By Alexander Gladstone

Genesis Healthcare, which operates approximately 175 nursing facilities throughout the U.S., filed for bankruptcy Thursday after struggling to overcome financial burdens including legal costs from personal-injury and wrongful-death claims.

The company operated over 500 facilities at its peak in 2016, but began divesting hundreds of the facilities after finding it unprofitable to operate at that scale. However, the legacy liabilities from its peak footprint continued to hamper the company, according to papers filed in the U.S. Bankruptcy Court in Dallas.

The overhang includes about $8 million a month in settlement and defense costs arising from alleged injury and death claims, co-chief restructuring officer Louis E. Robichaux said in a sworn declaration.

Genesis has secured a $30 million commitment from its existing lenders for a loan to fund the bankruptcy proceedings, and intends to ensure staff retain their positions and compensation, while residents will continue to be served and vendor agreements will remain in place, the company said. The company has more than 15,000 residents and 27,000 employees, court papers show.

ReGen Healthcare, a private investment entity that put about $100 million into the company across multiple capital infusions, has made a stalking horse bid to purchase substantially all of Genesis's assets out of bankruptcy. Genesis said it intends to commence a marketing process to see if it can obtain a higher and better offer.

The company originated around 1985, with a network of nine nursing centers it expanded with a focus on Medicare patients. In 2011, the company transferred substantially all of its real-estate assets to Health Care REIT, Inc., known as Welltower, in exchange for $2.4 billion.

Following this transaction, Welltower became its largest landlord, while an entity formed by Formation Capital LLC and JER Partners became Genesis's ultimate parent. The company continued to expand through acquisitions, as well as a partnership with an orthopaedic hospital system in China.

Genesis narrowly escaped having to file for bankruptcy during the Covid-19 pandemic by securing financing from ReGen, which appointed directors to the company's board, court papers show. As of last year, the company's revenue mix was 61% Medicaid, 17% Medicare, and 13% commercial insurance.

"We believe this financial reorganization is a necessary step for our organization to sustainably deliver on our mission of improving lives through delivery of high-quality healthcare and everyday compassion," said Lauren Murray, Genesis's chief operating officer.

The company enters bankruptcy owing roughly $700 million to secured creditors including private lender White Oak, its principal landlord Welltower and Omega Healthcare Investors, another real-estate investment trust that leases facilities to Genesis.

Write to Alexander Gladstone at alexander.gladstone@wsj.com

(END) Dow Jones Newswires

July 10, 2025 12:37 ET (16:37 GMT)

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