Toledo-Ohio ProMedica’s senior care division generated an operating loss of $93.1 million for the fourth quarter of 2021, compared with the division’s operating loss of $43.5 million for the prior year’s fourth quarter, the company said in a report and in a related call.
“The nursing home industry, in particular, has been one of the most challenged around labor costs and staffing costs,” Chief Financial Officer Steve Cavanaugh said.
ProMedica acquired HCR ManorCare, Arden Courts and Heartland in 2018. Its senior care division provides services at 157 Medicare- and Medicaid-certified skilled nursing and rehabilitation centers, at hospice care in 116 markets and at more than 50 memory care communities.
Skilled nursing facilities occupancy rose from 7.7% from a low point of 67.2%, and assisted living occupancy rose 6.9% from a low point of 60%. Still, Cavanaugh said, risks and challenges remain in the senior care division. Labor and staffing costs are up, and senior care volumes are going to take some time to recover to pre-pandemic levels.
“Our long-term optimism for the business remains unabated,” he said.
During the first quarter of 2021, ProMedica, Welltower and a third-party operator agreed to terms for the divestiture of a portfolio of skilled nursing facilities currently owned by Welltower and leased to ProMedica, according to the company.
“We’ve been able to do a number of transactions that we think are going to improve long-term outlooks,” Cavanaugh said.
Promedica’s senior care division divested 21 locations as of Dec. 31; they collectively lost $46 million. The company expects to sell off four more facilities by the end of the first quarter. ProMedica will receive a portion of the sale proceeds from the joint venture with Welltower and a rent reduction in exchange for the transfer of operating rights. The senior care division also acquired nine skilled nursing facilities and four assisted living/memory care sites in 2021. According to Cavanaugh, even after reinvesting capital back into the company, the transactions will add a net of approximately $40 million in cash proceeds to the balance sheet.