Eskaton ended 2022 with a $28 million net loss, and its skilled nursing properties largely are responsible, according to an independently audited financial report dated May 16.
The anticipated sale of its three stand-alone skilled nursing facilities to Cypress Healthcare Group for $35.6 million is meant to help put Carmichael, CA-based provider in the black, the company said.
“The operations of our three stand-alone skilled nursing buildings have been challenged. In 2022, these three buildings have negatively contributed $9.8M of income available for debt services,” Senior Vice President and Chief Financial Officer Mark Jenkins told the McKnight’s Business Daily. “Our remaining operations were unable to make up this shortfall.”
Excluding the three properties now being sold, the provider would have been in compliance with all of its debt covenants at the end of 2022, Jenkins said.
Net operating revenue for the year was 17.5% below budget, according to the report. Occupancy and skilled nursing census are responsible for the shortfall, the company noted.
Revenue from the 99-bed Eskaton Care Center Manzanita in Carmichael, CA; 148-bed Eskaton Care Center Greenhaven in Sacramento, CA; and the 149-bed Eskaton Care Center Fair Oaks in Fair Oaks, CA, was 22.6% below average last year, per the report.
Economic effects from the COVID-19 pandemic and ensuing workforce shortages reportedly led to revenue shortfalls, and the facilities were unable to maintain adequate staffing levels, even though the company used temporary agencies. Eskaton said that the availability of temporary nurses was sometimes limited. Additionally, the company said, intermittent cases of COVID among staff members and residents caused the health department to temporary halt admissions.
Eskaton began looking for buyers for the three aforementioned properties in the fourth quarter of 2022. After evaluating seven offers, the company entered an asset purchase agreement with Roseville, CA-based Cypress on March 24. The sale is expected to close in the third quarter.
The provider said it will “expand and enhance” its offerings in independent living, assisted living, memory care and home care.
