In a startling revelation, ProMedica, once a titan in the long-term care (LTC) industry, is now just down to two skilled nursing facilities following significant financial setbacks in 2022. The company’s journey from profitability to financial turmoil offers a cautionary tale to others looking to enter the long-term care space.
ProMedica’s financial health took a severe hit in 2022, with the company reporting operational losses nearing $350 million in Q4 alone. Breaking down the figures, ProMedica saw losses of $346.4 million in Q4, $126 million in Q1, $155 million in Q2, and $77.5 million in Q3. The total operating losses for the year amounted to a staggering $399 million.
As recently as 2021, ProMedica had a positive operating income of $141.4 million. So what happened? The decline in 2022 was attributed to the loss of a Medicaid contract in its Paramount insurance division, leading to a Q4 operating revenue of $1 billion, marking a 23.9% decrease from the previous year. The total operating revenue for 2022 stood at $4.1 billion, down by 21% from 2021.
Divestitures and Restructuring at ProMedica
In a bid to stem the financial bleeding, ProMedica divested over 100 money-losing skilled nursing facilities in December 2022. These were reclassified as “discontinued operations” and were not included in the year’s total losses. The company also exited the national nursing home business by divesting from 147 money-losing skilled nursing facilities, which were the primary culprits for the previous year’s financial losses. This move resulted in nearly 300 layoffs.
As of June 30th 2023, ProMedica‘s holdings have dwindled to just two skilled nursing facilities. This is a dramatic shift from five years ago when the company boasted over 400 senior care facilities serving 200,000 patients and residents. This change followed ProMedica’s acquisition of HCR ManorCare, which, at the time, was the nation’s second-largest provider of post-acute services and long-term care.
Furthermore, in a significant move, ProMedica sold its home hospice and healthcare business to Gentiva for $710 million in February. This division was one of its most profitable arms. Analysts speculate that the proceeds from this sale could be used to settle certain debts.
The Road Ahead
The company is currently undergoing significant restructuring to address its financial challenges. Recent actions include seeking a better naming rights deal for the Glass City Center, suspending donations and sponsorships, and terminating a sponsorship agreement with the USGA for the U.S. Women’s Open.
The financial report from June 30 mentions that the transfer of 14 SNFs in California, Maryland, and South Carolina is still in progress. ProMedica has allocated a portion of its operating reserve to fund these SNFs until September 30, 2023, if required.
Experience Care will keep you up to date with any new developments in this story.
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