Genesis Healthcare files for bankruptcy

Genesis Healthcare, once the largest skilled nursing operator in the United States,[1] filed for Chapter 11 bankruptcy in July 2025, burdened with more than one billion dollars in debt.[2]  The company’s collapse caps years of financial deterioration shaped by a private equity strategy of asset stripping, high-risk borrowing, and recurring regulatory violations.

Genesis’s financial unraveling reflects a familiar pattern: private equity owners extracted value through sale-leaseback deals and layered debt, while the company struggled to maintain operations. The result is another nursing home giant in bankruptcy, and a case study in how financial engineering can undermine long-term care delivery.

Private equity’s growing footprint in nursing homes has raised concerns from workers, patients, and regulators. A recent PESP report highlights how private equity firms have remained active in acquiring nursing homes. In recent years, at least two other nursing home companies owned by private equity firms have filed for bankruptcy, as well as a private equity firm that itself owned nursing homes.[3]

Genesis is also part of a broader wave of private equity-backed bankruptcies across healthcare. Private equity firms played a role in 56% (27 of 48 filings) of large U.S. corporate bankruptcies during 2024 (bankruptcies with liabilities of $500 million or greater at the time of filing), according to PESP’s Private Equity Bankruptcy Tracker. Among healthcare companies, private equity-backed companies accounted for 7 of the 8 largest bankruptcies.[4]

Bankruptcy filing: accumulated debt and liabilities

Genesis Healthcare entered bankruptcy with between $1 billion and $10 billion in both assets and liabilities. Genesis’ bankruptcy filings show a mix of secured and unsecured liabilities, including amounts owed to lenders, government agencies, vendors, and an affiliate of its current private equity owner.

The company carried approximately $708 million in secured debt at the time of filing,[5] including:

• $279 million in revolving credit from White Oak Healthcare Finance, secured by accounts receivable and cash;
• $233 million in term loans from real estate investment trusts Welltower and Omega;
• $103 million in federal tax liens from the IRS;
• $8 million in HUD-backed real estate loans; and
• $84 million in subordinated term loans held by two entities, WAX Dynasty Partners – an affiliate of ReGen Healthcare – and MAO 22322 LLC, which acquired its interest alongside WAX in a 2024 debt assignment from Welltower.

Bankruptcy court filings confirm that WAX shares common beneficial ownership with ReGen Healthcare, which is affiliated with private equity firm Pinta Capital Partners .[6]  Since acquiring a stake in Genesis in 2021, Pinta has used ReGen to issue debt to Genesis and appoint board members, giving it a role in shaping the company’s direction during bankruptcy.

In addition to its secured liabilities, Genesis reported over $1.5 billion in unsecured debt, much of it owed to public entities, workers, and critical vendors. This includes:

• $324 million to MAO 22322 LLC for a real estate loan;
• $103 million to the Internal Revenue Service for deferred payroll taxes;
• $58 million to the Commonwealth of Pennsylvania for unpaid provider assessments;
• $68 million to Healthcare Services Group, a staffing and cleaning contractor;
• $12 million to the 1199 New England Health Care Employees Pension Fund, which supports retirement benefits for unionized caregivers.

Genesis’ unsecured debt also includes $111.2 million in convertible subordinated notes issued to ReGen between 2021 and 2023. These notes, convertible into equity in Genesis, allow ReGen to increase its ownership share without infusing new capital. The final note, issued in May 2023, granted ReGen the right to appoint a third board member – building on the two board members it had already placed following its initial investment.

ReGen affiliates also submitted a stalking-horse bid to acquire Genesis’s assets out of bankruptcy. A stalking-horse bid is an initial offer on a bankrupt company’s assets that sets a minimum purchase price and helps establish a competitive bidding process. The stalking horse often receives advantages like deal protections, more time to conduct due diligence, and influence over sale terms.[7]

Separately, $30 million in debtor-in-possession (DIP) financing was provided by the company’s prepetition term loan lenders, which included Welltower, Omega, MAO, and ReGen-affiliated WAX Dynasty Partners. DIP financing is a special type of loan made to companies under bankruptcy protection, typically used to fund day-to-day operations during restructuring. DIP lenders are often given priority over other creditors in repayment.[8]

Private equity’s role: from Formation Capital to ReGen

Genesis Healthcare’s financial risk began well before ReGen became involved. In 2007, private equity firm Formation Capital, along with JER Partners, acquired Genesis in a $1.7 billion leveraged buyout financed in part with debt carried on Genesis’s own books, meaning the company became responsible for repaying the loans used by the private equity firms to buy it.[9]

While Formation controlled Genesis, it shifted financial resources to itself through a major real estate transaction. In 2011, Genesis sold 147 facilities to Health Care REIT (now Welltower) for $2.4 billion. That sale brought cash to investors but stripped Genesis of property ownership and saddled the company with a long-term triple-net lease[10] – likely forcing it to cover rent, utilities, taxes, insurance, and maintenance as a tenant on real estate it previously owned.[11]

Formation previously leveraged a similar approach at LaVie Care Centers (also known as Consulate Health Care), a nursing home chain under its ownership beginning in 2014.[12] Consulate entered bankruptcy in 2024 with over $1.1 billion in liabilities, including $622 million tied to facility lease obligations.[13] In 2021, six nursing homes tied to Consulate filed for bankruptcy after facing a $258 million False Claims Act jury verdict related to overcharging Medicare and Medicaid.[14]

Across both Genesis and LaVie/Consulate, a similar pattern emerges: the nursing home companies took on substantial long-term lease obligations that reduced their financial flexibility over time. While these arrangements may have generated investor returns, they also left the companies with fewer resources to invest in operations, staffing, and resident care – making them more vulnerable to financial stress and regulatory breakdown.

Risks and regulatory oversight

Genesis’s financial decline has been accompanied by inadequate care, regulatory scrutiny, and legal settlements. Across multiple states, inspections and lawsuits documented persistent problems with staffing, safety, and basic oversight:

• In 2017, Genesis agreed to pay $53.6 million to settle six federal False Claims Act lawsuits involving facilities in California, Georgia, Missouri, and Nevada. The lawsuits alleged that Genesis submitted false claims for medically unnecessary therapy and hospice services, and grossly substandard nursing care.[15]
• In 2017, Genesis announced the closure of Eagle Crest, a Carmichael, California facility, after inspectors found a female resident with Alzheimer’s had been sexually abused multiple times by another resident. The home had spent more than three years on the federal government’s “Special Focus Facility” list due to persistent care issues. The closure came after the state recommended termination of the facility’s Medicare provider agreement.[16] A 2014 Sacramento Bee investigation found that nursing homes operated in California by Genesis HealthCare received complaints of abuse at seven times the statewide average.[17]
• In 2020, Genesis Healthcare subsidiary-operated nursing homes reached a settlement with the Vermont Attorney General following findings of neglect at its nursing homes, including one incident that resulted in a resident’s death. As part of the agreement, the company paid more than $740,000 and accepted ongoing external oversight.[18]
• In March 2022, the Connecticut Department of Public Health ordered the emergency transfer of 94 residents from Quinnipiac Valley Center in Wallingford, owned by Genesis, after two resident deaths triggered a federal/state inspection. Regulators cited seven life‑threatening “Immediate Jeopardy” violations, including medication errors and failure to report incidents. The state Attorney General said that “findings regarding patient neglect, staffing, infection control measures, medication administration and their lack of leadership led to a finding of imminent harm.” A temporary manager was appointed before the facility was shuttered as unsafe.[19]
• In Massachusetts, two Heritage Hall facilities in Agawam, operated by Genesis,[20] reached settlements in May 2022 over neglect and safety violations. Heritage Hall North paid $55,175 after staff failed to prevent avoidable pressure injuries, while Heritage Hall West paid $33,725 for not conducting emergency response training and drills. Both settlements included multi-year compliance programs and retraining obligations.[21]
• In early 2025, Genesis Healthcare’s St. Joseph’s Center in Trumbull, Connecticut, faced two evacuations and was ultimately slated for closure following a series of health and safety failures. In March, nearly 200 residents were relocated after the discovery of Legionella bacteria in the facility’s water system.[22] In May, officials said patients at the facility had to be temporarily relocated because of fire safety concerns. Genesis later announced the facility would permanently close.[23]

According to bankruptcy filings, Genesis was funding approximately $8 million per month in settlement and defense costs arising from medical malpractice and wrongful death allegations, most of which date back several years.

Conclusion

Genesis Healthcare’s bankruptcy was a predictable result of a financial strategy that extracted value through debt and real estate transactions while leaving the company with fewer resources to sustain care.

The leveraged buyout that shifted ownership to private equity, the $2.4 billion sale-leaseback that removed Genesis’s real estate, and the long-term obligations that followed are choices that weakened the company’s financial foundation.

Calls for more transparency around ownership and financing have become a common response to private equity presence in the nursing home industry, but transparency alone is not enough. The private equity tactics that undermined Genesis were legal and disclosed – announced in press releases, reported in industry and major media, and met without serious concern. What’s needed is not just greater visibility but clear limits on private equity practices that prioritize investor return over keeping nursing homes running safely and sustainably.

To protect nursing home systems from similar outcomes, policymakers should act to:

• Prohibit sale-leaseback transactions that divest facilities of real estate while imposing long-term rent obligations;
• Limit the use of excessive debt, particularly when used to finance acquisitions or deliver investor payouts;
• Strengthen licensure and ownership rules to require evidence of long-term financial and operational capacity.

Unless these tactics are addressed directly, more nursing home operators may follow the same path and leave more patients, workers, and public programs to absorb the costs.

Resources

[1] Genesis HealthCare. “History.” Accessed July 24, 2025. https://www.genesishcc.com/about-us/company-profile/history.

[2] Genesis Healthcare, Inc. “Voluntary Petition for Non-Individuals Filing for Bankruptcy.” U.S. Bankruptcy Court, Northern District of Texas, July 9, 2025. https://document.epiq11.com/document/getdocumentbycode?docId=4487840&projectCode=GHI&source=DM.

[3] Private Equity Stakeholder Project PESP. “PE Is Continuing to Acquire — and Bankrupt — Nursing Homes.” April 23, 2025. https://pestakeholder.org/reports/pe-is-continuing-to-acquire-and-bankrupt-nursing-homes/.

[4] Valentina Dabos. “Private Equity Bankruptcy Tracker.” Private Equity Stakeholder Project PESP, February 12, 2025. https://pestakeholder.org/reports/private-equity-bankruptcy-tracker/.

[5] U.S. Bankruptcy Court, Northern District of Texas. “Declaration of Louis E. Robichaux IV in Support of Chapter 11 Petitions and First Day Pleadings.” July 10, 2025. https://document.epiq11.com/document/getdocumentbycode?docId=4488478&projectCode=GHI&source=DM.

[6] Eileen O’Grady. “Pulling Back the Veil on Today’s Private Equity Ownership of Nursing Homes.” Private Equity Stakeholder Project PESP, July 2021. https://pestakeholder.org/wp-content/uploads/2021/07/PESP_Report_NursingHomes_July2021.pdf, pp. 9-10.

[7] Reuters Practical Law. “Stalking Horse.” Accessed August 4, 2025. https://content.next.westlaw.com/practical-law/document/I2104e1a1ef0811e28578f7ccc38dcbee/Stalking-Horse?viewType=FullText&transitionType=Default&contextData=(sc.Default).

[8] Kenneth J. Steinberg, Christopher Robertson, Timothy H. Oyen, and Ethan Stern. “DIP Financing: Trends and Developments.” Reuters Practical Law, November 1, 2024. https://www.reuters.com/practical-law-the-journal/transactional/dip-financing-trends-developments-2024-11-01/.

[9] Liza Berger. “Formation Strikes Gold with $1.7B Genesis Buy.” McKnight’s Long-Term Care News, February 7, 2007. https://www.mcknights.com/news/formation-strikes-gold-with-1-7b-genesis-buy/.

[10] Genesis HealthCare. “Health Care REIT, Inc. Completes $2.4 Billion Acquisiton of Genesis Healthcare Real Estate Assets.” April 4, 2011. https://www.genesishcc.com/about-us/press/press-releases/health-care-reit-inc-completes-24-billion-acquisition-genesis.

[11] LII / Legal Information Institute. “Triple Net Lease.” Accessed July 24, 2025. https://www.law.cornell.edu/wex/triple_net_lease.

[12] Safanad Limited. “Formation Capital And Safanad Close On $150 Million Skilled Nursing Portfolio.” PR Newswire, July 18, 2014. https://www.prnewswire.com/news-releases/formation-capital-and-safanad-close-on-150-million-skilled-nursing-portfolio-267664991.html.

[13] Dietrich Knauth. “US Nursing Home Operator LaVie Files for Bankruptcy to Downsize, Shed Debts.” Reuters, June 3, 2024. https://www.reuters.com/legal/litigation/us-nursing-home-operator-lavie-files-bankruptcy-downsize-shed-debts-2024-06-03/.

[14] Danielle Brown. “Six Nursing Home Entities File for Bankruptcy Following $258M FCA Ruling.” McKnight’s Long-Term Care News, March 4, 2021. https://www.mcknights.com/news/six-nursing-home-affiliates-file-for-bankruptcy-following-258m-fca-ruling/.

[15] Office of Public Affairs. “Genesis Healthcare Inc. Agrees to Pay Federal Government $53.6 Million to Resolve False Claims Act Allegations Relating to the Provision of Medically Unnecessary Rehabilitation Therapy and Hospice Services.” U.S. Department of Justice, June 16, 2017. https://www.justice.gov/archives/opa/pr/genesis-healthcare-inc-agrees-pay-federal-government-536-million-resolve-false-claims-act.

[16] Marjie Lundstrom. “Alzheimer’s Patient Was Sexually Abused, State Says. Now Nursing Home Says It’s Closing.” The Sacramento Bee, September 18, 2017. https://www.sacbee.com/news/local/article170894757.html.

[17] Marjie Lundstrom and Phillip Reese. “Nursing Homes Unmasked.” The Sacramento Bee, November 8, 2014. https://media.sacbee.com/static/sinclair/Nursing1c/index.html.

[18] Insurance Journal. “Vermont Reaches Settlement with Nursing Homes After Fatality.” February 24, 2020. https://www.insurancejournal.com/news/east/2020/02/24/559212.htm.

[19] Dave Altimari. “Wallingford Nursing Home Shut down after Two Resident Deaths.” CT Mirror, March 14, 2022. https://ctmirror.org/2022/03/14/wallingford-quinnipiac-valley-center-nursing-home-shut-down-after-two-resident-deaths/.

[20] Ashley Shook. “Heritage Hall in Agawam Fined over Claims of Patient Neglect, Inadequate Care of Residents.” WWLP, May 3, 2022. https://www.wwlp.com/news/local-news/heritage-hall-in-agawam-fined-over-claims-of-patient-neglect-inadequate-care-of-residents/.

[21] Mass.Gov. “AG Healey Secures Resolutions With Five Nursing Homes Over Claims of Patient Neglect, Inadequate Care of Residents.” May 3, 2022. https://www.mass.gov/news/ag-healey-secures-resolutions-with-five-nursing-homes-over-claims-of-patient-neglect-inadequate-care-of-residents.

[22] Shaniece Holmes-Brown and Brianna Gurciullo. “Trumbull Nursing Home Fixes ‘water Issue’ behind Evacuation; Legionella Bacteria Found, Email Shows.” Connecticut Post, March 22, 2025. https://www.ctpost.com/news/trumbull/article/trumbull-st-josephs-center-legionella-water-issue-20225966.php.

[23] Hana Ikramuddin. “Trumbull Nursing Home, after Multiple Recent Evacuations, to Permanently Close, Officials Say.” Connecticut Post, May 30, 2025. https://www.ctpost.com/news/article/trumbull-ct-st-josephs-center-close-nursing-home-20352169.php.