A highly competitive and heavily regulated industry poses tough challenges for Genesis Health Ventures, according to a Moody's Investors Service report rating the company's new $415 million senior secured credit facilities. The credit, which is in syndication, has been assigned a Ba3 rating. Russell Pomerantz, v.p. and senior analyst, factored in the number of nursing homes when considering the rating. "It's a large, highly fragmented industry. There are tons of choices," he said. Genesis, headquartered in Kennett Square, Penn., provides eldercare in the eastern US through a network of Genesis ElderCare skilled nursing and assisted living facilities. Also factored into the rating is the litigious environment of health care in the state of Florida. "Florida's prohibitively expensive for large corporate nursing homes," Pomerantz said. "Lawyers go after the big companies. Some have left the state or sold to smaller companies that don't have deep pockets. In Florida there are no reforms that limit the size of settlements." Pomerantz added that this is a factor that affects all health care companies and he knows of no large settlements against Genesis in recent memory. Bolstering Genesis' position is the company's significant reduction of debt, which happened while the company was in a Chapter 11 reorganization. Genesis is reemerging from bankruptcy with $600 million in debt, compared to $2.5 billion when it filed. "They went on a large acquisition binge in the late 90s, but they're one of the first health care companies to come out of bankruptcy and their balance sheet is in good shape."
Competition, Regulations Pose Challenge For Genesis