The parent organization of one of the nation’s largest nursing home chains has filed for an IPO in what could set a record for a transaction of this type.
American Healthcare REIT is the majority owner of nursing home properties operated by Kentucky-based Trilogy Health Services, which was the focus of a USA TODAY investigation into nursing home deaths during the height of the pandemic.
The Real Estate Investment Trust would be traded on the New York Stock Exchange and could raise millions of dollars when it goes public.
USA TODAY reported in March that the 113 facilities in the federal government chain have collectively reported some of the worst death rates in the country. Following the release, the chain revised its numbers, reducing the death toll by 42%, despite still being among the worst performers during the COVID-19 surge of winter 2020.
More:This nursing home chain was characterized by high mortality rates across the country when the pandemic was at its peak
The REIT acknowledged to investors in its filing with the Securities and Exchange Commission on Friday that it has faced downward financial pressures from the pandemic, inflation and labor shortages. But the COVID-19 fatality rates compared to peers have not been reflected in communications with investors.
The magnitude of the death revisions prompted a review by the Centers for Medicare and Medicaid Services, which one of the agency’s chief medical officers called “concerning.” Spokesperson Elaine Kanellis told USA TODAY in June that regulators had asked Trilogy for an explanation of its revisions.
What is American Healthcare REIT and why are they going public?
Based in Southern California, the real estate investment trust owns and operates healthcare properties – including senior housing, hospitals and medical offices. The company operates 313 buildings in the US and UK and has approximately $4.5 billion in assets, including 9,636 qualified care beds.
As of now, the company is an untraded real estate fund available only to “accredited investors”. On the stock exchange, it would be available to a much broader circle of investors.
Overall, the American healthcare REIT continues to recover from the pandemic and reported more than $200 million in net operating income in 2021, a metric used to measure profitability.
“I see two key benefits for this company from going public, first, they are heavily leveraged with $2.4 billion in debt, and it will improve earnings,” said Matt Kennedy, senior strategist at Renaissance Capital. “And it will create liquidity for shareholders.”
Based on Friday’s filing, Kennedy expected shares to list before the end of the year, but noted that 2022 was one of the slowest on record given the volatile stock market.
According to American Healthcare REIT, Trilogy has largely recovered from the pandemic. Occupancy rates have increased from 66.9% in December 2020 to 81% in June 2022.
In its filing with the Securities and Exchange Commission on the IPO, the company said it was “focused on controlling costs, with a particular focus on reducing reliance on “agency” staff and that its nursing homes “will have the opportunity to increase rates , which we believe is a valuable attribute in an inflationary environment.”
The cost per share of the new shares, to be traded as “AHR” on the New York Stock Exchange, was not disclosed.
What Happened to Trilogy’s COVID Death Numbers?
The Midwest chain originally reported 772 deaths at 113 facilities from October 2020 to February 2021. The later cut of 325 deaths, which the company said was based on federal guidelines, lowered the reported rate from the highest to the third-highest among the country’s 10 largest nursing home chains.
More:This nursing home chain reported the highest COVID death rate. Then it deleted deaths.
Trilogy’s revisions removed as many deaths as had been removed from all 13,500 other facilities combined. According to a USA TODAY analysis of data published on the Centers for Medicare and Medicaid website, no other chain came close, and most major chains that revised their numbers added deaths.
After initially offering to share the results of an internal audit that led to the cuts, company officials have kept their process secret. A company spokesman declined to give further details this week.
More:When does a COVID-19 death in a nursing home count? It’s complicated.
Federal officials say they have completed their review of Trilogy’s death reports and have received assurances that “they have changed their internal reporting system to prevent the problem from reoccurring.”
USA TODAY has made Freedom of Information Act requests for federal exam documentation that has yet to be provided.
What are Congress and the government doing about nursing homes?
Nursing homes have become the focus of increased scrutiny amid the pandemic. A federal OIG report found that 1 million of the country’s 3 million nursing home residents have contracted COVID-19 in 2020.
The White House is preparing to use its executive power to tighten industry regulations, while some members of Congress say they want to deal with business owners and operators.
LOOK UP: Nursing Home COVID-19 Death Database
On Wednesday, the Select Subcommittee on the Coronavirus Crisis will release the findings of its investigation into for-profit nursing home chains. It will hold a hearing to consider the matter this afternoon.
Featuring: Jayme Fraser
Nick Penzenstadler is a reporter for USA TODAY’s investigation team. Contact him at [email protected] or @npenzenstadler or on Signal at (720) 507-5273.
Comments are closed.