Distressed Healthcare: Short Grandma

Everyone in the restructuring space has been pontificating about increased healthcare distress and yet the action has been relatively limited. This past week, however, Genesis Health Inc. ($GEN), one of the largest nursing home operators in the US, reported earnings and indicated that bankruptcy is a possibility. With 450 locations and nearly $1b of debt, this will surely pique a lot of interest. The company blames shortened stays, wage inflation, professional liability issues and escalating lease payments for the company's distress. Accordingly, it has entered into sale leaseback bandaids...uh, agreements...with two landlords, Sabra Healthcare REIT Inc. ($SBRA) andWelltower Inc. ($HCN). Will the company file for bankruptcy? It's capital structure is relatively un-complex and so this would seem to be an out-of-court candidate. But you never know.