Extendicare Exits Kentucky, Leases 21 Nursing Homes to Texas Operator

Increased litigation and a failed effort to pass legislation curbing lawsuits against nursing homes have pushed Canadian-based nursing home chain operator Extendicare Health Services Inc. out of Kentucky. 

The operator has agreed to lease its 21 Kentucky nursing homes, representing more than 1,700 beds, to an experienced third-party long-term care operator based in Texas. 

The lease has a 10-year term and gives the operator the option of two five-year extensions. The operator could also choose to purchase all of the care facilities during the initial lease term.


The decision to leave Kentucky wasn’t easy, but it is consistent with Extendicare’s continuing strategy involving “the divestiture of operations that impede growth or create undue risk exposure,” the chain said in a statement.

“The combination of a worsening litigation environment and the lack of any likelihood of tort reform in the state of Kentucky has made this the prudent decision for our company and unitholders,” said Extendicare. 

Following the October 2011 Medicare cuts to skilled nursing facility reimbursements, Extendicare’s 21 Kentucky nursing homes generated annualized revenue of $135.4 million (USD) and an EBITDA of $17.5 million. The operating lease transaction is expected to reduce the Canadian chain’s EBITDA by $2.5 million and adjusted funds from operations by $1.3 million on an annualized basis. 


The transfer of ownership and operations is subject to approval by state licensing officials and is expected by July 1.

Written by Alyssa Gerace 

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