Regency Plans to Sell 13 Nursing Homes in State

TUSTIN —  Regency Health Services Inc., eager to expand outside of California’s dicey health-care market, said Tuesday it plans to sell 13 nursing homes in the state and buy 18 facilities in Tennessee and North Carolina.

Richard K. Matros, chief executive of the Tustin-based nursing home operator, said the moves will help fulfill promises to diversify that executives made to investors nearly two years ago.

The company wants to diversify geographically, in part because of its troubles with Medi-Cal, the state’s Medicaid program. Regency, like other nursing home operators, receives much of its revenue from Medicaid patients. And health-care providers say Medi-Cal is notoriously stingy with its reimbursements.

Regency will pay $44.2 million for Liberty Healthcare L.P.’s nursing homes in Tennessee and North Carolina, plus two affiliates that provide pharmaceutical and other nursing home services.

Matros declined to say which of the company’s homes are up for sale. He noted many are small outfits that have trouble making it in the state’s highly competitive market. He said most of the 13 homes, which employ about 600 workers, are in Southern California.

Matros said the company might even decide to keep some or all of the facilities, depending on their individual financial performance.

The company said it will take a charge of $7 million to $9 million in the fourth quarter for writing down the assets and other costs related to sales of the facilities.

The company, which will have 67 California facilities left if it sells those now on the block, also said it has acquired the assets of Assist-A-Care, a San Diego provider of pharmaceutical services, for $4.9 million.

The San Diego purchase reflects Regency’s effort to boost profit margins by increasing the ancillary services it provides residents of its nursing homes in California and elsewhere, the company said.

Assuming regulators approve and the sales proceed, Regency will wind up with 99 health care facilities nationwide, including the 67 in California. The company now has 94 facilities--80 in California and the rest in Ohio, New Mexico and West Virginia.

Matros said the company is looking at other possible acquisitions across the country, although he declined to say where. He said the company has about $75 million left from recent debt financings to make more purchases.