Allowance for Doubtful Accounts

12 Months Ended

Dec. 31, 2025

Note 5 — Allowance for Doubtful Accounts

In making the Company’s credit evaluations, management considers the general collection risk associated with trends in the long-term care industry. The Company establishes credit limits through payment terms with customers, performs ongoing credit evaluations and monitors accounts on an aging schedule basis to minimize the risk of loss. Despite the Company’s efforts to minimize credit risk exposure, customers could be adversely affected if future industry trends change in such a manner as to negatively impact their cash flows. As a result, the Company’s future collection experience could differ significantly from historical collection trends. If the Company’s customers experience a negative impact on their cash flows, it could have a material adverse effect on the Company’s results of operations, financial condition and cash flows.

The Company evaluates its accounts and notes receivable for expected credit losses quarterly. Accounts receivable are evaluated based on internally developed credit quality indicators derived from the aging of receivables. Notes receivable are evaluated based on internally developed credit quality indicators derived from management’s assessment of collection risk. At the end of each period, the Company sets a reserve for expected credit losses on standard accounts and notes receivable based on the Company’s historical loss rates. Accounts and notes receivable with an elevated risk profile, which are from customers who have filed bankruptcy or are subject to collections activity, are aggregated and evaluated to determine the total reserve for the class of receivable. Additionally, starting in the year ended December 31, 2024, for notes receivable, management evaluates standard receivables based on whether the customer is current (paying within 60 days of terms) or delinquent (paying outside of 60 days of terms).

On July 9, 2025, Genesis Healthcare, Inc. (“Genesis”) filed for Chapter 11 bankruptcy protection in the Northern District of Texas. As of December 31, 2025, the Company had outstanding accounts and notes receivable due from Genesis (prior to applying an allowance) of $50.4 million and $20.4 million, respectively. Upon review of the bankruptcy petition, the Company identified the Genesis accounts and note receivables as separate loss pools for evaluating the collectability of the receivables due to the size of the outstanding balances and the assessed unlikelihood of any potential recovery. As of December 31, 2025, the Company assessed a 100% allowance on the outstanding balances of both the accounts and notes receivable due from Genesis. In conjunction with recording the allowance for Genesis receivables, the Company recognized bad debt expense of $63.9 million during the year ended December 31, 2025.

ASC 326-20 - Financial Instruments - Credit Losses (“ASC 326-20”) permits entities to make an accounting policy election not to measure an estimate for credit losses on accrued interest if those entities write off accrued interest deemed uncollectible in a timely manner. The Company follows an income recognition policy on all interest earned on notes receivable. Under such policy the Company accounts for all notes receivable on a non-accrual basis and defers the recognition of any interest income until receipt of cash payments. This policy was established based on the Company’s history of collections of interest on outstanding notes receivable, as we do not deem it probable that we will receive substantially all interest on outstanding notes receivable. Accordingly, the Company does not record a credit loss adjustment for accrued interest. For the years ended December 31, 2025, 2024 and 2023, the Company recognized $3.6 million, $2.8 million and $2.8 million in interest income from notes receivable, respectively.

The following tables present the Company’s tiers of notes receivable for the years ended December 31, 2025 and 2024, respectively, further disaggregated by year of origination, as well as write-off activity:


	Notes Receivable as of December 31, 2025
	Amortized Cost Basis by Origination Year
	2025		2024		2023		2022		2021		Prior		Total
	(in thousands)
Notes Receivable
Standard notes receivable	$	42,325	$	8,115	$	2,737	$	3,974	$	—	$	—	$	57,151
Delinquent notes receivable	$	535	$	134	$	684	$	1,811	$	405	$	—	$	3,569
Genesis note receivable	$	—	$	—	$	—	$	—	$	—	$	20,410	$	20,410
Elevated risk notes receivable	$	—	$	—	$	1,537	$	—	$	—	$	1,491	$	3,028

Current-period gross write-offs	$	—	$	6	$	326	$	—	$	121	$	—	$	453
Current-period recoveries	—		(278)		—		—		—		—		(278)
Current-period net write-offs	$	—	$	(272)	$	326	$	—	$	121	$	—	$	175


	Notes Receivable as of December 31, 2024
	Amortized Cost Basis by Origination Year
	2024		2023		2022		2021		2020		Prior		Total
	(in thousands)
Notes Receivable
Standard notes receivable	$	53,592	$	7,282	$	15,743	$	—	$	—	$	—	$	76,617
Delinquent notes receivable	$	499	$	1,055	$	1,942	$	671	$	—	$	21,933	$	26,100
Elevated risk notes receivable	$	—	$	1,537	$	—	$	—	$	1,491	$	—	$	3,028

Current-period gross write-offs	$	—	$	742	$	483	$	3,024	$	—	$	26	$	4,275
Current-period recoveries	—		—		—		—		—		—		—
Current-period net write-offs	$	—	$	742	$	483	$	3,024	$	—	$	26	$	4,275

The following tables provide information as to the status of payment on the Company’s gross notes receivable which were past due as of December 31, 2025 and 2024, respectively:


	Age Analysis of Past-Due Notes Receivable as of December 31, 2025
	0 - 90 Days		91 - 180 Days		Greater than 181 Days		Total
	(in thousands)
Notes Receivable
Standard notes receivable	$	403	$	—	$	—	$	403
Delinquent notes receivable	335		139		2,827		3,301
Genesis notes receivable	—		—		20,410		20,410
Elevated risk notes receivable	—		—		3,029		3,029
Total notes receivable	$	738	$	139	$	26,266	$	27,143


	Age Analysis of Past-Due Notes Receivable as of December 31, 2024
	0 - 90 Days		91 - 180 Days		Greater than 181 Days		Total
	(in thousands)
Notes Receivable
Standard notes receivable	$	142	$	—	$	—	$	142
Delinquent notes receivable1	761		682		23,151		24,594
Elevated risk notes receivable	225		225		2,429		2,879
Total notes receivable	$	1,128	$	907	$	25,580	$	27,615

1.The balance of delinquent notes receivable as of December 31, 2024 includes the principal balance of the note due from Genesis.

The following tables provide a summary of the changes in the Company’s allowance for doubtful accounts on a portfolio segment basis for the years ended December 31, 2025 and 2024, respectively:


	Allowance for doubtful accounts
Portfolio Segment:	December 31, 2024		Reclassifications1		Write-Offs2		Bad Debt Expense		December 31, 2025
	(in thousands)
Accounts receivable
Aged accounts receivable	$	87,520	$	(1,651)	$	(36,674)	$	19,715	$	68,910
Genesis accounts receivable1	—		1,651		—		48,744		50,395
Total accounts receivable	$	87,520	$	—	$	(36,674)	$	68,459	$	119,305

Notes receivable
Standard notes receivable	$	5,096	$	—	$	278	$	(1,787)	$	3,587
Delinquent notes receivable	6,026		(5,176)		(453)		873		1,270
Genesis notes receivable1	—		5,176		—		15,234		20,410
Elevated risk notes receivable	2,140		—		—		300		2,440
Total notes receivable	$	13,262	$	—	$	(175)	$	14,620	$	27,707
Total accounts and notes receivable	$	100,782	$	—	$	(36,849)	$	83,079	$	147,012

1.Genesis accounts and notes receivable were identified as new loss pools during the year ended December 31, 2025.

2.Write-offs are shown net of recoveries. During the year ended December 31, 2025, the Company collected $0.3 million of accounts and notes receivable that were recovered subsequent to being written-off.


	Allowance for doubtful accounts
Portfolio Segment:	December 31, 2023		Reclassifications1		Write-Offs2		Bad Debt Expense		December 31, 2024
	(in thousands)
Accounts receivable	$	80,819	$	—	$	(33,402)	$	40,103	$	87,520

Notes receivable
Standard notes receivable	$	6,125	$	(2,615)	$	—	$	1,586	$	5,096
Delinquent notes receivable1	—		2,615		(1,252)		4,663		6,026
Elevated risk notes receivable	4,755		—		(3,023)		408		2,140
Total notes receivable	$	10,880	$	—	$	(4,275)	$	6,657	$	13,262
Total accounts and notes receivable	$	91,699	$	—	$	(37,677)	$	46,760	$	100,782

1.Delinquent notes receivable was identified as a new loss pool during the year ended December 31, 2024.

2.Write-offs are shown net of recoveries. During the year ended December 31, 2024, the Company collected $0.2 million of accounts receivables that were recovered subsequent to being written-off.