v3.26.1
Commitments and Contingencies
6 Months Ended
Jun. 30, 2026
Commitments And Contingencies Disclosure [Abstract]  
Commitments and Contingencies

NOTE 12. COMMITMENTS AND CONTINGENCIES

Regulatory Matters

Laws and regulations governing federal Medicare and state Medicaid programs are complex and subject to interpretation. Compliance with such laws and regulations may be subject to future governmental review, audit, investigation and interpretation, as well as significant regulatory action, including fines, penalties and exclusion from certain governmental programs.

As of June 30, 2026, the Company’s facilities that are operated by the Company, leased or subleased to third-party operators, or otherwise managed by third parties were certified by the Centers for Medicare & Medicaid Services (“CMS”) and were operational. Because the Company operates through Healthcare Services, Pharmacy Services and Real Estate segments, regulatory exposure may arise directly from the Company’s operated businesses, indirectly through tenant and operator performance at leased facilities, or from legacy matters relating to prior periods of direct operations. Based on information currently available, the Company believes that it is in compliance in all material respects with applicable laws and regulations relating to its current operations, although there can be no assurance that governmental agencies will not reach different conclusions in the future.

Legal Matters

The Company is party to various legal actions and administrative proceedings and is subject to various claims arising in the ordinary course of business, including claims relating to prior direct facility operations, current operated facilities, employment matters, staffing requirements, commercial disputes and other business matters. The Company believes that many of these matters are defensible and intends to defend them vigorously unless settlement is determined to be in the best interests of the Company. However, there can be no assurance that the resolution of any such matters will not have a material adverse effect on the Company’s business, results of operations or financial condition.

In addition, the Company’s tenants and operators conduct business in a highly regulated industry and are subject to continuing state and federal scrutiny, supervision and control. Such scrutiny may include inquiries, investigations, examinations, audits, site visits and surveys, some of which are non-routine. The Company believes that governmental investigations and enforcement activity involving long-term care providers have increased, particularly in areas involving Medicare and Medicaid reimbursement, false claims, staffing requirements and quality-of-care matters. Adverse determinations in legal proceedings or governmental investigations involving the Company, its prior operations, or its tenants and operators could have a material adverse effect on the Company’s business, results of operations and financial condition.

Professional and General Liability Claims Covered by Insurance

As of June 30, 2026, the Company was a defendant in one professional and general liability action arising from care provided to a former patient at one of the Company's facilities. The complaint alleges, among other things, negligence, including alleged failures to provide adequate and competent staffing, and seeks unspecified actual, compensatory, and punitive damages for alleged injuries, pain and suffering, mental anguish, and malnutrition. The Company intends to vigorously defend this matter and believes that any losses, other than punitive damages, if awarded, would be covered by applicable insurance, subject to the terms, conditions, deductibles, and coverage limits of the applicable insurance policies. Punitive damages, if awarded, are not covered by the Company's insurance policies.

The Company evaluates this matter in accordance with ASC 450, Contingencies. Based on the information currently available, management has concluded that a loss is not probable; therefore, no liability has been accrued as of June 30, 2026. While an unfavorable outcome is reasonably possible, the Company is unable to estimate the amount or range of reasonably possible loss, if any, in excess of available insurance coverage due to the inherent uncertainties associated with litigation.