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. In making the Company’s credit evaluations, management considers the general collection risk associated with trends in the long-term care industry. 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, 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” or the “Debtors”) filed for Chapter 11 bankruptcy protection in the Northern District of Texas (the “Bankruptcy Court”). As of the bankruptcy filing date and as of September 30, 2026, the Company had outstanding accounts and notes receivable due from Genesis of $50.4 million and $20.4 million, respectively. Upon review of the bankruptcy petition, the Company identified the Genesis accounts and notes receivables as separate loss pools from other accounts and notes receivables for evaluating collectability due to the size of the outstanding balances and the assessed unlikelihood of any potential recovery. The Company assessed a 100% allowance on the outstanding balances of both the accounts and notes receivable due from Genesis at that time. The Company has reassessed the allowance for doubtful accounts specific to Genesis receivables during each reporting date subsequent to the bankruptcy filing and continued to account for the Genesis receivables under a separate loss pool and with a 100% allowance prior to September 30, 2026.

On October 14, 2026, the Bankruptcy Court entered an order approving the Genesis Chapter 11 Plan (the “Plan”). The Plan and associated documents filed with the Bankruptcy Court detail several events that fundamentally changed the outcome of the case. Most notably, the Debtors settled a litigation with multiple defendants resulting in a payment by those defendants of $150 million into the Debtors estate (the “Settlement”). In addition, a sale of substantially all of the Debtors’ assets was approved by the Bankruptcy Court and closed on or about October 14, 2026, (the “Sale”). The Settlement and Sale resulted in approximately $250 million in assets available for distribution to unsecured creditors, based on analyses provided by the Debtors. The magnitude of the Settlement and Sale far surpassed the Debtors’ previous estimates.

As of September 30, 2026, the Company again performed its quarterly current expected credit loss reassessment. Based on this new information, the Company determined that the Genesis receivables should continue to be assessed in a separate loss pool for both the accounts and notes receivable portfolios and that the allowance for doubtful accounts should be updated due to the expectation of future recovery. During the three and nine months ended September 30, 2026, the Company reduced the allowance for doubtful accounts by $6.1 million to account for estimated future recoveries related to the Genesis receivables.

The Company will continue to perform quarterly reassessments of the Genesis receivables at each reporting date until the bankruptcy claims are resolved, which may result in additional changes to the Company’s allowance specific to the Genesis receivables portfolio. The Company’s recovery, and its estimate of that recovery, remains subject to certain variables and contingencies that include, but are not limited to, the timing of expected future distributions, the enforceability of certain claims made as part of the bankruptcy case, the execution of future note payments by the successor operator, and the resale market for Genesis bankruptcy claims that emerges over time.

ASC 326 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. Interest income from notes receivable for the three months ended September 30, 2026 and 2025 was $0.6 million and $0.8 million, respectively. Interest income from notes receivable for the nine months ended September 30, 2026 and 2025 was $1.9 million and $3.1 million, respectively.


	Notes receivable
	Amortized cost basis by origination year
	2026		2025		2024		2023		2022		Prior		Total
	(in thousands)
Notes receivable
Standard notes receivable	$	41,357	$	20,977	$	3,304	$	673	$	1,016	$	—	$	67,327
Delinquent notes receivable	$	445	$	373	$	692	$	74	$	—	$	—	$	1,584
Genesis note receivable	$	—	$	—	$	—	$	—	$	—	$	20,410	$	20,410
Elevated risk notes receivable	$	—	$	—	$	—	$	2,009	$	1,737	$	1,732	$	5,478

Current-period gross write-offs	$	—	$	29	$	9	$	74	$	—	$	101	$	213
Current-period recoveries	—		—		—		—		—		—		—
Current-period net write-offs	$	—	$	29	$	9	$	74	$	—	$	101	$	213


	Age analysis of past-due notes receivable as of September 30, 2026
	0 - 90 Days		91 - 180 Days		Greater than 181 Days		Total
	(in thousands)
Notes receivable
Standard notes receivable	$	1,103	$	—	$	—	$	1,103
Delinquent notes receivable	185		131		461		777
Genesis note receivable	—		—		20,410		20,410
Elevated risk notes receivable	—		—		5,478		5,478
	$	1,288	$	131	$	26,349	$	27,768


	Allowance for doubtful accounts
Portfolio Segment:	June 30, 2026		Reclassifications		Write-Offs1		Bad Debt Expense		September 30, 2026
	(in thousands)
Accounts receivable
Aged accounts receivable	$	67,895	$	—	$	(4,749)	$	4,692	$	67,838
Genesis accounts receivable	50,395		—		—		(4,316)		46,079
Total accounts receivable	$	118,290	$	—	$	(4,749)	$	376	$	113,917

Notes receivable
Standard notes receivable	$	5,313	$	—	$	—	$	(1,072)	$	4,241
Delinquent notes receivable	1,603		—		(1)		(1,153)		449
Genesis note receivable	20,410		—		—		(1,748)		18,662
Elevated risk notes receivable	4,592		—		—		—		4,592
Total notes receivable	$	31,918	$	—	$	(1)	$	(3,973)	$	27,944
Total accounts and notes receivable	$	150,208	$	—	$	(4,750)	$	(3,597)	$	141,861


	Allowance for doubtful accounts
Portfolio Segment:	June 30, 2025		Reclassifications		Write-Offs1		Bad Debt Expense		September 30, 2025
	(in thousands)
Accounts receivable
Aged accounts receivable	$	64,743	$	—	$	(816)	$	4,172	$	68,099
Genesis accounts receivable	47,728		—		—		2,710		50,438
Total accounts receivable	$	112,471	$	—	$	(816)	$	6,882	$	118,537

Notes receivable
Standard notes receivable	$	5,621	$	—	$	(454)	$	(1,211)	$	3,956
Delinquent notes receivable	1,072		—		—		(40)		1,032
Genesis note receivable	20,410		—		—		—		20,410
Elevated risk notes receivable	2,310		—		—		—		2,310
Total notes receivable	$	29,413	$	—	$	(454)	$	(1,251)	$	27,708
Total accounts and notes receivable	$	141,884	$	—	$	(1,270)	$	5,631	$	146,245

1.Write-offs are shown net of recoveries. During the three months ended September 30, 2025, the Company collected less than $0.1 million of accounts and notes receivable which had previously been written-off as uncollectible.


	Allowance for doubtful accounts
Portfolio Segment:	December 31, 2025		Reclassifications		Write-Offs1		Bad Debt Expense		September 30, 2026
	(in thousands)
Accounts receivable
Aged accounts receivable	$	68,910	$	—	$	(9,393)	$	8,321	$	67,838
Genesis accounts receivable	50,395		—		—		(4,316)		46,079
Total accounts receivable	$	119,305	$	—	$	(9,393)	$	4,005	$	113,917

Notes receivable
Standard notes receivable	$	3,587	$	—	$	—	$	654	$	4,241
Delinquent notes receivable	1,270		—		(213)		(608)		449
Genesis note receivable	20,410		—		—		(1,748)		18,662
Elevated risk notes receivable	2,440		—		—		2,152		4,592
Total notes receivable	$	27,707	$	—	$	(213)	$	450	$	27,944
Total accounts and notes receivable	$	147,012	$	—	$	(9,606)	$	4,455	$	141,861


	Allowance for doubtful accounts
Portfolio Segment:	December 31, 2024		Reclassifications		Write-Offs1		Bad Debt Expense		September 30, 2025
	(in thousands)
Accounts receivable
Aged accounts receivable	$	87,520	$	(1,651)	$	(33,374)	$	15,604	$	68,099
Genesis accounts receivable	—		1,651		—		48,787		50,438
Total accounts receivable	$	87,520	$	—	$	(33,374)	$	64,391	$	118,537

Notes receivable
Standard notes receivable	$	5,096	$	—	$	278	$	(1,418)	$	3,956
Delinquent notes receivable	6,026		(5,176)		(453)		635		1,032
Genesis note receivable	—		5,176		—		15,234		20,410
Elevated risk notes receivable	2,140		—		—		170		2,310
Total notes receivable	$	13,262	$	—	$	(175)	$	14,621	$	27,708
Total accounts and notes receivable	$	100,782	$	—	$	(33,549)	$	79,012	$	146,245