COVID-19 PANDEMIC

9 Months Ended

Sep. 30, 2020

Unusual or Infrequent Items, or Both [Abstract]

COVID-19 PANDEMIC

COVID-19 PANDEMIC

As of September 30, 2020, the Company has received $42,274 from the PHSSEF, and recognized $9,563 and $14,711 as income, which is reflected in "other operating income" in the Company's results of operations for the three and nine month periods ended September 30, 2020, respectively. For the nine months ended September 30, 2020, the Company utilized $898 of these stimulus dollars to fund capital improvements to prevent the spread of COVID-19. The remaining stimulus funds of $27,157 as of September 30, 2020 are classified as "deferred income" on the interim consolidated balance sheet. Additionally, the Families First Coronavirus Response Act provided states with a temporary increase in the regular federal matching rate, or federal medical assistance percentage, used to determine the federal government's share of the cost of covered services in state Medicaid programs, provided the states agreed to certain conditions such as not imposing cost-sharing requirements for COVID-19-related testing and treatment. The Company recognized $6,645 and $11,709 for the three and nine month periods ended September 30, 2020, respectively, of Medicaid and Hospice dollars related to this temporary increase in the federal matching rate, which related to patient services rendered between March and September 2020 and is reflected in "patient revenues, net" in the Company's results of operations for the three and nine month periods ended September 30, 2020.

The Company initially elected to participate in the payment deferral of the employer's portion of Social Security taxes. During the third quarter of 2020, the Company ceased the deferral election and paid $3,185. As of September 30, 2020, the Company has no remaining liability related to the payment deferral and does not expect to participate in the payment deferral going forward.

The CARES Act also includes other provisions offering financial relief, for example lifting the Medicare sequestration from May 1, 2020 through December 31, 2020, which would have otherwise reduced payments to Medicare providers by 2%. For the three and nine month periods ended September 30, 2020, the suspension of the Medicare sequestration positively impacted net patient revenues by $724 and $1,031, respectively.

The Company incurred an additional $6,595 of salaries expense, $5,801 of supplies expense and $276 of travel expense related to the COVID-19 pandemic for the three month period ended September 30, 2020. The Company incurred an additional $9,376 of salaries expense, $7,237 of supplies expense and $379 of travel expense related to the COVID-19 pandemic for the nine month period ended September 30, 2020. These expenses are reflected in "operating expense" in the Company's results of operations for the three and nine month periods ended September 30, 2020.

The Company is closely monitoring and evaluating the impact of the COVID-19 pandemic on all aspects of its business. We have identified team members and patients who have tested positive for COVID-19 at a number of our centers, and we have incurred an increase in the costs of caring for the team members, patients, and residents in those centers. The Company has also experienced reduced occupancy at its centers and has incurred additional expenditures preparing its centers for potential outbreaks and maintaining the healthcare delivery capacity of its centers. While we have experienced reduced occupancy and increased expenses, we received additional PHSSEF and other stimulus funds during the third quarter of 2020, which have been used and are expected to continue to be used to mitigate the impact of COVID-19 derived lost revenues associated with the reduced occupancy as well as increased expenses, and any cash flow or liquidity impacts therefrom. The Company has an

interdisciplinary team monitoring and staying up to date on the latest information about COVID-19. The Company has implemented precautionary measures and response protocols to minimize the spread of COVID-19, following guidance from CMS and the CDC. Nevertheless, the Company expects additional COVID-19 cases will occur at our facilities. The Company is continuing to evaluate and consider the potential impact that COVID-19 may have on its liquidity, financial condition and results of operations due to numerous uncertainties. However, given the uncertainty as to the duration of the COVID-19 pandemic and the timing and availability of effective medical treatment and vaccines, it could have a material adverse effect on the Company's future results of operations, financial condition and liquidity.