Item 8.01Other Events.
On
Consequently, the disruptions described above have diverted management resources
from completing all of the tasks necessary to file the Quarterly Report within
the prescribed time period and additional time is needed to finalize the
Quarterly Report and furnish the XBRL Interactive Data File exhibits required by
Item 601(b)(101) of Regulation S-K.
In light of the current COVID-19 pandemic, the Company anticipates that it will include the following Risk Factor in its Quarterly Report, as may be updated to reflect subsequent events affecting the Company:
COVID-19 Risk Factors
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Our tenants have been materially and adversely affected by the COVID-19 pandemic. Such an outbreak or other adverse public health developments has materially disrupted our tenants' businesses and operations. Such events could cause temporary closures of nursing facilities, which could affect our tenants' ability to make rental payments pursuant to their lease agreements.
In addition, our tenants' operations could be further disrupted if any of their employees, or the employees of their vendors, have, or are suspected of having, a communicable disease, such as COVID-19. Such infections could cause, and in some cases have caused, our tenants or their vendors to experience staffing shortages, and this could potentially require our tenants and their vendors to close parts of or entire facilities, distribution centers, or other buildings to disinfect any affected areas.
We could also be adversely affected if government authorities impose upon our tenants, or their vendors, certain restrictions. These restrictions may be in the form of mandatory closures, requested voluntary closures, bans on new admissions, restricted operations, or restrictions on the importation of necessary equipment or supplies. Even if an infectious agent does not spread significantly, the perceived risk of infection or health risk may cause governmental authorities to take actions that may adversely affect our tenants' operations and, therefore, impact our business. Likewise, family members may elect to keep nursing facility residents at home during an epidemic or pandemic, thus reducing our tenants' revenue. Currently a number of our tenants have stopped admitting new patients due to COVID-19 infections and hence their revenues have declined.
During and after a public health emergency, our tenants may face lawsuits for alleged negligence associated with their responses to the emergency. The costs associated with defending, settling, or paying damages from such claims could impact our tenants' operating budgets and affect their ability to meet their obligations under our leases.
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While the Company has received most of its rental receipts from tenants through the date of this Current Report on Form 8-K, there are a number of uncertainties the Company faces as it considers the potential impact of COVID-19 on its business, including the length of census disruption, elevated COVID-19 costs related to personal protection equipment, cleaning supplies, virus testing and increased overtime due to staff illness and the extent to which federal and state funding support will offset these incremental costs for our tenants. We also do not know the number of facilities that will ultimately experience widespread, high-cost outbreaks of COVID-19, and while we have requested reporting from operators of their numbers of cases and CMS has required additional reporting by operators. Approximately 38% of our facilities have experienced positive COVID-19 test results of residents or staff as of the date of filing. We expect to see continued increased clinical protocols for infection control within facilities and increased monitoring of employees, guests and other individuals entering facilities; however, we do not yet know if future reimbursement rates will be sufficient to cover the increased costs of enhanced infection control and monitoring.
Forward Looking Statements
This Form 8-K contains forward-looking statements within the meaning Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, the Company's expectations as to the filing of the Quarterly Report. These forward-looking statements involve risks and uncertainties, and actual results could vary materially from these forward-looking statements. Factors that may cause future results to differ materially from management's current expectations include the risk that the completion and filing of the Quarterly Report will take longer than expected, especially if key Company employees suffer a severe COVID-19 infection, and the risk that the Company will be unable to file the Quarterly Report within the extension period of 45 calendar days provided under the Order. The Company disclaims any obligation to update information contained in these forward-looking statements whether as a result of new information, future events, or otherwise, except as required by law.
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