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Thursday, July 23, 2015

Nursing Homes Going For Big Money

SNF M&A Market Remains Robust

(from The Senior Care Investor)

With at least five transactions priced over $100,000 per bed so far this month, July may be a record for high-priced SNF sales.

The skilled nursing facility M&A market continues to lead the way in terms of where the post-acute sector may be heading. So far in the past three weeks, we have seen five deals close with values ranging from just over $100,000 per bed to over $200,000 per bed.

Yes, a few have been in the northeast, which can be expected, but these high-priced sales go all the way from North Carolina to Texas to California. This is not a regional phenomenon. It is a change that is going on in the sector that will be part of the evolution of who takes care of the elderly, how we do it, and who pays for it.

And while I say “elderly,” it is not just the elderly, but the care levels that can and should be provided in SNFs that have the capability of doing so. But as this evolves, there will also be implications for other providers, especially in the assisted living market.

Acuity levels will rise, costs will rise, revenues will rise but margins will decline, lengths of stay will decline, and staffing will get more difficult to find and train. My belief is that over the next 10 years we are going to see some major transformations.

1 comment:

  1. M&A activity in the senior housing and care market remained strong in the first half of 2015, carrying over from the previous 5 years which saw year over year increases in per unit/per bed acquisition costs, over all volume of deals, and over all value of deals. This activity has been largely driven by the continued consolidation among the major players in the market, along with opportunistic investors who see demand growing as a result of the increase in numbers of baby boomers hitting retirement age everyday. But with the new proposed rule changes by CMS that will affect long term care facilities that participate in the Medicare and Medicaid program, Mr. Swett's assertions that there will be major transformations over the next 10 years my actually come to fruition a lot sooner then he believes. What will this mean for the SNF M&A market looking forward to the second half of 2015 and into 2016, only time will tell but given the bullish streak the market has seen since 2010 one can only expect things will cool off allowing owners and investors time to reassess their strategic growth plans for the future.