By a margin of 26-1, shareholders approved the sale of Quality Care Properties to Welltower for $20.75 per share in cash, with Welltower teaming up with ProMedica Health System, which will own the HCR ManorCare operating business, lease the facilities from Welltower, and also own the home health and hospice business. Shareholders also approved the compensation packages for QCP’s executives but at a much smaller margin of 1.14-1.0.
Although we have not seen a closing date, we expect all the transactions to close in the next few weeks. We are sure Welltower would like to have it all wrapped up in time for the August 3 second quarter earnings calls.
It will be interesting to see how the HCR ManorCare acquisition plays out for ProMedica. We have previously stated that we believe Welltower got a good price for the real estate, with reasonable downside protections. We still have not figured out how skilled nursing facilities, scattered in states where ProMedica has no operations, will be beneficial to them. If they want to expand their health system operations into those states where it will now operate SNFs, well, we have called it a bit like the tail wagging the dog.
We have heard from local sources that the ProMedica CEO has an outsized ego, and given that both companies are based in Toledo, Ohio, the acquisition really will make him the local economic king, which may be what he wants. Still, there must be a turnaround of the HCR ManorCare operations, and given ProMedica’s lack of experience in the post-acute side of the business, we hope there is a plan somewhere, because the existing HCR ManorCare team did not seem to be having much success.
Admittedly, they had the “turmoil” of the past 18 months to deal with, but now there will be no excuses. And with the worst performing and orphan facilities being sold off, they should have the best ones to use for the re-set button. Now if only Medicare Advantage plans will cooperate. Wishful thinking.
