60 Seconds With Swett: Interest Rate Concerns Cooling M&A Market
In the last couple of months, we have heard from a number of people in the dealmaking business that rising interest rates have caused their potential buyers to hit pause, and a couple of major investors even said that pencils were down for the time being. We can’t say we’re surprised, given where wages have gone and what other issues inflation has caused. And if future earnings are affected by permanently higher labor costs alone, then the higher debt payments caused by higher rates really won’t cut it for those buyers. We have also heard that bid-ask spreads were widening, which will affect transaction volume. The terms “bid-ask spread” and “pencils down” conjure up memories of the worst... Read More »60 Seconds With Swett: SNF Values Soar Post-Pandemic, AL Falls
We continue to observe the post-pandemic senior care M&A market with curiosity, with many crosscurrents of headwinds and tailwinds to make sense of. And our most recent valuation statistics, which includes prices and financials both publicly announced and confidentially disclosed to us, shed some light on the currentmarket.First, the average price for skilled nursing facilities in the last four quarters soared 19% to $118,600 per bed from $98,000 per bed in calendar year 2021. Taking out the exceptionally high estimated price for Stonerise Healthcare’s SNFs, we still see the average price rising above $100,000 per bed for the four-quarter period. With more facilities coming up for sale... Read More »60 Seconds with Steve Monroe: Brookdale Has Great Start To Third Quarter
Brookdale Has Great Start To Third Quarter Nearly two years ago, we wrote that the first half of every year was a census downer for the industry, but that the third quarter was always a winner. We are making history, or better said, you are making history. The first half of this year has been a winner, which it should have been because of the COVID recovery. But census should have been growing faster, held back in part by the labor supply problems and lingering COVID outbreaks. Month-end occupancy for Brookdale Senior Living increased by 210 basis points in the first half of 2022, and then got a great start for the third quarter with a 50-basis point increase in July. The weighted average... Read More »60 Seconds with Steve Monroe: The Ensign Group Does It Again
I opened my email yesterday and a good industry friend sent me The Ensign Group’s second quarter earnings results with the question, Scam? I can understand his disbelief, as I have also thought there may be some monkey business with the company and its superior performance, especially during the pandemic. I could not find anything. One equity analyst asked, what’s not to like? Double-digit revenue and EBITDA growth, sequential and year-over-year occupancy growth, average daily revenue is up and management increased its guidance for the rest of the year. And remember, Ensign owns and operates skilled nursing facilities, a sector still under tremendous financial pressure. How did... Read More »60 Seconds with Steve Monroe: Investors Need Some Straight Talk
I know we live in a litigious country, and public companies have their teams of lawyers and PR consultants to protect them, telling them to disclose a minimum amount of information. But don’t you think it is time for some straight talk? I do. We are coming out of the pandemic distress, slowly for some and not as slow for others. Butwith census growth not what it was in the second and third quarters of 2021, let’s admit that this will be a long slog. We need both large census increases combined with margin increases. We will not get both as long as labor costs keep rising and inflation levels remain at 40-year records. And it is doubtful we will get back to the census levels of 2014-2015... Read More »Schedule a demo
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