Friday’s news that Brookdale Senior Living is looking for a buyer sent shock waves through the sector. Rightfully so.
After all, Brookdale is hardly the kind of mom-and-pop operator that would seem ripe for sale. No, it’s the nation’s largest senior living operator.
As is to be expected, the company is remaining mum on any possible deal. That is, until if and when one is actually consummated. But in retrospect, there were signs that a sale could be in the cards for the Brentwood, TN-based operator.
One was the firm’s selloff of 80% of its home health, hospice and therapy business to HCA Healthcare. The move strengthened the company’s balance sheet while consolidating holdings.
Another was comments made by President and CEO Lucinda “Cindy” Baier during an August earnings call. Baier said the firm was focused largely on rebuilding occupancy levels. The first goal would be its pre-pandemic 74.6% benchmark, she noted. The longer-range target would be 89%, which happens to be the company’s high water mark.
More heads in beds does a lot of good things for an operator. One of those good things can be that the firm becomes a more attractive asset.
To be clear, Brookdale has not been sold. And perhaps the rumors and speculation are just that. But it sure looks like someone within the company sent out a trial balloon.
And, frankly, this might be a great time for Brookdale to sell. The once-troubled company has been reporting improving numbers, has cleaned up operations and is bracing for unprecedented business in the years to come. Any speculator looking for a decent long-term investment could make a far worse bet.
Such a sale, were it to happen, would also be a conversation changer.
What we’ve mostly been hearing lately is that it’s the smaller, struggling operators who are most likely to seek buyers the next 12 to 24 months. But if an operator with 60,000 residents can be sold, who can’t?
We just might be in for some unprecedented deal making in the months to come. Whether that would ultimately be good or bad for the field remains to be seen.
John O’Connor is Editorial Director for McKnight’s.
