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Caring For The Elderly Pays… Especially If You Own The Nursing Home

Ask me about sports, wine, politics or the law and I feel fairly confident I can at least have a lively conversation about any of them.  But please don’t ask me about finance.  The past year has eroded any hint of confidence I had when it comes to companies for investment.

Wait a second. Maybe, I am onto something.  In looking over the recent financials of the following national nursing home companies it looks as though some of the companies mentioned below are holding up fairly well in the current economic climate. As quarterly earnings are reported by many large nursing home chains— caring for the elderly apparently pays well– sometimes very well.

Five Star Quality Care

Picture-71Five Star Quality Care, Inc. (Ticker: FVE) first quarter 2009 results reveal revenues increased 14% to 295.2 million from $258.9 million from a year earlier. New income for the company was $25.4 million for the quarter compared with $1.6 million in the first quarter of 2008.

Five Star Quality Care owns and operates 210 senior living communities in 30 states.  The companies facilities include: independent living centers and skilled nursing communities (nursing homes).  Five Star also operates five institutional pharmacies and two rehabilitation hospitals.

Kindred Health Care

KindPicture-91red Healthcare’s (ticker: KND) profits rose 55% in the first quarter to $22.8 million or 58 cents per share.  Despite the fact that Kindred provided care to fewer patients, it was able to exceed Wall Street expectations by managing labor costs.

According to chief financial officer, Richard Lechleiter, the recession may have actually helped the company’s bottom line.  The shortage of jobs in other industries may have actually encouraged current employees to remain at Kindred longer.  Turnover among the company’s hospital employees fell to 21% from a 25% turnover rate from a year earlier.

Kindred Healthcare, Inc. is a healthcare services company that operates: hospitals, nursing centers and a contract rehabilitation services business across the United States.  The hospital division operates 82 long-term acute care (“LTAC”) hospitals (6,482 licensed beds) in 24 states. The health services division operates 228 nursing centers (28,525 licensed beds) in 27 states.  Kindred also operates a contract rehabilitation services business which provides rehabilitative services primarily in long-term care settings.

Sunrise Senior Living

Picture-81Sunrise Senior Living (ticker: SRZ) will report quarterly earning on May 8th.  Will earnings be in line with the other long-term care providers?  Obviously, I have no idea– if I did would likely retire from the law.  However, Sunrise did recently announce an ‘Overhead Downsizing Plan’ to save the company more than $20 million annually by cutting employees–further adding to the companies profitability.

“The decision to reduce the number of people at Sunrise is never easy, but it was essential given  today’s economic environment and our need to further reduce spending.  We want to be completely clear that none of these changes will effect the extraordinary care and services we provide in our communities,” said Mark Ordan, Sunrise’s Chief Executive Officer.

No need to worry about the work levels for employees?

Sunrise Senior Living, Inc. provides senior living services in the United States, Canada, the United Kingdom, and Germany. It offers independent living services, which include housing, meals, transportation, activities, and housekeeping, as well as licensed skilled nursing services for residents who require 24-hour skilled nursing care; and determination of the appropriate level of care and service for such resident. The company’s assisted living communities also offer a reminiscence neighborhood that provides specially designed accommodations, service, and care to support cognitively impaired residents, including residents with Alzheimer’s disease and other forms of memory loss.

Next time a large nursing home chain claims that a jury award is too large considering the nature of the injury, take a look at the company’s financials and see who is really the one benefiting.

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  • retirement communities

    Pretty good numbers in this economy. I wonder how the other franchise type models are doing.

  • Thank you for advocating for the elderly in this manner! I follow you regularly and learn a great deal.

  • Former Activity Director

    Do these numbers track the average mom and pop 99 beds and fewer neighborhood/non-chain nursing homes? I spoke w/ a priest lately in LA who said he’d have to close his high quality SNF due to the rising costs and lower reimbursement for his 75% Medi-Cal beds. Sunrise and Kindred have a better model–significant private pay at all the assisted living facilities and often an entry fee w/ very attractive facilities. I have also seen them work the system–favoring Medicare clients w/ short term rehab–lots of money there. This may help explain their good showing. The Medicaid/Cal folks wind up in the lower care settings if they show up w/ no money on admission. There are only a few Medicaid/Cal beds at the better facilities…

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