Prices for Long-Term Care Facilities Spike Nearly 300%

The dollar value of long-term care (LTC) facility transactions ballooned by nearly 300% in the second quarter of 2017, even as the absolute number declined.

LTC facilities commanded a total of $9.7 billion in the second quarter of 2017, a 299% increase from the $2.4 billion that changed hands in the second quarter of 2016 — and a whopping 574% more than the total for the first quarter of this year, according to the most recent statistics from Irving Levin Associates.

Those numbers — the highest total recorded since the second quarter of 2014 — reflect several blockbuster deals reported in the last few months, including the impending merger of Sabra Health Care REIT (NASDAQ: SBRA) and Care Capital Properties and the complete sale of Kindred Healthcare, Inc.’s (NYSE: KND) skilled nursing portfolio to private equity investors.

“This increase in dollars committed to the seniors housing and care sector illustrates the continued investment interest in the sector and the willingness of buyers to commit significant amounts of capital, despite current headwinds,” said Steve Monroe, managing editor of The SeniorCare Investor and editor of The Senior Care Acquisition Report — a pair of Irving Levin Associates publications — in a statement announcing the new statistics.

“Each of the two largest transactions was more than double the dollar size of the largest acquisition in 2016, so it looks like the large deals are back in vogue,” Monroe added.

Overall health care merger and acquisition activity — including hospitals and other providers — dropped from 423 to 365 between the second quarter of 2016 and the same quarter in 2017, or a decline of 14%. That’s slightly better than the 17% drop in LTC deals over that span, which fell from 90 to 75.

These most recent numbers track with ongoing trends in the skilled nursing world, which has seen a decline in pure transaction numbers but steady gains in per-bed prices for facilities due to legally restricted supplies and an influx of inventory designed for higher-acuity residents.

Written by Alex Spanko