Welltower, ProMedica Close on $4.4B QCP-ManorCare Deal
Just one day after shareholders approved Welltower Inc.’s (NYSE: WELL) acquisition of Quality Care Properties (NYSE: QCP), the rest of the megadeal dominoes fell late Thursday.
The Toledo, Ohio-based real estate investment trust (REIT) announced that it had closed on its joint-venture purchase of QCP’s real estate with non-profit hospital system ProMedica. In the same sweep, ProMedica also acquired the operations of QCP’s primary tenant, struggling skilled nursing provider HCR ManorCare.
Welltower pegged the total value of the deal, originally announced in April, at $4.4 billion — significantly higher than the $1.95 billion figure noted in initial reports.
“The close of this transformative joint venture further validates our health system strategy through which we leverage high-quality real estate to optimize care delivery at lower costs sites of care, while remaining focused on improved outcomes,” Welltower CEO Tom DeRosa said in a statement announcing the completion of the multifaceted transaction.
For ProMedica, also based in Toledo, the deal marks a major expansion: The once-regional chain now has 70,000 employees across 30 states, according to a ProMedica statement. Over the next five years, the company plans to pump up to $400 million into upgrades and other capital expenditures.
“We are focused on tearing down the walls between care delivery channels to provide simpler navigation across the care continuum, along with greater value,” ProMedica CEO Randy Oostra said in his company’s statement trumpeting the deal. “Further, we see a tremendous opportunity to engage ProMedica’s nationally recognized, social determinants of health work to benefit seniors across the communities we serve.”
DeRosa has repeatedly framed the deal as a way to use ManorCare’s vast network of real estate to create different care settings for an aging U.S. population.
“I believe ProMedica and Welltower will together make this real estate more consequential as sites of care,” he told SNN back in April. “I believe that ProMedica sees this real estate beyond the basic function of the skilled nursing facility. This will allow this major health system to deliver its care model in effective, well-located, lower-cost real estate than an acute care hospital.”
Steve Cavanaugh, who took the reins as CEO of ManorCare last fall, will stay on as president of the ManorCare division within ProMedica.
Welltower has moved up its quarterly earnings release and conference call to early Friday morning in the wake of the deal.
Written by Alex Spanko