MarketWatch Shines a Light on Diversicare Acquirer Lahasky

Even skilled nursing industry insiders may not know a whole lot about the investor who recently bought Diversicare Healthcare Services properties – Ephram “Mordy” Lahasky.

The private investor doesn’t maintain a corporate website and has “largely avoided reporters for years,” according to a MarketWatch article published Wednesday.

MarketWatch spoke with Lahasky for its story; Skilled Nursing News reached out to Diversicare on Wednesday but did not hear back.

The Centers for Medicare & Medicaid Services (CMS) lists Lahasky as the owner of 97 SNFs, but MarketWatch reporting found that Lahasky’s network spans closer to 200 facilities in 24 states, according to business and regulatory filings, property records and CMS data.

Many of his facilities are “major turnarounds” taken from distressed facilities – Skyline Healthcare among them. The chain collapsed in 2018, and its former owner Joseph Schwartz in December was charged with Medicaid and tax fraud.

Of Lahasky properties listed by CMS, 3% meet staffing levels recommended by the federal government, and only two facilities have a five-star rating.

Private investors like Lahasky gained a larger foothold in the industry as private equity funds backed by institutional capital took to the sidelines, in part due to criticism from federal lawmakers, the MarketWatch article states.

Lahasky scored one of his biggest deals with Brentwood, Tenn.-based Diversicare, an operator of 61 facilities across eight states. He’s the manager of DAC Acquisition LLC in Delaware, which completed its acquisition of Diversicare in November.

Lahasky had approached Diversicare for a deal in the spring of 2019, according to the MarketWatch article – Covid-related liabilities finally changed the company’s stance on selling.

CIBC Bank USA supported the acquisition with a $100 million term loan and $10 million revolving line of credit for working capital as well, to encompass 15 of the Diversicare facilities.

The deal with Diversicare went relatively smoothly, Lahasky said in the MarketWatch article. He cited CIBC’s support and stated that some of the alleged quality issues at nursing homes in his portfolio are due to the fact that he takes on “major turnarounds” in “very hairy deals,” and the facilities can take two or three years to turn a reputational corner.

Before turning to nursing home investment, Lahasky spent 20 years as a computer programmer for the Long Island Railroad and launched his own transport company, which eventually expanded to ambulance services and provided an in with the nursing home sector.

Lahasky got into the nursing home business in 2012, according to the article, with the help of Benjamin Landa, then head of New York-based nursing home company SentosaCare.

The MarketWatch article connected Lahasky’s deals to some of the issues raised in the White House’s recent nursing home reform push, such as provisions to further illuminate facility financials, transactions and ownership logs.

Regulators in Vermont, the MarketWatch article stated, had trouble tracking who exactly was purchasing Genesis HealthCare facilities, Lahasky or his wife, Akiko Ike.

Lahasky and his partners were looking to acquire five Genesis nursing homes in the state as early as July 2020, after the nursing home behemoth purchased the properties from a Canadian company for $39 million in 2016.

These five properties hold more than 500 of the state’s 2,900 nursing home beds, according to Vermont publication Seven Days.

Ike was listed as a purchaser, but Lahasky’s name was listed in other “key places” in the loan documents.

Eventually, both Ike and Lahasky’s names were removed from the Vermont deal: “We were willing to walk away. We didn’t want to lose the deal for my partners,” Lahasky told MarketWatch.