Nursing Facilities – Upcoming Crisis and Opportunity – from Gordian Group

Many economic models are changing, and few are changing like the adult care industry – nursing homes, rehab centers, retirement communities.  We anticipate this area will present numerous risks and opportunities for investors in the coming cycle.  Recently, Buckingham Senior Living Community, Inc. filed for chapter 11 with over $300 million in liabilities. And just before that, Pinnacle Health Facilities and Amsterdam House Continuing Care Retirement Community filed for bankruptcy as well.

There are many areas for concern in this sector.  As an example, inflation is rearing its ugly head, and we believe that labor costs, notably for nursing care, will go through the roof.  We also expect that the political and regulatory environment will present numerous obstacles to success.  And any substantial increase in interest rates will put elevated pressures on the industry.

To us, that might mean opportunities to make opportunistic acquisitions where we can be helpful; we specialize in advising clients on acquiring assets with capital structure challenges as cheaply as possible.  And we can also (i) provide insights into what Gordian is seeing in the PE restructuring market for nursing homes, long term care facilities and addiction centers, (ii) discuss where we see things going from a “defensive” perspective on any existing portfolio capital structure issues and (iii) understand from you what opportunities to show you so you can play “offense” in new situations and take advantage of market uncertainty.

Gordian Group has significant experience in the healthcare space, including in representing Private Equity clients.  We would love to hear from you to share our insights.  Please coordinate with Leslie Glassman at ljg@gordiangroup.com.