Upon reporting third quarter operating results Tuesday, Emeritus Corp. (NYSE: ESC) said it is looking at expansion opportunities in the home healthcare business and has already begun efforts to expand into two new states.
The company posted a net loss attributable to shareholders of $27.8 million, down from a net loss of $16.2 million during the same period in 2012. Community and management fee revenues increased rose 47% to $484.5 million, with an uptick in cash flow from operations.
CFFO during the quarter rose 14% to $132.4 million, with same community occupancy up 30 basis points to 87.1% and average monthly rents up 1.8% to $4,036. Emeritus’s recent management contract for 39 Merrill Gardens communities after a Health Care REIT announced in June it would acquire the properties is performing better than anticipated, executives said during a conference call with analysts to discuss performance. While current properties are performing well, the company is eyeing expansion opportunities in home healthcare and ancillary services.
“We continue to expect a roughly 20% improvement in cash from facility operations for the full year 2013. During the quarter we welcomed 39 new communities into the Emeritus family; we also continue to generate solid growth in home healthcare services, which we have expanded to now include Arizona and Texas,” said Emeritus Chief Financial Officer Robert Bateman.
The company’s participation in the home healthcare sector includes the $102 million acquisition and integration of Nurse On Call Home Health Care last year, which is tracking expectations, and which Emeritus is now expanding into the two new states with four new branches in Texas and one in Arizona.
“In Florida, Nurse On Call was already established outside the walls of senior living communities, they had very little presence within senior living communities,” Emeritus President and CEO Granger Cobb said. “As we move into this other states, we’re using our platform to help facilitate their growth outside the walls into the greater marketplace.”
Like some of its senior living peers, Emeritus says it plans to grow ancillary services as a growth opportunity, to comprise a greater portion of revenues.
This year, Brookdale Senior Living announced it was expanding its ancillary service businesses including home health care and hospice. Emeritus said it is anticipating to grow external services to be the majority of its business.
“We expect to get to the same place where probably 20% to 25% of the revenues come from within our Senior Living communities and the rest comes from external services that are delivered outside the communities,” Cobb said.
Written by Elizabeth Ecker