Unconcerned about possible Federal Trade Commission intervention and with the blessing of healthcare REIT landlords, Brookdale executives gave a glowing overview during an investor presentation Wednesday of the recently-announced Emeritus merger and how it positions the company for industry domination.
One of the company’s goals is to become “the” top senior living brand in the nation and establish Brookdale as the go-to solution for seniors and their adult children decision-makers.
“There’s a huge opportunity around brand, a white space out there which nobody has taken control of, and we think we can do it,” said CEO Andy Smith, during Wednesday’s Citi Global Healthcare Conference in New York. “We think it’s a protective mode around our business, and we don’t think anybody else is going to be able to come close.”
The combined company will operate more than 1,100 senior living communities under the Brookdale brand, per the terms of the proposed merger announced last week.
Once the company is established and synonymous on a national basis with being the top quality senior living solutions provider, Smith said, it can translate to better occupancy, rates, and ability to attract employees, along with other tangible and intangible benefits, including reducing operating expenses by up to $45 million a year.
“We think this [merger] super-charges our brand activation,” Smith said. “It’s not often you get to say, we’re going to reduce the cost of establishing this national brand, but at the same time, we’re going to make more powerful the brand message we’ve got.”
The brand message will be “powerfully reinforced,” he continued, and provides opportunity to expand Brookdale’s service continuum, including by creating offerings like food service or private duty home health programs for people living around or near Brookdale communities.
The merger positions Brookdale at a “huge advantage” to capitalize on where healthcare policy is going, Smith said. The company is looking to capture part of the $4.5 billion of healthcare spending its 100,000 residents are already generating each year. Even earning just 1% of that would drive $45 million of revenue.
“As many elements of care you can provide in a campus or as part of a connected network, the better,” he said. “We see green field opportunity given the size and scope of this platform after the merger is consummated. We want to extend our brand outside communities where we’ve got the geographic representation to do so.”
The combined Brookdale-Emeritus entity creates “by far” (in terms of units) the largest senior housing operator, says Smith, with a combined $4.9 billion of revenue in 2013.
Post-merger Brookdale will be around 52% assisted living and will stay consistent with its approximately 80% private pay model. The company will own about 34% (nearly 38,500 units) of the portfolio, will manage 17%, and will lease around 50%.
While the FTC will review the merger, Smith said no problems are expected, and added that all the healthcare REITs who own properties managed or leased by Brookdale and Emeritus consented to the transaction.
“They supported it; I think they feel good about the fact it will be transformational for Brookdale and for the industry itself,” he said. “It will be advantageous to them, too. There’s an opportunity to make Program Max-type investments in their leased portfolio. They’re happy for us and enthusiastic for our success.”
Access Brookdale’s Citi Global Healthcare Conference presentation.
Written by Alyssa Gerace