Former Five Star Senior Living (Nasdaq: FVE) CEO Bruce Mackey and COO Scott Herzig have launched a new senior living operating company called Sona Senior Living.
Sona, which is headquartered in the Boston area, will initially focus on third-party management of senior living communities across the care continuum and throughout the U.S. While it hasn’t inked any deals yet, Sona is open to both short- and long-term management opportunities — though the company prefers the latter, according to Mackey, who is serving as managing partner along with Herzig.
“Scott and I started talking several months ago about potentially looking at doing our own thing,” Mackey told Senior Housing News. “From what we hear out in the industry, there’s a significant shortage of quality operators.”
While Sona is focused on management for now, the company’s portfolio could one day also include some ownership, though it’s still too early to tell in what form or where, Mackey added. New communities could carry the Sona branding, or they may not. Again, it all depends on the partners involved in the deal.
“If we got hooked up with private equity companies that wanted to make a big splash in the industry and take on multiple communities, then we would definitely start looking at Sona branding,” Herzig told SHN.
Already, there are some parties interested in Sona’s services. The duo has fielded multiple calls.
“It’s a networking challenge now for us,” Mackey said. “We’ve got meetings with developers and capital partners lined up.”
Both Mackey and Herzig are well-known throughout the senior living industry. Mackey retired from his president and CEO role at Five Star 18 years after helping found the company in 2001. Herzig made his exit soon after.
Under Mackey’s tenure, Five Star grew substantially. The Newton, Massachusetts-based company is currently one of the largest operators in the U.S. It also has a successful and expanding rehab and wellness division called Ageility Physical Therapy Solutions.
But the company saw its fair share of operational challenges in recent years, too, including those caused by anemic occupancy rates and steady levels of new supply in some markets. Five Star’s share price dropped so low that the company risked being de-listed from the Nasdaq, and it has recently struck a restructuring deal involving its major landlord, Senior Housing Properties Trust (Nasdaq: SNH). That restructuring framework was approved by shareholders yesterday.
In managing communities, Sona will focus on the operational aspects of Five Star which worked well. The company’s scope of services also includes consulting, with potential insights to share regarding development, culinary services or memory care operations, for instance.
“We made a career at Five Star most recently off of our clinical prowess, our ability to focus on quality resident outcomes and really look at what amenities drive the industry before others were really doing that,” Herzig said. “Between Bruce and I, we’ve got the skills to replicate all the stuff that we’ve been successful doing over the last 18 years.”
While the operator has just two employees today — Mackey and Herzig — the company has identified a need for other roles, including a vice president of clinical services, head of maintenance and head of marketing.
“We’ve got good experience building a company. I helped build Five Star up to 285 communities,” Mackey said. “I don’t think we’re going to do something that large, but we want to get some kind of substantial base.”
The company name, Sona, comes from the Old Irish word for happy. And along those lines, Mackey said he’s glad to again sit in the driver’s seat of a senior living company.
“It’s been exciting for Scott and I to rekindle the business plan, and we’re really looking forward to the adventure,” Mackey said.