[UPDATED] Eclipse Senior Living to Shut Down Corporate Operation By End of Q1 2022

Eclipse Senior Living, one the largest providers in the United States, plans to permanently shut down.

The Lake Oswego, Oregon-based operator has notified the state of Oregon about plans to shutter the company, in accordance with the Worker Adjustment and Retraining Notification Act (WARN). Senior Housing News obtained the company’s letter to the state Monday.

“This letter is to inform you that Eclipse Senior Living, Inc. will permanently be shutting down its operation, targeting closure by the end of the first quarter of 2022,” reads the company’s Oct. 1 letter to Oregon’s Higher Education Coordinating Commission/Office of Workforce Investments.

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The letter details 171 corporate employees slated to be affected by the closure, which is targeted to occur “by the end of the first quarter of 2022.”

“I want to express my deep thanks to all company associates who have worked tirelessly over the past four years to build a solid platform for growth and more importantly, provide excellent care and service to thousands of residents and each other – especially during this ongoing pandemic,” Eclipse CEO Kai Hsiao said Tuesday in a statement. “I also want to express appreciation to our business partner, Ventas, for its continued support.”

Real estate investment trust Ventas (NYSE: VTR), which owns a 34% stake in Eclipse, announced Tuesday it plans to transition operations of its 90 Eclipse-managed communities in 20 states to eight to-be-named providers.

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“[Eclipse Senior Living] and its key principals have agreed to facilitate an orderly transition to the new managers,” reads a press release Ventas distributed early Tuesday. “ESL is expected to cease operation of its management business in 2022 following transition of the communities.”

Ventas added that communities did not meaningfully contribute to the company’s net operating income (NOI) in the second quarter of 2021, and that the REIT expects to incur certain one-time costs and expenses in connection with the transitions. But the REIT also noted that the communities are located in markets with “positive forward supply-demand characteristics, which should position the communities to recapture value and NOI over time as the Covid-19 pandemic abates and the industry recovers.”

“The new managers are expected to provide strong local market focus and oversight for the communities,” reads the release. “They are experienced in middle-market assisted living and have strong geographical overlap.”

Eclipse was founded in 2017. The company’s first management deal was to operate a 76-community portfolio of Elmcroft communities owned by Ventas. The operator typically took on turnarounds, with a strategy of building out technology infrastructure and leveraging efficiencies of scale.

But the future of the Eclipse portfolio had been an open question, as Ventas explored a joint venture in 2017 but did not close a deal at that time. In February 2020, leaders with the Chicago-based REIT again said that they intended to form a JV.

“We have also taken initial steps to form an institutional joint venture for the ESL portfolio, as ESL continues to find its footing following the transition of assets to it, the recent rollout of its simplified pricing model and an increased allocation of capital to the communities,” Ventas CEO Debra Cafaro said during the company’s Q4 2019 earnings call.

The news of Eclipse’s closure comes during a challenging time for the senior living industry. Operators have been walloped by a one-two punch of rising expenses and lower-than-normal occupancy rates, squeezing margins.

Last year, Hsiao led the company in a “recalibration” that took the company from “sprint” to “marathon” footing as it related to the Covid-19 pandemic. 

In April 2021, Hsiao told SHN he was hopeful that a recovery was at hand as Covid case counts dwindled. But like others in the industry, Eclipse faced certain challenges in the pandemic age, such as a tough labor environment and occupancy pressures.

Eclipse was also among the first in the U.S. to mandate getting a Covid-19 vaccine as a condition of employment for workers, and the company has been focused on cracking the middle-market assisted living code with its Elmcroft brand.

Hsiao and other company leaders also emphasized having a diverse team, and in 2020 launched an initiative dubbed IDEA, around inclusion, diversity, equity and acceptance.

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