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Private Equity Investing in Senior Care

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As a generational segment, Baby Boomers (now 55 – 75 years old), have a significant impact on the demographics of the U.S. population and on the markets that serve them.

US Population by Age_2019_11_21_1333

As this population segment ages, there is an expected increased demand for elderly care and related services. According to Morningstar, the average age of admittance into a nursing home is 79. With the oldest baby boomers currently at 75 years, coupled with a ~5-year median holding period for private equity portfolio companies, I thought we should see an increased investment appetite for elderly care operators and related service providers from private equity firms. As it turns out, we do.

The chart below shows private equity platform investments into the elderly care space. To normalize for the effects of growth of the private equity investment community overall, the data below for elderly care investments is normalized by the total PE platform investments for each year.

PE Investments in Elderly Care

Clearly, there’s an increased focus on elderly care from the private equity community over the past five years. Not only are there more private equity firms, with larger funds, making more platform investments, a larger percentage of these investments are going into the elderly care space.

Our research into private equity acquiring elderly care operators and service providers as new platform investments include the following types of care:

  • Nursing homes
  • Assisted living
  • Elderly care
  • Memory care
  • Hospice
  • Senior care
  • End-of-life care
  • Retirement communities
  • Alzheimer’s care
  • Dementia care
  • Services specifically directed toward facilities offering the care

These related portfolio companies may be divided into three broad categories:

  1. Companies that operate a physical facility for elderly care (8%)
  2. Companies that provide hospice care and in-home care services (70%)
  3. Companies that provide a service to a senior care facility (22%)

As one might expect, private equity firms have a preference for the less capital intensive businesses (hospice, in-home care) compared to operating a facility.

 

Private Equity Investments in Senior Care Facilities – Sample Transactions

January 2019LongueVue Capital partnered with management of Platinum Senior Living Partners and provided growth capital to fund the development and operation of new senior living facilities.

Platinum Senior Living Partners is an owner and operator of assisted living and memory care facilities.

 

June 2017LongueVue Capital partnered made a growth equity investment in Quality Senior Living Partners.

Quality Senior Living Partners is an owner and operator of premier assisted living and memory care facilities serving seniors in tertiary markets throughout the Southeastern U.S.

 

February 2016Chicago Pacific Founders and its subsidiaries, CPF Living Communities and Grace Management acquired Dirigo Pines.

Dirigo Pines offers independent living, assisted living and memory care services and includes 107 apartment units, 56 cottages and has capacity for 29 additional cottages.

 

Private Equity Investments in Hospice Care – Sample Transactions

October 2019Revelstoke Capital Partners invested in The Care Team.

The Care Team is a home health and hospice agency. The Care Team offers a full spectrum of home care services including nursing services, therapy services and hospice care.

 

September 2019Three Oaks Hospice completed three acquisitions, acquiring locations from Total Hospice & Palliative Care, ABS Palliative and Hospice Care and Fellowship Hospice. Three Oaks Hospice received more than $21 million in private equity from Granite Growth Health Partners, Health Velocity Capital and Petra Capital Partners.

Three Oaks Hospice is a provider of hospice services to Medicare patients.

 

April 2019HCAP Partners invested in Mission Healthcare.

Mission Healthcare is a home health and hospice services provider serving the Southern California region.

 

Most Active Private Equity Firms Investing in Senior Care

The private equity firms below have made at least three elderly care related investments:

 

 

 

 

 

 

 

Subscribe to learn more about private equity investing in the senior care industry.

 

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