Tag: Corporate Analysis
Caring Times, July/August 2018
Accountancy firm Moore Stephens says there has been an 83% rise in the number of care home businesses entering insolvency, from 81 in 2016/17 to 148 in 2017/18.
With many care home places being paid for by local authorities, the sector has been struggling since the Government cut local authority funding during its austerity drive.
Times have been made harder still as a number of recent high profile and complex care-home insolvencies have caused mainstream lenders to be more cautious of providing low cost funding to the sector.
The Local Government Association say that the care home sector faces a £2.3bn funding gap by 2020 and a Competition and Markets Authority (CMA) report highlighted a £1bn shortfall in public sector funding of care homes in 2017.
In the 29th edition of Care Homes for Older People UK market report, released in late July, market analysts
LaingBuisson say new data has led to a reappraisal of whether there is likely to be a care home supply crisis.
The UK market for care homes for older people is estimated to be worth £16.9bn in the year to March 2018, which represents nominal growth of about 3% with respect to the previous year.
LaingBuisson has collated and analysed data taken from CQC reports on individual care homes which shows that overall occupancy of care homes is lower than previously thought. It shows that the aggregate numbers of residents as a percentage of registered beds is 85%, whereas the widely accepted occupancy benchmark had been around 90%.
The research also points to there being a good deal of ‘latent provision’ in care homes, which … Read More »
Caring Times, July/August 2018
The number of care operators included on the Care Quality Commission’s market oversight list has increased by 44%, rising from 39 in July 2015 to 56 in May 2018.
At a public board meeting of the CQC in May it was reported that the risk profile had deteriorated to such an extent that there has been a 36 percentage points increase in the number of providers that are subjected to higher levels of scrutiny.
The report said the CQC’s market oversight team’s workload had substantially increased and the unit had recently obtained agreement to increase its establishment headcount.
Market oversight data showed that profit margins had remained fairly resilient despite an almost 50% increase in agency expenditure across the market oversight portfolio since December 2015 but the overall level of return was insufficient to attract meaningful new investment into local … Read More »
A business report shows that the contribution health and social care services family firms make to the UK economy amounts to almost £23 billion of total gross value added (GVA) to UK gross domestic product (GDP).
The UK Family Business Sector Report, produced by Oxford Economics for the Institute for Family Business (IFB) Research Foundation, says that in the health and social care services sector there are more 277,000 family firms employing 859,000 people, providing 48.9% of private sector employment. And they are growing – their turnover has increased by £4.4bn in the last year.
“The family business health and social care services sector creates a substantial proportion of the UK’s GDP, and we are proud to champion and delighted to celebrate this incredible contribution,” said IFB director Elizabeth Bagger.
“To ensure family businesses continue to flourish, we’re calling on the Government to support … Read More »
As much as £13.5bn of equity could be invested in healthcare real estate this year, according to the inaugural
Healthcare Investor Survey launched at the end of January by global real estate advisor CBRE.
The survey audited the intentions of the 50 major investors who dominate the market and own £16bn of assets between them. They range from healthcare REITs and institutional investors with healthcare exposure as well as those from the development sector and private equity community.
Of the key investors in the healthcare market, over three quarters (77%) defined themselves as a net buyer, as opposed to a net seller, which is not always the case in the investor market.
Tom Morgan, senior director, CBRE Healthcare, said that, with so much capital to deploy, and now armed with deeper and more extensive market knowledge, institutional investors were dramatically expanding the range of … Read More »
Crowd Bonds, a type of debt-based crowdfunding, are gaining traction in the healthcare investment sector with a particular focus on high quality care homes, according to crowdfunding platform Downing Crowd.
Downing Crowd itself has launched a new £2.5m Crowd Bond for two established care homes in Scotland. operated by Care Concern.
Downing currently has invested more than £45m in 11 care homes. Earlier this year, the Downing Crowd platform also raised £3m for a luxury care home in Edinburgh with the same management team, hitting the target investment within eight days. Investing in this type of market is not entirely new to Downing with the company gradually building its expertise over time after making its first move into the sector back in 1998.
Head of Downing Crowd, Julia Groves, said shifting demographics had created ideal conditions for fresh investment in the sector, but … Read More »
Major care home operator Four Seasons Health Care has published a proposed financial and property restructuring package.
The key elements of the proposal, planned for implementation in November, are that:
Major stakeholder Terra Firma will inject equity value by way of 24 homes outside of FSHC that they valued at £136m in December 2016. These homes would contribute an estimated EBITDA increase of £18.9m and a cash flow increase of £17.1m.
Proposed refinancing of the debt with existing Senior Secured Notes (SSNs) of £350m being exchanged for £350m of new SSNs which would come with an extensive guarantee and first ranking security package granted by the restructured group. Under the proposal, the existing Senior Notes (SNs) of £175m will be exchanged for £60m of New SNs and 20% of the equity in the restructured group. In addition, there would be no payment of … Read More »
In reporting its financial performance for the second quarter of 2017, major provider Four Seasons Health Care says there has been across-the-board
improvement in earnings, occupancy and quality ratings.
Four Seasons chairman Robbie Barr said that in the second quarter of this year, EBITDA of £13.5m was 14% higher than in the first quarter, bringing EBITDA for the first half of this year to £25.3m, 11% ahead of the comparative period last year.
Turnover for the second quarter was £164.5m (£163.9m in Q1). Turnover for the first half of this year was £17.5m or 5.7% ahead of the comparative period last year, on a like for like basis, after adjusting for closures and disposals.
Occupancy across the group’s care homes in Q2 was 89.4%, compared to 87.5% during the comparative period in 2016.
Mr Barr said the group’s care quality ratings continued to improve, with … Read More »
Caring Times, July/August 2017
According to the latest market update from Savills Healthcare, strong fundamentals combined with an ageing demographic in the UK has made healthcare, and in particular, care homes, a very attractive asset class. The international real estate advisor notes that the long indexed income with either RPI or fixed uplifts have made an appealing proposition for investors struggling to find similar opportunities in the mainstream markets. In addition, care home yields have moved in significantly over the last five years and now fall in line with many other traditional commercial asset classes. Savills Prime Care Home Yield Index currently stands at 4.25%, down from 4.75% in 2016.
These fundamentals are supported by strong demand for good quality care homes, fuelled by an increasing 75+ years population and an imbalance between the number of care homes opened and those closed … Read More »
Having opened 12 new services during the past 12 months, the Regard Group –the UK’s fourth biggest private care-provider in the learning disabilities
and mental health sector – has also acquired nine new services and expects to expand organically as well by opening and filling a further dozen facilities within the next year.
The organisation’s EBITDA have grown 76% since 2014, due to a combination of organic growth, new openings and their merger with ACH.
The 12 established new services all have all filled very quickly, and management attributes this success to their careful monitoring of and targeted response to relevant local authorities’ demands.
Regard currently supports 1066 individuals across the country – a new record for the care-provider – and has introduced 110 new beds in the last two years as a result of new services opening.
Founded in 1994, the organisation employs more … Read More »