Two of the country's largest long-term-care operators, Vencor and Beverly Enterprises, announced plans last week to sell off some of their holdings to smaller players.
"What you're seeing is the companies' continued analysis of their nursing home portfolios and determinations of which ones fit their strategic direction," said Scott Mackesy, an analyst with Dean Witter Reynolds in New York. "They're shedding assets that are not in markets where they want to expand."
Louisville, Ky.-based Vencor signed a definitive agreement to sell 34 nursing homes to Lenox Healthcare, a privately owned company in Pittsfield, Mass.
The transaction is expected to close in 30 to 60 days. Terms weren't disclosed, but Vencor said it will record an after-tax charge of $80 million in the fourth quarter of 1996 in connection with the sale of the homes, which represent $120 million in annual revenues.
The company said the charge also is related to the planned replacement of certain facilities and a restructuring of its Medisave pharmacy operations.
"The sale of these facilities as well as the realignment of our Medisave pharmacy operations into our hospitals completes our restructuring of the assets acquired in the Hillhaven acquisition," said W. Bruce Lunsford, chief executive officer of Vencor.
Vencor completed a merger with Hillhaven Corp. in the third quarter of 1995.
Vencor operates 37 long-term-care acute hospitals, 313 nursing centers, 50 institutional and retail pharmacies, and 22 independent- and assisted-living communities. It reported 1995 revenues of $2.3 billion. Lenox owns 50 nursing homes in six states.
Meanwhile, Beverly sold four of its nursing facilities in Idaho to a subsidiary of Albuquerque, N.M.-based Sun Healthcare Group for about $9 million.
Fort Smith, Ark.-based Beverly operates more than 600 skilled-nursing facilities, as well as transitional acute-care hospitals, institutional and mail-service pharmacies, assisted-living centers, outpatient therapy clinics, and hospice and home-care centers. It reported total 1995 revenues of $3.2 billion.
Sun Healthcare runs 160 nursing facilities and provides pharmacy and therapy services. It reported total 1995 revenues of $1.1 billion.
Over the past two years, Beverly has divested more than 70 facilities in an effort to focus on more profitable ventures.
"The facilities may fit well geographically into the other companies' plans," Mackesy said. "That's why assets are swapping hands."