A desire to build a presence in the assisted-living industry has prompted Gaithersburg, Md.-based Manor Care to spin off its healthcare services from its real estate operations and form two separate companies.
The company said last week its board of directors has approved a plan to spin off the long-term-care concern's healthcare services by the end of the year to create ManorCare Health Services.
At that time, the company's remaining operations will be renamed Manor Care Realty and will go some $750 million in debt to capitalize the new company.
"Fundamental demographic forces and healthcare industry trends are driving the growth of the assisted-living business," said Stewart Bainum, Manor Care's chairman and chief executive officer. "The separation of Manor Care into distinct real estate and healthcare services companies will provide each company with the financial resources and managerial focus to capitalize on this significant opportunity."
Although they plan to trade separately on the New York Stock Exchange, the two companies look like they will have a close relationship.
ManorCare Health Services will lease and operate the skilled-nursing facilities owned by Manor Care Realty in addition to owning and operating Manor Care's existing assisted-living, institutional pharmacy and home health businesses. Manor Care now operates 206 healthcare facilities in 29 states.
Over the next five years, Manor Care Realty plans to develop and construct more than 200 assisted-living facilities that it plans to sell to ManorCare Health Services.
Besides financing sources, the companies also will share Bainum, who will serve as chairman of both companies. And the Bainum family, which currently owns 30% of Manor Care's outstanding common stock, will have 30% stakes in each of the two companies.
Donald C. Tomasso, an executive vice president of Manor Care, will be president and chief executive officer of ManorCare Health Services. Joseph R. Buckley, also an executive vice president of Manor Care, will be president and chief executive officer of Manor Care Realty.