Trickle-Down Healthcare Distress (Long Electronic Beds, Short Nana).

Nana’s Post-Acute Care, Powered by Private Equity.

There has been notable bankruptcy activity in the healthcare industry this year — from continuing care retirement communities to the acute care space. When end users capitulate and need to streamline operations and cut costs, who gets harmed farther down the chain? It’s a good question: after all, there’s always some trickle down effect.

Our internal search for answers to this question recently brought us to Charlotte-based Joerns Healthcare, a “premier supplier and service provider in post-acute care.” The company sells supportive care beds, transport systems, respiratory care solutions and more.

Now, all of that sounds well and good and even with operational and budgetary issues and rising healthcare costs, one could be forgiven for thinking that a business like this might be insulated to some degree — especially as baby boomers get older. Healthcare is not something people tend to skimp on. Yet, that simplistic thinking fails to take private equity into account. That’s right: your Nana’s post-acute care, powered by private equity.


TO READ THE REST OF THIS POST, SUBSCRIBE HERE.

DISCOVER MORE WITH PETITION.

Healthcare Distress (Long Divine Intervention)

Literally a week ago in “💥KKR Effectively Tells Bernie Sanders to Pound Sand💥 we wrote:

Remember all of those early year surveys about where the distressed activity was going to be? Yeah, so do we. Everyone was bullish about healthcare distress. And, sure, there have been pockets here and there but nothing that’s been truly mind-blowing in that sector. In other words, wishful thinking. Unless you’re DLA Piper (Orion Healthcare Corp.4 West Holdings LLC), the (limited) healthcare activity has meant basically f*ck all for you.

The Gods have acted to make us look stupid. Look! Healthcare distress!

Neighbors Legacy Holdings Inc., an operator of 22 freestanding emergency centers throughout the state of Texas filed for bankruptcy on July 12, 2018. The company blames its filing on "financial difficulties caused in large part by increased competition, less favorable insurance payor conditions, declining revenues, and disproportionate overhead costs as compared to their operational income." In other words, its owners did too much too fast, taking on too much debt to expand too rapidly in a space that requires significant upfront capital investment in exchange for a 12-18 month lag in cash flow generation. Initiate death spiral. 

The company's financial numbers look brutal. Per the First Day Declaration:

To continue reading, you must be a PETITION Member. Become one here.