In an annual study of 19 financial ratio median and quartile values deemed important for analyzing the credit quality of not-for-profit continuing care retirement communities, Ziegler Credit Surveillance found that most ratios were reasonably stable, if not improved.
“Stability during 2020 and 2021 was primarily due to government aid. Stimulus funding served its purpose throughout those two years, helping to offset lost revenues and COVID-related expenses,” Lavinia Criswell, head of credit surveillance and analytics at Ziegler, told the McKnight’s Business Daily.
The one “glaring” exception for fiscal year 2021, she said, was net operating margin, which excludes government aid and shows organic performance. CCRCs, she said, saw negative [net operating margin] for the first time in five years. Challenges included staffing shortages, supply expenses and reduced resident occupancy.
“Due to the COVID pandemic, analysis of these results is more nuanced and difficult than usual. Median ratio results for 2022 will be interesting,” Criswell said. “Although many communities will have ‘stabilized’ since the pandemic, others are still struggling to bring occupancy back to pre-pandemic levels, primarily in nursing.
“Labor challenges and associated expenses still remain, although there are some signs of abatement. CCRCs will have to manage such expenses as best they can given no further expected government funding,” she concluded.
