For their fiscal years ending in 2019, senior living organizations accredited by the Commission on Accreditation of Rehabilitation Facilities were in a solid financial position to weather the COVID-19 crisis, according to the latest report from CARF, tax advisory firm Baker Tilly and specialty investment banking firm Ziegler.
The 2020 Financial Ratio and Trends Analysis of CARF-Accredited Organizations shows that these operators achieved record levels of liquidity and record low debt burdens last year. Both single- and multi-site organizations extended a decades-long positive trend in liquidity to achieve new highs in days cash on hand medians. For single-site providers, the median DCH increased significantly to 432 days from 388 days the prior year. Among multi-site providers, the median DCH improved to 344 days from 341.
Further, the median unrestricted cash and investments to long-term debt ratio for single-site organizations hit a new high in 2019, jumping to 81.7% from 77.3% the prior year. Much of the improvement is driven by the strong equity market performance in 2019, as well as several years of strong operating profits, concentrated in the early post-recession years, noted Amy Castleberry, managing director at Ziegler, in a newsletter article released Thursday.
One area of concern, she noted, may be the pressure on operating profitability that single-site providers are experiencing. For example, the single-site net operating margin ratio dropped to 3.1% in 2019, the lowest level since 2004. Profitability ratios for single-site providers exhibited a widespread decline, with median profitability measures deteriorating for each of the five profitability ratios.
“In contrast, multi-site organizations posted better results for most profitability ratios, with the median NOM improving to 5.6% from 4.4% the prior year,” Castleberry said.