Profitability and cash flow have declined significantly for both single-site and multi-site long-term care providers over the past year, according to median measures reported in the recently released 2021 edition of Financial Ratios & Trend Analysis of CARF-accredited Continuing Care Retirement Communities. Liquidity remained strong, however, even improving for single-site organizations.
The analysis is a joint project of CARF International, Ziegler and Baker Tilly. This is the first edition to include financial statements revealing COVID-19’s effects as well as the impact of COVID-19 relief and government funding.
“The relief funds that providers received proved very necessary in 2020 and allowed organizations to maintain healthy balance sheets. That single-site organizations hit a new high for liquidity — at 500 days cash on hand — is surprising, but that may be a reflection of the strength of CARF-accredited organizations and not necessarily reflect the larger sector as a whole,” Amy Castleberry, CFA, managing director at Ziegler, told the McKnight’s Business Daily.
“With the loss of revenues and higher expenses associated with pandemic shut-downs and safety measures, operating margins and other cash flow ratios fell to levels not seen in a decade, if ever,” she said.
CARF-accredited senior living organizations, Castleberry said, were in a solid financial position before the onset of the pandemic, with good profitability and strong equity markets.
“One key take-away from this report and from what we, at Ziegler, are hearing from our clients, is that these staffing concerns are not going away in 2021 or 2022 with the easing of the pandemic,” Castleberry said. “Organizations must continue to focus on new and creative ways to address these pressures for years to come. Through technology solutions, new methods of care delivery or reimagining the life plan community concept, many of the senior living and care providers we work with are doing just that.”
