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Senior living industry key metrics
Hello, and thank you for your request of senior living industry key metrics. The short answer is that the total combined market size for retirement homes and nursing homes is $186 billion, and the top ten companies in the industry are Brookdale Senior Living, Holiday Retirement, Life Care Services, Five Star Senior Living, Sunrise Senior Living, Erickson Living, Atria Senior Living, Senior Living Lifestyle Corp, Capital Senior Living, and Affinity Living Group. The inventory of senior living units has been growing by an average of 3,277 units per quarter. Below you will find a deep dive into my findings, including notes on methodology.
METHODOLOGY
To answer your question, I began by identifying which trends and metrics in the for-profit senior living segment would be of most interest to a potential investor. I determined the following questions would be helpful to understand the trends and metrics of the senior living industry: what are the trends in supply of senior living units? What are the demographics of individuals seeking senior living? What are the trends in occupancy and how is occupancy measured? Which revenue models are most prevalent in the senior living industry? Who are the major players in senior living? What is the market size and financial data available for the senior living industry? These questions formed the basis of the rest of my research. I consulted a wide range of sources, including corporate websites, industry reports, government reports, regulatory filings, and trusted media sites.
STATISTICAL OVERVIEW OF THE SENIOR LIVING INDUSTRY
According to Ibis World, the total market size for the senior retirement industry is $66 billion, growing at a rate of 3.5% from 2012 to 2017. The total market size for the senior nursing home industry is $132 billion, growing at a rate of 2.3% from 2011 to 2016.
The senior living industry is projected to require an additional 347,000 jobs by 2025, which will bring the total number of people employed by senior living to 1.1 million. Compared to the average growth in industries across the board, senior living grew 3.7% faster. By 2055, the total number of American who require long term support and services will reach 15.1 million, increasing by 140%. Currently, less that 8% of adults in the United States have long- care insurance. A 65-year old can anticipate spending an average of $138,100 more over the course of their lifetime for long term care needs.
REVENUE MODELS IN THE FOR PROFIT SENIOR LIVING INDUSTRY
In the for-profit senior living industry, payments are either private, part of a Medicaid waiver, or supplied through long term care insurance, veteran's benefits, or assistance for low income rental programs. The most common revenue model is a monthly rent with a monthly care service package, or a one-time entrance fee with a monthly care service package. When care is paid for through private pay, senior living facilities face a risk when assets run out. When care payments are made through Medicaid or veteran's benefits, the care required may exceed the care paid for, with regulations that do not allow a company to discharge residents for non-payment. Rental rates have risen at an average of 3% to 5% over the last several decades.
MAJOR PLAYERS IN THE FOR PROFT SENIOR LIVING INDUSTRY
The top ten companies in the for-profit senior living industry are listed below in order starting with the largest. I searched for financial information for the top five companies and located information for three of them within the guidelines of the time dedicated for a Wonder research request. If you'd like more specific information about the financial data for the following companies, we encourage you to submit another research request.
1. Brookdale Senior Living Solutions- Serving 101,965 residents over 1,123 communities. In 2016, Brookdale's total revenue was $4,976.98 million. Their gross profit was $2,177.57 million; their operating income was $-19.97 million; and their net income was $-404.636 million.
4. Five Star Senior Living- Serving 26,252 residents in 252 communities. In the first quarter of 2017 alone, Five Star Senior Living had a revenue of $280.5 million. Revenues were up from last year, in part because of the increased total services required by their residents. Occupancy in the first quarter of 2017 was down to 83.6% compared to 85.1% for the first quarter of 2016.
5. Sunrise Senior Living- Serving 25,585 residents in 252 communities. Sunrise had a total revenue in 2016 of $1.3 billion.
RESIDENT DEMOGRAPHICS
Women make up the majority of the senior living population at 56% of those 65 and older and two-thirds of those 85 or older. Currently the racial demographics of the senior population are 78% white, 9% African American, 4% Asian, and 8% Hispanic. By 2060, those numbers are projected to be 55% white, 12% African American, 9% Asian, and 22% Hispanic.
TRENDS IN SUPPLY AND OCCUPENCY
Since 2014, trends in occupancy have stayed in the range of 89.7% and 90.3%. Growth in the supply of senior living units is one reason that the occupancy rate has wandered in this range. Since 2014, the industry has been adding apartments at the average rage of 3,277 units per quarter, compared to the average in previous years of 2,189 units per quarter. If somewhere between 60% and 80% of construction projects in the pipeline come to fruition, that number could jump to "between 4,843 and 6,457 units per quarter." Inventory rates are growing at a rate of 3.1%. To contrast that with the potential demand, age groups of 75 and older are expected to grow from between 3.8% and 5.7%.
CONCLUSION
To wrap it up, I have identified the key metrics of the for-profit senior living industry and provided an overview including trends in supply and occupency, popluation demographics, major players, revenue models, and a statistics overview. Thank you for using Wonder! Please let us know if we can help you with any future research.