CareTrust REIT Inc. rang in the new year with a $142 million acquisition of six skilled nursing facilities in the Mid-Atlantic area.
It was a prime region to invest in due to good Medicaid reimbursement rates and access to labor markets, according to Chief Executive Dave Sedgwick.
“It really checks all of our traditional skilled nursing investment boxes,” Sedgwick told the Business Journal.
The newly acquired portfolio includes 532 licensed beds managed by an undisclosed operator.
Sedgwick said the acquisition continues the company’s momentum after closing on a record $1.6 billion in investments last year, driven in part by its recent diversification into senior housing.
In December, CareTrust launched a senior housing operating portfolio (SHOP) platform to invest, with its first investment, a $40 million portfolio of three senior living communities in Texas, adding to its skilled nursing facilities.
“Skilled nursing is very healthcare heavy with doctors, nurses and therapy,” Sedgwick said.
“Assisted living, by contrast, is not nearly as healthcare heavy, but the only way you can grow in senior housing today is to actually own the operations.”
Growing the SHOP platform will be one of the company’s main focuses going into 2026, Sedgwick said.
CareTrust has grown to become one of the nation’s largest operators of skilled nursing facilities, overseeing 53,589 beds in 34 states.
Since March, shares have risen more than 37% to $36.35 and now sport an $8.4 billion market cap (NYSE: CTRE).
CFO of 11 Years Retires
CareTrust last week also announced several promotions and new hires, including the promotion of Derek Bunker to chief financial officer, succeeding William “Bill” Wagner, who served as CFO since the company’s inception in 2014.
Wagner helped build the company from a startup, through the growing pains of COVID-19, to explosive M&A growth now, Sedgwick said. He also noted in an October LinkedIn post that Wagner played a large role in the company’s 368% total shareholder return over 10 years.
“It’s been over 11 years now and he’s just at the stage of his life and career where he’s ready to retire,” Sedgwick said.
Wagner hand-picked Bunker as his successor, according to Sedgwick.
Bunker joined CareTrust last June as senior vice president of strategy and investor relations, bringing over a decade of healthcare leadership experience. Past roles include vice president of acquisitions and business legal affairs at The Ensign Group Inc. (Nasdaq: ENSG), and chief investment officer and executive vice president at The Pennant Group Inc. (Nasdaq: PNTG), a provider of hospice services and mobile diagnostic and clinical laboratory operations.
“All of that experience just really sets him up well to take us to the next level, which is going to require bigger and more creative complex deals,” Sedgwick said.
Both CareTrust and Pennant were spun off from San Juan Capistrano-based Ensign Group, which has a $10.3 billion market cap and ranks as the fifth-largest public company in Orange County.
Expansion into UK Market
Last year, CareTrust closed its largest acquisition to date.
The company acquired Care REIT, a senior care REIT in the U.K., for $817 million, marking CareTrust’s first expansion into Europe.
Sedgwick said they had been evaluating the market there “for several years,” noting a growing older population in the U.K., similar to the U.S. and Japan. The number of people aged 65 or over in the U.K. is projected to nearly double from 12.7 million to 22.1 million, according to the Office of National Statistics.
The acquisition added 137 care homes with approximately 7,500 operating beds, and currently makes up about 24% of CareTrust’s portfolio, according to the company.
Prior to the Care REIT purchase, its largest announced acquisition was $500 million for 30 skilled nursing facilities in Tennessee and one in Alabama through a joint venture with a “large third-party healthcare real estate owner.”
Twelve of the Tennessee facilities were originally set to be operated by PACS Group Inc., a nursing home operator that leases some of the CareTrust’s facilities.
PACS, which manages about 315 nursing facilities across 17 states that serve over 31,000 patients daily, in 2024 was the target of fraud accusations by activist short-trading firm Hindenburg Research. In the report, Hindenburg accused PACS of knowingly making false claims for Medicare coverage, causing the company’s shares to plunge. Hindenburg Research closed its doors last year (NYSE: PACS).
PACS appears to have weathered the short trader’s accusations after undergoing a federal investigation and audits. On Nov. 14, PACS reported earnings for the first time in over a year, saying third-quarter revenue increased 31% to $1.34 billion, beating the consensus estimate of $1.11 billion.
Since that report, shares of PACS have quadrupled from $10.58 each to $40.71 at press time and a $6.4 billion market cap.
“We are pleased they met their filing deadline and are encouraged by the results in the filings and the additional talent they’ve added to the organization,” Sedgwick said.
