Ohio Living and Brio Living Services are exploring joining forces as leaders of both organizations keep their eye on future growth amid a rapidly changing landscape for senior living in the U.S.
The organizations on Monday announced they are mulling coming together as one through an affiliation. If the merger is executed, the combined organization will have a combined total of 36 communities.
The affiliation could take 12 months and needs approval from the respective boards. With the official public announcement, Ohio Living and Brio Living Services now face due diligence prior to the final deal.
They are spurred by the “rapid pace of change in the senior living and service sector post-Covid,” according to an announcement on the potential affiliation.
Ohio Living operates 12 life plan communities and various ancillary care service lines in Ohio and Brio Living Services operates 24 locations and services in Michigan.
The combined organization would look to enhance services and optimize workplace efficiencies fostering new growth within various subsets of senior care. The deal would also allow both companies to expand their market penetration and impact in the Midwest, Gumina said.
By exploring affiliation, Ohio Living and Brio Living Services join a growing list of non-profit operators that have sought to affiliate as a growth strategy. Other recent examples of successfully executed non-profit mergers include Transforming Age, which in 2022 officially joined forces with SHAG; and the 2021 merger between Front Porch and Covia. But not every recent affiliation attempt has been ultimately successful.
While affiliation is one strategy as a way to survive in turbulent times, Ohio and Brio are not pursuing the merger to address any shortfalls, Ohio Living CEO Larry Gumina told Senior Housing News.
“We believe that we can make much more of a generative difference and an accretive difference doing this,” Gumina said. “This would get at some of the challenges our industry is facing right now in terms of labor, expense pressures and top line revenue challenges.”
The need for the affiliation is now “more important than ever,” according to Brio Living Services CEO Steve Fetyko, as operators diversify care strategies since the pandemic started.
“Smart growth is essential, and both organizations are focused on making decisions that allow them to achieve the best possible outcomes for the people they serve and their compassionate team members,” Fetyko said in a news release.
The company’s home-based senior service offerings are also set to grow in an affiliation, if successful.A combined organization would stand to build from Brio Living’s home health success in Michigan, while Brio can capitalize on Ohio Living’s sphere of influence in Ohio markets and Medicare Advantage plan expertise. In total, home-based services for Ohio Living currently bring in about $70 million in annual gross revenue, Gumina said.
With scope could also come modest protection against industry headwinds on labor, expenses and margin compression, he added. But some challenges, like occupancy growth, are getting easier as communities in Ohio Living’s portfolio range between 93% and 99% occupancy.
For new growth, Ohio Living reported home based services have seen a 19% growth rate last year. But that growth also could shift to supporting more growth in IL, with IL communities reporting strong recoveries from the pandemic. As part of physical growth, Ohio Living is set to open a new 57-unit, mid-rise senior living community as part of a $43 million project, Gumina said.
“We’re increasing our capacity throughout our markets,” Gumina added. “We want to identify pocket markets around our periphery that we want to continue to create more of a market share presence.”
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