Welltower, ProMedica Complete $4.4B Acquisition of QCP

TOLEDO, Ohio — A joint venture between Toledo-based healthcare REIT giant Welltower (NYSE: WELL) and nonprofit healthcare operator ProMedica Health System has completed its previously announced acquisition of Quality Care Properties (NYSE: QCP).

QCP stockholders approved the sale, which was the last hurdle to the deal’s completion. Stockholders will receive $20.75 in cash for each share of QCP stock. Although initially reported as a $2 billion sale when the deal was announced in April, Welltower is now claiming the value as $4.4 billion. The increased price is the total enterprise value, including the joint venture's investment in both QCP and HCR Manorcare plus the acquired companies' assumed debt.

The joint venture acquired the real estate of QCP’s principal tenant, HCR ManorCare, the nation’s second-largest nursing home chain.

Toledo-based HCR ManorCare filed for Chapter 11 bankruptcy in March after struggling to pay rent to QCP, which owns nearly all of the facilities that HCR ManorCare operates.

QCP itself is a spin-off of healthcare REIT HCP (NYSE: HCP), which created the company in 2016 specifically to remove HCR ManorCare’s 320 properties from its portfolio.

ProMedica will operate the massive HCR portfolio, and plans to invest up to $400 million in upgrades over the next five years.

"At the heart of this transaction is the need to shift care delivery into new, more cost-effective settings as well as to expand our unique wellness-focused strategy as we scale nationally," says Randy Oostra, ProMedica president and CEO. "This is our opportunity to redefine the settings of effective care delivery outside of the hospital walls for aging seniors and enhance our service offering to span the entire continuum of care, including home health, post-acute care and residential memory care."

The HCR ManorCare chain has more than 50,000 employees providing services in 450 assisted living facilities, skilled nursing and rehabilitation centers, memory care communities, outpatient rehabilitation clinics, and hospice and home health agencies operating under the names of Heartland, ManorCare Health Services and Arden Courts.

Through this transaction, ProMedica, which operates in six states, will expand its footprint into 30 states, employing approximately 70,000 people with projected annual revenues of $7 billion.

Goldman, Sachs & Co. LLC and Lazard are financial advisors to QCP.  Wachtell, Lipton, Rosen & Katz is legal advisor to QCP.

Welltower’s stock price closed at $64.31 per share on Thursday, July 26. The price is up from $50.44 at the time of the acquisition announcement in April, but still down from $71.83 a year prior to that announcement.

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