Company Analysis: Sunrise Senior Living Essay

Sunrise Senior Living Inc. is one of the top firms in the rapidly growing long-term care industry. They provided a number of services for senior citizens including assisted living, meals, transportation, housekeeping, and licensed and highly skilled nurses for certain residents who require 24 hour care. The company was started in 1981 in Fairfax, Virginia by married couple Paul and Terry Klaassen who had a vision of creating alternative senior living options that emphasize quality of life. They have started what is now the most recognized company in the industry boasting innovative products and services for senior citizens. Ultimately after thoroughly researching the company’s credentials, I decided that Sunrise Senior Living would be a favorable investment given that it is part of quickly expanding industry, it is the top firm in the industry, and expert analysts believe that it is a smart investment. Introduction and Statement of Purpose The purpose of this report is to provide a thorough analysis of Sunrise Senior Living in order to make a decision as to whether this company is worth investing in. This report will include an analysis of the company’s history and public relations, the company’s financial performance and trends, economic variables that affect the company, and an overview of the industry and competing firms. In order to conduct this analysis, all of the components previously mentioned have been researched in depth. All analysis and suggestions made will be supported with valid evidence from a variety of different sources. Financial analysis will include a glance at the company’s balance sheets and income statements of the past few years along ith their performance in the stock market of the past few years. The basic structure of this report consists of an executive summary, a brief introduction to the report with basic information of the Sunrise Senior Living Inc. , a more sufficient overview of the company outlining the research conducted in order to draw conclusions regarding the objective of the report, a comprehensive analysis of the company under the criteria previously mentioned, my personal recommendations as to whether an individual should invest in this company, and finally, an appendix with all necessary tables, graphs, etc. hat are necessary to support my recommendations and more clearly illustrate some of the company analysis. Sunrise Senior Living Inc. is a company based in Fairfax County, Virginia that provides a number of senior living services in the United States, Canada, the United Kingdom, and Germany. Sunrise Senior Living offers independent living services which include housing, meals, transportation, housekeeping, and licensed and highly skilled nurses for certain residents who require 24 hour care. Also, these assisted living communities boast nostalgic neighborhoods that provide uniquely designed accommodations, services, and care to support residents who are cognitively impaired or face issues with memory loss, including Alzheimer’s disease. Finally, it provides a medication management program, which includes the storage and distribution of medications as directed by the resident’s physician. As of December 31, 2009, Sunrise Senior Living operated 384 communities, including 335 communities in the United States, 15 communities in Canada, 27 communities in the United Kingdom, and 7 communities in Germany. The company was founded in 1981 by Paul and Terry Klaassen who had a vision of creating alternative senior living options that emphasize quality of life. (Yahoo Finance) Sunrise Senior Living Inc. is in the healthcare sector of the long term care facilities industry. The senior care industry is continually growing because of the increased life-span of the population. With the Baby Boomers entering the age of retirement, the senior citizen population is currently supplying a huge market for companies who provide these service-oriented products (Business Week). In fact, according to an article by Senior Care  Marketer, â€Å"The senior care industry is booming and it’s just getting started as the baby boom generation cares for their aging parents and require care themselves as they transition into their own senior years. People sixty-five years and older represent the fastest-growing age group in the United States, and it is projected that the 75+ population will increase 70% by 2025. By 2030, 70 million Americans will be over the age of 65 – that’s one out of every five Americans! †(Senior Care Marketer). With that said, there a number of competing firms that are seeking to reap the benefits of this growing industry. Sunrise Senior Living is currently the leading competitor in the senior care industry. However, there are number of other firms that are close behind including Brookdale Senior Living, Emeritus, Gentiva, Odyssey Healthcare, and ResCare. Overview Company History and Background As previously mentioned, Sunrise Senior Living Inc. was founded by Paul and Terry Klaassen more than 25 years ago. The idea for this now successful business originated in Holland where Paul Klaassen would visit his grandparents as a child. Paul’s grandparents lived in assisted living homes called verzorgingstehuizen. These assisted living homes are very similar to those offered by Sunrise today. The verzorgingstehuizen allowed its residents to be independent while simultaneously providing support or care for those who needed it. To start this company, a youthful and energetic Paul and Terry Klaassen sold their home and moved into a run-down nursing home in Northern Virginia. Paul and Terry went on to renovate this nursing home and open up their first location of Sunrise Senior Living. Paul and Terry cared for the residents themselves in their first years of business, but word quickly spread regarding their new successful business. As demand for their services increased, they opened up two more locations in the mid 1980’s. Taking on a similar strategy as they did with the old nursing home, they opened up new locations by renovating older buildings and converting them into warm environments that were fit for caring for senior citizens. By 1987, Paul and Terry opened their first Victorian-style mansion which is now a nationally recognized icon for their company. (Sunrise Senior Living) As with any successful business or corporation, it all starts with a vision and mission statement which provides direction and purpose. When founding Sunrise Senior Living, Paul and Terry Klaassen wanted to â€Å"champion quality of life for seniors in a home-like, resident-centered environment, unlike existing, more institutional options. † Their operating philosophy originates from a deep seated certainty in the method in which they accomplish the most premium quality of care of every individual. These convictions that have served as the foundation for Sunrise Senior Living’s mission statement are now also the foundation for Sunrise’s Principles of Service and Core Values. These set of principles and values currently direct Sunrise’s team members and employees at all of their locations worldwide. Sunrise Senior Living’s Principles of Service include preserving dignity, nurturing the spirit, celebrating individuality, enabling freedom of choice, encouraging independence, and involving family and friends. Their core values include passion, joy in service, stewardship, respect, and trust. Each member of the Sunrise Senior Living team is encouraged to follow these principles and core values to ensure that each resident or client receives the most premium caliber service. Sunrise Senior Living) At first glance, one may question the importance of information such as mission and vision statements. However, by evaluating and analyzing a company’s mission and vision statements, it becomes possible to take a deeper look into the company’s culture and goals which can often be an indicator of their success and or failure in various fiel ds. Also, as an investor, it is important to possess a thorough understanding of the company’s purpose and values. Although the primary concern for most investors is the return they will receive on their investment, another factor that investors consider is the company’s reputation which is linked to their morals and code of ethics. For example, an investor may choose not to invest in a certain company even though it would provide large returns on his or her investment because he or she may not agree with the company’s mission and vision statements. Products and Services As previously mentioned Sunrise offers a number of different services and amenities for senior citizens. These services include assisted living, Alzheimer’s and memory care, independent living, skilled nursing, and short term stays. Not to mention that Sunrise also offers different financial options for those residents who have trouble with payments. Under each main service offered are a number of more specific programs as well. For example, one program in particular that Sunrise is known for is their reminiscence neighborhoods, which is part of their Alzheimer’s and memory care treatment. These specially designed neighborhoods were created in order to allow senior citizens to re-live their glory days. To do this, members at Sunrise Senior Living begin by gaining an understanding of the senior’s life stories without overlooking minute details. The reminiscence program encompasses a number of different activities that allows them to retain the spirit of their youth. It includes encouraging residents to participate in common daily practices such as gardening, sewing, office work, and household chores. Additionally, the reminiscence program offers â€Å"Snoezelen† environments which are essentially forms of stimulation for the senses and are used to maintain calmness and serenity among all of the seniors. These â€Å"Snoezelen† environments integrate music, aroma therapy, peaceful sounds, and visual displays for an experience that is incredibly soothing. (Sunrise Senior Living) Although Sunrise Senior Living offers a number of innovative and unique services, their customer and employee reviews are mixed to a certain degree. In order to best find out the opinions of customers and employees regarding Sunrise, I decided that it would be best to examine random personal accounts of both customers and employees. I have examined a number of different websites and blogs in which individuals share their experiences with Sunrise Senior Living. Customer and Employee Reviews Measured up is a website that offers a wide variety of customer reviews and complaints of a number of businesses worldwide. There was recently an instance that occurred on June 19, 2010 in which a Sunrise neglected to aid one of their resident’s who fell and broke her leg and eventually needed a hip replacement surgery. The review off the company was written by the daughter of the woman who fell. She, unfortunately for Sunrise Senior Living, had only the worst things to say about the company. After the incident, Sunrise, according to the daughter of the woman, did not offer fair compensation for the injury of her mother. She also stated that the members at Sunrise did not give any form of apology whatsoever and â€Å"treated the entire affair with as cold a heart as they could muster. † She even went on to say that the â€Å"Sunrise Difference† was cruelty, malice, and disdain. She also strongly advised any individual with elderly loved ones to stay away from Sunrise Senior Living because she thought they were cold and malicious. (Measured Up) As aforementioned, this incident occurred on June 19, 2010. It is especially relevant because of how recent this whole affair took place. As with any company or organization in general, it takes only one mishap to permanently tarnish a reputation. The incident with the woman falling is obviously going to be detrimental to Sunrise Senior Living’s reputation. This is important because it is a tribute of customer satisfaction, even though it was only one incident. This decrease in customer satisfaction, if great enough, will be reflected in the financial performance of the company because clients will no longer demand Sunrise’s services as much. Employee reviews of the company are arguably equally as important as customer reviews given that ultimately, it is the employees who are running these companies. According to Glassdoor, a blog that provides insight and internal reviews of jobs and companies, Sunrise Senior Living received an average employee rating of 2. 6 out of 40 reviews, meaning that employees feel that working at Sunrise is â€Å"Ok. † Also, Mark S. Ordan, CEO and Director of Sunrise since March of 2008, received a 44% approval rate by employees. Although these statistics are from a relatively small sample, considering that Sunrise consists of close to 5000 employees, it is still a testament to the entire company’s satisfaction in their workplace. (Glass Door Reviews) Recent News Recently, Sunrise Senior Living has done some restructuring with regards to their upper level management as well as the relationships they hold with some of their joint ventures. Namely, they have appointed Marc Richards as Chief Financial Officer, Greg Neeb as Chief Investment and Administrative Officer, and David Haddock as the General Counsel. In terms of their joint ventures, Sunrise Senior Living is currently working with Ventas, HCP, and CNL Lifestyle Properties. In order to understand the restructuring of these relationships it is necessary to possess a basic understanding of the function of each of these companies. (Sunrise Senior Living – Investor Relations) Ventas is one of the country’s primary healthcare real estate investment trusts. Their increasing portfolio contains 602 healthcare-related facilities that contain roughly 50,000 licensed beds and senior housing units which are located advantageously in 44 states in the US and two provinces in Canada. Ventas) HCP, a real estate investment trust, was established in 1985 and is a publicly traded company of the S&P 500. Their portfolio contains 673 properties in 42 states and Mexico, and mezzanine loans and other debt instruments. All of which are spread across the healthcare industry including senior housing, life science, post-acute/skilled nursing a nd hospital. (HCP) CNL Lifestyle Properties, also a real estate investment trust, is a company that invests in properties projected to produce income that focus primarily in lifestyle related industries. CNL Lifestyle Properties purchases properties and leases them on a long-term basis with the potential of long-term revenue. CNL Lifestyle Properties owns 10 ski resorts, two former Six-Flags owned and branded parks, two former non branded Six-Flags Parks, and three former Six-Flags owned water parks just to name a few. (CNL Lifestyle Properties) Sunrise Senior Living has restructured with Ventas through sale of joint venture interests which brought forth funds improving their balance sheet as well as reaching a new agreement that allows Sunrise to continue to manage senior living facilities owned by Ventas. With HCP, Sunrise has ended management contracts with 27 communities which has allowed them to reduce their debt. Finally, Sunrise has gained 40% ownership interest, from 10% in the previous year of a wholly owned subsidiary of CNL Lifestyle Properties, offering the opportunity to purchase their new partner’s interest in the venture. All of these adjustments are consistent with their strategy of pursuing sole ownership of the assets they manage.