I recently saw an article in The New York Times about the rising costs of elder care.
These reports of financial ruin have become all too common in the U.S. The same goes for Canada, where I live. Only the very wealthiest are growing old with dignity. The rest of us are left to cope as best we can. Sadly, long-term care stocks are benefiting from the crisis.
My task is to find three long-term care stocks to buy that are attempting to do good while remaining for-profit enterprises. That’s no easy task.
We need public and private American companies to innovate our way out of this crisis that will only worsen before it gets better because governments don’t seem to want to. According to the Times:
“By 2050, the population of Americans 65 and older is projected to increase by more than 50 percent, to 86 million, according to census estimates. The number of people 85 or older will nearly triple to 19 million.”
We talk of saving for retirement but give lip service to our long-term care. I don’t know about you, but what’s the point of enjoying retirement if you spend the last 10-15 years of your life slowly going broke because there’s no one to take care of you?
I believe these three companies understand what it means to grow old with dignity.
UnitedHealth Group (UNH)
This acquisition’s most significant issue is whether regulators allow it to go through. UnitedHealth already owns home health provider LHC Group, which it acquired for $5.4 billion in February. Both would operate in the company’s Optum subsidiary, which provides integrated health care.
As long-term care housing costs rise, more seniors opt to stay in their houses longer to avoid additional expenses. With so many people turning 65 over the next 20-30 years, Amedisys and LHC will have plenty of customers to serve.
“Amedisys’ commitment to quality and care innovation within the home, and the patient-first culture of its people, combined with Optum’s deep value-based care expertise can drive meaningful improvement in the health outcomes and experiences of more patients at lower costs, leading to continued growth,” Healthcare Dive reported the comments of Optum Care Solutions CEO Patrick Conway in June when it announced the deal.
Backed by one of America’s largest healthcare companies, Amedisys should thrive under Optum’s umbrella.
Fidelity National Financial (FNF)
FNF makes the list because it spun off 15% of its F&G Annuities & Life (NYSE:FG) business in December 2022. Its shareholders got 68 FG shares for every 1,000 FNF shares held. Fidelity National retains 85% of the company.
F&G sells fixed-indexed annuities and life insurance products to customers of all ages. It finished 2022 with 623,000 policyholders. FNF acquired F&G in June 2020. That year, it had gross sales of $4.5 billion. In 2022, they were $11.3 billion, and Fidelity National made money off those sales.
A big reason for the growth in sales was FNF’s work to expand its distribution channels from one before F&G was acquired to five after.
“As of December 31, 2022, 94% of our fixed maturity securities were rated under criteria of the National Association of Insurance Commissioners (the “NAIC”) as NAIC 1 or NAIC 2, the two highest credit rating designations of the NAIC,” stated pg. 8 of F&G’s 2022 10-K.
With 10,000 baby boomers retiring every day through 2029, the company’s guaranteed income products for this cohort will continue to experience significant demand from seniors who are already retired and those who are not retired but are getting closer.
Having enough income to live to 100 is a big deal. Annuities give you peace of mind, knowing you will have enough.
J.D. Power recently ranked F&G number one for highest customer satisfaction among U.S. annuity providers in the U.S.
Ensign Group (ENSG)
Ensign Group (NASDAQ:ENSG) has more than 300 affiliates providing post-acute care such as assisted living, skilled nursing and rehabilitative care at facilities in 13 states. It has done so since it was founded in 1999.
As part of its post-acute care strategy, it acquires, leases and owns healthcare real estate to service the post-acute care continuum through these healthcare properties.
On Nov. 3, the company announced that it acquired the real estate and operations of Champions Healthcare at Willowbrook in Houston. The campus includes a 98-bed skilled nursing facility and a 144-bed assisted living facility. The acquisition strengthens its presence in the Houston metropolitan area.
As a result of its latest acquisition, it now has 297 healthcare facilities as part of its operations, with 113 owned and the remainder leased.
In fiscal 2023, it expects earnings of $4.76 a share at the midpoint of its guidance, 15.0% higher than in 2022 and 30.8% higher than in 2021. It also raised its revenue guidance to at least $3.72 billion in 2023, up from $3.69 billion.
ENSG stock gained 159% over the past five years, more than double the S&P 500.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.