Diversified Senior Services, Inc. (Nasdaq: DISS) is a developer of assisted living residences, a provider of home care services to the frail-elderly, and a manager of low and moderate-income apartment complexes and assisted living facilities.
Assisted living facilities lie somewhere in between independent living facilities and nursing homes both in terms of cost and the level of care provided. They provide a home-like environment for seniors.
Diversified recently reported its net income for the first quarter of 1999 to be $202,958, or $0.06 per share. This compares with a loss of $243,913, or $0.08 per share, in the like year-ago quarter. Revenue growth totaled approximately 264%.
The company broke ground on its first two 30-unit facilities in Pittsboro and Kinston, North Carolina in December, has six 60-unit facilities under construction, and plans to begin construction on two additional 30-unit facilities in the near future.
Mr. William G. Benton has served as CEO and Chairman of the company since its inception. Mr. Benton has engaged in the commercial real estate business in the areas of multifamily apartments, hotels, shopping centers, long-term health care facilities, and restaurants. Mr. Benton served as CEO and director of Health Equity Properties Inc., a real estate investment trust (REIT) with over $150 million in long-term health care assets, from 1988 to 1994, when it merged with Omega Healthcare Investors, Inc. (NYSE: OHI). He is currently a director of Tanger Factory Outlet Centers (NYSE: SKT), in which Warren Buffett recently bought a 5% stake.
Mr. Benton believes that beginning this year or early in the year 2000, Diversified will be able to annually build between 12 and 24 30-unit facilities and six to eight 60-unit projects offering full assisted living services.
DISS has just completed part one of a three part private placement, in which it sold $3 million worth of preferred stock.
The company was formed in May 1996 as a wholly owned subsidiary of Taylor House Enterprises, Ltd, and completed its initial public offering on January 14, 1998. It saw a profit in the second quarter of 1998, which was a pleasant surprise since a profit was not expected until 1999.
DISS is positioned in a growth market with moderate barriers to entry. The company is targetting smaller-scale living facilities, and has very few competitors in this market niche. Additionally, since assisted living facilities are less expensive for patients than either home care or full nursing homes, there is little competition from alternative forms of care. Moreover, the market is nearly 100% private-pay, which minimizes the possibility of government regulation. |
