Shares of Diversicare Healthcare Services doubled Friday after an investor offered to buy the company for more than three times its value at the close of business Thursday.
New York-based retirement assets manager MCS Plan and its manager Ephram “Mordy” Lahasky, who control 5.2 percent of Diversicare’s stock, said late Thursday they are looking to pay about $70 million to take over the Brentwood-based company via a separate LLC and integrate it with some of Lahasky’s other skilled nursing holdings while letting CEO Jay McKnight and his team continue to run the business. Company leaders said Friday morning they have been in talks with Lahasky and expect to continue negotiations with the help of investment bankers from Brentwood Capital Advisors.
“The company has not established a definitive timeline to complete this review and no decision has been reached at this time,” executives said. “There can be no assurance that the review being undertaken will result in a business combination or a path different from the company's current strategic plan.”
Lahasky is offering to pay $10.10 for Diversicare’s shares, which ended Thursday trading at just $2.84. The thinly traded stock (Ticker: DVCR) last traded above $10 in late 2017 and was changing hands at about $6 midday Friday, suggesting other investors are skeptical about Lahasky’s bid succeeding.
Lahasky is a veteran entrepreneur in the skilled nursing and medical transport sectors. Via the latter, he has relationships with 20 properties Diversicare leases from their owners. Through the former, he has via a network of entities been very active of late in trying to grow his holdings, which number more than 100 properties in 23 states. Late last year, he added to his Massachusetts holdings; in March, he offered to pay $69 million for a Detroit-area retirement community that had filed for bankruptcy protection but eventually lost out to another bidder. He also is involved in a bid to buy facilities that house one out of every six nursing home beds in Vermont.
The Lahasky network of senior care centers also have run into a fair bit of scrutiny and controversy in recent years: In February, a former facility administrator at a company he co-owns was accused of falsifying staffing records and a Connecticut facility he bought with partners has been in court-ordered receivership since late 2019.
Regarding his bid for Diversicare, Lahasky said Thursday he and his team have developed “a comprehensive set of best practices and procedures for the provision of care to the elderly” that they plan to bring to the company along with greater operating efficiencies.
“Mr. Lahasky believes that centralization of management and the cost efficiencies from the amalgamation of the Diversicare facilities with his existing portfolio will enable them to deliver additional resources to the facilities through more efficient purchasing of goods and contracting for services,” he wrote in a filing with regulators.