Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

The Junk Pile

Is Ventas Inc. making money in healthcare?

Ventas Inc. (NYSE: VTR) is one real estate investment trust (REIT) that could profit from coronavirus.

To explain, Ventas claimed to own 16 nursing facilities, 37 inpatient and long-term acute care facilities, three international hospitals, nine health systems, 36 medical research and innovation centers, and 347 medical office buildings in 2nd Quarter 2020. Hence, Ventas owns large numbers of healthcare facilities during what could be the greatest health crisis in history.

However, Ventas is vulnerable to coronavirus because it owns 742 senior housing facilities. To explain senior housing is a euphemism for care home or nursing home. Nursing or care homes are notorious coronavirus hotspots.

Can Coronavirus Kill Ventas?

For instance, there had been 43,231 COVID-19 deaths in American nursing homes as of 26 July 2020. The Centers for Medicare and Medicaid (CMS) estimates there had been 102,531 suspected coronavirus cases and 164,055 confirmed COVID-19 cases in US nursing homes before 26 July 2020.

Thus, Ventas is in a position to profit from coronavirus and suffer from COVID-19 at the same time. For example, the hospitals, inpatient and long-term acute care facilities, and nursing facilities could care for recovering coronavirus patients. Importantly, insurance or government could pay for that treatmen

Ventas could profit from Coronavirus if they test COVID-19 treatments, drugs, and vaccines at its 36 medical innovation and research facilities. For example, the U.S. federal government is investing $4 billion in coronavirus vaccine research, The New York Times reports.  

Does Ventas Make Money?

Ventas (NYSE: VTR) makes some money. For example, Ventas reported a quarterly gross profit of $876.63 million and quarterly revenues of $943 million on 30 June 2020.

Furthermore, Ventas reported a quarterly operating income of $64.47 million and a quarterly common net loss of -$175.17 million on30 June 2020. Moreover, Ventas is making less money, its revenues fell at rate of 0.7% in the quarter ending on 30 June 2020.

Ventas is making less money in 2020. For instance, Ventas’s quarterly revenues fell from $996 million on 31 December 2019. In addition, the quarterly gross profit fell from $920.71 million on 31 December 2019.

Additionally, the quarterly operating income grew from $124.61 million on 31 December 2019. In contrast, the quarterly common net income grew from $11.44 million on 31 December 2019 to $473.12 million on 31 March 2020.

How Much Cash Does Ventas Generate?

Ventas (NYSE: VTR) generates enormous amounts of cash. For instance, Ventas reported a quarterly operating cash flow of $405.56 million on 30 June 2020.

In addition, Ventas reported a quarterly investing cash flow of $517.18 million and a quarterly financing cash flow on of -$2.095 billion on 30 June 2020. However, I think the financing cash flow indicates Ventas paid off $2.095 billion in debt.

Consequently, Ventas reported a quarterly  ending cash flow of -$1.867 billion on 30 June 2020. The quarterly ending cash flow fell from $2.886 billion on 31 March 2020. That quarterly ending cash flow grew from -$62.49 million on 31 December 2019.

Finally, Ventas reported $1.029 billion in cash in short-term investments on 30 June 2020 and $2.886 billion in cash and short-term investments on 31 March 2020. That number grew from $146.10 million on 31 December 2019.

I think, the cash shows a very responsible management at Ventas. To explain, Ventas’s management is hoarding cash at the beginning of a possible depression. Hence, Ventas could be in a position to buy distressed properties at a low price at some time.

Is Ventas a Value Investment?

Ventas Inc. (NYSE: VTR) could be a value investment because it has more cash but its share price fell from $56.39 on 2 January 2020 and fell to $41.52 on 7 August 2020 to $39.89 on 13 August 2020.

Additionally, Ventas reported total assets of $24.589 billion on 30 June 2020 and a $14.88 billion market capitalization on 13 August 2020. Hence, you can argument Mr. Market is underpaying for Ventas. Moreover, Ventas’s share price has fallen in 2020.

Appealingly, Ventas paid a quarterly dividend of 45₵ on 30 June 2020. That dividend fell from 79.25₵ on 19 March 2020. Thus, Ventas’s dividend is strong but falling.

If you are looking for a cheap growth stock that pays a dividend, Ventas (VTR) is worth examining. Therefore, Ventas could be one REIT that thrives as coronavirus kills residential property, retail, and office REITs.