The transformation of Discovery Senior Living in recent years has included rapid growth and the launch of various operating companies.
With the creation of the Discovery Management Group (DMG) and a new credit facility from Comvest Credit Partners, the company is almost completely reorganized and ready to begin the next chapter, CEO Richard Hutchinson told Senior Housing News.
“This big, final push in our restructuring of Discovery is in its most simplistic form taking the best of what we do in our regional operating companies and applying that to our national brand communities,” he told SHN.
The latest operating platform will provide support to communities from corporate hubs in California and Florida, delineated between east and west to leverage management and optimize operations. Also in development is a central-U.S. support team.
This builds on Discovery’s continued growth in recent years, which draws similarities to the hospitality industry’s evolution.
As described by Hutchinson, Discovery’s nationally-branded communities include properties with high unit counts in primary markets across four brands: Discovery Village, a full continuum boutique brand like Aston Gardens; Discovery Commons assisted living and memory care with 100-plus units, as well as Discovery’s active adult brand, Choreograph.
“This pivot is about growing and making sure we continue to have that focus that has really benefited us on the regional management company structure; and the other thing I want DMG to do is be that lead dog with regard to testing new support systems,” Hutchinson said.
Those properties, Hutchinson said, are the highest-occupied with 90% census and made up of the largest number of units and overall communities within the Discovery portfolio. That’s on top of the national brands being Discovery’s “largest contributor on cash flow.”
“Now’s the right time, because we have developed our support infrastructure and we only have operating companies underneath, and they’re all leveraging that support and focusing efforts into the communities,” Hutchinson explained. “What we’re doing now is bringing people closer to the communities and that support infrastructure.”
Longtime Discovery executive Dave Adams, who helped build out Discovery’s TerraBella Senior Living brand, will lead the new DMG management company.
Discovery’s ‘system is working’
Discovery has seen rapid transformation since 2022 following a recapitalization with Lee Equity Partners and Coastwood Senior Housing Partners. In March of last year, Discovery acquired Integral Senior Living (ISL) but kept ISL’s leadership and management structure intact in a partnership that at the time essentially created the nation’s fifth largest senior living operator.
Among other regional brand launches, Discovery launched a Midwest-focused management company, LakeHouse Senior Living. In January, Discovery launched Arvum Senior Living, its latest operating company managing properties in five states.
Up to eight operating companies as of early April, with ISL and DMG operating national brand communities, Hutchinson teased the impending launch of an additional company, Provincial Senior Living. In recent visits with capital partners, Hutchinson has highlighted strong occupancy growth and margin expansion portfolio wide.
On Provincial, Hutchinson noted the brand is related to a recent acquisition of a former Holiday property.
“The system is working and we’re at over 300 communities now,” Hutchinson said. “The bigger we’ve become, the more performance has accelerated and that’s never happened in the industry; the bigger you get, you gain leverage from scale, and it’s what we’re seeing.”
In a recent interview with SHN, ISL CEO Collette Gray highlighted how the support system from Discovery had been a “game-changer” for operations, and Hutchinson highlighted ISL’s 700 basis point increase on occupancy in recent months as success stemming from that vital operational support.
For example, if a Discovery community is lagging on lead generation, the support team can put “subject matter experts” from the home office support system to consult with community-level staff to more quickly address issues related to marketing and sales.
For DMG this year, Hutchinson outlined two goals: fill out the organizational chart and figure out the tempo necessary to support community-level staff in a way that brings results.
“It’s a great environment to beta test something with these communities where we have enough scale so that it’s statistically-valid information coming back to us, so we can make really good decisions,” Hutchinson said.
Shaping future growth
Senior living operators have spent recent years trying to shape the structure of their organizations in order to capture future demand as demographics shift and construction rates remain muted.
For Discovery, that has meant horizontal growth and the launch of various management and operating companies to support communities and their respective rebuild.
On Wednesday, Discovery also announced a recent investment by Comvest Credit Partners into Discovery. The move is a recapitalization of Discovery’s financing facility at the corporate level, Hutchinson said, that will add “more horsepower to what we can do.”
“Comvest was pleased to deliver a flexible facility to help support Discovery through its next phase of growth,” said Bryce Peterson, a managing director of Comvest and co-head of healthcare for the firm’s direct lending strategy. “This transaction marks Comvest’s third with Lee Equity Partners in support of a health care services provider. We look forward to working with Coastwood and to further strengthening our relationship with the Lee team in helping Discovery achieve its expansion goals.”
What that expansion could look like remains to be seen exactly, but Hutchinson said that Discovery would continue to review acquisition opportunities of “operators who would like to join Discovery.”
“There’s a fair amount of those on the list,”Hutchinson said. “We always want to make sure that we have our financial capacity to transact.”
In regard to what opportunity lies ahead, Hutchinson said the next “24 to 36 months” is going to reveal “a ton of opportunities across all sectors, at all levels.”
