Co venture elderly_care

2
At CoVenture, we invest in pre-seed startups led by founders with strong domain
expertise.

Industry at a Glance
Source: FranchiseHelp
The Industry
Industry Overview
Description Elderly care is the business of
fulﬁlling living needs and
requirements to living citizens
Market Size (2013) $57.6 billion to $261.5 billion
Services §  Assisted living
§  Nursing homes and facilities
§  Hospice care
§  Pharmaceuticals
§  In-home care
Revenue Breakdown
Medicare,
37%
Private
Insurance,
22%
Medicaid,
19%
Local
Governme
nts, 20%
Other, 2%
4

U.S. Elderly Population
Source: Wells Fargo Securities, Census Bureau
The Industry
5
16.4
17.0
17.6
18.3
18.9
19.6
20.3
21.0
19.5
19.8
20.2
20.6
21.1
21.9
22.5
23.2
5.8%
6.0%
6.2%
6.4%
6.6%
6.8%
7.0%
7.2%
14
16
18
20
22
24
2013 2014 2015 2016 2017 2018 2019 2020
%ofTotalU.S.Population
MedicarePopulation(m)
Women 75+ 75+ Population % of Total Pop
Observations and Analysis
§  75+ population in the U.S.
projected to increase by 3.7m
total (19%), with women
increasing 4.6m (28%)
§  Percentage of total U.S.
population projected to
increase at a CAGR of 1.6%
between 2013 to 2020
§  As elderly population rises, so
too will demand for elderly
care services (especially for
women)

U.S. Average Life Expectancy
Source: United Nations World Project, 2009
The Industry
6
Observations and Analysis
§  Average life expectancy to
increase by 2.8 years by 2045
§  Mean years spent as a senior
(65+) increases to 18.3 years,
representing an 18% increase
§  Increasing life expectancy will
lead to longer-term
relationships between elders
and service providers
§  Financial management issues
will become more prominent
as people live longer
80.5
83.3
70
72
74
76
78
80
82
84
1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045
AverageLifeExpectancy

Elderly Population Concentration
Source: U.S. Census Bureau
The Industry
7
Implications
§  States such as Montana,
Florida, West Virginia, and
Maine have the highest
concentration of elderly
people
§  California, Texas, New York,
Florida, and Illinois have the
highest absolute elderly
population
§  These regions will provide
highest demand for elderly
care services, and provide the
most opportunity for
expansion
FL
19.5%
MT
17.6% ME
18.0%
WV
18.1%
>17.5%
15.1% - 17.5%
12.5% - 15.0%
<12.5%

Medicare Overview
Source: Medicare Website
The Industry
8
Increasing prevalence of Medicare will give rise to higher spending on elderly care
§  Guarantees health insurance for Americans aged 65 and older who have worked and paid into the system, as well as people
younger than 65 with disabilities
§  In 2010, Medicare provided health insurance to 48 million Americans, 40 million of which were 65+
§  That number is expected to increase to 80 million by 2030
§  Spending is expected to increase from $560 billion in 2010 to $1 trillion by 2022
Parts
Part A) Hospital
Insurance
Part B) Medical
Insurance
Part C) Medical
Advantage Plans
Part D) Prescription
Drug Plans
Program of All-
Inclusive Care for the
Elderly
Covers short term (up
to 60 days), in
hospitals and skilled
nursing homes
Includes medical
equipment such as
canes and
wheelchairs; 80%
covered by Medicare
HMO or non-HMO
plans for a monthly
premium; use by 28%
of recipients
(supplemental)
Provides coverage for
most prescribed drugs
(supplemental)
Services provided by
adult day health
centers and in-home
services to individuals
frail enough to need
nursing care
(supplemental)

Affordable Care Act
Source: Medicare Website, National Committee to Preserve Social Security and Medicare
9
Prescription Medication Coverage
0%
75%
$- $1,050 $2,100 $3,150 $4,200 $5250+
Under $2,800:
75% Coverage
$2,800 - $4,550:
No Coverage
$4,550+: 95%
Coverage
Affordable Care Act Coverage for $2,800 to
$4,550
Brand-Name Drugs Generic Drugs
2014
53% 28%
2015
55% 35%
2016
55% 42%
2017
60% 49%
2018
65% 56%
2019
70% 63%
2020
75% 75%
Insights
§  Prescription medication coverage gap currently exists in $2,800 to $4,550 range
§  Affordable Care Act will attempt to ﬁll in “donut hole” for prescription medication coverage
§  Will also help lower Medicare B (Medical Insurance) premiums

Long-Term Care
Source: Congressional Budget Office
10
Informal
Care, 55%
Institutional
Care, 31%
Community
-Based Care,
14%
Estimated Economic Value of Formal and
Informal Long-Term Services, 2011
What is Long-Term Care?
Long-term care is support provided to people who cannot live independently. There are three main types of LTC: 1) Informal
Care, which consists of in-home caregivers and support from family members 2) Institutional Care, which consists of nursing
homes and assisted living centers and 3) Community Based Care, which consists of day time care for elderly people in community
centers and transportation services. Currently Long-term care account for 1.3% of the US GDP and that number is expected to
grow to 3% by 2050.
Estimated Market Size
$426B

Payment for Long-Term Care
Source: Congressional Budget Office, US Senate Commission on Long-Term Care
11
58%
24%
14%
31%
29%
36%
14%
30%
52%
Nursing Home
Assisted Living Facility
Part-Time Home
Healthcare Aid
Survey Data for Cost of Long-Term Care
Under Estimate Correct Estimate Over Estimate
Medicaid,
$131.40 ,
62%
Out of
Pocket,
$45.50 ,
21%
Other
Private,
$24.40 ,
12%
Other
Public,
$9.70 , 5%
LTSS Expenditures by Source, 2011
(USD Billions)
Insights
§  Medicaid pays for the largest portion of long-term care, as people who exhaust private insurance policies or simply cannot
afford their care, rely on Medicaid. Out of Pocket is (private pay) for long-term care has been growing and makes up over
20% of overall expenditures on LTC
§  Other alternatives are long-term care insurance which currently have high premiums, but as more people have a need for the
insurance, more people will sign up, and the premiums will likely drop
§  Many people underestimate the costs of long-term care, especially the cost of nursing homes

2 | Traditional Healthcare Providers
12

Industry Key Players
Traditional Healthcare Providers
Life Insurance
and Annuities
Retirement
Facilities
Specialty
Hospitals
In-Home Care
13

Specialty Hospitals
14
Industry Overview
Market Size (2013) $42.3 billion
Businesses 571
Key Performance
Drivers
§  Labor intensity
§  Consolidation of smaller companies
§  Aging US population
Revenue Breakdown
Long-‐term

Acute
Care,

39.0%

Inpa8ent

Rehabilita8on
,
29.5%

Children's

Specialty,

13.5%

Orthopedic

Facili8es,

6.0%

Cardiat

Facili8es,

5.0%

Women's

Facili8es,

3.0%

Other,
4.0%

Revenue and Growth, 2005-2019 (USD Billions)
CAGR = 6.2%
0%
2%
4%
6%
8%
10%
$0
$20
$40
$60
$80
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
Revenue % Growth
Source: IBISWorld

Life Insurance and Annuities
15
Industry Overview Customer Segmentation
Businesses 848
Key Performance
Drivers
§  Improvements in bond and equity
markets
§  Aging domestic population
§  Increasing household affluence and
retirement planning
65 and Older,
20.2%
45 to 54, 23.5%
35 to 44, 22.2%
34 and
Younger, 17.4%
55 to 64, 16.7%
CAGR = 2.9%
-30%
-20%
-10%
0%
10%
20%
$0
$200
$400
$600
$800
$1,000
$1,200
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
Revenue % Growth
Source: IBISWorld

Retirement Facilities
16
Industry Overview Revenue Breakdown
Businesses 16,795
Key Performance
Drivers
§  Aging population and life expectancy
§  Increasing housing price index
§  Improving retirement facility living
conditions
Assisted Living
Facilities, 41%
Independent
Living
Facilities, 37%
Continuing
Care, 22%
CAGR = 4.8%
0%
2%
4%
6%
8%
10%
$0
$20
$40
$60
$80
$100
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
Revenue % Growth
Source: IBISWorld

Home Health Care
Source: IBISWorld
17
Industry Overview Revenue Breakdown
Businesses 304,350
Key Performance
Drivers
§  Rising costs of institutional care
§  Medicare spending and regulation
changes
Home
Nursing
Care, 12%
Homemaker
and Personal
Services, 50%
Home
Hospice, 22%
Other
Services, 16%
CAGR = -0.2%
-2%
0%
2%
4%
6%
8%
$0
$20
$40
$60
$80
$100
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E 2015E 2016E 2017E 2018E 2019E
Revenue % Growth

Current Elderly Care Companies
Note: Companies are primarily established players in elderly care spanning in-home care products and services, retirement communities, and insurers
Current Players
Services Products Institutions
19
Insights
The Elderly Care industry is a low-technology, segmented, and high-growth industry, which makes it prime for consolidation.
Currently there are thousands of small players with nominal market share, yet this is likely to change.

Disruptive Technologies
Source: AngelList
Current Players
Financial Management In-Home Caregiver Platforms Durable Goods
Lack of many existing technologies in
ﬁnancial management software provides
an excellent opportunity
20

In-Demand Products and Services
Source: National Institute on Aging
Market Opportunities
Type of Care Examples
Personal Care Bathing, washing hair, getting dressed
Homemaking
Chores, housework, yard work, groceries, laundry
Meals Organizing meals with other senior citizens and meal delivery service
Money
Management
Paying bills, financial planning
Accessibility Driving assistance, scooters, electric chairs
Activities Organized events and gatherings for seniors
Safety Protection from physical harms and financial scams
Insights
§  Elderly customers seek a wide variety of products and services
§  Most offerings are encompassed by in-home care with the exception of money management and financial safety solutions –
major opportunities lie in these areas
22

Traditional Sources of Information
23
Federal
Govern-
ment
Friends and
Family
Community and
Local Government
Resources
Geriatric
Care
Managers
Trained specialists can
help form a long-term
care plan and help ﬁnd
the services that seniors
require
People that seniors know
are often the most
immediate source of
care and services
Local healthcare
providers and social
providers may provide
quick solutions
Information on long-
term care planning and
help locating is readily
available online in a
variety of government-
sponsored sources
Understanding how people are ﬁnding out about services is important for marketing products and creating a
distribution strategy

Major Opportunities in Elderly Care
Source: USNews
24
Alternative Retirement
Assets
In-Home Care
Major opportunity exists in solutions for leveraging assets to increase income
§  As life expectancy increases, seniors will need to find ways to enhance their retirement fund
and social security, to avoid running out of money
§  Most common method would be leveraging assets to increase income
§  Ways of leveraging assets:
1.  Reverse mortgages
2.  Refinancing home
3.  Home equity loan or line of credit
4.  Annuities
In-home care provides a cheaper alternative to independent retirement
§  Increasing demand for retirement care facilities (due to the aging baby boomer population)
will increase prices for living in retirement homes
§  In-home care presents a cheaper alternative, with associated benefits of independent living
and freedom
§  Major expected areas of opportunity:
1.  Skilled nursing services and matchmaking platforms
2.  Communication and safety software
3.  Accessibility products

Summary and Conclusions
Conclusion
1 Elderly
care
industry
is
projected
to
grow
and
presents
an
excellent
investment
opportunity

3
Elderly
care
space
is
currently
segmented,
with
consolida8on
to
occur
soon
and
a
dominant
player

likely
to
emerge

Medicare
and
the
Aﬀordable
Care
Act
are
going
to
help
relieve
senior
expenditures
on
prescrip8on

drugs
and
insurance,
freeing
up
money
to
spend
on
alterna8ve
healthcare
solu8ons
2
4 Majority
of
current
elderly
care
start-‐ups
focus
on
in-‐home
care
plaTorms
and
durable
goods

5
Increasing
life
expectancy
will
create
demand
for
ﬁnancial
management
and
planning
products
and

altera8ve
ways
to
increase
re8rement
income

26

Ali Hamed
ali @ coventure.us | 818 307 7964 | @alibhamed
2
7

Brian Harwitt | brian @ coventure.us
Clark Zhang | clark @ coventure.us

Co venture elderly_care

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