Chain Of Assisted-Living Communities Going Public -- Emeritus Seeks Financing For Its Expansion Strategy

Emeritus Corp., a fast-growing chain of assisted-living communities, has joined a growing list of local companies going public.

The Seattle company, co-founded by a former executive of Hillhaven Corp., filed papers with the Securities and Exchange Commission last week for an initial public offering to raise $104 million for an ambitious expansion strategy.

Company officials hope to sell 6.53 million shares of common stock, priced between $15 and $17 a share. Natwest Securities is managing the offering, and roughly half of the shares are being offered by current owners.

Founded in 1993, Emeritus has grown quickly and quietly into a national chain of 25 residential assisted-living communities in 14 states, employing 877 people. Locally, the company runs Renton Villa and Seabrook in Everett and plans to open centers in Kirkland and Walla Walla.

The centers, which are not licensed to provide medical treatment, are geared toward senior citizens who don't require a nursing home but do need some assistance for their day-to-day activities. The company eventually plans to open 15 to 20 facilities each year.

The strategy follows a familiar pattern for Daniel Baty, Emeritus' chairman and chief executive officer. Before co-founding Emeritus, he was CEO of Hillhaven, the nation's second-largest nursing-home chain.

Baty took Hillhaven from a company with $11.4 million in revenue in 1971 to one that generated $850 million in 1986, when he left. Similarly, he took Holiday Retirement Corp., his next company, from a chain of 40 independent-living facilities in 1987 to one with 155 facilities in 31 states today.

Baty continues to serve as Holiday's CEO while running Emeritus, which company officials concede in their prospectus could lead to a conflict of interest.

Although Emeritus has grown fast, it hasn't been profitable. In its first two years, it generated $4.4 million and $8.3 million in revenue, respectively. As of July 31, its cumulative net loss was $5.3 million.

Company officials say that's not likely to change quickly because a substantial portion of revenue must go to pay off debt.