Earlier this month, I released an article analyzing the recent acquisition of NextAdvisor by Bankrate (NYSE:RATE). Bankrate, if you are unfamiliar, is a marketing company specializing in personal finance products. The company owns a number of the leading personal finance websites including Bankrate.com and CreditCards.com.
This month, I've dug deep into Bankrate research. Along the way, I started research on one of Bankrate's lesser known assets, Caring.com. Most of us know Bankrate as a personal finance media company, but in actuality, Bankrate has its hands in more than just personal finance.
In 2014, Bankrate purchased Caring.com for $54 million in cash. As you might guess, Caring.com is a leading senior care resource for those seeking information and support as they care for aging family members and loved ones. Caring.com provides assisted living and eldercare content, online support groups, and a comprehensive Senior Care Directory for the United States.
Caring.com, while not in personal finance, is actually very similar to Bankrate. Caring.com, like Bankrate, is exceptionally good at content marketing and search engine optimization. And, Caring.com is paid referral fees as a lead generation company for senior housing communities.
In my initial research, I put Caring.com off to the side. I didn't give the asset too much consideration. But after some additional thinking, I've started to see great potential in Caring.com.
If you've followed my writing here at Seeking Alpha, you know that I am a fan of healthcare. Specifically, I am a fan of any company that stands to benefit from the graying of America. Americans are getting older, and healthcare services stand to benefit. Caring.com is at the intersection of this thesis.
According to the Census Bureau, by 2050, 83.7 million Americans will be 65 or older, compared with 43.1 million in 2012, the report said. In contrast, fewer than 10 percent were older than 65 in 1970.
Better access to healthcare and healthier lifestyles are leading to longer lifespans. Baby boomers are getting older and Caring.com is in a great position. The aging population in the United States will help the senior housing market. Higher demand for senior housing will give Caring.com increased traffic and influence over advertisers.
Higher demand over the long term gives Caring.com room for great growth. In 2015, senior housing occupancy was above 90%. Rent growth in the senior housing market is expected to grow by 2.25% to 3% in 2016. Caring.com increased full-year 2015 revenues by 131.6% to $23.9 million, up from $10.3 million in 2014.
Caring.com is a leader in creating content for the senior housing industry. According to SEMRush, Caring.com is currently ranking for nearly 400,000 keywords related to senior housing and senior health. As interest for senior housing increases, Caring.com stands in a position to benefit.
However, Bankrate has had a difficult year. Since the start of the year, shares are down by about 38%. Caring.com lost a large customer in the fourth quarter, which had an immediate negative impact on the Caring.com business.
In the second quarter conference call, Chief Executive Officer Kenneth Esterow was positive:
Now, within our Senior Care segment, revenue was up 5% year-over-year versus the prior-year quarter. Our Caring sales team is adding communities to our network at a healthy clip. At the end of Q2 2016, we have more than 5,300 participating communities, up roughly 20% year-over-year from the second quarter of 2015. We also move forward with our in-home care and financial services offerings. Over time, we expect this cross-selling between home care and senior care financing to increase the value and monetization of our Caring consumer inquiries.
Tough loss in Q4, but it looks like Caring.com is stabilizing. And, over the long term, I believe that demand will only grow.
I am still not sold on buying Bankrate stock. Though, the Caring.com business segment does have long-term potential, it is only a small part of the company's revenue. In 2015, Senior Care made up about 6.4% of the total revenue.
Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in RATE over the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.