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Rise in Alzheimer’s Patients Creates Health-Care Plays

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Alzheimer’s disease is one of the deadliest and costliest ailments, affecting Americans aged 65 and older, according to Alzheimer’s Association data. And the disease that can impair brain function is expected to affect more Americans.

About 5.2 million people have the disease, or one out of every eight people aged 65 or older, according to the association. And by 2050, that figure is forecast to swell to 16 million people.

And the cost of care to treat Alzheimer’s is only growing exponentially. In 2012, it cost about $200 billion to treat US Alzheimer’s patients. That figure is expected to grow to $1.1 trillion by 2050, according to the association. Alzheimer’s care starts at about $3,500 a month, going up to $6,500 for some of the best facilities.

Adding to the complexity, there’s not enough supply of senior housing, and related on-site care, to meet patient demand, said Peter Martin, analyst at JMP Securities. After the 2008 financial crisis, senior housing developers broadly have had a difficult time securing loans to build new senior housing projects.

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Of course, this is serious health-care issue facing Americans. But Martin offers a few different ways to play the growing health-care sector as an investor, based on the growing population of Alzheimer’s patients:

Emeritus (ESC) is the nation’s largest memory-care provider.

Capital Senior Living (CSU) may present investors a takeout opportunity by a bigger company wishing to expand into the lucrative, private-pay business.

Many Brookdale Senior Living (BKD) operators own the senior-living real estate and are considering REIT conversions.

Five Star Quality Care (FVE) is another private-pay senior living operator.

Disclosure: Martin Owns Shares of CSU

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