LHC Group Inc. (Nasdaq: LHCG) has already hit a record year for M&A activity.
It added to its streak in a major way on Wednesday, announcing an agreement to purchase Brookdale Health Care Services agencies in 22 states from the recently formed venture between Brookdale Senior Living Inc. (NYSE: BKD) and HCA Healthcare (NYSE: HCA).
Overall, the Lafayette, Louisiana-based LHC Group will purchase 23 home health locations, 11 hospice agencies and 13 therapy businesses, with all acquired entities maintaining their existing brands. Geographically, the 23 home health assets stretch from Brookdale Home Health in Lynwood, Washington, to Nurse On Call in Shrewsbury, Massachusetts, with several locations dotted in between.
“In short, this agreement creates an abundance of opportunity for LHC Group to positively impact more lives through the delivery of quality health care in cooperation with our new colleagues from Brookdale Health Care Services,” LHC Group Chairman and CEO Keith Myers said in a press release announcing the news. “As such, we will be able to serve more people in the comfort of their home or place of residence.”
LHC Group expects to close its deal with the HCA-Brookdale venture in the fourth quarter. Annualized revenue from the purchase is about $146 million, according to the company.
HCA completed its $400 million deal for Brookdale Health Care Services in July, gaining an 80% ownership stake in the senior living giant’s home health, hospice and outpatient therapy segment.
The Nashville, Tennessee-based HCA is a for-profit operator of health care facilities that has more than 2,000 sites of care nationwide, including 185 hospitals, surgery centers, freestanding ERs and more. At the time of its deal with HCA, Brookdale — headquartered in nearby Brentwood — had 57 home health locations, 22 hospice agencies and 84 outpatient therapy offices across its footprint.
Strategically, Brookdale leadership decided to sell 80% of its health care services segment to cash in on the strong demand for home health and hospice assets with scale. It also, however, sought a long-term partner that brought more clinical and higher-acuity services to the table for Brookdale residents.
Brookdale, which maintains its stake in the venture, now adds another important partner in LHC Group, according to President and CEO Cindy Baier.
“We are looking forward to working with LHC Group, another national provider of health care services,” Baier said in the release. “This transaction will further strengthen our liquidity, maintain our 20% interest in the venture with HCA Healthcare, and ensure that high-quality home health and hospice services continue to be available to our residents at communities in these markets. I’m pleased that Brookdale’s residents will benefit from a seamless offering of services across our broad care continuum.”
HCA and Brookdale aren’t offloading all of their home health, hospice and outpatient therapy assets to LHC Group. The only agencies changing hands are those located in areas that HCA Healthcare does not currently serve.
“In July, HCA Healthcare purchased a majority stake in Brookdale Health Care Services to expand access to health care services for our patients,” HCA CEO Sam Hazen noted. “We believe the sale to LHC Group of these sites of care, which were part of that transaction and are not in communities we currently serve, positions them for continued success.”
Currently, LHC Group and its roughly 30,000 employees deliver home health, hospice, home- and community-based services (HCBS), and facility-based care in nearly three dozen states, reaching 60% of the country’s 65-and-older population.
This is a developing story. Please check back later for additional information.
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