Brookdale Senior Living Inc. (NYSE: BKD) used to be one of the largest home health providers in the country, thanks to its health services segment.
Moving forward, it won’t be. HCA Healthcare (NYSE: HCA) — one of the largest hospital systems in the U.S. — purchased 80% of that segment, with the deal official as of July 1. Even post-deal, however, Brookdale will remain an intriguing home health-adjacent company to follow.
“We further strengthened our liquidity position by over $300 million when we completed the 80% sale and smooth transition of our home health, hospice and outpatient therapy business,” Brookdale CEO Cindy Baier said on last week’s Q2 earnings call. “We are pleased with this value-enhancing transaction and that high-quality health care services continue to be available to our residents. Brookdale’s residents will benefit from a seamless offering of services across a broad care continuum.”
Brentwood, Tennessee-based Brookdale previously operated nearly 60 home health agencies and almost two dozen hospice agencies, a number that has now dwindled thanks to the sale.
The company has positioned the transaction as a win-win for its shareholders and residents. Not only will Brookdale continue offering home health through HCA Healthcare, but it will also be better positioned liquidity wise, while retaining 20% of a segment that will be bolstered by HCA’s wide-ranging network.
Because the deal was not finalized until July, the health services segment was still included in its entirety in Brookdale’s Q2 earnings report.
Year over year, the segment’s revenue decreased over 3%, from $90.2 million in Q2 2020 to $87.3 million this year. Overall, Q2 revenue for the company came in at $679.2 million, down 8% from the $737.7 million it posted in 2020 over the same period.
In future quarters, the segment will be removed from the earnings results and net cash proceeds will be reported as net cash provided by “investing activities,” Baier said.
Brookdale’s health services segment had been an embattled one for some time, increasingly so once the COVID-19 pandemic began disrupting operations.
“The completion of the HCA Healthcare transaction has strengthened our liquidity position, as we continue to have an ongoing interest in a growing home health and hospice business,” Baier said. “Over the past three years, including the recent health care services transaction, we have made significant transformational changes to reshape our business. We are in a better position to capture a larger share of the robust ‘silver wave’ of senior demographic demand and drive meaningful shareholder value.”
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