Hospice revenues at Brookdale Senior Living (NYSE: BKD) are up nearly 18% in the second quarter largely due to same-store admissions growth and de novo activity, the company reported in an earnings conference call.

Hospice accounted for much of growth in the company’s Health Care Services segment, outstripping quarterly percentage gains for its home health and outpatient therapy service lines.

“Hospice is the engine that’s driving growth in Brookdale’s ancillary business. The company expects to continue to expand its reach and improve margins over time,” Chad Vanacore, analyst for Stifel Financial Corp. (NYSE: SF), told Hospice News. “[Hospice] is an attractive business that’s growing. It has support from government administrators and a clear long-term tailwind from aging population.”

Brookdale’s hospice revenues exceeded $23.1 million for the second quarter, up from nearly $19.7 million in second quarter 2018 and $21.7 million in first quarter 2019.

Admissions growth drove much of Brookdale’s hospice gains. Average daily census (ADC) for Brookdale’s hospice operations has risen steadily for the past year. ADC is currently up 15.2% from second quarter 2018. ADC reached 1,500 in the second quarter 2019 and topped 1,600 for the month of July.

“Hospice is a critically need service, and we are delighted to provide that to more residents both within our communities and outside the walls,” Brookdale CEO Lucinda Baier told Hospice News.

Also contributing to the strong earnings was the company’s de novo activity.

The company opened new hospice locations in Portland, Ore., and Detroit, with a third expected to open later this year in Sacramento, Calif. Brookdale Hospice of Portland accepted its first patient pro bono in April and was approved for billing in July.

“Management is clearly looking to grow the hospice business by opening new agencies,” Jason Plagman, vice president of health care equity research for Jeffries, LLC., told Hospice News.

Brookdale has 21 hospice locations nationwide. The company has identified growing its hospice business as a key priority for the year.

“We have a resident base that needs this service,” Baier said at the RBC Capital Markets 2019 Healthcare Conference in May. “So by building an agency you are providing a needed service for residents, and you are providing a great cash flow stream that has a very low capital requirement and a very nice margin. You will continue to see us grow our hospice business.”