[UPDATED] HCA Healthcare to ‘Aggressively Grow’ Brookdale Hospice, Home Health Post-Sale

HCA Healthcare (NYSE: HCA) is expected pursue speedy growth for the hospice and home health business the company is set to acquire from Brookdale Senior Living (NYSE: BKD). Brookdale has entered into a definitive agreement to sell an 80% stake in its health care services segment to HCA for $400 million.

Brookdale will retain a 20% interest in the segment. Following the transaction’s closing, Brookdale will no longer report revenue and expenses on that portion of the business. It will be considered an equity investment.

“Given what a really strong operator HCA Healthcare is, they will have a plan in terms of how to grow [Brookdale Health Services (BHS)] aggressively, and that will be from incorporating BHS into their continuum of care,” said Brookdale CEO Lucinda Baier. “That will give their patients better option and will really help by growing both BHS as well as our senior living community occupancy.”


Nashville-based HCA Healthcare operates 185 hospitals, surgery centers, freestanding emergency rooms, urgent care centers, and physician clinics in 20 states and the United Kingdom, more than 2,000 sites of care all told. This opens up a substantial network that stands to boost hospice census and referrals.

HCA sees about 32 million patient encounters annually and a solid proportion of their patients will need home health and hospice care, Baier indicated in a Brookdale earnings conference call.

While patients do not have to be residents of Brookdale’s senior living communities to use their health care services, that is where the company obtains at least half of its hospice and home health business. The remainder coming from the surrounding communities. Brookdale Senior Living will be a minority partner following the sale but will remain the home health and hospice operation’s largest customer.


Brookdale and HCA foresee significant health care services expansion both within facility walls and among the larger community-based patient population, according to Baier.

“We believe HCA Healthcare has the ability to accelerate the growth of the home health and hospice business, and we will look to share in this growth through our retained minority interest,” Baier said. “The depth and breadth of our two companies provides an incredibly strong foundation for growth.”

Brookdale’s fourth quarter 2020 hospice revenues dropped 2.4% from the prior year’s quarter, largely due to headwinds brought on by the COVID-19 pandemic. The company’s hospice business brought in $25.4 million during Q4, compared to nearly $26.1 million for the same period in 2019. However, hospice revenues were up 11% sequentially from Q3 2020’s $23 million.

Overall health care services segment revenues were also down, reaching $91.9 million in Q4 compared to $109.5 million the prior year.

While many of the high profile mergers and acquisitions in the hospice space in recent months have involved private equity-backed companies, the Brookdale deal is a signal that the large publicly traded players will not be overshadowed.

The Brookdale announcement follows several large-scale transactions, including the purchase of AseraCare by Amedisys (NASDAQ: AMED) for $235 million and the acquisition of Queen City Hospice by Addus HomeCare Corp. (NASDAQ: ADUS) for an undisclosed sum.

Late last year, home health and hospice provider Encompass Health (NYSE: EHC) announced that it also was considering a spin off or sale for its hospice and home health operations, which could further shake up the market.

The fact that these large players operate home health businesses in addition to hospice could signal a resurgence in that market as well, according to Kevin Palamara, managing director of Provident Healthcare Partners. Home health M&A lagged behind hospice during 2020 largely due to disruption caused by implementation of the patient-driven groupings model (PDGM) and reduced institutional referrals brought on by COVID-19.

“We continue to see public acquirers such as Addus, Amedisys and LHC Group (NASDAQ: LHCG) remain incredibly active and would anticipate there will be other transactions announced this year that are of significant scale,” Palamara told Hospice News. “It is widely known that Encompass is exploring its strategic options at the moment and more recently there was news that Bristol Hospice has entered the market.”

A unique consideration in the Brookdale-HCA transaction is the nature of the buyer, according to Mark Kulik, managing director for home health and hospice at the M&A firm The Braff Group.

HCA Healthcare is historically a health system provider that is now making an entry into the home health and hospice market. The trend in the hospital industry has been to step away from home-based care or to pursue it through joint ventures, Kulik indicated. A key impetus for a move like this could be the COVID-19 pandemic, which has been reducing acute care utilization and shifting more care into the home. 

“COVID has certainly shed a huge spotlight on the importance and the value of home health, home care and hospice,” Kulik told Hospice News. “As a result, I think you’re seeing an unusual buyer step into the marketplace, one that’s not private equity traditionally and one that’s not strategic”.

A transaction the size of Brookdale’s can have a ripple effect through the industry. Among the various segments of the health care sector, hospice continues to be the most active, even as valuations soar and multiples continue to hit record highs.

Even so, HCA Healthcare’s $400 million layout suggests that hospice price tags may not have hit a ceiling. 

“A rising tide lifts all boats. The valuations at this level absolutely pull up the rest of the marketplace,” Kulik said. “[The Brookdale deal] is both atypical and very helpful to the marketplace at large.”

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