LHC Group, Inc. (NASDAQ: LHCG) and Orlando Health have expanded their joint venture with the realignment of Bayfront Home Health Services in the St. Petersburg, Fla., market. LHC Group owned Bayfront individually prior to this transaction; control of the organization now transfers to the joint venture.
LHC Group finalized its joint venture with Orlando Health on Aug. 1, 2020, a deal expected to bring in $3.5 million annually for the home health and hospice provider. Orlando Health, a $5.6 billion nonprofit health system, operates throughout nine Florida counties with nearly 450 locations.
“Bayfront Home Health Services is an agency that was already part of the LHC Group family via our joint venture partnership with Community Health Systems (CHS),” an LHC Group spokesperson told Hospice News. “Once Orlando Health finalized their purchase of the St. Petersburg hospital from CHS, it made sound strategic sense to expand the LHC Group/Orlando partnership to include the existing agency into the JV partnership portfolio.”
Prior to the Bayfront transaction, the joint venture included six home-based care locations, all in Florida. Via the joint venture LHC Group acquired majority ownership and assumed management of those locations. While Bayfront is a home health provider, LHC Group often seeks to co-locate new hospice operations in markets where they already have a home health presence.
Hospice growth in Florida is key due to demographic tailwinds and high hospice utilization. The U.S. Census Bureau estimates that 32.5% of Florida’s population will be 60 and older by the year 2030, up 34% from 2012. Florida had the fourth highest rate of hospice utilization in the nation in 2018 at 57.9%, according to the National Hospice & Palliative Care Organization. The national average that year was slightly higher than 50%.
This transaction is likely just the beginning for LHC Group’s hospice M&A. The company has earmarked $421.5 million for acquisitions during 2021 with 84% of those dollars designated for hospice transactions. This is a top strategic focus for LHC.
The company is already in discussions or in the diligence phase of several hospice deals, some of which may involve large organizations. The company’s strategy has been to acquire hospices through its extensive joint venture partnerships to build hospice density in markets in which it already has a home health presence.
“We have the ability to bring all of our core services to bear to provide the access to the right level of care and to do so across the national footprint,” LHC Group President Joshua Proffitt said in an earnings call. “If there ever was a time to look ahead and see more room to grow and a wealth of organic, inorganic and strategic growth opportunities, it’s today.”