Tennessee-based National Healthcare Corp. (NYSE: NHC) has acquired total ownership of hospice and palliative care provider Caris Health. NHC previously held a majority stake in Caris, which will now become a wholly owned subsidiary. Prior to the transaction, Caris founder and former managing director Norman McRae and McRae Investment Company were the minority stakeholders. Financial terms of the transaction were not disclosed.
The combined average daily census for hospice and palliative care at Caris reached 1,200 patients during 2021. The company operates 28 locations in Georgia, Missouri, South Carolina, Tennessee and Virginia. Their services also include pediatric hospice and transitional care programs.
“Caris has been a premier hospice and palliative care provider for many years. We are honored to continue to provide these critical, compassionate services for patients and their families during such a challenging time in their lives,” said NHC CEO Steve Flatt.
NHC and McRae founded Caris as a joint venture in 2003. Since then, NHC has gradually increased its stake in the hospice provider. In 2012 the company paid McRae $7.5 million to raise its proportion of ownership by 7.5%. In conjunction with that transaction, NHC traded its membership interest in its South Carolina-based Solaris Hospice division to Caris for an additional 2.7% interest.
NHC’s footprint includes 75 skilled nursing facilities, 24 assisted living communities, five independent living communities, one behavioral health hospital and 73 home care and hospice agencies. The company also provides memory care, long-term care pharmacies, hospital, rehabilitation services and management and accounting services to third parties.
One impetus behind the Caris transaction is the desire to build a continuum of care for their patients and residents from the onset of serious or chronic illness through the end of life.
The deal comes at a time when the pandemic is driving more health care towards the home setting rather than facilities.This is a trend that emerged long before the outbreak, but accelerated as COVID-19 spread — a side effect of public anxiety about entering hospitals and facility-based care settings for fears of contracting the virus.
Hospice utilization is also going up, contributing to investors’ interest in the space. Utilization among Medicare decedents reached a record 51.6% during 2019, according to the Medicare Payment Advisory Commission (MEDPAC). This is up from 50.3% in 2018.
NHC brought in close to $251 million in revenue during the first quarter of 2021, down 2% from $256 million during the prior year’s quarter. This includes more than $30 million in COVID-19 provider relief funds. The company’s home care business accounted for nearly $1.7 million in Q1 revenue. NHC did not report hospice-specific financials.
The decline in earnings was largely due to COVID-19-related headwinds that pummeled the skilled nursing and senior living industries during 2020 and 2021. NHC’s skilled nursing occupancy fell to 76.8% in the first quarter of 2021, down from 91.4% during the same period in 2020. The company is showing some signs of recovery with a 3.5% rise in its skilled nursing census during Q1, the first increase since the onset of the pandemic.
“As a provider of health care services, we are significantly exposed to the public health and economic effects of the COVID-19 pandemic,” the company indicated in a Securities and Exchange Commission filing. “Due to the pandemic, as well as the increased availability of assisted living facilities and home and community-based services, the challenge of maintaining desirable patient census levels has been amplified.”
Companies featured in this article:
