LHC Group (NASDAQ: LHC) had a record-breaking year when it came to acquisitions during 2021, with much of that activity leaning towards hospice. As 2022 begins, the company is focused on integrating those new assets and elevating their performance to its full potential, while fueling further growth with de novos and its joint venture strategy.

One of the hallmarks of LHC Group’s growth strategy has been co-locating hospice locations in markets where they already have home health care agencies. The company currently has 86 hospice locations co-located with home health, out of a total 155. This is up from 77 in 2020 and 58 in 2018, LHC Group President and COO Joshua Proffitt said at the JP Morgan Healthcare Conference.

“As we turn to this year, one of our top priorities will be finalizing the integration of some of those deals that we closed there toward the end of the year, and to get them on track and on target to reach our corporate margin profile, and deliver great results across the board,” Proffitt said.

Among LHC Group’s largest deals last year was the acquisition of South Carolina-based Heart of Hospice, which has locations in Arkansas, Louisiana, Mississippi, and Oklahoma as well as its home state.. LHC Group expects to earn $92.5 million in annual revenue from the transaction.

In another substantial transaction, the company acquired home health and hospice operations in 22 states from the joint venture between Brookdale Senior Living (NYSE: BKD) and hospital system HCA Healthcare (NYSE: HCA). The acquisition included 11 hospice, 23 home health and 13 therapy locations expected to generate nearly $146 million annually. Financial terms were undisclosed.

For 2022, the company’s acquisition plans are weighted more towards home health. Hospice growth for the coming year will rest on other pillars, including de novo opportunities and boosted referral numbers via its hospital joint ventures.

“When you co-locate a home health and hospice, that can result in approximately a half a million dollars in incremental revenue per hospice location. There’s clearly a lot of room to grow with this strategy …,” Proffitt said. “In 2021, over 80% of our hospice deals that we closed in M&A overlap with existing home health locations. We’re thinking about 2022 and that opportunity to de novo and to build off of what we acquired this last year.” 

Hospital JVs also promise to be an engine for growth, according to Proffitt. LHC Group has more than 400 hospital and health system joint venture partnerships.

According to numbers presented at the JP Morgan conference, LHC Group’s same-store organic growth averaged nearly 200 basis points higher at the company’s JV operations versus its non-joint-venture locations. Margins for JV locations also average between 100 and 200 basis points higher. These trends resulted in an average range of $65 million to $75 million in annual acquired revenue via joint ventures. 

“We’re known for our joint ventures with hospitals and health systems around the country. What you might not fully appreciate is how these JVs drive our organic admissions growth and our margin improvement across our footprint …,” Proffitt said. “When you put all that together, with an average of anywhere from $65 to $75 million a year in acquired JV revenue over the past four years, that’s a very thick layer of growth for us in the coming years. That will continue to propel our growth, not only in top line, but also in margin expansion.”