LHC Group Taking ‘Fresh’ Approach to End-of-Life Care Strategy

LHC Group (NASDAQ: LHCG) is setting its strategic sights on “all things end-of-life care,” seeing further upside in its sizable hospice business.

The Lafayette, Louisiana-based provider has spent the past few years building up its hospice platform through acquisitions. It plans to continue the momentum in 2022, though the company has previously suggested it will pull back the reins somewhat when it comes to M&A.

“In addition to the growth potential in our hospice segment now, operationally from a strategic perspective, we’re stepping back and really thinking about all things end-of-life care,” LHC Group President and COO Joshua Proffitt said Thursday during a fourth quarter and year-end earnings call.

A national hospice, home health and facility- and community-based care provider, LHC Group has locations across 37 states and the District of Columbia, reaching 60% of the country’s 65 and older population.

Last year was a “huge year” of acquisitions that firmed up LHC Group’s hospice platform, with key leaders and management at the core of future growth, Proffitt said. Placing a focus on services related to end-of-life care will roll into the company’s continued hospice plans in a more strategic way looking ahead, he added.

“Whether it’s palliative care, it’s transitioning into hospice or it’s supportive care, we’ve really added a lot to our leadership and our management team,” he explained. “That’s helping us to think fresh and new on all areas of end-of-life care, which honestly is just so important to our health care system. It’s going to help us continue to grow that segment in a real, more strategic way than maybe we have in the past.”

The company doubled down on hospice deals heading in the first half of 2021 and saw an increase of 40 hospice locations added last year overall. LHC Group’s acquisition volume hit an all-time high, bringing the company’s total hospice locations to 170 nationwide.

One of the most significant deals was LHC Group’s purchase of the home health and hospice operations from the joint venture between Brookdale Senior Living (NYSE: BKD) and hospital system HCA Healthcare (NYSE: HCA). The company finalized the acquisition on Nov. 2, expecting roughly $130 million in annual revenue from the deal.

LHC Group also acquired South Carolina-headquartered Heart of Hospice from the family-owned investment firm Evening Post Industries (EPI) Group.

This was also a significant gain for the company, according to CEO and Chairman Keith Myers.

“On the hospice side, the acquisitions we made last year — especially with Heart of Hospice — really beefed up our management and leadership team,” Myers said on the call. “Our strategy is pretty targeted and low-risk, which fits us well. Hospice will be a combination of some small hospice acquisitions in markets where we don’t currently serve, mixed with de novo startups in markets where we already have home health and have relationships with referral sources.”

Co-locating hospice locations in markets where LHC Group already has home health care operations is key to the company’s operating strategy, with untapped opportunities remaining a top priority in 2022.

The company currently averages around 15% to 16% of home health census discharged into hospice.

LHC Group saw an average daily census of 7,024 hospice patients in the fourth quarter of 2021, up 62.6% compared to 4,320 during the same period a year ago. Overall, average daily census grew by 24.4% in 2021 over 2020, with year-over-year growth attributed to the bulk of hospice locations added last year.

The company’s overall revenue rose by 7.6% in 2021, reaching $2.22 billion. At more than $3.1 million, the hospice segment accounted for 14.1% of this revenue, up from $2.4 million in 2020.

Looking ahead, LHC Group expects revenue in 2022 to be in the range of $2.5 billion to $2.55 billion.

The average length of stay for hospice patients rose during Q4, nearing pre-pandemic levels, according to Proffitt. LHC Group saw just above 10% in organic admission growth thus far in Q1 2022, up from 8% the same quarter last year. 

These gains were largely due to realignment and reorganization in both sales and operations, Proffitt said.

“We’ve met a decent hurdle for Q1 and had a lot of growth momentum going on in our hospice business right now organically,” he said. “In the fourth quarter, we did some realignment in both sales and operations, and reorganizing of some of the geography and looking at real growth-minded leadership, both operationally and from a sales perspective.”