VITAS Healthcare, a subsidiary of Chemed Corp. (NYSE: CHE), is reaping the benefits of this recent $85 million purchase of Covenant Health and Community Services hospice business, along with one assisted living facility location.

The deal is structured as an asset purchase, which allows the buyer to assume liability for assets included in the transaction. It also brought VITAS into the Alabama market and expands its geographic footprint in Florida and marked the company’s entry into the assisted living space.

This is VITAS’ first deal in several years, but more are likely on the way, according to Chairman and CEO Nick Westfall.

“It is an active pipeline, and a very targeted and focused one,in states, as well as in counties, particularly those that are restricted, because we think they operate very efficiently and help to service the needs of all those communities,” Westfall said in an earnings call. “So we have a lot in active discussion, but time will tell.”

Covenant Health and Community Services Inc., d/b/a/ Covenant Care, provides hospice across six cities in the panhandle and northwest region of Florida and in three markets across southeast Alabama. The company has provided hospice, palliative care, home health and personal care for more than 36 years. The nonprofit provider operates a 32-bed assisted living facility in Pensacola, Florida.

During Q2 2024, the acquisition brought in an estimated $8.2 million to $8.7 million of revenue, according to Chemed CFO Michael Witzemant. This revenue translated to net income of approximately $1.6 million to $1.8 million.

The transaction also contributed to admissions growth. During Q2, VITAS admissions rose 11% to 17,334. About 680 of those admissions were the result of the Covenant deal, Westfall indicated.

The company’s average daily census reached 21,036 patients in Q2, an 14.4% increase year-over-year. Net patient revenue at VITAS increased 16.7% in Q2 compared to the prior year’s quarter, reaching $374 million.

The company also secured a certificate of need to operate in Pasco County, Florida, which Westfall called a “significant growth opportunity.”

In addition to the Covenant transaction, hiring is a major contributor to growth as it increases clinical capacity. During Q2, excluding new employees gained through the acquisition, VITAS hired 234 licensed clinical staff.

“I’m very pleased with the continued sustainable expansion of our workforce and patient capacity through the second quarter of 2024 …” Westfall said. “The second quarter of 2024 marked our eighth consecutive quarter of expanding our clinical workforce capacity in disciplines identified as part of the retention program.”