It was in a vulnerable position when Brookdale Senior Living Inc. (NYSE: BKD) was considering future buyers of the home healthcare and hospice segment.
In the words of Brookdale’s president and chief executive officer, Cindy Bayer, the home healthcare business was sometimes “disappointed.” During the COVID-19 crisis, the occupancy of the senior living segment fell to record lows.
However, Brookdale’s forecasts are generally positive as HCA Healthcare (NYSE: HCA), one of the largest healthcare systems in the United States, has agreed to acquire 80% of its home health and hospice business.
Not only will it acquire $ 400 million in capital from the transaction, but it will also maintain 20% of the segments that are likely to benefit significantly from HCA involvement.
In other words, Brookdale will continue to be an important player in the home healthcare sector, even if the contract is finally signed in the middle of the year.
“The most important thing is that residents have access to high-quality services,” Bayer said at the company’s first-quarter earnings briefing on Friday. “We will hold a 20% stake in the Brookdale Health Services business after selling 80% of our business to HCA Healthcare. But what has really changed over the last few years is the integration of healthcare. The ability to provide residents with a better integrated healthcare experience. “
Brookdale residents will eventually have better access to physician, hospital-level care and lab services by joining the HCA Healthcare Network, all of which should be a “better than it is now” experience. is.
Brookdale’s Health Services division, based in Brentwood, Tennessee, operates 57 home care institutions, 22 hospice institutions, and 84 outpatient care facilities in 26 states. As part of its core business, the company operates more than 700 seniors living and retirement communities in the United States.
These more than 70 home care and hospice locations are received by HCA Healthcare, based in Nashville, Tennessee, and Brookdale benefits from the HCA network. Currently, this includes 185 hospitals, surgical centers, stand-alone ERs, emergency medical centers and clinics in 20 states and the United Kingdom.
Frank Morgan, managing director of healthcare services equity research at RBC Capital Markets, said in an investor’s note, “HCA’s acquisition of 80% of BKD’s home care and hospice assets is towards the end of the year. It’s going well. ” “This transaction adds $ 300 million in liquidity and provides a 20% minority interest, which should be positioned upwards given the potential for referrals across the HCA network. . “
Brookdale’s vaccination efforts have been successful, with 93% of the population being vaccinated. As a result, it has not been investigated recently whether home health services have improved, but Brookdale is in a position to make progress in the field before and after the HCA contract is signed.
“Is there a difference in family health and hospice penetration between vaccinated and unvaccinated people just because the proportion of unvaccinated residents is very low? I haven’t taken the time to look up, “Bayer said.
At $ 56.3 million in the first three months, home healthcare revenues have declined quarterly since the first quarter of 2020, down more than 14% year-on-year. The company’s average daily census went from 14,020 in the first quarter of 2020 to 11,647 in the first quarter of 2021. Overall, quarterly revenues were down more than 24% year-on-year to nearly $ 673 million.
However, things are unlikely to get worse between resident vaccination rates, estimated access to the HCA network later this year, and improved occupancy rates.
Brookdale’s senior living occupancy is still far from its pre-pandemic state, but since the beginning of February its occupancy has returned from nearly 2% to 71.1% at the end of April. And, in theory, more residents mean more home care patients.
In addition to these tailwinds, Brookdale’s pending deal with HCA will consolidate two companies with similar market coverage. That’s mutually beneficial to both, and that’s why HCA considered Brookdale a promising seller in the first place.
“This business provides a large platform that complements the local provider system,” said Samuel Hazen, CEO of HCA Healthcare. April company’s first quarter financial results announcement.. “This will expand the services we offer across our network and provide more enterprise capabilities to coordinate patient care and improve the patient experience. With continued growth in demand, homes will be I believe it will be a more important environment for healthcare in the future. “
Brookdale’s current home health care figures can also be a bit misleading if the deal is closed. What that health services segment looks like now isn’t what it looks like later this year.
“It’s clear what the business would look like if it partnered with HCA to manage and divert a lot of emissions into this joint venture. Obviously, the financial profile of the business would be significantly different.” Eugene Goldenberg Partner, Managing Director of Edgemont, Earlier told Home Health News..
Increased market share could boost Brookdale’s home healthcare business, which is pending HCA acquisitions
Source link Increased market share could boost Brookdale’s home healthcare business, which is pending HCA acquisitions