Brookdale Senior Living’s Offloading of Home Health Assets Yields Desired Results

When Brookdale Senior Living Inc. (NYSE: BKD) sold the majority of its home health assets to HCA Healthcare (NYSE: HCA) last year, health care insiders were split on whether it made more sense for one side, the other, both or neither.

A year after the definitive agreement was announced, however, it seems to be working out – at least for now – for Brookdale.

“Full-year G&A expense was 4% lower than 2020,” Brookdale CFO Steven Swain said on the company’s fourth quarter earnings call Tuesday. “Which was primarily related to the Brookdale health care services associates, who transitioned with the business to HCA Healthcare effective July 2021.”

Brookdale had documented the troubles it had faced in its home health business – formerly one of the 10 largest Medicare fee-for-service providers – dating back to 2019. The $400 million sale helped offload costs associated with running the business, but maintaining a 20% stake allowed it the ability to still provide those services seamlessly to residents.

In September, LHC Group Inc. (Nasdaq: LHCG) announced that it had entered an agreement to purchase Brookdale Health Care Services agencies in 22 states from the recently formed venture between Brookdale and HCA. Overall, that included 23 home health locations, 11 hospice agencies and 13 therapy businesses.

“In the past two quarters, we strengthened our liquidity position by nearly $350 million, when we successfully completed the 80% sale of our home health, hospice and outpatient therapy business to HCA healthcare,” Swain said. “And then the Brookdale-HCA Healthcare venture subsequently sold a select group of agencies to LHC Group. We look forward to working with both companies and having these high quality health care services continue to be available for our residents.”

After its earnings call Tuesday, Brookdale’s stock was up nearly 18%.

Its fourth quarter revenue totaled $643.9 million, a nearly 25% decrease compared to the $852.2 million it brought in during the same time period the prior year. Full-year revenue came in at $2.76 billion, about a 22% decrease compared to $3.54 billion in 2020.

Brookdale’s occupancy rates are on a “vaccination-fueled rebound,” according to its executives. And despite troublesome year-over-year results, it seems the company has gotten what it wanted out of the HCA deal thus far.

Meanwhile, the sale has provided opportunities for HCA Healthcare to get involved with at-home care and for LHC Group to further its footprint to a steady population of residents.

“We look to extend residents’ length of stay through an integrated health care continuum,” Brookdale President and CEO Lucinda Baier said on the call. “We have taken steps to enhance our coordination with our residents’ primary care teams, and after the mid-year transition of our home health and hospice business, we are working with HCA Healthcare and LHC Group to continue delivering high-quality services to our residents.”

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