HCA Healthcare executives have agreed to pay $400 million for 80 percent of Brookdale Health Care Services, the Brentwood-based company’s home health and outpatient therapy division.
Brookdale Health Care Services is the country’s seventh-largest home health business, comprising 57 home health agencies and 22 hospice agencies in 26 states as well as 84 outpatient therapy locations. A lot of those locations overlap nicely with key HCA markets in Texas, Florida, California and the Midwest. Stung by the COVID-19 pandemic, the group last year produced an operating profit of $1.9 million on $367 million in revenues. In 2019, those numbers were $25.0 million and $447 million, respectively.
HCA’s cash deal calls for the company to adjust the $400 million headline price by nearly $85 million to account for Medicare advance payments and deferred payroll tax payments the Health Care Services unit must still repay. Along with a few other customary adjustments, that means Brookdale will take home about $300 million following those adjustments and stands in line to still benefit from HCA’s plans to grow the home health business.
“HCA Healthcare’s objective is to be the health care system of choice in the communities we serve,” CEO Sam Hazen said in a statement. “This opportunity to partner with Brookdale will expand the services we offer and enhance our ability to deliver a better experience for our patients as well as for Brookdale residents.”
Announced Wednesday, the transaction is expected to close around the middle of this year. It will extend HCA’s reach beyond its extensive network of hospitals, surgery centers and freestanding ERs — in all, the company delivers care through more than 2,000 sites — into more of the community settings in which Brookdale Health Care Services operates.
For Brookdale, which last year restructured parts of the home health business to adjust to a new Centers for Medicare and Medicaid Services payment model, divesting the majority of the home health group will bring in more cash to go with proceeds from the year-ago sale of a stake in a group of continuing care retirement communities and a renegotiated lease with major landlord Ventas that is netting the company about $85 million in its first year.
Shares of HCA (Ticker: HCA) rose slightly Wednesday to $175.43, continuing a trend higher from about $125 in late October. Those of Brookdale (Ticker: BKD) were up nearly 2 percent to $5 after hours; they have roughly doubled since late September. The company on Wednesday afternoon also reported its fourth-quarter results, a $44 million loss on revenues of $852 million.