No stranger to joint venture agreements, LHC Group Inc. (Nasdaq: LHCG) has entered into a new deal with Orlando Health.
The JV agreement will focus on strengthening Orlando Health’s home health capabilities, along with its home- and community-based services, in the state of Florida. Announced on Wednesday, LHC Group’s newest JV agreement marks its third deal since the start of 2020.
LHC Group is a Lafayette, Louisiana-based home health, hospice and personal care services provider that operates in 35 states, employing 32,000 people.
Meanwhile, Orlando Health is a not-for-profit health care organization that operates in nine Florida counties. The organization manages more than $5.6 billion in assets and has almost 450 locations.
Overall, the joint venture will include six locations: three current Orlando Health providers and three current LHC Group providers in Orlando, Clermont, Kissimmee and Altamonte Springs. As a part of the deal, LHC Group will acquire majority ownership and assume management responsibility of those six locations.
“We look forward to expanding the availability of in-home health care services in the state of Florida, particularly in cooperation with an outstanding partner like Orlando Health,” Keith G. Myers, LHC Group’s chairman and CEO, said in a press release. “Throughout the state, Orlando Health has earned a reputation for quality through hard work, dedication to patients, and a commitment to the health of the communities they serve. Working together, we will bring that same level of service to even more people.”
The JV agreement is slated to close on Aug. 1, 2020.
LHC Group expects incremental annualized revenue from this joint venture of approximately $3.5 million. The deal will not materially affect LHC Group’s 2020 diluted earnings per share, according to the company.
With more than 60 locations, LHC Group already has a sizable footprint in Florida.
Timing-wise, a relationship with LHC Group could further support Orlando Health’s COVID-19 response, as many hospital-bound patients are being shifted into the home setting. That’s especially true due to the fact Florida is now seeing a surge of cases.
Throughout the public health emergency, in-home care providers have positioned themselves as an alternative to facility-based care in order to help alleviate the burden placed on hospitals facing over-capacity challenges.
As of Tuesday, there have been an additional 3,286 cases of the virus in Florida, which brings the state’s total to 103,503, according to the Florida Department of Health.
Prior to COVID-19, Florida had already been a strong market for LHC Group. The company, for example, saw a 15% same-store growth in the state during 2020’s first quarter.
“Florida was such an important initiative for us,” Joshua Proffitt, the recently named president of LHC Group and the company’s former CFO, said during a Q1 earnings call. “We doubled down and added a division-president-level resource there. We’ve also really added some much higher producing feet on the street and have armed them with not only better quality results … but better daily metrics.”