LHC Group Inc. (Nasdaq: LHCG) and Orlando Health announced Tuesday they are expanding their joint venture into St. Petersburg, Florida, by realigning Bayfront Home Health Services into the partnership’s portfolio.
Bayfront Home Health Services was already owned by LHC Group, but now the home health provider will be controlled through the joint venture.
“Bayfront Home Health Services is an agency that was already part of the LHC Group family via our joint venture partnership with Community Health Systems (CHS),” an LHC Group spokesperson told Home Health Care News’ sister site Hospice News. “Once Orlando Health finalized their purchase of the St. Petersburg hospital from CHS, it made sound strategic sense to expand the LHC Group/Orlando partnership to include the existing agency into the JV partnership portfolio.”
Lafayette, Louisiana-based LHC Group operates 537 home health locations, 120 hospice locations and 124 home- and community-based services locations across 35 states. It is also the preferred joint venture partner for nearly 400 U.S. hospitals and health systems.
On its end, Orlando Health is a not-for-profit health system spanning multiple states in the Southeastern U.S. The system served 150,000 inpatients in 2020 and over 3 million outpatients.
LHC Group and Orlando Health first formed their joint venture partnership in 2020. It allowed for LHC Group to share ownership of Orlando Health’s home health agencies and for Orlando Health to do the same with LHC Group’s agencies that were in close proximity to its locations.
The joint venture includes five home health agencies and one home- and community-based services agency in the Orlando area. The Bayfront Home Health Services realignment will add to that number.
The partnership’s goal is for Orlando Health and LHC Group to bank on each other’s expertise in their respective fields. It also allows for each to expand their footprint in the Southeast.
Specifically, its focus is on delivering patient-centered care in the home.
“More than ever before, hospitals and health systems are fully leveraging LHC Group’s infrastructure and capabilities as an integral part of their healthcare delivery model,” the company said in a press release.
LHC Group has high aspirations for its JV partnerships and M&A pipeline in 2021. The company is targeting $150 million to $200 million in acquired annual revenue, LHC Group President Joshua Proffitt said on the company’s Q4 earnings call last week.
“As we have discussed in the past, our pipeline is multifaceted,” Proffitt said. “We have the separate JV pipeline, the tuck-in acquisitions and the larger, more strategic opportunities.”
That JV pipeline, in particular, has been one of LHC Group’s proudest points as an overall organization.
Margins for JV locations average 100 to 200 basis points higher than non-JV locations, according to company statistics. Revenue growth for JVs typically averages between 10% and 15% by their second and third years.
LHC Group normally acquires between $65 million and $70 million in revenue annually through its JV pipeline.
Chairman and CEO Keith Myers specifically highlighted 2020 gains within the Orlando Health JV during LHC Group’s Q4, explaining how the venture has seen a 157% increase in census since Aug. 1 despite COVID-19 challenges.
“This is another good example of how we tailor our approach to meet the needs of specific hospital partners in each community we serve,” Myers said.