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HCA Healthcare (HCA) Buys 80% Stake in BHS, Boosts Network

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HCA Healthcare, Inc. (HCA - Free Report) recently completed the acquisition of a majority stake in the home health, hospice and outpatient therapy business of Brookdale Senior Living Inc. (BKD - Free Report) . In late February, Brookdale inked a deal to collaborate with HCA Healthcare for divesting the former’s unit named Brookdale Health Care Services (“BHS”), which is valued at $500 million as stated by Brookdale.

As agreed upon, HCA Healthcare has bought 80% of equity interest in BHS implying purchase price of $400 million. The remaining 20% stake has been retained by Brookdale.

The joint venture (JV) has added around 80 sites of care to HCA Healthcare’s portfolio. As a result, the reach of the post-acute care services offered by HCA Healthcare will increase further paving the way for enhanced care coordination leading to greater access to care. This, in turn, will result in improved health outcomes of patients across communities it serves.

Moreover, the tie-up with Brookdale, which is one of the leading U.S. operator of senior living communities, seems to be a time opportune move. The primary reason behind this is an aging U.S. population and their demand of access to quality and high-value care. Per Statista, the American population aged 65 years or older accounted for around 16.5% of the total population in 2019. However, the aging population is likely to make up 22% of the total population by 2050.

Another stock in the medical space namely Encompass Health Corporation (EHC - Free Report) is looking for strategic alternatives for selling its home health and hospice business.

Coming back, HCA Healthcare has undertaken a wide array of measures ranging from buyouts to collaborations. These initiatives have bolstered the company’s capabilities, boosted patient volumes and diversified treatment network through which it strives to reach more patients grappling with inadequate care access. These factors have made HCA Healthcare the preferred choice for obtaining high-quality care.

Case in point, the leading national healthcare services provider boasts of 186 hospitals and around 2,000 ambulatory sites of care encompassing surgery centers, freestanding ERs, urgent care centers and physician clinics spanning across 20 U.S. states and the U.K.

Besides, the company engages in frequent divestitures, which highlights its efforts to intensify focus on the core business and get rid of non-performing ones. In May 2021, HCA Healthcare agreed to divest its Redmond Regional Medical Center to AdventHealth for around $635 million. In the same month itself, the company inked deals to sell four of its hospitals in Georgia for approximately $950 million to Piedmont Healthcare. Such sell-offs will boost the company’s financial strength, which can be utilized for pursuing growth-related initiatives in future.

Another medical stock, Tenet Healthcare Corporation (THC - Free Report) recently inked a deal to sell five hospitals to Steward Health Care System for a deal value of $1.1 billion.

Zacks Rank & Price Performance

Shares of this Zacks Rank #3 (Hold) healthcare provider have soared 116.2% in a year compared with the industry’s rally of 106.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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