LHC Group (LHCG) strengthens national presence with new takeover – September 13, 2021



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LHC Group, Inc. (LHCG Free Report) recently signed an agreement to acquire the Brookdale Health Care Services agencies of the new home care, palliative care and outpatient therapy business between HCA Health (HCA Free Report) and Brookdale Senior Living Inc.

The transaction is expected to be finalized in the fourth quarter of 2021, once the usual conditions have been met. This takeover marks LHC Group’s first entry into two new states, namely Minnesota and New Mexico, and also expands its services in states where it already operates.

Agencies outside of the areas served by HCA Healthcare include 23 home care centers, 11 hospices, and 13 therapy agencies in 22 states. These agencies will continue to operate under their existing brands and locations.

This operation is likely to give a substantial boost to the home health and hospice businesses of the company.

Importance of acquisition

The buyout is likely to add resources and service capabilities outside of the substantial expansions of the LHC Group’s national presence. According to management, the deal enables the LHC group to positively impact more lives by providing quality healthcare with the help of the team at Brookdale Health Care Services.

It is important to mention here that the LHC Group anticipates annualized revenues of approximately 146 million dollars from this buyout. However, the transaction will not have a significant impact on its 2021 earnings per share (given the schedule for finalizing the buyback).

Image source: Zacks Investment Research

As a result of this acquisition, LHC Group has now acquired or announced mergers and acquisitions valued at $ 308 million on an annual basis.

Market outlook

Through a market data forecast report, the global palliative care market size is expected to experience a CAGR of 9.1% between 2021 and 2026. This aside, according to a Grand View search Article, The global home healthcare market was worth $ 281.8 billion in 2019 and is expected to experience a CAGR of 7.9% during the forecast period (2020-2027). This takeover is therefore timely for the LHC Group.

Recent developments

In September, the LHC Group reached its previously announced agreement (June 2, 2021) to acquire Heart of Hospice from EPI Group, LLC, a family-owned holding company based in Charleston, South Carolina. The takeover will allow the LHC Group to expand its palliative care footprint in five states. The transaction includes 16 hospice care agencies in Arkansas, Louisiana, Mississippi, Oklahoma and South Carolina.

In August, the company finalized previously agreed buyouts of three home care, hospice and hospice care providers in Virginia, Indiana and Arkansas.

In July, the LHC Group formed a strategic partnership with SCP Health to jointly develop and deliver advanced clinical home care services. The partnership will provide a comprehensive home health care service offering, including home and hospital-based skilled nursing facility (SNF) programs, to existing and new hospital and health system partners to respond to the growing demand for value. based care models and home care solutions.

Price return

Shares of this company Zacks Rank # 3 (Hold) are down 14.3% in one year compared to the industry’s 35.9% decline.

Choice of keys

Two better classified actions of the medical space in the broad sense are Henry Schein, Inc. (HSIC Free report) and Envista Holding Company (NVST Free Report), both currently carrying a Zacks Rank # 2 (Buy). You can see The full list of today’s Zacks # 1 (strong buy) stocks here.

Henry Schein’s long-term earnings growth rate is estimated at 13.9%.

Envista Holdings’ long-term earnings growth rate is estimated at 27.4%.

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