March almost came and went without any major M&A news, but then UnitedHealth Group announced it was buying LHC Group, Inc., one of the largest home health providers in the nation. The deal is being completed through Optum, a significant part of UnitedHealth Group. LHC is going for $170 per share, or $5.4 billion in cash. With debt included, that brings the deal’s total to $6 billion.
Based in Lafayette, Louisiana, LHC Group, Inc. is a national provider of in-home healthcare services and innovations for communities around the nation, offering quality, value-based healthcare to patients primarily within the comfort and privacy of their home or place of residence. The company’s 30,000 employees deliver home health, hospice, home- and community-based services and facility-based care in 37 states and the District of Columbia, reaching 60 percent of the U.S. population aged 65 and older. LHC Group had a full year 2021 revenue of $2.220 billion.
Optum and UnitedHealth are following in the footsteps of Humana Inc., which purchased Kindred at Home back in April for $5.7 billion. These two deals highlight a larger trend where managed care and health insurance companies are expanding into various healthcare sectors, being both insurer and provider, removing the middleman between them and the patient, so to speak. For the past two years, we have seen managed care companies acquire companies in the Rehabilitation, Physician Medical Group and eHealth sectors, creating all-encompassing healthcare machines.
In addition to the acquisition of LHC Group, Optum has announced several deals for companies in a variety of sectors. Back in January 2021, the company purchased Change Healthcare, a major digital health company focused on financial interactions among care providers, payers and consumers, for $13.7 billion, and in March 2021, it acquired Atrius Health, a Boston-based primary care provider with 715 physicians.
Evernorth, Cigna‘s high-performing health services portfolio, purchased MDLive Inc., which offers convenient, affordable virtual healthcare services to more than 60 million members nationwide.
LHC was a particularly dominant player in the M&A market, and has been one of the major forces driving consolidation in the home health market. The deal will give UnitedHealth and Optum significant presence in the home health field. UnitedHealth expects the LHC deal to be neutral to its outlook for adjusted profit per share in 2022 and modestly add in 2023. SVB Leerink and Jefferies LLC served as financial advisers to LHC Group.
