LHC Group Joint Venture Completes Missouri Acquisitions

LHC Group, Inc. (NASDAQ: LHCG) along with joint venture partner Capital Region Medical Center (CRMC) have completed an acquisition of a Mexico, Mo.-based hospice agency from nonprofit health system SSM Health. The purchase also included two home health agencies, also based in Missouri communities. Financial terms of the deal were not disclosed.

The three acquired agencies will rebrand as Central Missouri Home Health and Central Missouri Hospice. They currently serve a combined 250 patients per day. The transaction expands LHC Group’s hospice portfolio to 112 hospice locations in 35 states.

LHC Group anticipates about $5 million in revenue annually from the venture, and they do not expect it to materially impact its 2019 diluted earnings per share.

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“One of the strongest aspects of our value proposition for joint venture partners is our ability to help expand their brand and footprint across their region of influence and in markets they serve,” Josh Proffitt, CFO of LHC Group said. “This acquisition presented an excellent alignment with that strategy, and we see this as a great opportunity to grow our partnership with Capital Region Medical Center.”

CRMC is a 100-bed inpatient hospital that also provides hospice and home health care. LHC Group formed the joint venture with CRMC during 2018. The company currently engages in joint ventures with 350 hospitals nationwide.

LHC Group is actively pursuing additional hospice acquisitions, particularly in markets providing overlap with their home health operations. Many of these acquisitions will be purchased through joint ventures.

“Our goal is to co-locate hospice services in markets where we currently provide home health,” Proffitt told Hospice News. “Apart from our existing 112 active locations, we have identified an additional 127 markets across the nation where we have a strong home health presence and intend to actively pursue opportunities for co-location of hospice.”

These acquisitions come on the heels the purchase in March of a majority share of Geisinger Home Health and Hospice and its subsidiary AtlantiCare Home Health and Hospice, for an undisclosed sum.

Prior to the Missouri transaction, LHC Group has acquired or agreed to acquire 18 home health, hospice, or home- and community-based services locations since the start of the year. All of these transactions involved joint ventures with hospitals; the acquisitions represent approximate annual revenues of $44 million.

The company’s JV activity was a key factor in LHC Group’s decision to raise its FY19 guidance earlier this year, coupled with better-than-expected cost controls and a lower tax rate assumption, according to a May 8 note by analyst Dana Hambly of Stephens, Inc.

In addition to JV activity, the company continues to pursue growth through tuck-in acquisitions, with the goal of co- or tri-locating hospices in markets where their home health locations are well established.

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