LHC Group, Inc. (NASDAQ: LHCG) and its joint venture partner Ochsner Health System have agreed to acquire five Egan Home Health and Hospice locations in Louisiana. Financial terms of the transaction were not disclosed.
The companies launched the joint venture, called Southeast Louisiana HomeCare, in 2009. The Egan deal is expected to close on Jan. 1, 2020, and LHC Group expects to see the acquired locations to bring in nearly $16 million in revenue per year.
“We are excited by this opportunity to expand our current joint venture agreement with a respected health care partner like Ochsner Health System,” said Keith Myers, LHC Group chairman and CEO. “We look forward to helping Ochsner care for more people and continue enhancing and expanding access to vital health care services in communities we serve together.”
More acquisitions are certainly on the way for LHC Group in the new year. The company recently indicated that it intended to double its hospice footprint within the next 12 to 18 months.
LHC Group’s acquisition strategy has been to purchase hospices through joint ventures in regions where the company already operates home health care locations.
“There will be an increase in M&A [during 2020], and we intend to be at the front of that,” Myers told Hospice News’ sister site Home Health Care News. “We have a separate team responsible for hospice growth. Their challenge is to double our hospice locations in the next 12 to 18 months. We have roughly 80 locations now, but we want to more aggressively move toward our goal of having hospice in every market we have home health.”
LHC Group and its joint venture partner LifePoint Health also recently acquired Bryant, Ark.-based Saline Memorial Hospice, for an undisclosed sum. In November, the same joint venture agreed to purchase Casa de la Paz Hospice in Sierra Vista, Arizona; and St. Joseph Family Hospice in Lewiston, Idaho in separate transactions, also for undisclosed amounts.
The company’s active year in M&A is representative of a very robust acquisitions market in the hospice space that is not expected to slow during 2020.
The population in Egan’s home state of Louisiana is aging with the rest of the nation.
An estimated one-quarter of Louisiana’s population will be older than 60 by 2030, which is up by 25% from 2012, according to the U.S. Census Bureau. The proportion of the state’s population that is older than 60 is growing while the proportion of those younger than 60 is shrinking, the bureau reported.
Hospice utilization in Louisiana hovers around 49.7%, making it 23rd in the nation in the number of Medicare decedents that elect hospice, according to the National Hospice & Palliative Care Organization. Nationally, utilization is slightly above 50% as of 2018. Utah has the highest rate at 59.4%.
“There is nothing more important than continuing seamless quality care for the patients who depend on us,” said Peter Egan, CEO of Egan Home Health and Hospice. “We are thrilled that LHC Group and Ochsner together have the experience and infrastructure – along with an outstanding reputation for quality – to ensure the patients in our care continue receiving vital healthcare services without interruption.”