LHC Group to Acquire Grace Hospice of Oklahoma

LHC Group, Inc. (NASDAQ: LHCG) has agreed to acquire Tulsa-based Grace Hospice of Oklahoma for $12.1 million. This is the company’s second hospice acquisition this week.

On Nov. 9 the company announced that it would purchase two Mesa, Ariz.-based providers, East Valley Hospice and East Valley Palliative Care. LHC Group’s acquisition strategy is focused on co-locating new hospice operations with their existing home health locations. This is a top strategic focus for the home health and hospice provider.

The Grace Hospice transaction marks the company’s entry into the Oklahoma hospice market, where LHC Group already operates five home health agencies in and around the Oklahoma City area under the Alliance Oklahoma Home Health brand, a company spokesperson told Hospice News.

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“This is an outstanding opportunity to continue expanding our hospice service line as we make our initial entry into the state of Oklahoma,” said Keith Myers, LHC Group chairman and CEO. “Grace Hospice has achieved a remarkable reputation for service in their community, and we look forward to building on a trusted name and a record of providing high-quality hospice care to patients and families in Tulsa and across the region.”

LHC Group expects annualized revenue of nearly $12.1 million as a result of this deal, which is expected to close on Dec. 1. The transaction will not materially impact its 2020 diluted earnings per share, the company indicated, and Grace Hospice will not rebrand.

Home health operations for LHC in Grace Hospice’s home state are concentrated in the Oklahoma City area, but plans are in place to expand those agencies to Tulsa.

Hospice utilization in Oklahoma reached 50.4% among Medicare decedents during 2018, which is in line with the national average, according to the National Hospice & Palliative Care Organization. This makes the state 22nd in the nation for utilization. Utah leads with a rate of 60.4%

LHC Group is expected to remain active in the M&A market in both the hospice and home health sectors for the duration of 2020 and into next years.

“Our recent activity will continue to gain momentum with increased M&A and continued strong organic growth trends in Q4 and 2021,” said Meyers in a recent earnings conference call. “We anticipate a historic consolidation opportunity in home health and seeing an increasing number of hospice opportunities in our pipeline. We believe we are well-positioned for a strong finish in 2020 and a strong start in 2021.”

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