LHC Group, Inc. (NASDAQ: LHCG) has finalized the acquisitions of Grace Hospice in Tulsa, Okla., as well as two affiliated providers in Mesa, Ariz., East Valley Hospice and East Valley Palliative Care. The Grace transaction marks LHC Group’s entry into the Oklahoma hospice market, where the company already has a home health presence.
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 company expects annualized revenues of $12.1 million from the Oklahoma purchase and $4.8 million for the Arizona operations.
“We have a well-established and sizeable home health agency in the Phoenix market that operates under the brand At Home Healthcare (same brand operates in Tucson as well), and the addition of East Valley Hospice (and East Valley Palliative Care) in Mesa supports our co-location growth strategy of providing multiple services in certain markets where deemed appropriate, needed and feasible,” an LHC Group spokesperson told Hospice News in an email. “The activity we have announced so far is just the start of continued inorganic growth momentum we expect in [the fourth quarter], 2021, and beyond.”
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%
In 2018, Arizona, the site of LHC’s other two acquisitions, had the third-highest number of Medicare decedents who died in hospice at 58.8%, according to NHPCO.
LHC Group is expected to remain active in the M&A market in both the hospice and home health sectors for the duration of 2021.
“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.”