The anticipated acquisition of LHC Group (NASDAQ: LHCG) by the UnitedHealth Group (NYSE: UNH) subsidiary Optum is now expected to close during the first quarter of 2023.
Optum in April announced its agreement to purchase the Lafayette, Louisiana-based home health and hospice provider for $5.5 billion. Initially expected to close this year, LHC Group today filed a report with the U.S. Securities and Exchange Commission (SEC) indicating that a Q1 2023 date is more likely.
The apparent delay follows two requests from the Federal Trade Commission seeking more information about the pending deal.
“On December 6, 2022, the company and UnitedHealth Group certified to the FTC their substantial compliance with their respective second requests,” the company’s SEC filing indicated. “As a result of the foregoing, the company expects the closing of the transactions contemplated by the merger agreement, including the merger, to occur in the first quarter of 2023.”
This transaction closely followed Humana Inc.’s (NYSE: HUM) $5.8 billion purchase of Kindred at Home last year. The two massive deals signal rising interest among payers to operate health care provider companies, particularly those that are well-positioned to participate in value-based, risk-bearing payment models.
UnitedHealth Group is positioning Optum as a cornerstone of its growing home-based care infrastructure and value-based service delivery.
Optum’s third-quarter revenues rose 17% to $46.6 billion year-over-year, driven by its proliferating value-based care arrangements and care delivery platforms. These included in-home, clinic-based, ambulatory surgery, behavioral and digital health services.
UnitedHealth Group has deployed billions in capital to fortify Optum’s capabilities through a number of high-profile acquisitions, including the health care tech firm Change Healthcare and the in-home medical group Landmark Health.
“This year, already, we’ve transferred or grown a million more lives looked after within our OptumCare value-based platform. Next year, we’re expecting to add at least 750,000 more. But it’s not just about the clinics. It’s now about home and community,” UnitedHealth Group CEO Andrew Witty recently said at the company’s investor conference. “The home and community platform itself gives us yet another opportunity to extend the idea that we believe in, that comprehensive value-based care delivers better medical outcomes, better quality for patients better, a better role for providers, and crucially better value for money for payers.”
LHC Group delivers hospice, home health, home- and community-based services, and facility-based care to seniors in 37 states and the District of Columbia.
The company’s board and executive leaders began discussions of a possible sale beginning in November 2021. The conversations included several potential buyers, including UnitedHealth Group. Soon after, the company engaged investment banks SVB Securities and Jeffries to lay the groundwork for a deal, according to a May SEC filing .
“We can use the expertise and capabilities we have developed in home services to see how else we build greater value for people,” UnitedHealth Group executive vice president and CFO John Rex said at the investor conference. “Compared to a decade ago, when we look at partnering with an organization like home health care company LHC, there are many more points across our company to which they can connect. As such, we can expand the impact we can create for patients and for payer customers.”