USA – UnitedHealth Group has announced that it would acquire LHC Group for approximately US$5.4 billion in cash, as the country’s largest health insurer expands its home health services.
The merger will bring together the provider of home healthcare services, primarily for older patients dealing with chronic illness and injuries, and UnitedHealth’s Optum unit, which manages drug benefits and provides healthcare data analytics services.
Demand for home healthcare services has increased in the United States, particularly during the COVID-19 pandemic, as patients and caregivers increasingly prefer to access vital services from the comfort of their own homes.
The agreement comes a month after the US Justice Department filed a lawsuit to block UnitedHealth’s US$8 billion acquisition of billing and payment services provider Change Healthcare, claiming that the transaction would give the health insurer access to the data of its competitors.
UnitedHealth will pay US$170 per share for LHC Group, representing an 8.12% premium over the stock’s previous close.
UnitedHealth said that the deal will be neutral to its adjusted earnings forecast for 2022 but will help it slightly next year. The acquisition must still be approved by regulators and LHC Group shareholders.
Following the close of the transaction, Keith and Ginger Myers, co-founders of LHC Group, will invest US$10 million in the health insurer’s stock.
LHC provides nurses and home health aides to carry out doctor-recommended treatment plans, as well as therapists to provide physical, occupational, and speech therapy. It also offers end-of-life hospice care at 170 different locations.
Humana paid US$5.7 billion last year for the remaining 60 percent stake it did not own in home health provider Kindred at Home in order to expand its patient care business.
UnitedHealth and Humana are the two largest providers of privately run Medicare Advantage plans in the United States.
Medicare Advantage plans are privately managed versions of government-funded Medicare coverage for people 65 and older or with certain severe disabilities.
LHC Group provides in-home health care to patients who have been injured, ill, or have chronic conditions.
According to the non-profit Kaiser Family Foundation, which studies health care issues, UnitedHealth and Humana accounted for roughly 45 percent of the more than 26 million people enrolled last year.
LHC Group’s financial advisers were SVB Leerink and Jefferies LLC.
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