CEO: LHC Has Capacity To Double In Size
Following the announcement of a scaled-back pipeline in summer 2016, the third largest home health and hospice provider in the country, LHC Group Inc. (Nasdaq: LHCG), now has again put its acquisition pipeline at the $1 billion mark originally revealed in March 2016.
“We’ll be over $1 billion in our 2017 pipeline,” LHC Group Chairman and CEO Keith Myers said at the J.P. Morgan Healthcare Conference last week. “Our acquisition pipeline is very robust with the right types of acquisitions. We built the infrastructure to support a company twice the size we are now.”
The $1 billion figure represents the total annual revenue of the potential acquisition targets under consideration.
Since the company has doubled down on its long-standing strategy of hospital and health system partnerships in 2016, it has seen immense success and room for even more growth in both partnerships and acquisitions, Chairman and CEO of LHC Group Keith Myers, revealed
Most recently LHC jumped into a joint venture with LifePoint Health (Nasdaq: LPNT) and the company doesn’t show signs of slowing down.
If growth from the past few years is any indication of how 2017 may go for LHC, it could be a very successful year. It is predicted that by the end of 2017, the company’s revenue will reach $910 million to $920 million, said Myers.
In 2014 LHC saw a net service revenue of $733.6 million followed by $816.4 million in 2015.
Growth throughout the industry as a whole is also underway, driven by trends such as shifting care away from skilled nursing facilities (SNFs) and moving more towards a home health setting for post-hospital care, Myers pointed out.
“The info [about SNFs versus home health care] is finally making the rounds,” he said. “That’s why I think home health is in vogue more than it was just a couple years ago.”
Even with a positive outlook for the coming years, LHC as well as the industry are facing some challenges. The industry is shifting away from fee-for-service models and integrating more value-based models, and that puts pressure on providers to get their timing right.
“The challenge that we face today is how to manage the transition from fee to value-based,” he said. “It’s different for everyone, but if you’re all fee for service you’ll be left out in the cold. If you go all toward a value-based model, you won’t survive until the end.”
Written by Alana Stramowski