Post-acute care provider LHC Group Inc. (NASDAQ:LHCG) has entered into an agreement to acquire the home health service line of Addus HomeCare Corp. (NASDAQ:ADUS) in a $20 million transaction expected to close on or around Feb. 28, 2013.
The deal encompasses 19 home health agencies and two hospice agencies in five states and will expand LHC Group’s operations to more than 300 locations in 23 states once the acquisition is completed. Annual revenues from the acquired service area is about $36.7 million with an estimated 2.6 million 65-plus population.
Terms of the transaction include LHC Group acquiring 100% of the assets of three home health agencies in Arkansas, one home health agency and two hospice agencies in South Carolina, and one home health agency in Nevada.
LHC Group will also acquire 90% of the assets of eight home health agencies in Illinois and six in California, while Addus will retain a 10% ownership interest in these locations.
In November, Addus announced its intention to explore strategic alternatives relative to its home health business.
“The healthcare landscape is undergoing massive and rapid change as a result of healthcare reform and the economic imperative that we adopt new and more effective methods for serving the healthcare needs of those most at risk,” Mark Heaney, president and CEO of Addus, said in a statement. “States across the country are moving quickly to implement managed care models to serve over nine million primarily older persons—the dual eligible population—who consume a disproportionately high percentage of our nation’s healthcare resources. This transaction enables Addus to focus entirely on our home and community business and, along with our demonstrated expertise in this sector, positions us to benefit significantly from the enormous opportunity to serve this large and growing high-cost population.”
Written by Alyssa Gerace