After posting strong earnings in the second quarter of 2015 and announcing its intentions to grow, LHC Group Inc. (Nasdaq: LHCG) has followed through on its word, acquiring Halcyon Hospice LLC for $58.4 million in cash.
The deal enables LHC to save $7 million in net present value taxes over the next 15 years, resulting in an adjusted purchase price of $51.5 million, according to a news release. The transaction, already approved by each company’s board of directors, is expected to close on or around Oct. 1.
One of the nation’s largest home health and hospice providers, LHC will consist of 53 sites in 12 states upon completion of the acquisition, to generate more than $110 million in annual revenue, according to the release.
Currently, Halcyon employs about 400 people and operates 16 hospices in three states, including two inpatient facilities, making it one of the biggest independent providers of hospice services in the southeastern United States.
“Two of our stated strategic objectives are to grow our hospice operations into new geographical markets and to expand our hospice footprint in specific markets where we have home health operations,” LHC’s CEO Keith G. Myers said in a prepared statement. “When we combine the Halcyon operation with our current LHC hospice operations, we are confident we will not only have one of the largest hospice platforms in the country, but also one of the industry leaders in care and service.”
LHC’s move follows a trend toward more transactions in the home health and hospice market as of late. Following a slow start to the year, industry experts have said merger and acquisition activity increased significantly, and it’s expected to continue in 2016.
As a result of the addition of Halcyon, LHC has increased its full-year 2015 guidance for net service revenue to a new range of $800 million to $815 million, up from the previous range of $780 million to $795 million, the release states.
Earnings results released for the six months that ended June 30 indicated that LHC’s net income was $15.8 million, or $0.90 cents per diluted share, an increase of 55.5% from the year prior.
Along with the Halcyon purchase, LHC also announced the acquisitions of a home health and hospice provider in Louisiana and a home health provider in Arkansas, according to the release. These transactions’ annual combined revenue totals $3.8 million.
Written by Kourtney Liepelt