Previous health care merger blowups aren’t deterring LHC Group (Nasdaq: LHCG) executives from the hardships of major transactions as the Lafayette, Louisiana-based home health care provider works through its combination with industry peer Almost Family (Nasdaq: AFAM).
“Internally, we’re calling this more of a wedding than a merger,” LHC Group CEO Keith Myers said during the company’s end-of-year earnings call Thursday.
The deal, which was announced in November, will combine two of the nation’s largest home health care providers in a transaction worth approximately $2.4 billion. The combined company will be the second largest such provider in the country. Despite a slight hiccup with the paperwork in January, the transaction is expected to close in April 2018, Myers disclosed Thursday.
Executives also touted the transaction’s progress — now in its fourth month — with the hiring of Berkeley Research Group (BRG), a global strategic advisory and consulting firm, to aid in the integration between the two companies. LHC Group will hold a shareholder meeting on March 29, 2018, to vote on the deal.
LHC Group ended 2017 on a high note, with net service revenue up $24.2 million to $292.4 million during the fourth quarter, compared to $235.4 million in the same three months in 2016. However, LHC Group’s share price dropped more than 6% during midday trading, just above $60 per share.
While industry peers have discussed their aims to acquire hospice and personal care services heading into 2018, LHC Group executives said the company would continue to stick to its home health-focused joint venture partnerships.
“We still like the strategy of joint venture partnering with hospitals and health systems, and almost always our lead in this [partnership] is with home health,” Myers said. “After we establish the relationship, the partnership, we have the opportunity to do hospice and personal care services in those markets.”
At the same time, other buyers are seeing more opportunity in the space during the first half of the year as LHC Group and Almost Family undergo their integration.
Written by Amy Baxter