Addus, LHC Group Rev Up 2018 M&A Wins

Top executives for Addus HomeCare Corporation (Nasdaq: ADUS) and LHC Group, Inc. (Nasdaq: LHCG) touted their recent M&A wins last week—while hinting there’s likely more to come.

Addus CEO Dirk Allison and LHC Group CEO Keith Myers discussed the home health industry’s bustling M&A landscape and provided overall updates on their respective companies during the 2018 UBS Global Healthcare Conference in New York City, an annual event attended by hundreds of investors and stakeholders from across the health care sector.

Addus, which moved its headquarters from Illinois to Texas last year, has 156 unique locations across half the country and provides primarily personal care services, as well as hospice and home health care. It has about 31,000 employees. Within the last two months, Addus finalized an $18.5 million acquisition of Arcadia Home Care & Staffing and its $40 million purchase of Ambercare. The deals strengthen Addus’ presence in New Mexico, while expanding its reach into the new markets of Florida and Wisconsin.


“We are a leading provider in a fragmented market,” Allison said at the conference Monday. “As we look at our company, there are a number of areas for growth opportunity.”

Addus’ recent acquisitions, which the company has largely been able to complete at lower multiples compared to other M&A deals in the home health by searching for better built-in value, has added about $130 million in revenue. Deals for businesses that only do hospice care are particularly pricey, while deals for companies that provide all aspects of care are, comparatively, more “reasonable” in value, Allison said. Addus’ 2017 net service revenue was about $425.7 million.

Moving forward, Addus will continue to focus on deals in the range of $5 million to $50 million. Addus’ M&A strategy is not to be in every state, but rather to be very strong in the states where it operates, Allison said. Addus is active in discussions with “a number of companies” and expects to close at least one more deal within the next year, he said.


“We have a lot of room to go where we can bring on very accretive deals,” Allison said.

In addition to M&A, Addus executives also see growth opportunities as Medicare Advantage begins to open its doors to personal care services. About 70% of Addus consumers are Medicare-Medicaid dual eligibles.

More horsepower

Addus isn’t the only provider eyeing growth opportunities throughout the rest of 2018.

Lafayette, Louisiana-based LHC Group, which delivers home health, hospice, personal care and facility-based services in 37 states, is well known for partnering with health and hospital systems in joint venture deals. The company is fresh off a mega-merger with Louisville-based Almost Family Inc., and the deal, which nearly doubled the size of LHC Group, could add more fuel to the company’s M&A engine.

“[The Almost Family merger] really gives us a lot of horsepower and a lot of runway, especially in personal care,” Myers said at the conference Tuesday.

A big part of LHC Group’s strategy in future transactions will be the combined integration of home health, hospice and community-based services in its markets, he said. Personal care and hospice, in particular, are poised for strong growth.

“What you can expect from us is just more of the same,” Myers said. “If it’s not broke, don’t fix it.”

Just hours before Myers spoke at the conference on Tuesday, LHC Group also announced it was creating a new position and filling it with the U.S. Department of Health and Human Service’s current chief technology officer. CTO Bruce Greenstein will leave his post in June and join LHC Group as its chief innovation and technology officer.

Written by Robert Holly

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