LHC Group Executes First Acquisition Post-Optum Deal

LHC Group is back on the M&A scene, sans the stock ticker next to its name.

UnitedHealth Group’s (NYSE: UNH) Optum officially acquired the company on Feb. 22. For the first time since then, LHC Group has made an acquisition of its own. It is acquiring the Delaware-based, Medicare-certified home health agency Summit Home Care.

“Our recent combination with LHC Group expands in-home capabilities,” Dirk McMahon, president and COO of UnitedHealth Group, said during the company’s first-quarter earnings call Friday. “LHC provides high-quality, compassionate home health, hospice and post-acute care services, with over 12 million patient encounters each year. We will learn from and build upon LHC’s capabilities, expanding the scope and acuity of the care we can provide in a patient’s home.”

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The Lafayette, Louisiana-based LHC Group provides home health, hospice and home- and community-based care in 37 states and the District of Columbia via its 30,000 employees. In addition to its 527 home health locations, the company has more than 400 hospital partnerships.

Though LHC Group’s network is expansive, UnitedHealth Group is one of the largest insurers in the country. For instance, UnitedHealthcare has about 8 million Medicare Advantage (MA) beneficiaries.

Optum will find plenty of ways to leverage LHC Group as it focuses more on home- and community-based care.

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At the same time, as it currently stands, LHC Group can not cover home health services for those millions of beneficiaries on its own. Therefore, it bodes well for UnitedHealth Group overall if LHC Group can embed more quality home health providers into its network.

In all likelihood, the company will take a two-pronged strategy to expanding home health reach. The first aspect of that strategy will be acquiring more providers, like Summit Home Care. 

LHC Group will also likely act as the home health expert on behalf of its parent company, searching for and finding like-minded, independent providers that can cover some of the markets that it can’t. That could be a way to artificially extend its footprint.

It’s also likely that Optum – the health care services side of the house – will be the more active acquirer. UnitedHealthcare has less room to grow. Adding new beneficiaries is a tall task, and acquisitions of other payers tend to be scrutinized heavily.

LHC Group can be a part of the M&A engine within Optum, starting with Summit Home Care.

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