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Friday, December 02, 2022

UnitedHealth to buy LHC Group for $ 5.4 billion

Unitedhealth Lhc Group Deal 13653

TOM MURPHY

AP Health Writer (AP) – UnitedHealth Group will spend $ 5.4 billion to acquire LHC Group and delve deeper into home health, an area of ​​care that is expected to grow as baby boomers grow older.

The healthcare giant said on Tuesday it would pay $ 170 in cash for each share of LHC’s share in a deal that is expected to close later this year.

UnitedHealth, which manages the country’s largest health insurer, will LHC Group Inc. adds to its Optum Health business, which operates primary care clinics and surgery centers across the country.

The deal represents “a good strategic fit” for Optum, given the growth potential in home health care and UnitedHealth’s Medicare Advantage coverage, Mizuho Securities USA analyst Ann Hynes said in a research note.

Medicare Advantage plans are privately run versions of state-funded Medicare coverage for people 65 or older or those with certain severe disabilities.

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LHC Group provides home health care to patients dealing with injuries, illnesses or chronic conditions. The company in Lafayette, Louisiana, has 964 locations in 37 states.

It provides nurses and home health assistants who care for physician treatment plans and therapists who offer physical, occupational, and speech therapy. LHC also provides end-of-life hospice care through 170 locations.

Health insurers and other payers have in recent years placed more emphasis on home care, a trend fueled by the COVID-19 pandemic. They expect this type of care to remain popular as the U.S. population ages and more people become eligible for Medicare.

Patients usually prefer home health care. Technology improvements also allow for more care at home, and payers see the practice as a good alternative to expensive stays in hospitals or care centers where possible.

Health insurers have also emphasized more regular care for their clients to keep people healthy and out of hospitals.

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Last year, UnitedHealth competitor and Humana spent $ 5.7 billion to expand its home health business.

UnitedHealth and Humana are the two largest providers of privately run Medicare Advantage plans in the United States. Together, they accounted for about 45% of the more than 26 million people enrolled last year, according to the nonprofit Kaiser Family Foundation, which studies health care issues.

UnitedHealth said on Tuesday that the deal would be neutral against its 2022 adjusted earnings forecast, but it would help modestly next year. Regulators and LHC Group shareholders have yet to approve the acquisition.

Shares of LHC Group rose more than 6% on Tuesday while the Dow Jones industrial average rose less than 1%. Shares of UnitedHealth Group Inc., a Dow component, rose slightly.

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