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LHC Group (LHCG) Expands Hospice Presence with New Buyout

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LHC Group, Inc. LHCG recently inked a deal to acquire Heart of Hospice from EPI Group, LLC, which is a Charleston, SC-based family-owned holding company. The buyout will enable LHC Group to broaden its hospice foothold in five states. Notably, the transaction comprises 16 hospice agencies in Arkansas, Louisiana, Mississippi, Oklahoma and South Carolina.

The acquisition is anticipated to get completed during the third quarter of 2021, subject to customary closing conditions.

It is worth mentioning here that LHC Group operates more than 120 hospice locations throughout the nation.

This transaction is likely to provide a substantial boost to the company’s hospice business line.

Deal Rationale

Heart of Hospice’s mission and vision complement LHC Group’s core values. The combination of these companies will help patients and families through the difficult period related to end-of-life care.

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Additionally, the transaction aligns with the company’s strategy of keeping and operating under a family of well-known local brands.

Notably, LHC Group projects annualized revenues of around $92.5 million from this buyout, while also noting that it will not materially impact its 2021 earnings per share. The providers will continue to function under the Heart of Hospice name.

Market Prospects

Per a report by Market Data Forecast, the global hospice market size is anticipated to see a CAGR of 9.1% between 2021 and 2026. Hence, the acquisition comes at an opportune time for the company.

Recent Developments

In May, LHC Group announced its decision to acquire Heart ‘n Home Hospice, which marks its foray into hospice services in the state of Oregon. The buyout also expands LHC Group’s foothold in Idaho.

In the same month, the company agreed to acquire two Casa de la Luz provider locations in Tucson, AZ. The transaction is anticipated to get completed on Jul 1, 2021, subject to certain customary closing conditions. Notably, this buyout is likely to expand LHC Group’s scope of services in the Tuscon market.

Price Performance

Shares of the Zacks Rank #3 (Hold) company have gained 20.8% in a year’s time, compared with the industry’s growth of 11.5%.

Key Picks

Some better-ranked stocks from the broader medical space are HCA Healthcare, Inc. HCA, DaVita Inc. DVA and Illumina, Inc. ILMN, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

HCA Healthcare’s long-term earnings growth rate is expected at 12.3%.

DaVita’s long-term earnings growth rate is estimated at 14.4%.

Illumina’s long-term earnings growth rate is projected at 7%.

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