UnitedHealth (UNH) has agreed to acquire home healthcare provider LHC Group (LHCG) in a $5.4 billion cash deal. The deal values LHC Group at $170 per share. In addition to its flagship health insurance business, UnitedHealth provides primary care and other health services through its Optum unit.
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Founded in 1994, LHC Group provides home-based healthcare. It operates 964 locations across 37 states in the U.S. Notably, 435 leading hospitals in the country have selected LHC as their preferred home care partner. UnitedHealth plans to fold LHC Group into its Optum division after the acquisition.
The Deal
Once the deal goes through, it would give UnitedHealth a deeper presence in the expanding home-based care market. According to Centers for Medicare and Medicaid Services estimates, U.S. spending on home healthcare is forecast to grow to $226.4 billion by 2030 from $129.1 billion in 2022.
Optum Health CEO, Dr. Wyatt Decker, commented, “LHC Group’s sophisticated care coordination capabilities and its warm, human touch is so important for home care, and will greatly enhance the reach of Optum’s value-based capabilities along the full continuum of care, including primary care, home and community care, virtual care, behavioral health and ambulatory surgery.”
The deal requires the approval of LHC Group shareholders and regulators. If all goes well, UnitedHealth expects to close the transaction in the second half of 2022.
UnitedHealth does not expect the LHC Group acquisition to boost its earnings immediately and predicts that the deal will have a neutral impact on its adjusted earnings per share (EPS) in 2022. But it expects to start seeing the benefits from 2023.
Wall Street’s Take
Consensus among analysts is a Strong Buy based on 14 Buys and two Holds. The average UnitedHealth price target stands at $535.55 and implies upside potential of 4.9% to current levels. Shares have gained 32% over the past six months.
Blogger Opinions
TipRanks data shows that financial blogger opinions are 96% Bullish on UNH, compared to a sector average of 71%.
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