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LHC Group (LHCG) to Expand Access in Georgia With New Buyout

LHC Group LHCG announced that it has signed an agreement to acquire a privately-held home health provider, Three Rivers Home Health. The acquisition will expand the service footprint of the LHC Group in 36 counties in the Certificate of Need state of Georgia.

LHC Group expects to complete the acquisition of Three Rivers Home Health in the fourth quarter of 2022. The company estimates that the expansion of service in Georgia with this buyout will lead to annualized revenues of approximately $12 million. However, the acquisition will not materially affect the company’s 2022 earnings per share.

The buyout of Three Rivers Home Health will boost the LHC Group’s position as a leading national provider of in-home healthcare services. The buyout aligns with LHC Group’s co-location strategy to provide multiple in-home healthcare services in certain markets.

Following the acquisition, Three Rivers Home Health will continue to operate under its current name and from its present locations, per LHCG’s strategy of retaining and operating under a family of well-known local brands.

Notable Events

Earlier this month, LHC Group reported dismal second-quarter results, wherein both earnings and revenue were below market expectations. The top line was hurt by a decline in net sales of its major segment, Home Health, partially offset by strong organic growth of its hospice services.

In March, LHCG inked a deal with Archbold Medical Center to form a new joint venture to boost home health services in Thomasville, GA and across the greater region.

Home health services is a growing market and LHCG’s expansion plans bode well for its growth. Per a report by Grand View Research, the global home healthcare market was worth $299 billion in 2020 and is anticipated to witness a CAGR of 7.9% from 2021 to 2028. The company’s prospects also attracted an acquisition bid from UnitedHealth Group UNH.

In March, LHC Group inked a deal with Optum, a diversified health services company and part of UnitedHealth Group, to jointly improve their shared capability to accelerate value-based care, primarily in the comfort of a patient’s residence. Per the agreement, UnitedHealth Group will acquire LHC Group by paying $170 for each share of the latter in cash. The buyout is likely to be completed in the second half of 2022.

Price Performance

Shares of this Zacks Rank #5 (Strong Sell) company have gained 18.4% on a year-to-date basis against the industry’s decline of 23.3%.

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Stocks to Consider

A couple of better-ranked stocks from the medical industry include ShockWave Medical SWAV and Alkermes ALKS. While ShockWave Medical sports a Zacks Rank #1 (Strong Buy), Alkermes carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ShockWave Medical’s earnings per share estimates have improved from $1.84 to $2.57 for 2022 and from $2.82 to $3.42 for 2023 in the past 60 days. SWAV has gained 62.5% so far this year.

ShockWave Medical delivered an earnings surprise of 180.14%, on average, in the last four quarters.

Alkermes’ earnings per share estimates have improved from a loss of 17 cents to earnings of 20 cents for 2022 and from 31 cents to 50 cents for 2023 in the past 60 days. ALKS has gained 13.8% so far this year.

Alkermes delivered an earnings surprise of 325.48%, on average, in the last four quarters.

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