Healthcare Business News

LHC Group continues expansion of home health business

By Bob Herman
Posted: July 16, 2014 - 12:45 pm ET

LHC Group has agreed to buy the assets of 14 home health agencies as the post-acute-care provider continues an aggressive acquisition strategy.

The Lafayette, La.-based, publicly traded company forged an agreement Tuesday with Life Care Home Health, the home health division of Life Care Centers of America, based in Cleveland, Tenn. For $10 million in cash, LHC will take control of Life Care's home health agencies, which are scattered across seven states.

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LHC—and other large home health providers—has turned to consolidation as a way to offset declining Medicare payments. The CMS pitched reducing Medicare rates to home health providers by 0.3%, or $58 million in 2015, one year after rates dropped by 1.1%, or $200 million. The CMS expects to cut home health payments by $22 billion through fiscal 2017.

In 2013, Medicare represented almost 80% of LHC's net service revenue.

Most recently, LHC completed a $60 million deal to acquire Deaconess HomeCare, adding 32 post-acute facilities to its ranks. Adding in other smaller deals and the Life Care transaction, LHC will operate 352 locations in 30 states.

LHC recorded a 35% drop in profit in the first quarter of this year, realizing $4 million on $163.7 million in revenue. The company expects full-year revenue will be between $700 million and $720 million.

Follow Bob Herman on Twitter: @MHbherman

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