LAFAYETTE, La., June 07, 2016 (GLOBE NEWSWIRE) -- LHC Group (NASDAQ:LHCG) today announced that it has signed definitive purchase agreements with Professional Healthcare Resources (PHR) and East Arkansas Health Holdings. Because each of these companies is aligned with LHC Group’s focus on providing a tri-level of care to its markets, the transactions will enable the Company to acquire a number of locations providing home health, hospice or community based services. In aggregate, these locations produce annualized revenues of approximately $44 million, which consists of $23.3 million in home health revenue, $5.1 million in hospice revenue and $15.6 million in community based services revenue.
Subject to the completion of normal closing conditions, LHC Group expects to complete the purchase of PHR, headquartered in Annandale, Va., on August 1, 2016, and East Arkansas Health Holdings, headquartered in Little Rock, Ark., on July 1 2016. While the transactions are expected to have an approximately neutral impact on LHC Group’s 2016 earnings, excluding transaction costs, they are expected to be accretive to 2017 earnings per diluted share in an aggregate range of $0.15 to $0.25.
“We are very pleased to announce these two transactions, which strengthen our presence in Virginia, Maryland and Arkansas – and provide our initial presence in Washington, D.C. – with well-regarded organizations and outstanding teams,” said Keith G. Myers, LHC Group’s chairman and CEO. “These transactions are wholly consistent with our acquisition growth strategy, which seeks to leverage increasing consolidation pressures in a highly fragmented industry to purchase assets and acquire organizations that enhance our market position, increase our referral base and expand the breadth of services we provide. They also reflect our robust pipeline of potential transactions. Thus far in 2016, we have announced transactions generating annualized revenue of $60 million, putting us on pace to exceed our record year of 2014, which had nine announced transactions with annualized revenue totaling $105.5 million.
“The success of our acquisition strategy has increased the long-term potential of our organic growth strategy, which, for the first quarter of 2016, produced a record quarterly increase in organic revenues of 8.4%. We currently serve more than 900 counties in 25 states, less than 30% of which are primary markets with LHC Group locations in the county. In addition to our ability to increase market share in these primary markets, we have a substantial organic growth opportunity in our secondary markets, for which our average market share is about one-third of our average market share in the primary markets. While we are focused on growing this secondary market share through the increased capacity and capabilities provided by our point of care system and through de novo development, acquisitions such as we are announcing today increase our coverage of these markets, while also expanding our presence to new markets.”
With multiple locations serving Washington, D.C., Virginia and Maryland, PHR delivers a wide range of home healthcare solutions, such as skilled nursing, therapy, personal care services and hospice. PHR’s licensed service area covers a combined 16 counties in the Certificate of Need (CON) District of Columbia, the CON state of Maryland and the state of Virginia. The estimated population of the licensed service area is over 8.7 million with more than 1 million over 65 years of age. Estimated annualized revenue from this transaction is approximately $33.5 million. The transaction is expected to be accretive to LHC Group’s 2017 earnings per diluted share by between $0.10 and $0.15.
East Arkansas Health Holdings operates four home health locations, two hospice locations and a community based services location that serve 11 counties primarily in eastern Arkansas. The estimated population of the licensed service area is over 800,000 with more than 110,000 over 65 years of age. Estimated annualized revenue from this transaction is approximately $10.5 million and the transaction is expected to be accretive to LHC Group’s 2017 earnings per diluted share by between $0.05 and $0.10.
About LHC Group, Inc.
LHC Group, Inc. is a national provider of non-acute healthcare services, providing quality, cost-effective healthcare to patients primarily within the comfort and privacy of their home or place of residence. LHC Group provides a comprehensive array of healthcare services through home health, hospice, community-based services agencies and long-term acute care hospitals (LTACHs). At March 31, 2016, LHC Group operated 284 home health services locations, 61 hospice locations, 11 community-based service locations and six LTACHs with eight locations.
Certain matters discussed in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements about the Company’s future financial performance and the strength of the Company’s operations. Such forward-looking statements may be identified by words such as “continue,” “expect,” and similar expressions. Forward-looking statements involve a number of risks and uncertainties that may cause actual results to differ materially from those expressed or implied by such forward-looking statements, including changes in reimbursement, changes in government regulations, changes in LHC Group’s relationships with referral sources, increased competition for LHC Group’s services, increased competition for joint venture and acquisition candidates, changes in the interpretation of government regulations and other risks set forth in Item 1A. Risk Factors in LHC Group’s Annual Report on Form 10-K for the year ended December 31, 2015, filed with the Securities and Exchange Commission. LHC Group undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.