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UnitedHealth Announces The Purchase Of LHC For $5.4 Billion

By Cristian Bustos. Originally published at ValueWalk.

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UnitedHealth Group Inc (NYSE:UNH) is set to buy LHC Group Inc (NASDAQ:LHCG) for $5.4 billion, a move that sees the health care giant expand its Optum Health business. The rise of home-based care during the pandemic has played a key role in the acquisition.

Deal

As reported by CNBC, UnitedHealth announced Tuesday it is set to pay $170 for each share outstanding and expects to finalize the deal in the second half of the year. At present, UnitedHealth operates the largest health insurer in the U.S., while LHC operates primary care clinics and surgery centers.


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The price is an 8.1% premium to $157.23, the closing price reported on Monday. While the deal is on, regulators and LHC stakeholders will have to approve the purchase.

With 31.7 million shares outstanding as of February 21, the per-share bid LHC implies a market capitalization of $5.56 billion, according to MarketWatch.

Optum Chief Executive Wyatt Decker said, “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.”

Rising Home Care Business

The move takes place amid the significant growth of home care in the U.S. as COVID-19 prompted health insurers and other payers to focus on this type of service. Further, the rising geriatric population and increasing incidence of dementia, Alzheimer’s, and orthopedic conditions are drivers behind market growth.

Long and expensive hospital stays for patients can now be replaced with home care given the leaping developments in technology and patient monitoring.

According to a Grand View Research, “The healthcare industry witnessed a shift in trends towards home healthcare as compared to hospital care due to revised norms with regards to the COVID-19 pandemic.”

“The awareness for home healthcare services increased in 2020 as these services are safer and cost-effective alternatives to hospital services. Also, service providers are expanding their portfolio by offering services, such as at-home COVID-19 testing.”

Shares of LHC Group hopped 7% in premarket trading.

Updated on

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