LHC Group Remains an Active M&A Buyer Following Optum Deal

LHC Group has acquired Delaware-based Summit Home Care for an undisclosed sum, signaling that the company will remain active on the M&A front following Optum Health’s recent $5.4 billion buyout. 

Optum, a subsidiary of UnitedHealth Group (NYSE: UNH), closed the LHC Group transaction in February and has since been quiet on its plans for its new asset — aside from general statements about expanding its home-based care capabilities.

“LHC Group’s history of high-quality home and community-based care, matched with Optum’s extensive value-based care experience and resources, will accelerate Optum’s ability to deliver compassionate, high-touch, integrated care,” LHC Group indicated in an SEC filing. “As demand for care in the home increases, this combination will help elevate the health care experience for the people Optum and LHC Group serve, prioritizing quality and seamless coordination that reduces fragmentation and complexity.”

LHC Group delivers hospice, home health, home- and community-based services, and facility-based care to seniors in 37 states and the District of Columbia.

The Summit transaction is the first sign that LHC Group is still in the M&A game following the Optum deal.

Historically a major buyer in the space, this could signal a resurgence in activity for the Louisiana-based provider, particularly as the volume of private equity deals starts to slump due to rising interest rates and other factors.

PE firms tend to finance their acquisitions by taking on debt, meaning that the flow of dollars may slow as borrowing gets more expensive. Q4 2022, for example, saw the slowest volume of PE acquisitions since late 2017, the M&A advisory firm Mertz Taggart reported.

Beyond inflation, one contributing factor is the limited number of large platforms that are ripe and ready for sale. This likely means that smaller and mid-size deals, like LHC Group’s Summit purchase, will likely be the most prevalent type of transaction in 2023.

Headquartered in Delaware, Summit Home Care provides a range of home-based services, including skilled nursing, physical, speech and occupational therapies, as well as medical social services. M&A Healthcare Advisors represented Summit in the deal.

UnitedHealth Group is positioning Optum as a cornerstone of its growing home-based care infrastructure and expansion of value-based service delivery.

The Minnesota-based insurance colossus has deployed billions in capital to fortify Optum’s capabilities through a number of high-profile acquisitions, including LHC Group and the health care tech firm Change Healthcare.

“We know that at-home care settings — especially for people with mobility challenges and highly complex health needs — can improve outcomes, elevate patient experience and result in better care,” UnitedHealth Group CEO Andrew Witty said in an earnings call. “So we bring together teams with medical, behavioral, and palliative experience in addition to our home infusion capabilities of OptumRx. By doing so, we help patients and their families keep multiple chronic conditions in check while significantly reducing the need for care in acute and post-acute settings — really positive for them.”