Home health provider LHC Group in Lafayette will acquire Louisville, Kentucky-based Almost Family in an $850 million stock deal, nearly doubling the size of LHC to 781 locations in 36 states and $1.8 billion in revenue.
LHC also said it expects to add about 500 new jobs in Lafayette over the next five years. The company is building a 90,000-square-foot addition next to its headquarters to house those workers. The acquisition will somewhat accelerate those plans, although those arrangements were in the works before the Almost Family deal, said LHC Chairman and Chief Executive Officer Keith Myers.
The deal makes LHC Group the second-largest publicly traded home health company in the country on the basis of revenue for the 12 months ending Sept. 30. Louisville-based Kindred at Home was No. 1 at $2.5 billion. Baton Rouge-based Amedisys Inc. was No. 2 at $1.5 billion in revenue. However, Amedisys is still larger than LHC in terms of patients seen each year, 385,000-plus to LHC and Almost's 290,000-plus.
LHC expects to avoid three major risks that caused less-than-smooth transitions for previous large health care mergers, Myers said. The deal brings together companies with similar corporate cultures, involves very little borrowing and has very little overlap among locations.
"All of those things combined to just bring the risk profile way down for me and get us across this line. Again, I can't think of another large transaction that would work for us," Myers said.
Myers made his comments during a Thursday conference call with investors and stock analysts.
The deal offers other advantages for LHC, he said. It gives LHC the national reach and scale needed to work with payers in major markets.
A greater range of services and larger footprint, not to mention both companies' track record with joint ventures, will make LHC the preferred in-home provider and joint venture partner for hospitals and health systems, he added.
In addition, LHC will be able to leverage Almost Family's expertise in personal care services, which is larger and more extensive, to drive growth nationwide, he said. LHC will be able to use its expertise in the hospice segment to grow that business in the areas served by Almost Family. LHC has nearly six times as many hospice locations as Almost Family.
Myers will head the combined company. Donald Stelly will be named president and chief operating officer and Joshua Profitt will be chief financial officer.
On the Almost Family side, Chairman and CEO William Yarmuth will become an adviser, and President Steve Guenthner will be named LHC's chief strategy officer.
The deal came together after a conversation this summer about Medicare's proposed for-home health payments, Myers said. The acquisition had nothing to do with the proposed payments, but that topic led Myers and Yarmuth to revisit earlier conversations about combining the companies.
Yarmuth said it took about a week to make the decision.
"It didn't take long to say, 'Let's see if we could make it work,'" Yarmuth said. "Then that took a little longer."
Combining forces made sense, Yarmuth said. Putting the deal together quickly also was important because delaying would have cost the combined company opportunities.
Under the deal, LHC will exchange 0.915 shares of its stock for each share of Almost Family. LHC shareholders will end with 58.5 percent of the combined company, while Almost Family shareholders will own 41.5 percent.
LHC's corporate headquarters will remain in Lafayette. Personal Care Services, Healthcare Innovations and other support services will continue to operate out of Louisville.
LHC is a growth company and has been acquiring hospital joint ventures and post-acute care services around the country, Myers said. As the company's footprint expands, so does the need for support services in Lafayette.
"People are assuming we're moving 500 jobs from Louisville to Lafayette. That's just not the case," Myers said.
LHC had 449 locations in 27 states and 14,509 employees as of Sept. 30. The company provides care for more than 150,000 patients a year and had $1.02 billion in revenue for the 12 months ending Sept. 30. Almost Family had 332 locations in 26 states and 16,900 employees. Almost Family provides care to more than 140,000 patients a year and had $750 million in revenue for the 12 months ending Sept. 30.
In comparison, rival Amedisys Inc. in Baton Rouge has 425 care centers in 34 states and the District of Columbia, 17,000-plus employees, 385,000-plus patients and $1.5 billion in annual revenue.