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LHC Group (LHCG) Ties Up to Improve Home Health Services

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LHC Group, Inc. recently inked a deal with Archbold Medical Center to form a new joint venture to boost home health services in Thomasville, GA and across the greater region. This joint venture will include two locations catering to Thomas, Brooks, Grady, Colquitt, Mitchell, Decatur, and Seminole counties, thereby expanding the LHC Group service area to five additional counties.

It is worth mentioning that the joint venture agreement will be finalized on May 1 (subject to customary closing conditions), and at this time, LHC Group will purchase majority ownership and take on management responsibility. In fact, the company projects incremental annualized revenues from this joint venture of around $5 million, although this deal will not materially impact its adjusted earnings per share.

This transaction is likely to provide a substantial boost to the company’s home health business line.

Significance of the Collaboration

Archbold Medical Center is a four-hospital, three-nursing-home health system equipped with 540 patient beds.

Hospital and home health partnerships aid in providing patient-centered care in the comfort of the patient's home or place of residence. These collaborations are crucial in helping patients manage their conditions, avoid unnecessary hospital readmissions, and get the best possible health outcomes in a cost-effective way.

Per management at LHC Group, this deal will help the company to collaborate with an exceptional partner that can extend the availability of in-home healthcare services in Thomasville and throughout South Georgia.

Market Prospects

Per a report by Grand View Research, the global home healthcare market was worth $299 billion in 2020 and is anticipated to witness a CAGR of 7.9% from 2021 to 2028. The rising geriatric population and growing incidence of target diseases and orthopedic diseases are factors that are likely to drive this market’s growth.

Recent Development

In February, the company reported its fourth-quarter and full-year 2021 results. Apart from reporting revenue growth, the company witnessed organic growth in home health admissions.

Some other companies in the broader medical space that have been involved in partnerships are DaVita Inc. (DVA - Free Report) , Baxter International Inc. (BAX - Free Report) and Pacific Biosciences of California, Inc. (PACB - Free Report) .

This month, Baxter announced a long-term strategic partnership with Digital Diagnostics to advance diabetic retinopathy detection. The tie-up is aimed at helping front-line care providers deliver better quality of care and improve care outcomes.

In January, DaVita Integrated Kidney Care (“DaVita IKC”), which is an integrated care division of DaVita’s subsidiary DaVita Kidney Care, introduced 11 value-based care programs throughout the United States. These programs have been launched in collaboration with around 1,000 kidney doctors, transplant providers, hospice providers and advanced care practitioners.

Also, in the same month, Pacific Biosciences of California, Inc., also popularly known as PacBio, partnered with Care4Rare Canada Consortium (“Care4Rare”) to study some of the most complicated unexplained rare disease cases within Canada. It is worth mentioning that the study will utilize PacBio’s HiFi long-read whole genome sequencing (WGS) technology to learn about rare disease samples, already sequenced with short-read WGS technology, but for which no genetic variant was found.


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