LHC Group, Inc. (NASDAQ:LHCG), a national provider of comprehensive post-acute healthcare services, announced today that it has entered into a definitive agreement to acquire Halcyon Hospice LLC for approximately $58.5 million in cash. As a result of the acquisition, LHC Group expects to receive a step up in tax basis, resulting in anticipated cash tax savings to LHC Group over the next 15 years, the net present value of which is approximately $7 million. Therefore, the adjusted purchase price, net of tax benefits, is $51.5 million. The transaction, which has been approved by the Boards of Directors for both companies, is expected to close on or around October 1, 2015, subject to certain customary closing conditions.
Halcyon was founded in 2010 by Dan Kohl and Jack Draughon with a private equity partner. Based in Cumming, Georgia, Halcyon is one of the largest independent providers of hospice services in the southeastern United States. It operates 16 hospice locations across three states, including two inpatient hospice facilities, and has approximately 400 employees. Halcyon’s service area covers 183 counties across Georgia, Mississippi and South Carolina, including 59 counties in which LHC is licensed for home health. Annual revenue for Halcyon is approximately $41 million. Upon completion, this acquisition will increase LHC’s hospice service line to 53 locations in 12 states with over $110 million in annual revenue.
This acquisition is anticipated to be dilutive to LHC Group’s fourth quarter 2015 earnings per share by approximately $0.06 due to transaction and integration costs, but accretive to LHC Group’s 2016 earnings by between $0.15 and $0.20 per diluted share. LHC Group is raising its full year 2015 guidance for net service revenue to a new range of $800 million to $815 million from the previous range of $780 million to $795 million and is reaffirming its 2015 fully diluted earnings per share in the range of $1.70 to $1.80 to incorporate the impact from this transaction.