UnitedHealth Buy of LHC Group Seen as a 'Nice Fit' by Mizuho
March 29 2022 - 1:15PM
Dow Jones News
By Chris Wack
UnitedHealth Group Inc.'s deal to buy LHC Group Inc. for about
$5.4 billion in cash got the thumbs up from analysts at Mizuho
Securities USA, saying the merger would bolster UnitedHealth's
OptumCare business.
UnitedHealth shares hit their 52-week high of $519.59 on
Tuesday, and were trading just about flat at $509.01 at 12:20 p.m.
ET. LHC Group shares were trading up 6% to $166.48.
Mizuho said in a note that the LHC Group deal is a "nice bolt-on
strategic fit" for OptumCare, a part of the OptumHealth business,
and is intended to enhance the company's home-healthcare
capability.
The analysts expect the deal to be accretive to 2023 earnings by
about 1%, while UnitedHealth said the deal would be neutral in
2022, and moderately accretive in 2023.
Mizuho estimates that LHC Group will contribute 3% to 4% of
total OptumHealth revenue after the combination and about 5% of
total OptumHealth operating profit.
Mizuho said the combination with LHC Group is expected to
enhance OptumCare's home-based care and hospice capabilities, and
strengthen UnitedHealth's value-based care model.
The analyst reiterated its Buy rating of UnitedHealth, with a
price target of $550 a share.
Write to Chris Wack at chris.wack@wsj.com
(END) Dow Jones Newswires
March 29, 2022 13:00 ET (17:00 GMT)
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