Lafayette-based home health and hospice provider LHC Group announced Monday that it has concluded its strategic review and will stay the course on its operating plan, including the possibility of repurchasing up to $50 million of its outstanding common stock with cash on hand or borrowings under existing or new debt facilities.
The process, which the company commenced in November 2011 shortly after settling a dispute with the feds over its billing practices, involved an objective review of all strategic alternatives for the company, including execution of its operating plan for 2012 through 2016. Such reviews also typically involve the possibility a company will put itself on the sale block.
In February the company announced the review in a public statement and said it had hired J.P. Morgan Securities LLC to advise it on its options.
Citing unnamed sources, Reuters reported in March that private equity firm TPG Capital LP was considering making an offer for LHC Group:
“Private equity makes more sense at this point,” said Kevin Ellich, senior research analyst at Piper Jaffray & Co. “You take the company private and deal with the regulatory and reimbursement headwinds in the next couple of years.”
TPG approached LHC after it announced last month that it had appointed J.P. Morgan Securities LLC (JPM.N) to advise it on its options, the people said. This, however, may not necessarily result in an offer, they cautioned.
It's unclear whether talks between the two entities ever materialized, but LHC Group now says it will stay the course it was on before undertaking the review. As a result of the analysis, its board of directors unanimously decided that the best opportunity to enhance shareholder value is for the company remain an independent public corporation.
LHC Group and its home health competitors have been hit hard by reimbursement cuts and federal investigations into their billing practices.
Shares of LHC Group (LHCG) closed at $17.93 Friday on the Nasdaq and were down 94 cents by noon today.
“We engaged in this evaluation from a position of strength and, with the assistance of our legal and financial advisers, carefully considered various alternatives,” Keith G. Myers, LHC Group’s chairman and chief executive officer, said in announcing the conclusion of the review process. “This thorough process has affirmed our belief in the long-term value of our company based on our proven ability to grow through our industry-leading model for hospital partnerships, to improve efficiency by leveraging technology and to control overhead costs.
“Following this review by our board, our management team will continue to execute our operating plan to maximize value for our shareholders and customers. Our strong balance sheet allows us to invest in areas we believe will enhance shareholder value such as acquisitions and stock repurchases.”
The stock repurchase program does not obligate the company to acquire a minimum amount of common stock and can be modified, suspended, terminated or extended by the company at any time.