LHC Group Inc. (Nasdaq: LHCG) has entered into a definitive agreement to acquire the home health service line of Addus HomeCare Corp. (Nasdaq: ADUS) in a deal valued at $20 million. The transaction is expected to close on or about Feb. 28.

The acquisition includes 19 home health agencies and two hospice agencies in five states. When the transaction is complete, LHC Group, a national provider of post-acute care, will operate more than 300 locations in 23 states nationwide.

In a press release, LHC Group says it will acquire 100 percent of the assets of three home health agencies in Arkansas, one home health agency and two hospice agencies in South Carolina and one home health agency in Nevada. It is buying 90 percent of the assets of eight home health agencies in Illinois and six in California, with Addus retaining a 10 percent ownership interest in those locations. Both Arkansas and South Carolina are certificate of need states.

The local company notes that the estimated 65 and older population in the acquired service area totals 2.6 million. Annual revenue is approximately $36.7 million.

Mark Heaney, president and CEO of Addus HomeCare, said in the release that in November Addus announced its intention to explore strategic alternatives relative to its home health business. In June LHC Group said that it had decided to stay on course with its operating plan after concluding a similar strategic review.

“The health care landscape is undergoing massive and rapid change as a result of health care reform and the economic imperative that we adopt new and more effective methods for serving the health care needs of those most at risk,” Heaney said. “States across the country are moving quickly to implement managed care models to serve over nine million primarily older persons— the dual eligible population — who consume a disproportionately high percentage of our nation’s health care resources. This transaction enables Addus to focus entirely on our home and community business and, along with our demonstrated expertise in this sector, positions us to benefit significantly from the enormous opportunity to serve this large and growing high-cost population.”

The transaction is subject to customary closing conditions. Both parties noted that there can be no assurance that the transaction will be completed.

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