(Reuters) -UnitedHealth Group said on Tuesday it would buy LHC Group (NASDAQ:LHCG) for about $5.4 billion in cash, as the largest U.S. health insurer expands its home health services.
The deal will combine the provider of healthcare services at home, mainly for older patients dealing with chronic illness and injuries, with UnitedHealth (NYSE:UNH)'s Optum unit, which manages drug benefits and offers healthcare data analytics services.
Demand for home healthcare over clinic-based services has increased in the United States, especially during the COVID-19 pandemic as patients and caregivers increasingly prefer to access vital services from the safety of their homes.
The deal comes a month after the U.S. Justice Department sued to stop UnitedHealth's $8 billion acquisition of billing and payment services provider Change Healthcare (NASDAQ:CHNG), saying the deal would give the health insurer access to its competitors' data.
UnitedHealth will pay $170 for each share of LHC Group, representing an 8.12% premium to the stock's last close.
Shares of LHC climbed 7.5% and were trading just shy of the offer at $168.70 before the opening bell, while those of UNH rose marginally.
UnitedHealth expects the LHC deal to be neutral to its outlook for adjusted profit per share in 2022 and modestly add in 2023. LHC Group co-founders Keith and Ginger Myers will invest $10 million in the health insurer's stock, following the close of the deal.
Last year, health insurer Humana (NYSE:HUM) acquired the remaining 60% stake it did not own in home health provider Kindred at Home for $5.7 billion to expand its patient care business.
SVB Leerink and Jefferies LLC served as financial advisers to LHC Group.