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LHC Group and Almost Family Announce Merger of Equals to Create Leading National Provider of In-Home Healthcare Services

LAFAYETTE, La. and LOUISVILLE, Ky., Nov. 16, 2017 (GLOBE NEWSWIRE) -- LHC Group, Inc. (NASDAQ:LHCG) and Almost Family, Inc. (NASDAQ:AFAM) announced today that they have agreed to combine in an all-stock merger of equals transaction pursuant to a definitive merger agreement unanimously approved by the Boards of Directors of each company. 

The merger will create a nationwide provider of in-home healthcare services with a long track record of successfully partnering with hospitals and health systems led by the most experienced management team steeped in home health. The combined company will have 781 locations in 36 states with more than 31,000 employees and revenue of $1.8 billion and Adjusted EBITDA of approximately $145 million for the trailing 12-month period ended September 30, 2017.

Compelling Strategic Rationale

  • Industry Leadership: Creates the leading in-home healthcare company in the United States, with a large, national footprint and diversified lines of service as well as Centers for Medicare & Medicaid Services (CMS) Star ratings that outpace the industry. The combined company is well-positioned to lead the industry’s transition to value-based reimbursement and highly coordinated care. 
     
  • Accelerated Growth: The creation of a comprehensive in-home healthcare solution with home health, hospice and personal care services sets the stage for new channels of organic growth throughout the existing footprint. The combined company will be positioned as the preferred in-home healthcare partner to current and potential hospital joint venture partners as well as referral sources. A significant pipeline of joint ventures, extensions of existing relationships and acquisitions is expected to accelerate revenue growth. 
     
  • Immediate Accretion: The merger is expected to be immediately accretive to adjusted earnings per diluted share for both companies, and to generate identified pre-tax run-rate cost synergies of $25 million.
     
  • Balance Sheet Flexibility: Combined gross leverage is expected to be 1.5x based on combined trailing 12-month 2017 Adjusted EBITDA as of September 30, 2017, pro forma for $25 million in cost synergies, which provides additional capacity to pursue new acquisition opportunities.
     
  • Strong Cultural Fit and Shared Vision: A history of senior leadership collaboration within the in-home healthcare industry and a shared vision to shape the evolution of the U.S. healthcare delivery system to value-based reimbursement set the stage for an integration of naturally synergistic organizations. The ability to leverage technology to extend scale and share best practices among two industry leaders in quality and patient satisfaction creates a localized provider with an unrivaled commitment to delivering patient-centered care in the home.
     
  • Industry Leading Management Team: The combined company is led by a management team with strong operational expertise, a proven track record of developing joint ventures with leading hospitals and health systems and a history of successful, efficient capital deployment.

Transaction Details
Under terms of the transaction, Almost Family shareholders will receive 0.9150 shares of LHC Group for each existing Almost Family share. Upon closing of the transaction, LHC Group shareholders will own 58.5% and Almost Family shareholders will own 41.5% of the combined company. The stock issuance in the merger is expected to be tax-free to shareholders of both companies. The transaction, which is expected to be completed in the first half of 2018, is subject to the receipt of regulatory approvals and other customary closing conditions as well as the approval of shareholders of both LHC Group and Almost Family.

The combined company will continue to trade on NASDAQ under the ticker symbol, “LHCG.” William Yarmuth, current chairman and chief executive officer of Almost Family, will remain as a special advisor to the combined company, while Steve Guenthner, current president and principal financial officer of Almost Family, will be named chief strategy officer. Keith Myers, current chairman and chief executive officer of LHC Group, will be named chairman and chief executive officer of the combined company, while Donald Stelly will be named president and chief operating officer and Joshua Proffitt will be named chief financial officer. The Board of Directors will be comprised of ten members, six of which (including Mr. Myers and Lead Independent Director Billy Tauzin) will be current LHC Group directors and four of which will be Almost Family directors. The combined companies’ Home Office will remain in Lafayette, La., and Personal Care Services, Healthcare Innovations and other support services will continue to operate out of Louisville, Ky.

Commenting on the announcement, Keith G. Myers, LHC Group’s chairman and CEO, said, “William Yarmuth and I have worked closely together on many of the important issues our industry has faced over the years, including the most recent home health advocacy with CMS, Office of Management and Budget and Congress. Almost Family shares our vision for making a difference in the communities we serve by delivering quality, outcomes-focused, patient-centered care to the most vulnerable in society. This merger is truly a transformative event for both our companies and our patients nationwide and a unique opportunity to bring more than 30,000 dedicated and talented employees together to lead the in-home healthcare industry’s transition to value-based reimbursement and highly coordinated care.”

William B. Yarmuth, Almost Family’s chairman and CEO, added, “In my opinion, we are combining two of America’s most successful home healthcare companies to create what will be the best-run, best-positioned in-home healthcare company in America.  The complementary nature of our two firms provides incredible fit, adding clinical, operational and financial strength, and depth without any meaningful conflicts or overlaps in management, geography, and service capabilities.  I believe the combined company will have the management team with the broadest and deepest experience of all the national in-home healthcare providers.

“By combining the best of both our long track records of success and patient-focused cultures, we will be able to accomplish much more together than either of us could possibly achieve alone.  I am extremely proud of the work we’ve done, the progress we’ve made, and the tremendous prospects for our future together. I look forward to working with Keith and the rest of the management team in the continued evolution of these companies.”

Jefferies LLC is serving as financial advisor to LHC Group and Alston & Bird LLP is serving as its legal advisor. Guggenheim Securities, LLC is serving as financial advisor to Almost Family and Gibson, Dunn & Crutcher LLP is serving as its legal advisor.

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