UNH UnitedHealth Group Inc

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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