TPG Eyes LHC

(Reuters) – Private equity firm TPG Capital LP is considering making an offer for LHC Group Inc as the provider of home health and hospice services reviews its strategic alternatives, two people familiar with the matter said.

TPG approached LHC after it announced last month that it had appointed J.P. Morgan Securities LLC to advise it on its options, the people said. This, however, may not necessarily result in an offer being made, they cautioned.

TPG declined to comment, while a spokesman for LHC did not respond to a request for comment.

LHC, which has a market capitalization of $345 million, said on February 14 that it had begun a strategic review process to enhance stockholder value and that it had not set a definitive timetable for completion of the process.

The homecare industry is benefiting from long-term demographic drivers, as more people live longer and require chronic care for more time.

But LHC Group, as well as its peers Almost Family, Gentiva Health and Amedisys Inc have been hit by a series of setbacks, including reimbursement cuts, federal investigations into billing practices and new Medicare regulations.

LHC currently trades at 5.8 times enterprise value to 12-month estimated earnings before interest, taxes, depreciation and amortization — a measure of how investors value it — compared with 5.9 times for Almost Family and Gentiva and 4.8 times for Amedisys, according to Thomson Reuters Starmine.

Founded in Louisiana in 1994, LHC serves over 80,000 patients annually in 19 U.S. states. It has given guidance for fully diluted 2012 earnings per share in the range of $1.45 to $1.65, up from a diluted loss per share of $0.73 in 2011.

(Reporting by Greg Roumeliotis in New York; Editing by Lisa Von Ahn, Dave Zimmerman)