(Reuters) - Private equity firm TPG Capital LP is considering making an offer for LHC Group Inc (LHCG.O) as the provider of home health and hospice services reviews its strategic alternatives, two people familiar with the matter said.
“Private equity makes more sense at this point. You take the company private and deal with the regulatory and reimbursement headwinds in the next couple of years,” said Kevin Ellich, senior research analyst at Piper Jaffray & Co.
TPG approached LHC after it announced last month that it had appointed J.P. Morgan Securities LLC (JPM.N) 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 shares rose as much as 8 percent early Wednesday on the news.
LHC, which has a market capitalization of about $360 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 home-care 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 peers Almost Family (AFAM.O), Gentiva Health GTIV.O and Amedisys Inc (AMED.O) have been hit by a series of setbacks, including reimbursement cuts, federal investigations into billing practices and new Medicare regulations.
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 73 cents in 2011.
Reporting by Greg Roumeliotis in New York; Editing by Lisa Von Ahn, Dave Zimmerman