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Increased Labor Costs Hinder LHC Group

For LHC Group Inc. (Nasdaq: LHCG), its plan to mix with UnitedHealth Group’s (NYSE: UNH) Optum remains to be the large headline.

All of the whereas, the corporate remains to be navigating by means of the identical residence well being care panorama that its friends are.

Again in March, UnitedHealth Group introduced that it will purchase the Lafayette, Louisiana-based firm for the worth tag of $5.4 billion. The deal is valued at nearer to $6 billion, together with debt.

Upon completion of the deal, LHC Group would mix with Optum, a technology-enabled well being providers firm.

LHC Group delivers residence well being, hospice, and home- and community-based providers, in addition to facility-based care, throughout 37 states and the District of Columbia. It employs about 30,000 people.

So far as the corporate’s efficiency this quarter, it skilled labor market headwinds. Greater wages, sign-on and retention bonuses and elevated new rent prices are among the elements that contributed to this.

Particularly, residence well being salaries and wages value per go to — inclusive of sign-on and retention bonuses — spiked by 8.1% in Q2 in comparison with Q2 2021.

“These pressures haven’t solely resulted in vital year-over-year value will increase, however have additionally created capability constraints in sure markets,” LHC Group wrote within the supplemental info it made out there for buyers.

These challenges have additionally impacted natural progress in admissions for residence well being, which decreased 4.3% for Q2 in comparison with the identical interval final yr.

Nonetheless, natural progress in admissions for hospice grew 5.5% yr over yr in Q2.

Rising the corporate’s episodic payer combine is high of thoughts at LHC Group. The corporate’s non-Medicare episodic common every day census elevated by 16.7% in Q2 in comparison with Q2 2021.

Moreover, LHC Group joined forces with different residence well being stakeholders to deal with the unfavorable proposed cost rule.

“The house well being trade, together with LHC Group, acted rapidly by means of its associations and different well being care companions to suggest laws mitigating this adjustment and engaged CMS by difficult its methodologies proposed on this rule,” the corporate wrote. “These efforts resulted within the submitting of laws in Congress on July 25 and July 26 which might freeze for 3 years the power of CMS to make behavioral changes in residence well being charges.”

Total, the corporate’s web service income elevated by 5.5% to $576.2 million. Final yr throughout the identical interval, the corporate’s income checked in at $545.9 million.

When it comes to section outcomes, residence well being web service income for Q2 was $392.7 million. Hospice web service income for the quarter was $102.6 million.

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