Dive Brief:
- UnitedHealth expects its acquisition of home health and hospice provider LHC Group to close in the first quarter of 2023 after facing antitrust scrutiny, according to a Tuesday SEC filing.
- UnitedHealth in March said it planned to acquire LHC for $5.4 billion in a bid to provide more integrated care. Originally, the companies expected the deal to close in the second half of 2022. However, the Federal Trade Commission in June extended its period to challenge the acquisition by requesting additional data from the companies.
- UnitedHealth and LHC certified their compliance with the request on Tuesday, with LHC also extending the termination date for the acquisition to March 28, according to the 8-K filing.
Dive Insight:
Antitrust regulators have been a thorn in the side of UnitedHealth’s M&A plans this year.
The Minnesota-based healthcare giant, which owns the biggest private payer in the U.S., expected to close its $13 billion acquisition of data analytics firm Change Healthcare earlier this year, but the the Department of Justice halted the deal over anticompetitive concerns in February.
UnitedHealth closed the deal in October after a judge ordered that the deal could go through. However, the DOJ announced in November that it was appealing the purchase.
To make matters trickier, the FTC sent warning letters to merging entities last year, warning them that the agency could deem combinations unlawful even after decisions to merge due to a “tidal wave” of merger filings.
Meanwhile, the FTC delayed UnitedHealth’s acquisition of LHC earlier this year by requesting additional information and documentation from the companies. The request extends the acquisition waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 until the 30th day after “substantial compliance” with the request, which the companies said they fulfilled on Tuesday.
As a result, UnitedHealth’s buy of LHC for $170 a share could close as early as January 6.
Interest in home health has been skyrocketing as the U.S. faces an aging population. LHC is a major player in the home health space, with more than 960 locations in 37 states and $2.2 billion in revenue last year.
When the deal was announced, analysts said that acquiring home health assets made sense for large Medicare Advantage insurers, allowing them to track patients’ health conditions and coordinate in-home care.
MA is a growth area for UnitedHealth. The company expects to add between 600,000 to 650,000 MA enrollees in 2023, up 9% year over year, management said at its investor day late November.
UnitedHealth plans to integrate Louisiana-based LHC into Optum, its health services arm. UnitedHealth has been leaning heavily on its Optum business for expansion and revenue diversification.
Last year, the division — which already works with 100 health plans — added 100,000 medical practices, making it the biggest physician employer in the U.S.
UnitedHealth expects to bring in up to $360 billion in revenue next year, driven by Optum growth, management said during its investor day late November.
