Dive Brief:
- Home health and hospice provider Amedisys has agreed to be acquired by UnitedHealth’s Optum for $101 a share in cash, ending a previous merger agreement with Option Care Health, the company announced Monday.
- Earlier this month, Amedisys announced an unsolicited acquisition offer from Optum for $100 a share, leading to exploratory negotiations with the UnitedHealth unit even as Amedisys was in the midst of a merger pact with Option.
- The deal, which comes out to about $3.3 billion and is subject to shareholder and regulatory approval, is likely to face antitrust scrutiny despite minimal geographic overlap between Amedisys and existing UnitedHealth home health business LHC Group, analysts said.
Dive Insight:
Although Monday’s press release provided few details on the merger’s rationale, UnitedHealth has been focused on beefing up its provider capabilities, especially in home and community-based care.
The deal represents UnitedHealth’s second purchase of a home health and hospice company after buying LHC for $5.4 billion, as the integrated healthcare giant looks to capture revenue from medical care increasingly delivered outside of hospitals.
Providing convenient, high-quality care at a lower cost could prove lucrative as the U.S. population ages, which should increase demand for home-based care models. In addition, reimbursement for seniors remains high in programs like Medicare Advantage. UnitedHealth is the biggest MA plan provider in the country.
“Amedisys’ commitment to quality and care innovation within the home, and the patient-first culture of its people, combined with Optum’s deep value-based care expertise can drive meaningful improvement in the health outcomes and experiences of more patients at lower costs, leading to continued growth,” Patrick Conway, CEO of Optum Care Solutions, said in a statement along with its initial offer in early June.
Amedisys’ original all-stock deal with Option valued the company at about $3.6 billion, indicating a roughly $97 per share value for the Louisiana-based provider at the time. After Amedisys received Optum’s offer, Option argued its offer still delivered value due to the combined company’s scale.
However, “given this was the offer with the higher price tag [near-term] (not considering long-term value creation and positive stock movement [with Option]), the final result doesn't come as a surprise,” Jefferies analyst Brian Tanquilut wrote in a note on the deal.
Amedisys will pay Option $106 million to terminate their agreement, according to a Monday filing with the SEC.
Option, a provider of home and alternate site infusion services, is unlikely to enter a bidding war over Amedisys, given UnitedHealth’s deep pockets, according to Tanquilut.
"While we are disappointed in this outcome, Option Care Health has a long track record of delivering value for our shareholders," Option CEO John Rademacher said in a release. "We take a disciplined approach to acquisitions and, as we evaluated our options, we applied this discipline to ensure we continue to create value for all of our key stakeholders."
Antitrust scrutiny in healthcare deals has risen during the Biden administration, as federal and state regulators take a tougher stance on mergers as healthcare prices continue to rise. UnitedHealth has been subject to scrutiny, after regulators asked for more data on its LHC deal and sued to block its 2022 acquisition of Change Healthcare. The deals went through in both cases.
“We think this deal will get a second request given the government's recent focus on UNH's acquisition history,” Tanquilut wrote. “We could see potential divestitures in a few select markets.”
