The UnitedHealth Group (NYSE: UNH) subsidiary Optum has penned a deal to acquire Amedisys (NASDAQ: AMED) in an all-cash transaction of $101 per share, or about $3.3 billion.
The pending transaction followings a previous offer to aquire Amedisys by the home infusion company Option Care Health (NASDAQ: OPCH) for $3.6 billion.
“We are excited about this opportunity with Optum – it’s a win for everyone, especially patients who need our services,” Amedisys CEO Richard Ashworth said in a video sent to employees, according to a transcript. “Combining our home health, hospice, palliative, and high-acuity care services with Optum’s value-based care experience and resources will accelerate Amedisys and Optum’s shared mission to serve more patients and improve outcomes and patient experiences at lower costs.”
The agreement with Optum terminates Amedisys’ prior deal with Option Care, which was announced on May 3. The contract between those two companies contained a “Superior Proposal Clause” that enabled the home health and hospice provider to pull out if they received a better offer.
The Option Care deal would have been an all-stock transaction equivalent to $97.38 per Amedisys share, including the assumption of net debt. On June 5, Optum made its own bid of $100 in cash per share, which has increased to $101, according to today’s announcement.
Under the terms of their agreement, Option Care would receive a $106 million “breakup” fee if Amedisys pulled out of the deal.
“While we are disappointed in this outcome, Option Care Health has a long track record of delivering value for our shareholders,” John C. Rademacher, president and CEO of Option Care, said in a statement. “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.”
The decision to go with Optum is unlikely to lead to a bidding war, according to Brian Tanquilut, equity analyst for the investment banking firm Jefferies Financial Group.
“We don’t expect OPCH to raise its bid and go into a bidding war, especially given UNH’s deep pockets and the fact that they are also OPCH’s largest client,” Tanquilut indicated in a research note. “If AMED chooses UNH, OPCH stands to receive a $106MM breakup fee, which management could re-deploy to an accelerated share repurchase.”
This marks Optum’s second purchase of a massive home health and hospice company, as the insurance behemoth continues to beef up its presence in the provider space, including its home-based capabilities.
The UnitedHealth Group subsidiary closed its $5.4 billion acquisition of LHC Group this past February, citing the growing prevalence of home-based care as a driver for these investments. Another factor is the rising tide of Medicare Advantage, particularly on the home health side. UnitedHealth Group is the largest operator of MA plans in the country.
To date, Optum has not indicated whether Amedisys and LHC Group would combine under its auspices. Until the deal closes in early 2024, it will be “business as usual,” Amedisys indicated in a U.S. Securities and Exchange Commission filing.
“Optum is one of the largest health care services providers in the world and one of the most impactful organizations in health care,” Ashworth said in the video. “Together, we will have the ability to offer different types of care models to our patients and offer more services that can be integrated into the home to increase clinical care and experience for patients. Joining together with Optum will allow us to reach and impact more patients than ever.”