The U.S. Department of Justice (DOJ) will investigate potential antitrust violations in the UnitedHealth Group (NYSE: UNH) subsidiary Optum’s forthcoming acquisition of Amedisys, Inc. (NASDAQ: AMED).
To date, neither Amedisys nor Optum have been accused of any wrongdoing. The DOJ performed a similar investigation when Optum acquired the health care technology company Change Healthcare earlier this year. A federal court eventually allowed that deal to proceed.
Subsequently, Optum closed a deal for the home health and hospice provider LHC Group for $5.4 billion.
Investigations like these are becoming more common as massive health care transactions proliferate, according to Dexter Braff, founder and president of the M&A advisory firm The Braff Group.
“This is fully expected, especially after the LHC Group deal. Moreover, there has been increased scrutiny regarding potential antitrust issues. On a national basis, there probably isn’t a problem, but the DOJ will likely examine individual markets to assess potential antitrust concerns,” Braff told Hospice News in an email. “Should they determine anti-competitive situations, they might require that United sell off certain locations. This would not be unusual at all.”
Amedisys announced the investigation in a filing with the U.S. Securities & Exchange Commission (SEC).
Optum in June penned a deal to acquire Amedisys in an all-cash transaction of $101 per share, or about $3.3 billion. The pending transaction followed a previous offer to acquire Amedisys by the home infusion company Option Care Health (NASDAQ: OPCH) for $3.6 billion.
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 separate SEC filing.
The DOJ investigation will likely examine markets where Amedisys and LHC Group locations overlap, according to Kevin Palamara, managing director of Provident Healthcare Partners LLC.
If the DOJ doesn’t approve the deal outright, the agency’s review could delay closing or require Optum or Amedisys to sell off some locations.
“This is likely most focused on overlapping markets between the completed LHC group transaction and Amedisys existing markets for home health care and hospice operations to ensure that the combined operations are not creating an anti-competitive environment,” Palamara said. “There was certainly a Hart-Scott-Rodino Act filing for the transaction given the size and this would be very common.”