Home Health & Hospice Week

Cash versus stock features in UnitedHealth’s play for the publicly traded chain.

Don’t assume you know what’s going to happen to one of the nation’s largest home health chains.

Why? On May 3, Amedisys Inc. and Option Care Health Inc. announced they had “entered into a definitive merger agreement to combine in an all-stock transaction that values Amedisys at approximately $3.6 billion, including the assumption of net debt,” according to a release. Upon closing, Option Care stockholders were projected to own about 64.5 percent of the combined company, and Amedisys stockholders about 35.5 percent.

But now, the Baton Rouge, Louisiana-based chain has received an unsolicited offer from Optum, a division of UnitedHealth. Optum proposes “to acquire all of the outstanding shares of Amedisys’ common stock in an all-cash transaction for $100 per share,” Amedisys says in a release.

Reminder: UnitedHealth Group/Optum acquired Lafayette-based LHC Group Inc. for a whopping $5.4 billion earlier this year. But the deal was significantly delayed by Federal Trade Commission investigations into antitrust issues.

The Optum offer for Amedisys, which is in cash, may be viewed as better than Option Care’s. The $100 per share bid is “a 26 percent premium over Amedisys’ most recent closing share price,” Optum points out in a release.

But don’t count on it preempting the Bannockburn, Illinois-based infusion company’s offer quite yet. “Amedisys remains bound by the terms of the merger agreement with Option Care Health, and Amedisys’ Board has not determined that Optum’s proposal constitutes a Superior Proposal as defined in the merger agreement with Option Care Health,” the company maintains in the release. “Amedisys notes that there can be no assurance that the discussions with Optum will result in a transaction,” it adds.

Option Care maintains in a release that its “previously announced definitive merger agreement with Amedisys delivers significant value to Amedisys and Option Care Health stockholders, a high degree of certainty in obtaining the required regulatory approvals due to the complementary nature of the parties’ businesses, and benefits patients, providers, payers, and care teams.” Further, “our compelling all-stock transaction, expected to close in the second half of 2023, allows stockholders of both companies to participate in the upside of the combined company, which will be a differentiated leader in home health and alternate site care with unmatched scale and a unique cash flow profile,” Option Care insists.

Multiple stock analysts have raised the issue of Federal Trade Commission approval of the Optum deal.

However, Jeffries analyst Brian Tanquilut predicts that the Optum acquisition of Amedisys would receive a green light from the FTC, perhaps with divestitures in certain markets, according to press reports.

“No single participant” in the industry has “more than a single-digit percentage share, a core reason Optum is confident it can secure approval for the combination,” Optum says in a release. “Even with the numerous providers, demand for in-home care far exceeds available supply, creating the need for substantial investment in the sector to more fully serve patients and their families.”