Amedisys Expects to Close UnitedHealth Group Deal By Q4

The recent divestment of home health locations by Amedisys (NASDAQ: AMED) likely will give the company a smoother course towards closing its acquisition by the UnitedHealth Group (NYSE: UNH) subsidiary Optum.

Last week, Amedisys announced the sale of the locations to the home health and hospice provider VitalCaring for an undisclosed amount, according to a filing with the U.S. Securities and Exchange Commission (SEC). VitalCaring also acquired some Unitedhealth Group (NYSE: UNH) care centers in the deal. Rumors of a potential divestiture began circulating in May.

However, the deal is contingent upon the closure of Optum’s Amedisys transaction, the SEC filing indicated.

“Consummation of the divestiture is contingent on a number of conditions, including the consummation of the previously announced merger transaction contemplated under the agreement and plan of merger, dated June 26, 2023 by and among UnitedHealth Group, Aurora Holdings Merger Sub Inc., a wholly owned subsidiary of UnitedHealth Group and Amedisys,” the filing indicated.

Following this action, Amedisys noted in the filing that it now expects the deal to close in the second half of 2024.

The transaction has taken a circuitous route through the regulatory approval process, with agencies like the U.S. Department of Justice (DOJ) scrutinizing the details due to antitrust concerns.

Last summer, DOJ began investigating potential antitrust concerns related to the Amedisys-Optum deal. The DOJ performed a similar investigation — and filed a lawsuit — when Optum acquired the health care technology company Change Healthcare last year. A federal court eventually allowed that deal to proceed.

In Oct. 2023, a group of federal lawmakers also called on DOJ, the Federal Trade Commission and other agencies to look hard at the deal.

By selling these locations, Amedisys reduced its footprint in certain markets to ensure a more competitive environment, which could help alleviate regulator’s antitrust considerations.

Last June, Optum penned its agreement to acquire Amedisys in an all-cash transaction of $101 per share, or about $3.3 billion. Optum swooped in with this offer after Amedisys began the process of a merger with Option Care Health (NASDAQ: OPCH) in what would have been an all-stock deal amounting to $3.6 billion.

In 2022, Optum also closed a $5.4 billion transaction for the home health and hospice provider LHC Group.

The divestiture makes it more likely that theOptum deal will complete this year, according to Brian Tanquilut, equity analyst for the investment banking firm Jefferies Financial Group.

“While we recognize that scrutiny of UNH’s deals is high and that the DOJ could still move to sue to block its acquisition of AMED, our belief is that the composition of the portfolio of assets that AMED/UNH are selling to VitalCaring was determined through multiple conversations with the DOJ over the last few months,” Tanquilut indicated in a research note. “For this reason, we believe that the divestiture agreement announced on Friday, technically, addresses antitrust concerns, which should meaningfully increase the likelihood of the AMED deal closing in the next few months.”