Amedisys is the hot target of the second quarter. Early in May, Option Care Health, the largest independent home and alternate site infusion services provider in the United States, offered $3.6 billion to acquire a 64.5% stake in Amedisys and its multi-state home health and hospice network. The deal seems straightforward, and the offer price (which includes debt) values Amedisys at approximately $5.6 billion, or 2.65x the company’s 2022 revenue and 27.1x EBITDA.
However, on Monday, Amedisys announced it received an unsolicited offer from Optum, a significant division of the health insurance giant UnitedHealthcare. Optum is offering $100 per share, valuing Amedisys at approximately $5.73 billion. The proposed transaction represents a 26% premium over Amedisys’ most recent closing share price and a premium of 29% to the unaffected Amedisys share price of $77.26. Optum’s proposal has no financing contingency or condition and does not require shareholder approval.
Although the offer was unsolicited, it’s not surprising. Optum and other managed care giants have been on the market for home health providers for the past few years. In March, Optum paid $6 billion to acquire LHC Group, Inc., a home health provider with a network spanning 37 states. Optum’s acquisition of LHC follows Humana’s takeover of Kindred at Home in a deal valued at $7.1 billion and its purchase of onehome, a Florida-based home health network. Managed care companies view home health agencies and organizations as crucial in their strategy to establish a presence in the outpatient care space, which is experiencing tremendous growth. Another tailwind driving these deals is the surge of Medicare Advantage (MA) plans, which has one of the fastest-growing enrollment rates for Medicare. Since most MA plans require members to use services and doctors in the membership network, payers keep the reimbursement in-house. For a managed care company, blending payer and provider is a very lucrative source of revenue.
In a statement, Option Care Health reiterated the value of its offer for Amedisys. According to Option, the combined company is expected to generate approximately $1 billion in adjusted EBITDA by 2027 and more than $9 billion in combined revenue by 2027.
Amedisys said in a news release that the offer from Optum could result in a better deal as defined in Amedisys’ merger agreement with Option Care Health. “As permitted by the terms of Amedisys’ merger agreement with Option Care Health, Amedisys entered into a confidentiality agreement with Optum on May 30, 2023, and is currently engaging in exploratory discussions with Optum with respect to Optum’s proposal,” the release stated.
The deal between Amedisys and Option was expected to close in the second half of 2023, but with Optum in the mix, adhering to that timeline might be challenging. If Amedisys finds that Optum’s deal is a better value, we might see Optum end up with one of the nation’s largest home health networks by the end of the year.
