We’ve got a good ol’ fashioned home care standoff, with UnitedHealth Group’s Optum division throwing a wrench in Option Care Health’s takeover of Amedisys by submitting a competing offer of $100 per share, 100% cash.
Optum’s offer values Amedisys at about $3.2B, whereas Option Care’s already-accepted all-stock offer valued the home health and hospice provider at $3.6B barely over a month ago.
- Amedisys shareholders now have the option to back out of the Option Care acquisition, which is probably tempting since the all-stock transaction would give them less liquidity, expose them to a ton of downside risk, and was met with pretty tough analyst reactions.
- The Optum announcement prompted Option Care to reiterate its confidence in the acquisition, which it says could reduce costs by over $50M right out of the gate and lead to $9B in combined revenue by 2027 (vs. $6B today).
Besides showing that it can steamroll any would-be competitors’ moves, Optum is picking up home care providers left and right as a way to expand its margins by keeping patients in their homes and out of higher-cost healthcare facilities.
- Amedisys operates close to 350 home health agencies, 160 hospice care centers, and is a major hospital-at-home figure thanks to its 2021 acquisition of Contessa Health.
Here’s a look at the top five US home health providers and their current market share:
- Kindred – 6.0%
- Amedisys – 5.0%
- LHC Group – 4.4%
- Encompass – 3.9%
- AccentCare – 1.7%
Kindred has already been scooped up by Humana. Amedisys is moments away from an acquisition. LHC group was recently acquired by Optum. It’s anyone’s guess who the next targets are, but there’s a pretty clear trend among the top players.
The Takeaway
Although Amedisys is still bound to its agreement with Option Care, Optum’s approach likely qualifies as a “superior proposal” that would let shareholders dissolve any existing obligations. The market currently looks like it’s picking Optum as its favorite to get the acquisition, with shares of Amedisys jumping over 10% on the new offer, and shares of Option Care also rallying since its investors weren’t too enthused about the acquisition in the first place.
