Amedisys and UnitedHealth Group to divest some home health assets, clearing path for $3.3B Optum deal

Amedisys, a large home health provider, plans to divest a number of care centers to an affiliate of VitalCaring Group in advance of its planned merger with UnitedHealth Group later this year.

VitalCaring also acquired some UnitedHealth Group care centers in the deal, according to a filing with the U.S. Securities and Exchange Commission (SEC) June 28.

The completion of the divestiture hinges on the closing of the merger between Amedisys and UnitedHealth Group, which is expected to close in the second half of 2024, Amedisys said in the SEC filing.

Financial details of the deal and the number of locations involved in the divestiture were not disclosed.

The divestiture of a number of Amedisys home health assets is a significant move to appease Department of Justice antitrust concerns over the hefty merger deal between Amedisys and UnitedHealth.

"This news is unsurprising and relatively on schedule," wrote Matt Larew, a healthcare research analyst and partner at William Blair, in an analyst note. "In May, a report originally surfaced that UnitedHealth and Amedisys were working with regulators on a divestment package of over 100 locations and a short time after it was reported that VitalCaring had emerged as the buyer. Later reports suggested some disagreements had emerged between buyer and seller, but our view has remained that it was a virtual certainty that a buyer (of the whole divestment package) or buyers (if it needed to be parceled out) would be able to transact in line with AMED/UNH’s stated second half 2024 timeline."

With the divestiture now agreed upon, there is "minimal risk" that the UnitedHealth-Amedisys deal does not close, Larew wrote.

Healthcare giant UnitedHealth Group announced plans in late June to buy the home health and hospice firm, outbidding a competitor, Option Care Health. The deal will further bolster the home health capabilities of UHG's Optum subsidiary. 

UnitedHealth's Optum unit said it would buy Amedisys in an all-cash deal for $101 per share. Media reports have pegged the deal value at $3.3 billion.

In mid-August, Amedisys disclosed in a filing that the Department of Justice had issued a second request for information on the deal, extending its probe.

UnitedHealth has been in the market for home health assets and earlier this year closed a $5.4 billion buy of LHC Group.

In October, Sen. Elizabeth Warren, D-Massachusetts, and Rep. Pramila Jayapal, D-Washington, urged federal officials to take a closer look at the proposed merger, citing concerns about vertical integration.

And, in March, Amedisys disclosed that Oregon regulators were conducting a full review of the potential deal.

UnitedHealth Group executives said in a statement issued a year ago that the combination of Amedisys with Optum unites two organizations "dedicated to providing compassionate, value-based comprehensive care to patients and their families."

The Baton Rouge, Louisiana-based company provides home health, hospice and palliative care services and has approximately 18,000 employees and 522 care centers in 37 states and the District of Columbia. The company expanded into the hospital-at-home market in 2021 when it acquired Contessa Health for $250 million.