DOJ taking a closer look at UnitedHealth's $3.3B bid for Amedisys

The Department of Justice (DOJ) is requesting more information from Amedisys regarding its proposed $3.3 billion deal to be acquired by UnitedHealth Group, which pushes back the timing of the deal.

UnitedHealth Group announced plans in late June to buy the home health and hospice firm, outbidding a competitor, Option Care Health.

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 a filing with the U.S. Securities and Exchange Commission Thursday, Amedisys said it received a second request for information from the DOJ under the Hart-Scott-Rodino Antitrust Improvements Act.

Amedisys and UnitedHealth Group filed the required pre-merger notification forms with the Federal Trade Commission (FTC) and the DOJ's antitrust division on July 5, the company said in the filing. It received the DOJ's request on Aug. 4.

The second request extends the waiting period for UnitedHealth and Amedisys to complete the deal. The companies can't move forward with the deal until 30 days after they have "substantially complied with the second request unless the period is extended voluntarily by the parties or terminated sooner by the U.S. Department of Justice."

Federal regulators have signaled they plan to step up oversight of M&A deals in a bid to crack down on anticompetitive tactics.

The FTC and DOJ recently proposed updated merger guidelines to better monitor a surge in merger filings and multi-industry market concentration.

The FTC also aims to change its pre-merger notification requirements to give regulators more information to review during a deal’s initial waiting period—and likely giving the agency more fuel to block mergers it views as anticompetitive.

President Joe Biden issued a sweeping executive order in the summer of 2021 for the agencies to take a closer look at merger deals, with specific mention of rampant consolidation within healthcare. Since then, regulators haven’t shied away from challenging major healthcare and pharmaceutical deals they view as anticompetitive, although those efforts haven’t always panned out in the courts.  

Investment in the health home sector has been heating up with CVS making a hefty purchase for Signify Health this year. UnitedHealth Group's Optum is on the hunt for home health assets. The company shelled out $5.4 billion to pick up home health provider LHC Group, a deal that was finalized earlier this year.

Baton Rouge, Louisiana-based Amedisys 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.

Analysts said they anticipated regulatory scrutiny of th UnitedHealth-Amedisys deal, but they also surmised that Optum’s experience with the FTC during the LHC process gives it confidence this deal would close as well, William Blair analyst Matt Larew wrote in an analyst note.

Larew also noted there is not a dominant player in the home health market, and a combined LHC Group and Amedisys would make up less than 10% market share and a lower percentage of the hospice market.

While regulators could challenge the deal, the second request for information doesn't necessarily signal that the acquisition won't go through.

There have been several recent healthcare deals that were delayed because regulators asked for more information, including Amazon's $3.9 billion buy of One Medical and CVS' $8 billion bid for Signify Health. The FTC also took a deeper look at UnitedHealth Group's $5 billion acquisition of home health provider LHC Group. All three deals went through.