Option Care Health, a provider of post-acute care and infusion services, will shell out $3.6 billion to acquire home health and hospice firm Amedisys.
The deal will create a massive provider of post-acute care services encompassing more than 16,500 employees and 674 care centers in 46 U.S. states, with a projected $6.2 billion in annual revenue. The combination of the two will enable the companies to beef up capabilities and expand their footprints as care options increasingly move into patients' homes.
Combining Amedisys' home health, hospice, palliative and high-acuity care services with Option Care Health's home and alternate site infusion services will create a leading independent platform for home and alternate site care, according to the executives in a press release.
Amedisys expanded into the hospital-at-home market in 2021 when it acquired Contessa Health for $250 million.
Under the agreement, Amedisys shareholders will receive just over three shares of Option Care Health stock for every share they own. Shares of Amedisys closed at $78.63 Wednesday, while Option Care Health closed at $32.79.
Upon closing, Option Care Health stockholders will own approximately 64.5% of the combined company, and Amedisys stockholders will own approximately 35.5%.
The transaction is expected to close in the second half of 2023.
"This transaction unites two leading and complementary companies to provide unsurpassed care and superior clinical outcomes to patients," said John Rademacher, Option Care Health CEO and president, in a statement.
The acquisition enables Option Care Health to move deeper into a value-based care model and provides it with a more expansive payer mix.
"With the addition of Amedisys, we will bolster our offerings to meet the growing demand for personalized care in the home and alternative sites that move us closer to achieving this goal. The combination will link together our teams of passionate, compassionate, and highly skilled professionals to create a unique platform and breadth of services that will help us move deeper into value-based care and allow us to better serve patients," Rademacher said.
Amedisys CEO and President Richard Ashworth said, "Bringing together Option Care Health and Amedisys is an exciting next step on our journey and one that we believe will deliver significant value to stockholders, allowing them to participate in the upside of a combined company that is well positioned in the home infusion and growing home health, hospice, palliative, and high-acuity care spaces."
Through the deal, Amedisys adds a strong presence in hospital-at-home, home health, hospice, palliative and high-acuity care services better enabling Option Care Health to expand beyond its existing home and alternate site infusion services. The combined company will build out end-to-end home-based health solutions at a time when there is growing demand for home-based health and alternate site health services.
Health systems and payers are increasingly looking for a single provider for home health, infusion and hospice services, and the acquisition strategically positions Option Care Health to meet this need, executives said.
"Following the closing of the transaction, Option Care Health expects to be well positioned to serve as that single partner with its offerings across the alternate site care spectrum. Both companies have track records of working closely with payers to offer consistent, high-quality care at an appropriate cost. Together, the companies are expected to expand relationships with commercial and government payers to deliver more affordable cost of care," executives said in a press release.
The two companies had a preexisting relationship as the two launched a partnership in 2021 to deliver home infusion services, particularly, at that time, to COVID-19 patients, Home Health Care News reported.
Rademacher will serve as CEO of the company, while Ashworth will move into a special adviser role.
The combined company will be headquartered in Bannockburn, Illinois, the location of Option Care Health's headquarters, and will continue to maintain substantial operations in Amedisys' corporate locations in Baton Rouge, Louisiana, and Nashville, Tennessee.
By the third year after closing, the companies expect to generate annual cost savings close to $75 million.
This deal follows several other massive acquisitions in the home health and hospice space.
UnitedHealth Group bought home health provider LHC Group for $5.4 billion and folded it into its Optum subsidiary.
Insurer Humana picked up Kindred at Home in a $5.7 billion deal to become the country's largest provider of home healthcare services. Kindred at Home provides home health, hospice and personal care to more than 550,000 patients each year, Humana said.