UnitedHealth outbids Option Care Health for Amedisys in deal valued at more than $3B

UnitedHealth Group has once again flexed its muscles and outbid a competitor to pick up another home health asset.

Amedisys on Monday agreed to be acquired by UnitedHealth's Optum unit in an all-cash deal while also scraping a previous all-stock deal offer from Option Care Health.

Optum is buying the company for $101 per share, which is a dollar higher than its previous offer and above the $97.38 per share all-stock deal with Option Care in May.

The deal values the company at roughly $3.7 billion, a 10.7% premium to Amedisys’ most recent closing price of $91.21, according to William Blair analyst Matt Larew in a note issued today. Media reports have pegged the deal value at $3.3 billion.

In May, Amedisys agreed to an all-stock acquisition deal with Option Care Health that valued the company at $3.6 billion. UnitedHealth then countered with an unsolicited all-cash offer for $100 a share. 

As part of the May agreement with Amedisys, Option Care will receive a $106 million termination fee.

Investment in the health home sector has been heating up. Option Care Health is a provider of post-acute care and infusion services and picking up Amedisys would have helped the company beef up its capabilities and expand its footprint as care options increasingly move into patients' homes.

That deal would have created 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. 

"While we are disappointed in this outcome, Option Care Health has a long track record of delivering value for our shareholders," said John C. Rademacher, president and Chief Executive Officer of Option Care Health in a statement issued Monday. "We take a disciplined approach to acquisitions and, as we evaluated our options, we applied this discipline to ensure we continue to create value for all of our key stakeholders."

"Option Care Health benefits from a leading platform in home and alternate site infusion services and a proven track record of execution," Rademacher added. "We remain confident in our growth trajectory, which is underpinned by current industry trends and market forces as well as our strong financial position. Our team is committed to serving all our stakeholders by providing unsurpassed care and superior clinical outcomes in the home or ambulatory setting, and we will continue to identify ways to increase the value we can deliver."

UnitedHealth Group executives said in a statement 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.

In the analyst note, Larew said UnitedHealth's victory in the bidding war was an unsurprising outcome given the higher offer and all-cash nature of the UnitedHealth bid.

"Option Care’s management team has said that should the deal fall through, Option Care will continue to explore strategic M&A opportunities and will be a disciplined acquirer (previous acquisitions have all generated high-teens cash-on-cash returns). The team did emphasize that the company does not need to do a large M&A deal to be successful in the long term, citing the strength of the core home infusion business, and noted that the next move does not have to be a home health asset," Larew wrote.

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.

Optum said acquiring Amedisys would accelerate the "seamless provision of value-based care in the home, improving patient outcomes and experiences."

"Amedisys’ commitment to quality and care innovation within the home, and the patient-first culture of its people, combined with Optum’s deep value-based care expertise can drive meaningful improvement in the health outcomes and experiences of more patients at lower costs, leading to continued growth," Patrick Conway, M.D., chief executive officer of Optum Care Solutions, said in a statement issued earlier this month.