Option Care Buying Amedisys in Deal Valued at $3.6B

May 4, 2023
Executives say the combination will create a more viable option for health systems and payers looking for partners operating alternate sites of care.

Infusion specialist Option Care Health Inc. has agreed to buy home health and hospice player Amedisys Inc. in a deal that values the latter at $3.6 billion.

If completed as contemplated later this year, the combination will create a $6.2 billion-revenue organization that will work with 720,000 patients annually, run more than 670 community centers across country and have a clinical workforce of more than 16,500 people. Executives with both businesses said bringing together their organization will help simplify patients’ care process and let them drive deeper into the value-based care space from preventative care to acute and post-acute services as well as end-of-life care.

Option Care’s Chicago-area headquarters will be the home base for the combined organization and CEO John Rademacher and CFO Mike Shapiro will stay in their roles.

“Health system referral networks are increasingly looking for a single provider partner for home health, infusion and hospice pathways,” Rademacher said on a May 3 conference call. “The combined company will be well positioned to serve as that single partner with its offering across the alternate-site care spectrum.”

Rademacher and Shapiro are forecasting that the purchase of Amedisys will generate $50 million in annualized cost savings by year three and add $25 million to the combined companies’ adjusted EBITDA, 4 percent of the $622 million the businesses generated last year. The merged business would get about 35 percent of its revenues from government payers, a big increase from Option Care’s 12 percent today.

Investors don’t appear convinced about the strategic rationale of the Option Care-Amedisys combination, which executives said has roots in the Operation Warp Speed response to the COVID-19 pandemic: Heading into the close of regular trading May 4, Option Care shares (Ticker: OPCH) were down 16 percent to $27.59, their lowest level in 11 months. Amedisys’ shares (Ticker: AMED) were up about 3 percent in late trading.

Pushed on the reasons to join forces with Amedisys, Rademacher was insistent: “This will be accretive the first year out of the gate […] We think the economics are going to be quite compelling when people truly understand the opportunity that lies ahead for us.”

Word of Amedisys’ plans to sell to Option Care comes less a month after former Walgreens and Tivity Health leader Richard Ashworth took over as president and CEO of the Baton Rouge-based company from Paul Kusserow, who remains chairman of its board. Kusserow, who also was CEO of Amedisys from December 2014 to early 2022, had himself stepped back into that role just last November when the board had terminated the employment of Chris Gerard after just seven months.