UnitedHealth Group Inc.’s Optum division is seeking to break up Option Care Health Inc.’s takeover of home health and hospice player Amedisys Inc. with an all-cash offer that Amedisys directors say could trump Option Care’s plan.
Optum’s leaders are offering to pay $100 for each Amedisys share and said June 5 that their offer has no financing contingencies and doesn’t need shareholder approval. The Optum offer for Amedisys comes about a month after Amedisys and Option Care executives said they plan to join forces and create an organization that would work with 720,000 patients and produce $50 million in annual savings by its third year.
Investors had greeted that announcement with skepticism, slicing more than 15% from Option Care’s market capitalization. That also bit into the implied valuation of Amedisys: Before being announced, Option Care's buyout offer valued each Amedisys share of $97.38.
“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,” Optum Care Solutions CEO Patrick Conway said in a statement.
The Optum statement also noted that UnitedHealth has the financial muscle to further invest in Amedisys’ operations since, “even with […] numerous providers, demand for in-home care far exceeds available supply.”
The board of Amedisys said Optum’s approach is likely to qualify as what the Option Care agreement defines as a superior buyout proposal. As a result, the directors have signed a confidentiality agreement with Optum and are in “exploratory discussions” about the United division’s offer. But, for now at least, their recommendation that Amedisys investors vote for the Option Care agreement remains in effect.
For its part, Option Care issued a statement affirming its belief that combining with Amedisys best positions both organizations for the expected growth in demand for care at home and other alternative sites.
“Our compelling all-stock transaction, expected to close in the second half of 2023, allows stockholders of both companies to participate in the upside of the combined company, which will be a differentiated leader in home health and alternate site care with unmatched scale and a unique cash flow profile,” the company said.
Shares of Amedisys (Ticker: AMED) popped on the Optum announcement: In midday trading June 5, they were changing hands at $90.57, up about 14% on the day. Option Care (Ticker: OPCH) also rallied, rising about 7% and growing the value of its offer to buy Amedisys to about $92.70 per share. United shares (Ticker: UNH) were up slightly from their Friday close.