The Justice Department's lawsuit to block UnitedHealth Group's proposed $3.3 billion acquisition of Amedisys isn't changing the companies' views on combining.
UnitedHealth's Optum said in an email it would vigorously defend against what it alleges is overreach by a Justice Department lawsuit that would prevent the two companies from forming a multi-state home care and hospice operation. An Amedisys spokesperson said the company remained committed to the transaction and looked forward to supporting Optum as it presents the case defending the deal.
Related: DOJ files lawsuit to block UnitedHealth-Amedisys deal
The Justice Department contends the merger would stifle competition. The DOJ filed the lawsuit Tuesday, 17 months after Amedisys agreed to the $3.3 billion all-cash deal with UnitedHealth Group’s Optum and spurned a previous all-stock bid from Option Care Health for $3.6 billion.
The planned acquisition has also drawn scrutiny from the state of Oregon which launched a review of the deal in March after a preliminary analysis by the state’s health authority found it could reduce competition. The review is ongoing.
Here's what to know about UnitedHealth Group's pursuit of Amedisys.
Why does UnitedHealth Group want to acquire Amedisys?
Demand for home health services has been increasing, along with an aging population, and health insurers with Medicare Advantage plans have been acquiring home health companies as a way to ensure better patient access to post-acute care. It also helps them control costs because home health companies have been negotiating higher rates with insurers in exchange for access to care.
Humana purchased Kindred at Home for $8.1 billion in 2021 and rebranded it CenterWell Home Health. UnitedHealth Group acquired LHC Group in February 2023 for $5.4 billion and negotiated the deal to buy Amedisys four months later.
Optum Care Solutions CEO Dr. Patrick Conway said when the acquisition was announced that it could improve health outcomes and patient experiences at lower costs, “leading to continued growth.”
“The Amedisys combination with Optum would be pro-competitive and further innovation, leading to improved patient outcomes and greater access to quality care,” a statement from Optum said Tuesday.
Where is the Justice Department worried about market overlap?
In the lawsuit filed Tuesday, the Justice Department said combining Amedisys with UnitedHealth’s LHC Group would lead to higher prices in 23 states and Washington, D.C., where the two companies have significant overlap.
Both Baton Rouge, Louisiana-based Amedisys and LHC Group operate in 38 states. The two home care providers have the highest concentration of locations in the South, but they also overlap in the Midwest, Northeast and Northwest.
Amedisys proposed selling 100 Texas locations to VCG Luna, a division of Dallas-based home health and hospice company Vital Caring Group. However, the Justice Department said the sale of those locations would not mitigate antitrust concerns in more than 100 other markets that serve approximately 200,000 patients.
How have the DOJ's actions affected mergers and acquisitions?
Tom Lillis, a partner at home health advisory firm Stoneridge Partners thinks the Justice Department’s long inquiry into UnitedHealth Group’s deal with Amedisys hampered acquisitions.
“I think that has had a somewhat chilling impact on the market and some of the deals that would be happening otherwise,” Lillis said.
The home care industry is a highly fragmented industry with more than 11,000 providers nationally, according to the Centers for Medicare and Medicaid Services. Mergers and acquisitions took off in 2021 during the COVID-19 pandemic, but cooled this year.
Still, the CEOs of Addus HomeCare, Aveanna Health and the Pennant Group told analysts last week during third quarter earnings calls they are eager to acquire home health and hospice companies in 2025.
What might happen in a Trump administration?
The Justice Department filed the lawsuit approximately two months before President-elect Donald Trump will take office and presumably appoint a new attorney general.
Lillis and Andre Ulloa, a founder and managing director at M&A Healthcare Advisors both expect the lawsuit will be dropped.
Ulloa also said he thinks the Justice Department under President-elect Trump will be less likely to interfere with mergers and acquisitions in the healthcare space, which could clear the way for future consolidation in home healthcare.
