Amedisys’ decision to be acquired by UnitedHealth Group division Optum for $101 a share, or $3.3 billion, secures home care as a desirable area of the healthcare continuum, financial experts told McKnight’s Home Care Daily Pulse.
“We are still in the relatively early stages of the race toward value-based care, but it’s clear home-based care is the early leader,” Cory Mertz, managing partner with Mertz Taggart, said. “When a company like UnitedHealth doubles down on their investment in the industry, it signals to the rest of the investment community that they see the long-term value of keeping the frail and elderly in their homes.”
Tom Lillis, a partner with Stoneridge Strategic Consulting, agreed that the sale sends a signal about the value of home care. “It’s good to see there is an increasing appreciation for the service, and the benefits of the service, the industry provides,” he said.
With Monday’s announcement, Amedisys reversed its course to merge with Option Care Health. The home and alternate site infusion services firm was on track to merge with Amedisys in all-stock deal that valued Amedisys at $3.6 billion.
Optum, which placed an unsolicited bid for Amedisys at $100 a share earlier this month, got a deal, Mertz commented.
“I can only speculate that it was a relatively easy decision for Optum to make the offer given what was on the table with Option Care,” he said. “At a $3.7 billion total valuation, Optum probably has a high level of confidence they will generate a strong return in a relatively short period of time, not just because of the cash flow Amedisys generates, but because of the savings it will generate across its membership.”
He continued, “I’m confident they could have justified paying more if they had to … but they didn’t have to, because Option Care essentially set the price. It’s a better deal for Amedisys shareholders because the price is locked in at $101. Now they just need to get the deal closed.”
Up next: The close
There is speculation about whether Optum can close the deal given that it just acquired LHC Group for $5.4 billion. Lillis noted that UnitedHealth may not have a “smooth ride. The LHC review took almost a year. I think we’ll see the FTC [Federal Trade Commission] take a very hard, long look at it.”
The acquisition price of $101 a share represents $10 a share over the current value of the stock. This serves as a “discount” for shareholders should the deal collapse or take an extended period of time to complete, Mertz offered.
“Based on the approximate 10% discount, the smart money says it’s going to take a while,” Mertz said. “As we appear to get closer to FTC approval, that discount will shrink and the share price will approach $101.”
