In early May, it was reported that UnitedHealth Group (NYSE: UNH) and Amedisys (Nasdaq: AMED) were working on a divestment package to satisfy regulator concerns over antitrust violations.
Capitol Forum had previously reported that Amedisys was aiming to offload more than 100 of its locations to a “private equity-backed buyer.”
On Friday, Capitol Forum reported that the buyer had walked away from the deal, leaving Amedisys without a divestment partner. Amedisys stock dropped over 5% as of Friday afternoon, after the news surfaced.
“Amedisys shares were weak today after a report from Capitol Forum … suggesting that talks have fallen through between AMED/UNH and the PE-backed potential buyer of the company’s home health assets that need to be divested as part of their sale to UNH,” an analyst note from the investment banking firm Jefferies read. “While we are still assuming that the AMED sale at $101/sh gets finalized, we highlight how our downside scenario in a no-deal situation points to a valuation of $74/sh.”
It is unclear why the buyer walked away at this point. But multiple sources with knowledge of transaction talks told Home Health Care News that the April Anthony-led VitalCaring was the buyer.
VitalCaring and one of its private equity sponsors, Nautic Partners, did not respond to inquiries from HHCN Friday to confirm or deny that reporting. The Vistria Group elected not to comment, according to a spokesperson.
UnitedHealth Group’s Optum agreed to acquire Amedisys – one of the largest home health and hospice companies in the country – in a $3.3 billion all-cash deal last June. Since then, the U.S. Department of Justice (DOJ) has requested more information around the deal, and has also reportedly considered suing to block the deal. UnitedHealth Group is also under a DOJ antitrust investigation.
Optum already owns another one of the largest home health providers in the country in LHC Group, which it officially acquired at the beginning of 2023.
The divestment strategy was a way for Amedisys and UnitedHealth Group to mitigate those DOJ concerns. That strategy, however, has now seemed to hit a bump in the road. It’s likely that Amedisys wants to sell the locations to one buyer, rather than multiple.
VitalCaring – if it was the rumored private-equity buyer – would have become one of the largest home health providers in the country had it been the beneficiary of Amedisys’ divestment. Currently, it has close to 100 locations, mostly in the Southeastern U.S.
It’s likely that other parties would be interested in the Amedisys locations. But there may not be a lot of strategics willing – or able – to step in.
Humana’s (NYSE: HUM) CenterWell Home Health may also be concerned about antitrust scrutiny. Enhabit Inc. (NYSE: EHAB) just completed a strategic review. Addus HomeCare Corp. (Nasdaq: ADUS) still leans toward personal care more than it does home health care. That leaves only a few other large providers – of the public and private variety – that may or may not have interest.
Other private equity groups could step in to form a new venture from the Amedisys divestment, but it’s also a tough buying environment currently, given the macroeconomic headwinds as well as the micro payment headwinds in home health care.
The Capitol Forum report suggested that Amedisys is currently looking for another single buyer for the assets.
Companies featured in this article:
