UnitedHealth and Amedisys Progress Toward $3.3B Merger with Strategic Divestitures

UnitedHealth Group and Amedisys have taken significant steps toward finalizing their $3.3 billion merger, announcing key divestitures aimed at addressing antitrust concerns. The healthcare giants have found buyers for select assets, potentially clearing a path for regulatory approval of the deal first announced in mid-2023.

Divestiture Agreements Reached

According to recent Securities and Exchange Commission (SEC) filings, UnitedHealth and Amedisys have entered into agreements to sell certain home health and hospice centers to BrightSpring Health Services and the Pennant Group. The divestiture package includes assets from both Amedisys and UnitedHealth's existing portfolio of care centers.

While the full financial terms were not disclosed in Amedisys' filing, the Pennant Group revealed in a separate SEC document that it would pay approximately $102.5 million for its portion of the divested assets.

The completion of these sales is contingent on several factors, most notably the final closure of the UnitedHealth-Amedisys merger itself. This strategic move demonstrates the companies' commitment to addressing regulatory concerns and their confidence in ultimately securing approval for the deal.

Regulatory Challenges and Mediation

The merger has faced significant scrutiny since its announcement, with the Biden administration challenging the deal on antitrust grounds. Regulators have expressed concerns that the combination would grant UnitedHealth Group an outsized role in the home healthcare market, potentially limiting competition and consumer choice.

In response to these challenges, UnitedHealth and Amedisys have engaged in several steps to move the deal forward:

1. Extended the merger timeline to the end of 2025, allowing additional time to navigate regulatory hurdles.
2. Entered into mediation with the Department of Justice as part of ongoing legal proceedings.
3. Identified and agreed to divest specific assets to address market concentration concerns.

These actions underscore the companies' determination to complete the merger while also highlighting the complex regulatory landscape facing major healthcare consolidations in the current environment.

Industry Implications and Next Steps

The UnitedHealth-Amedisys merger, if approved, would represent a significant shift in the home healthcare and hospice sectors. As the companies work to finalize the deal, industry observers will be closely watching for:

1. The outcome of mediation efforts with the Department of Justice.
2. Any additional divestitures or concessions required by regulators.
3. The impact on competition and service delivery in affected markets.
4. Potential responses from other major players in the healthcare industry.

With the announcement of these strategic divestitures, UnitedHealth and Amedisys have signaled their continued commitment to closing the deal. However, the final outcome remains uncertain as regulatory review processes continue.