UnitedHealth and Amedisys Reach New Divestiture Agreement in Merger Bid

UnitedHealth Group and Amedisys have announced a fresh agreement to divest certain home health and hospice centers, as they continue efforts to secure regulatory approval for their proposed merger. This latest development comes as the companies face ongoing scrutiny from the U.S. Department of Justice (DOJ) over antitrust concerns.

New Divestiture Partners Emerge

In a strategic move to address regulatory challenges, UnitedHealth and Amedisys have inked deals with BrightSpring Health Services and Pennant Group to sell select home care and hospice locations. This agreement replaces a previous divestiture plan with VCG Luna, a subsidiary of VitalCaring Group, which was abandoned in January.

Pennant Group, based in Eagle, Idaho, is set to acquire assets for $102.5 million, as disclosed in a recent securities filing. The company, which currently operates over 120 affiliated agencies across 13 states, primarily in the Western U.S., views this acquisition as an opportunity to expand its footprint in the home health and hospice sector.

BrightSpring Health Services, a Louisville, Kentucky-based company that recently went public, will also participate in the divestiture. While financial details of BrightSpring's acquisition have not been disclosed, CEO Jon Rousseau emphasized that the purchase aligns with the company's acquisition strategy and presents minimal geographical overlap with their existing operations.

Regulatory Hurdles and Mediation Efforts

The proposed $3.3 billion acquisition of Amedisys by UnitedHealth's Optum unit has faced significant regulatory challenges since its announcement in summer 2023. The DOJ sued to block the deal late last year, citing concerns that the merger would give UnitedHealth control over 30% or more of the home health or hospice market in eight states.

In response to these antitrust concerns, a judge has scheduled a mediation session between the companies and the DOJ for August 18. This mediation represents a critical juncture in the merger process, as both UnitedHealth and Amedisys continue to deny the DOJ's claims that the acquisition would negatively impact patients.

Industry Implications and Market Dynamics

The ongoing saga of the UnitedHealth-Amedisys merger highlights the increasingly complex regulatory environment surrounding healthcare industry consolidation. As major players seek to expand their market share and service offerings, regulators are becoming more vigilant in assessing the potential impacts on competition and patient care.

The involvement of companies like BrightSpring and Pennant Group in the divestiture process underscores the dynamic nature of the home health and hospice market. These acquisitions, contingent on the closure of the larger merger, represent significant growth opportunities for mid-sized providers looking to expand their reach and capabilities in this vital healthcare sector.