Yesterday, the US Department of Justice (DOJ) filed a proposed settlement that would allow UnitedHealth Group (NYSE: UNH) to acquire Amedisys (NASDAQ: AMED). According to experts, in the home care industry, mergers confirm the value of their services while creating an additional level of competition.
“For small providers, this increases interest,” Benjamin Bogan, partner and managing director of healthcare M&A advisory firm Stoneridge Partners, told Home Health Care News in an email. “Competition with integrated payer provider networks like Optum can become increasingly challenging, especially in overlapping markets. On the flip side, it opens strategic opportunities for agile, high-quality operators to position themselves as high-quality options or potential acquisition targets in other integrated regions that want to remain competitive.”
As part of the DOJ's proposed settlement, UnitedHealth and Amedisys will need to sell at least 164 home sanitation and hospice facilities, with annual revenue worth approximately $528 million.
Pennant Group (NASDAQ: PTNG) announced Thursday it plans to acquire between 38 and 50 institutions from Amedisys and UnitedHealth. Amedisys announced in May that it had agreed to sell its home hygiene centre and hospice centre to Pennant and Brightspring Health Services (NASDAQ: BTSG).
According to Widmar, players in small, middle market regions are most likely to benefit from the sale.
Joe Widmar, West Monroe Director of a Chicago-based business and technology consulting firm, told HHCN: “But considering what I expect to be a pretty large number of buyers looking at these places, I could see them normalized a bit.”
The entire home healthcare industry will also enjoy additional evidence that the industry is attractive.
“Despite recent issues, UnitedHealth is still committed to that strategy, and I think that's good for the industry,” Tao Qiu, equity research analyst at Macquarie Group, told HHCN.
While some home health athletes support the benefit of potentially discounted institutional purchases and broader evidence of the value of home health care, this transaction can cause problems for some providers.
Providers in duplicate markets aren't just competing for patients. They will have a hard time attracting clinicians, which is already a taxable issue.
“From a labor standpoint, there is concern as it will maintain fair and competitive wages for clinicians who are within the home health industry and seek careers in the home health industry,” Widmar says. “Companies of that size have a lot of purchasing power. It will be much more difficult to separate talent from the home health business in the future.”
The proposed settlement was not surprising, experts told HHCN, showing the Trump administration's approach to trading activities.
“Investors and company management consider current management business friendly, and there is no indication that it is not,” Qiu said. “From an overall perspective, the current administration is even more pleased that some of these transactions will go through, as some of these transactions are a natural process of integration throughout the tough times.”
The settlement also shows that DOJs are willing to “admit more standard operating procedures in favor of compromise,” indicating that current DOJs are willing to speed up other DOJs to mutually beneficial outcomes.
For UnitedHealth, who has experienced many well-known challenges, putting together the Amedisys deal is a bit of a positive news that could help the company's trajectory for the remainder of 2025.
“At this point, I'm looking at United struggling trying to make the most of this deal,” he said. “It's probably going to take some time for the investment outcomes here to really develop in a positive way… They're probably going to put this behind them at this point and pursue an investment paper they started with Amedisys.”
The deal will make UnitedHealth an even stronger player in the home healthcare industry, Widmar said. It also speeds up the growth trend of integration in the home care industry.
“If a merger is confirmed, it will further accelerate the trends in integration and vertical integration in home care that CMS has driven in reimbursement and regulation of PDGM and other industry integration decisions,” Bogan said. “UnitedHealth/Optum has a large portion of primary care, acute care, insurance and support services. Adding Amedisys deepens its integration and gives Optum an even bigger footprint in the hospital-to-home patient route.”
