UnitedHealth Group and Amedisys have mutually decided to extend the deadline of their proposed merger as the transaction faces increased scrutiny from the US Department of Justice (DOJ) over competition concerns. Initially announced in June 2023, UnitedHealth, through its Optum subsidiary, aimed to acquire the home health and hospice services provider Amedisys for $101 per share in cash.
However, the deal has since raised notable concerns within regulatory circles, necessitating a thorough review before it can proceed. In a significant development last month, the Justice Department, joined by attorneys general from Maryland, Illinois, New Jersey, and New York, initiated a lawsuit in Maryland against the planned merger.
This move reflects growing apprehensions regarding the potential impact on competition within the healthcare landscape, a sector often characterized by high consolidation rates and regulatory oversight. In light of these challenges, both companies have now agreed to postpone the merger's completion deadline.
Under the new agreement, the deal will either close 10 days following a final court decision related to the DOJ lawsuit or by December 31, 2025, whichever date comes first, as disclosed by Amedisys in a recent filing with the Securities and Exchange Commission. Previously, the expectation was for the merger to finalize by December 27.
This delay could pose significant strategic questions for investors and stakeholders, particularly as market conditions evolve and regulatory landscapes shift. Furthermore, the new waiver agreement stipulates a regulatory break fee of $275 million. This fee has the potential to increase to as much as $325 million if the companies fail to divest certain assets to satisfy regulatory approval criteria, as outlined in the latest filing.
Importantly, the filing also indicates that certain closing conditions related to government approvals will no longer impede the consummation of the merger. UnitedHealth issued a statement to MT Newswires confirming that it had “nothing more to share” beyond the details already included in the filing.
Consequently, during Friday’s trading session, shares of the health insurance giant dipped by 0.4%, while Amedisys saw a notable increase of 4.5%. Highlighting the critical nature of this merger, US Attorney General Merrick Garland recently stated, “We are challenging this merger because home health and hospice patients and their families experiencing some of the most difficult moments of their lives deserve affordable, high quality care options.” He further emphasized that the Justice Department remains vigilant against unlawful consolidation practices that could negatively impact vulnerable patients, their families, and healthcare providers. As this situation unfolds, stakeholders should remain informed of further developments in this high-stakes merger case, including the legal proceedings and potential implications for competition within the healthcare sector..