Amedisys falls as DOJ sues to block $3.3B sale to UnitedHealth

Amedisys (NASDAQ:AMED) dropped 1.7% as the Dept. of Justice confirmed a lawsuit to challenge the home-health services provider’s planned $3.3 billion sale to UnitedHealth (UNH).

The DOJ and three states filed a lawsuit on Tuesday to block the combination, according to media reports. The attorneys general of Maryland, Illinois, New Jersey and New York joined the complaint, according to Bloomberg.

Bloomberg reported earlier Tuesday DOJ that antitrust officials were expected to file the lawsuit as soon as this week. The regulators are worried that the deal could lead to higher prices in home health care in areas where Amedisys primary competitor is UnitedHealth’s LHC Group.

“Eliminating the competition between UnitedHealth and Amedisys would harm patients who receive home health and hospice services, insurers who contract for home health services, and nurses who provide home health and hospice services,” the department said in a statement, according to Reuters.

The DOJ lawsuit on Tuesday comes after a report on Monday that the DOJ was leaning toward filing a lawsuit to block the UnitedHealth (UNH) deal this week. The news sent Amedisys (AMED) shares tumbling 4.2% on Monday.

Amedisys (AMED) may fall to $80/share in a deal termination scenario, though likely to $90 when a lawsuit hits, traders have told Seeking Alpha in recent days.

Amedisys (AMED) agreed to a $101 a share sale to UnitedHealth in late June of last year, Amedisys announced in August 2023 that it received a request from the DOJ for more information regarding its planned sale to UnitedHealth (UNH). The companies have said they expect the deal to be completed by the end of the year.

UnitedHealth (UNH) in late June announced an agreement with VitalCaring Group to sell some of the two companies’ healthcare centers. The divestiture was being done to appease Department of Justice antitrust concerns over the more than $3B deal.

This isn’t the first time that the DOJ under the Biden administarion has sued UnitedHeath (UNH) over a planned deal. The regulator sued in 2022 to block UNH’s $8 billion acquisition of Change Healthcare, thought the court ruled to allow the deal to be completed.