Option Care Health on Wednesday announced plans to acquire hospice and healthcare company Amedisys for $3.6 billion in a deal that reflects companies’ need to build scale as Care options are increasingly moving to the home.
All-stock trading would create a massive post-acute care provider that generates approximately $6.2 billion in annual revenue and provides a wide range of in-home services in 46 states and over. 674 locations.
Option Care Health is the nation’s largest independent provider by revenue for infusion services at home and at alternative sites. Amedisys is the nation’s second-largest home health care provider and a leader in home hospital services, palliative care, and hospice.
“We think this positions us well in a growing market in which value-based care is starting to take hold more in the future and, more importantly, community needs. payers,” said John Rademacher, President and CEO of Option Care Health, on a call with analysts Wednesday.
The acquisition will give Option Care Health more access to the lucrative Medicare and Medicaid markets. It generates only about 12% of its revenue from government payers. Executives say the Amedisys acquisition will increase that rate to 35%.
A combined company will also provide payers and major health systems with a one-stop shopping opportunity when referring patients to care.
“We know there is waste in the system that exists in its current form and so our ability to better coordinate care and ensure that we are delivering superior clinical outcomes through intervention of both clinical resources which we believe will be of great value to payers who are very concerned about the possibility of cost restraint,” said Rademacher.
Amedisys President and CEO, Richard Ashworth, negotiated the merger less than three months after taking a leadership role at the Baton Rouge, Louisiana-based company.
Rademacher will remain president and chief executive officer of Option Care, which will continue to be headquartered in Bannockburn, Illinois. Ashworth will act as an advisor to the company.
For Amedisys, its pending sale is the latest step in two years that have been transformed. In 2021, it moved into the home hospital business by acquiring Nashville-based Contessa for $250 million. Earlier this year, Amedisys exited the personal care business.
Option Care Health and Amedisys have had a partnership in recent years with Option Care providing home infusion services to Amedisys patients during the COVID-19 pandemic.
Ashworth said the deal will benefit patients from both companies. “There is a great opportunity between both organizations to enhance the health outcomes for both patients that we have by combining our services, let alone our ability to develop and maintain our health workforce. a workforce of more than 18,000 clinicians is quite interesting,” he said at the press conference. call.
Under the terms of the definitive agreement, Amedisys shareholders will receive 3,0213 Option Care Health common shares for each Amedisys common stock they hold at the close of the transaction, equivalent to $97.38 per Amedisys share based on closing stock of Option Care Health. price on May 2. It represents a premium of approximately 26% to Amedisys shareholders based on the company’s May 2 closing price.
The deal includes a debt assumption and is expected to close in the second half of the year, pending approval from regulators and shareholders of both companies.
Each company reported first-quarter earnings on Wednesday. Option Care Health reported net income of $39.2 million, or 22 cents per share, compared with $30.3 million, or 17 cents a share in the same period last year. Quarterly revenue grew 10.9% to $1.01 billion.
Amedisys said it earned $25.2 million, or 77 cents a share, in the first quarter, compared with $31.7 million, or 97 cents a share a year ago. Revenue rose 11.1% to $556.4 million.
