How UnitedHealth Group Wooed Amedisys Into Breaking Up With Option Care Health

I have always loved the UnitedHealth Ammedisys group.

The Minnesota-based healthcare giant has made an offer to acquire Ammedisys, a Baton Rouge-based home healthcare company, in 2021, according to SEC filings. They flirted, but divorced in October of that year. At the time, Amedicis believed that a single life was better.

But Medicare reimbursement rates changed in 2022, shifting Ammedisys' financial situation. The relationship suddenly became attractive.

The new guy is here - Option Care Health. An infusion therapy company in Illinois invited Ammedisys to dinner and won them over. After a brief courtship and negotiations, they got engaged in May.

A few weeks later, UnitedHealth Group is back with an even better deal.

Ammedisys ended its agreement with Option Care Health in June and announced its upcoming marriage to UnitedHealth Group. Option Care Health received expensive divorce and marriage fees.

Perhaps the boardroom negotiations weren't so romantic. But the merger triangle involving Amidisys, UnitedHealth Group and Option Care Health was built over about two years through business lunches, shareholder meetings and even a meeting in Las Vegas, according to SCV documents.

Ammedisys is asking its shareholders to approve her marriage to UnitedHealth Group on Sept. 8. In a statement authoritative to these voters, Amidisys described how it ultimately chose UnitedHealth Group and how Option Care Health was disqualified.

when it all started

Amedasis, in its papers with the Securities and Exchange Commission, said UnitedHealth Group was already "one of its major customers" before merger talks began in 2021. They have occasionally discussed potential partnerships.

UnitedHealth Group has made early offers from time to time throughout 2021 and early 2022, including a cash offer in October 2021 to acquire all of Ammedisys' common stock at a premium of approximately 28%. UnitedHealth Group subsequently increased that bid to 48% in January 2022.

Ammedisys' board of directors rejected the offer several times, stating that "at that time it had no greater value to Amidisys than it did as a separate company".

The two parties kept in touch in 2022 and 2023 and discussed day-to-day matters. Talk of a "strategic agreement" appeared here and there without much movement.

As of March 2022, Ammedisys is satisfied with its financial situation. The Center for Medicare and Medicaid Services proposed a 2.7% increase in the condo fee, Ammedisys' primary source of revenue. At the end of the month, Ammedisys shares were trading at $172.

Two months later, Ammedisys executives met with Option Care Health executives at a healthcare conference in Las Vegas. After working to introduce antibodies against COVID-19 in early 2021, they met to consider "other potential strategic partnerships."

Alternative meets

Amedisys' financial projections changed in June 2022 when CMS proposed new rates for the elderly that were "fundamentally different" from the home health care provider's projections. According to SEC filings, the change affected Amidisys' projected earnings of $30 million in 2023, and the share price fell to $105 three months later.

Three key Amidisys executives, new CEO Christopher Gerard, chief financial officer Scott Jane, and chief strategy officer Nick Muscato, met with the executives of Option Care Health Illinois in August 2022. In September, they signed a confidentiality agreement to discuss a partnership with Option. Care Health and Contessa Health, an Ammedisys company.

After Gerrard was fired in November due to lower-than-expected earnings, Paul Cosero, who previously served as chairman, took over as CEO and met with executives of Option Care Health in Nashville, Tennessee, on June 7. December for dinner. Although there were plans to discuss a partnership with Contessa Health, the idea of ​​a "major strategic agreement involving the two companies" surfaced.

Kosyrov reported these discussions to the Amidisys board of directors, allowing him to continue negotiations with Option Care Health.

Negotiations continued into January and February 2023. Richard Ashworth, the former Walgreens CEO who eventually took over as CEO of Amidisys at Cosero, was only officially informed of the merger when he signed the confidentiality agreement in February. Ashworth endorsed the deal.

John Rademacher, Chairman and CEO of Option Care Health, made its first proposal to Kuserov on February 26: a stock merger that would give Ammedisys shareholders 36-38% of all shares in the combined company. The remainder went to Option Care Health shareholders.

Ammedisys and Option Care Health have been at odds for months over inventory allocation and board representation. In response, Amidisys offered up to 39% of the shares, while Option offered only 33%. By May they had agreed to transfer 35.5% of the shares to Ammedisys shareholders. They also agreed that Amidisys could have three members on the combined company's 10-member board of directors.

On May 3, Amidisys and Option Care Health announced a commitment of $3.6 billion. According to filings with the Securities and Exchange Commission, Ammedisys shareholders should receive about three shares of Option Care Health for every share Amidisys owns, or about $97 per Amidisys share.

On the day the deal was announced, Amidisys shares closed at $78.63. Care Health option closed at $32.79.

A day later, the stock price of Option Care Health fell to $27.50.

The return of an old fan

UnitedHealth Group has never forgotten about Ammedisys.

On May 22, representatives of UnitedHealth Group unexpectedly contacted Kozyrov and informed him of the company's intention to resume criminal proceedings against Ammedisys. Referring to the upcoming agreement, Kuserov abruptly interrupted the conversation and reported this to the Option Care Health management.

Four days later, UnitedHealth Group made an offer: a cash deal would be paid at $100 per share, a premium of nearly 30% over Ammedisys' then-common stock price, and a premium of nearly 20% to Amidisys shareholder value. . Pick-up option. Care Health merger.

May 27 was decisive. Ammedisys' board of directors met with attorneys and financial advisors to discuss UnitedHealth Group's proposal. The Board agreed that the proposal for a new healthcare charter was a "fantastic proposal" which gave them enough legal light to consider.

Amidisys' board of directors has voted to enter into a confidentiality agreement with UnitedHealth Group. One day later, he shared his intentions with Option Care Health.

Amidisys announced the UnitedHealth Group bid in a June 5 filing with the Securities and Exchange Commission. On June 13, UnitedHealth Group raised its bid to $101 per share.

Two days later, attorneys for Amidisys sent Option Care Health a draft termination agreement that would have paid a $106 million termination fee. In the end, the UnitedHealth group offered to foot the bill.

As of June 26, Amidisys and Option have completed their mutual separation, and Amedsys has signed a $3.29 billion merger agreement with UnitedHealth Group.

In the end, the share price prevailed. In its power of attorney to shareholders, Ammedisys simply justified the new deal: the merger with UnitedHealth Group "was the most attractive strategic alternative available to Ammedisys and its shareholders."

Rademacher, CEO of Option Care Health, said his company was "disappointed with this outcome." However, he remained optimistic about the company's prospects.

"We remain confident in our growth trajectory, supported by current industry trends and market forces, as well as our strong financial position," Rademacher said in a statement.

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