Bidding war revs up to acquire Amedisys Inc., tops recent multi-billion-dollar M&A activity

June 28, 2023

By: G.F. Gay Le Breton And Ryan Gerton June 14, 2023

A bidding war to acquire Baton Rouge-based Amedisys Inc. seems to be heating up. On May 3, 2023, the publicly-traded home health and hospice care company agreed to sell to Illinois-based Option Care Health, Inc., the nation’s largest independent provider of home and alternate site infusion services, in a deal valued at $3.6 billion, including the assumption of net debt of $490 million.

In the all-stock offer, Amedisys shareholders would receive 3.0213 shares of Option Care Health common stock for each Amedisys common share. The offer valued Amedisys common stock at $97.38 per share, about a 26% premium to the May 2, 2023 closing stock price.

Then on June 5th, Optum Health Inc., a subsidiary of UnitedHealth Group, announced that it has made an unsolicited all-cash offer of $100 per share for Amedisys. This offer valued Amedisys at $3.75 billion at the enterprise level. Amedisys’ board has entered into a confidentiality agreement with Optum Health, despite the $106 million breakaway fee it would face should it back out of the Option Care Health deal. It is uncertain if other buyers could come forward.

Speaking last month of the Option Health Care deal, Richard Ashworth, president and CEO of Amedisys, stated that the deal “will deliver significant value to stockholders, allowing them to participate in the upside of a combined company that is well positioned in the home infusion and growing home health, hospice, palliative and high-acuity care spaces.” Analysts have raised questions about the timing and strategic value of the deal.

In early 2021, Amedisys’ stock was trading at over $310 per share, and its market capitalization reached over $10 billion. On May 2, 2023, Amedisys stock traded at $77.26, and the company had a market capitalization of about $2.5 billion. This decline appears to be partially attributable to Medicare lowering reimbursement rates. Option Care Health’s share price dropped from $32.64 the day before the Amedisys announcement to $26.84 about two weeks later.

Founded in 1982 by Bill Borne, Amedisys has grown to become one of the country’s largest home health and hospice care providers, with 2022 annual revenue of $2.22 billion and EBITDA of $208.7 million. The company has grown both organically and through frequent acquisitions of home health and hospice providers.

Just over a year ago, Optum Health, which provides post-acute care and infusion services, purchased Louisiana home health giant LHC Group, Inc. for $5.4 billion. For 2021, the last fiscal year before its sale, LHC generated revenues of about $2.21 billion and EBITDA of $208.0 million. The initial offeror, Option Care Health had revenues of $3.9 billion in 2022, while Optum Health had revenues of $71.2 billion that year.

Also in May, New Orleans-headquartered port logistics and storage provider Dupuy Storage and Forwarding, LLC, along with its subsidiary Dupuy Silo Facility, LLC (“Dupuy”) was acquired by supply chain investment giants Ridgewood Infrastructure and Savage Services, through their joint venture Transportation Infrastructure Partners (“TIP”). Terms of the deal were not disclosed.

Dupuy was founded in 1936. Four generations and 87 years later, the company provides near-port logistics infrastructure and services in four states, and has more than 2.7 million square feet of warehouse space, according to the company’s website. Dupuy focuses on the food and agriculture sectors, particularly coffee.

Allan Colley, president of The Dupuy Group, commented that “with the benefit of our shared resources and expertise, Dupuy will continue to provide best-in-class service and grow with our customers.”

TIP focuses on acquiring and operating essential transportation and logistics infrastructure across the United States. This marks TIP’s third acquisition, following its purchases of port operators Carolina Marine Terminal and Worldwide Terminals Fernandina.

Jason Ray, president of Savage’s infrastructure sector, believes Dupuy strengthens their network of nearly 50 ports and terminals, enhancing their ability to deliver critical supply chain services. Ryan Stewart, partner of Ridgewood Infrastructure, anticipates synergies in the Dupuy transaction with its port facilities in North Carolina and Florida.

In the technology sector last month, Baton Rouge’s private equity-backed software developer Kologik LLC acquired Alabama-based ALEN Inc., which offers cloud-based software solutions to law enforcement agencies. The combined entity’s goal is to streamline law enforcement agencies’ processes and achieve greater efficiency in policing. Terms of the deal were not disclosed.

Both companies offer electronic records management, computer-aided dispatch, and access to criminal justice databases for law enforcement agencies. The transaction will bring Kologik’s unique offerings to ALEN’s customers including jail-management software, a real-time information-sharing tool for officers and administrators, and automated arrest reports.

G.F. Gay Le Breton is managing director for Chaffe & Associates Inc., responsible for the merger and acquisition activities of the firm. Ryan Gerton is a research associate with the firm. Investment banking services are provided by Chaffe Securities Inc., member FINRA/SIPC.