Health insurer UnitedHealth (UNH) and home healthcare provider Amedisys (AMED) have entered a settlement with the U.S. Department of Justice (DOJ), clearing the way for their $3.3 billion merger. With the deal now approved, UNH is poised to deepen its footprint in home-based care, strengthening its position in a fast-growing healthcare sector.
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Following the news, UNH stock was down 1.4% while shares of Amedisys traded 1.6% higher.
It must be mentioned that the DOJ had sued to block the deal in November, arguing that it would reduce competition in key markets. At the time, regulators said the merger would give UNH control over nearly 500 locations in states where it already operates, potentially driving up costs and limiting choices for patients.
Key Terms of the Settlement
The agreement requires the companies to divest at least 164 home health and hospice facilities across 19 states.
These divested facilities generate approximately $528 million in annual revenue. This represents the largest divestiture of outpatient healthcare services ever mandated to resolve a merger challenge.
In addition, Amedisys will pay a $1.1 million civil penalty for allegedly providing false information to the government during the merger review process.
Additional Provisions
The proposed settlement includes several other key measures. A court-appointed monitor will track UNH’s compliance and ensure the divestitures are carried out properly. Also, if certain regulatory approvals fall through, UnitedHealth may be required to divest eight additional locations.
To further protect market fairness, the agreement includes strict rules preventing UnitedHealth from interfering with the new owners’ operations.
Is UNH a Good Buy Right Now?
Turning to Wall Street, UNH stock has a Moderate Buy consensus rating based on 18 Buys, four Holds, and two Sells assigned in the last three months. At $315.05, the average UnitedHealth stock price target implies a 29.86% upside potential.
