Optum, the health services arm of UnitedHealth Group, has outbid Option Care Health to acquire Amedisys, a home health and hospice care provider, in a deal valued at $3.64 billion including net debt of approximately $350 million, or 15.2x estimated 2023 EBITDA of $239 million according to the fairness opinion prepared in support of the transaction. Optum is paying $101 per share for Amedisys in a deal that the Amedisys board and shareholders have selected over Option Care's proposed non-cash merger, which represented the equivalent of $97.38 per Amedisys share based on Option Care Health's closing stock price on May 2, 2023.
Home Health and Hospice EBITDA Multiples
While the multiple is a premium to most home-based services deals, it's also a pretty significant discount compared to Optum's ~$6b acquisition of LHC Group in early 2022 (20.8x EBITDA), which is the second largest home-based services deal in the Scope Research database. LHC was growing at a faster rate than Amedisys at the time of the transaction, which may have been a result of its strategy of focusing its development efforts on joint ventures with health systems. LHC management was projecting a 5-year EBITDA CAGR of 17.4% ($291m estimated 2022 to $593 by 2026), compared to 5.9% for Amedisys. Even eliminating the impact of M&A on EBITDA growth, LHC management was projecting a 12.2% 5-year CAGR, which is considerably higher than Amedisys's management projections.
Recent Valuation Multiples from Large Home Health and Hospice Deals
Still, the deal represents a significant premium to other recent large deals, such as:
Gentiva's acquisition of ProMedica's home health and hospice business in February, which was a $710 million deal at a single digit multiple of reported EBITDA ($80 million to $100 million), A review of ProMedica's publicly-available audits indicates that the home health and hospice business revenue had basically flatlined over the past few years prior to acquisition.
CDR's 2022 acquisition of Humana's hospice business for $3.4b at an implied multiple of approximately 12x.
Other Home Health and Hospice Deals
Get Scope Research's take on other home health and hospice transactions:
About Scope Research
The Scope Research Healthcare M&A Valuation Database currently has financial details for 169 home-based services deals going back to 2010, 113 of which include reported EBITDA multiples. The home health and hospice databases can be purchased individually, while our affordable annual subscriptions provide access to all of our healthcare M&A databases and segments, updated continuously.
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