On Monday, Amedisys Inc . (NASDAQ:AMED), a provider of home health and hospice services, experienced a change in stock rating by Deutsche Bank. The firm downgraded the stock from Buy to Hold and set a price target of $101.00. This adjustment comes in light of the company's impending acquisition by Optum, a part of UnitedHealth Group (NYSE:UNH).
The downgrade reflects Deutsche Bank's latest model update, which now factors in the anticipated acquisition. Amedisys has recently sold off some of its home health assets, which Deutsche Bank interprets as a move towards finalizing the deal with Optum. The new price target of $101.00 is aligned with the proposed terms of the acquisition.
The analyst from Deutsche Bank stated, "We are updating our model to incorporate the pending acquisition by Optum (UnitedHealth). We believe Amedisys' recent divestiture of certain home health assets signals progress towards the Optum for AMED deal closure this year and downgrade the stock to Hold."
The price target revision to $101.00 is specifically based on the acquisition deal price, indicating that the analyst sees the transaction as a determining factor for the stock's value. Amedisys' strategic divestitures are seen as an effort to streamline operations and facilitate the acquisition process.
The downgrade comes as Amedisys proceeds with the divestiture of over 100 of its home health assets, a move aimed at addressing antitrust issues tied to the merger. Vital Caring has been identified as the potential buyer in this divestiture process.
These recent developments are part of a strategic alignment with regulatory expectations, as suggested by the timing of the 2025 home health rule proposal by the Centers for Medicare & Medicaid Services. The divestiture agreement has significantly reduced the perceived risk of the deal not concluding.
Amedisys has also announced a definitive agreement for the sale of certain home health care centers to VCG Luna, LLC, an affiliate of VitalCaring Group. This strategic transaction is in anticipation of the merger with UnitedHealth Group, with the sale including specific Amedisys home health locations and select UnitedHealth Group care centers.
The merger is expected to be finalized in the second half of 2024, with Amedisys becoming a wholly owned subsidiary of UnitedHealth Group. Both Amedisys and UnitedHealth Group have expressed commitment to ensuring a smooth transition for the affected centers, focusing on maintaining high-quality care for patients and continuity of services."
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