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UnitedHealth (UNH) Intends to Buy Amedisys to Boost Home-Health

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UnitedHealth Group Incorporated (UNH - Free Report) unit, Optum, recently submitted a full-cash proposal to combine with Amedisys, Inc. (AMED - Free Report) , a pioneer of home health, high-acuity care and hospice. UnitedHealth has offered $100 per Amedisys share, implying a 26% premium on AMED’s most recent share price.

Ever since the pandemic hit the world, demand for in-house care has risen. People now seek treatment from the comforts of their homes.  This move will combine Optum’s deep expertise in value-based care with Amedisys’ care and quality innovation within the home. Better health outcomes at lower costs will drive Optum’s top line in the future. Moreover, the company can get access to Amedisys’ medicare customers, boosting its UnitedHealthcare business in the future.

Optum contributed 38% to total first-quarter 2023 revenues. The primary growth drivers for Optum are pharmacy care services, care delivery, technology, government services and international portfolio. Each sub-segment of Optum is expected to deliver a solid performance, driving the overall segment’s growth.

UnitedHealth’s offer to combine with Amedisys comes in a bid to tap the growth opportunities as demand for in-home care exceeds the available supply. The company expects to secure approval for the collaboration as no single participant holds more than a single-digit share in this space.

The company expects to serve more than 4 million patients in value-based care arrangements through Optum in 2023. This highlights UNH’s unwavering focus on improving customer experience and providing better health outcomes. This growth is fueled by the growing popularity of value-based care for physicians. The physicians prefer value-based care as they are able to understand, diagnose and treat patients through the full cycle rather than a fee-based service. The company expects to witness continuous growth in value-based care in the future.

Price Performance

Shares of UnitedHealth Group have gained 1.1% in the past month compared with the industry’s growth of 0.5%.

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank & Key Picks

UnitedHealth Group currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Medical space include Ligand Pharmaceuticals (LGND - Free Report) and Masimo Corporation (MASI - Free Report) . Ligand Pharmaceuticals currently sports a Zacks Rank #1 (Strong Buy) and Masimo carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ligand Pharmaceuticals’ earnings surpassed estimates in two of the last four quarters and missed the mark twice, the average surprise being 21.50%. The Zacks Consensus Estimate for LGND’s 2023 earnings indicates a rise of 9.6% from the year-ago actuals. The consensus mark for LGND’s 2023 earnings has moved 26.2% north in the past 30 days.

The bottom line of Masimo beat estimates in each of the trailing four quarters, the average beat being 10%. The Zacks Consensus Estimate for MASI’s 2023 earnings indicates a rise of 3.7%, while the same for revenues suggests an improvement of 19.7% from the respective prior-year tallies. The consensus mark for MASI’s 2023 earnings has moved 0.2% north in the past 30 days.

Shares of Masimo have gained 16.6% in a year. However, Ligand Pharmaceuticals stock has declined 17.4% in the same time frame.

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