Company leaders will tell you that the talks to combine Amedisys Inc. (Nasdaq: AMED) and Option Care Health (Nasdaq: OPCH) started in earnest over the last several months.
But the two have been circling each other ever since the early days of the COVID-19 pandemic.
“We announced a relationship with Amedisys going back to Operation Warp Speed in helping to deal with the public health emergency and thinking how to get monoclonal antibodies into the marketplace,” Option Care Health President and CEO John C. Rademacher said during this week’s BofA Securities Health Care Conference. “The orbits continued to circle and we saw a really important opportunity to work more closely, and then to create something better as we looked at the capability sets of both organizations.”
The ability to cover a broad spectrum of the care continuum and being a more attractive partner to payers and health systems were the main drivers in the decision to combine the two companies, Rademacher said.
The Bannockburn, Illinois-based Option Care Health is one of the largest providers of home and alternate site infusion services in the U.S. It has 7,500 employees, 4,500 clinicians and delivers care across all 50 states.
The team at Option Care has been working hard to establish itself as a dependable care provider with hopes that it could – eventually – broaden its scope.
As more care shifted into the home and payers started to value the quality of care by focusing on the total cost of care, Rademacher and his team felt like the winds were shifting.
“The better you can align around the needs of the payers, the more we can make certain that we have a position at the table to have those conversations and to make certain that we’re paid fair value for the value that we deliver,” Rademacher said. “We know there’s waste in the system. There are ways for us to become more efficient and effective in the way that we’re addressing the needs of patients in the home. That’s a benefit for the patient. That’s a benefit for the payer. That’s a benefit for us from a capacity standpoint and being able to leverage and utilize the model in new and more efficient ways.”
Together, Option Care and the Baton Rouge, Louisiana-based Amedisys will — in theory — create an “end-to-end” continuum of care under one roof.
Despite the excitement, challenges are still on the horizon post-close. Among those is the uncertain payer landscape in home health care.
Because of that, it was important for Option Care to partner with what they believe is a dependable and quality-focused provider in Amedisys.
“We know that the reimbursement model will be changing over time and we’ve been thinking about what we need to do to provide broader services with that,” Rademacher said. “We think that we have built [the reimbursement uncertainty] into the model and an appropriate assessment of those types of changes.”
The deal values Amedisys at $3.6 billion. That number is a 26% premium compared to Amedisys’ closing stock price on May 2.
Option Care Health CFO Mike Shapiro added that the home infusion space is not a stranger to fighting for fair compensation when it comes to service rates.
“No one’s knocking on our door saying they wanted to give us more money in the infusion space either,” Shapiro said. “We fight for every aspect of reimbursement to make certain that we’re fairly paid and we believe that there’s a compelling value proposition here to drive better outcomes for their patients.”