UnitedHealth Group Incorporated UNH and Amedisys, Inc. AMED have reportedly decided to cancel their plan to sell medical centers to Texas-based VitalCaring Group, a move initially intended to address antitrust concerns related to their $3.3 billion merger. This sale was part of an effort to gain regulatory approval for the merger between Amedisys and UNH’s subsidiary, Optum.

In November, the U.S. Department of Justice filed an antitrust lawsuit, arguing that the merger would give UnitedHealth too much control over the home health and hospice services market, particularly in eight states where it would control more than 30% of the market. This could negatively impact competition and affect home-based care workers and payers.

The divestment deal was intended to transfer some of Amedisys' assets, including home health centers and Optum's locations, to VitalCaring, a provider of home health services. However, complications arose due to a recent court ruling concerning VitalCaring's business practices. The court mandated 43% of VitalCaring’s future profits to be allocated to Encompass Health Corporation EHC and Enhabit, Inc. EHAB. These two companies were involved in a lawsuit alleging unethical practices in VitalCaring’s formation.

This was later followed by UNH terminating the sale agreement with VitalCaring earlier this year. UNH and AMED are now expected to identify new buyers for the divestment assets by March 2025, per reports. Also, the assets in the divesture package are expected to change.

Despite these challenges, the companies are still working to complete the merger, which was previously expected to close by the end of 2024. The new target deadline for closing the deal has been extended to either 10 days following a final court decision on the antitrust lawsuitor by the end of this year, whichever occurs first.

UNH’s Price Performance & Zacks Rank

UnitedHealth shares have declined 2.6% in the past year compared with the industry’s 7.4% fall. It currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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