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Amedisys shares could have downside to $74 a share in a no-deal scenario – analyst

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Amedisys (NASDAQ:AMED) shares could have significant downside from current levels its planned $3.3 billion sale to UnitedHealth (NYSE:UNH) doesn’t close, according to a Jefferies analyst.

Amedisys (AMED), which agreed to a $101 a share sale to UnitedHealth in late June of last year, is waiting for the Dept. of Justice to sign off on the deal for the home-health care provider. Amedisys announced in August that it received a request from the DOJ for more information regarding its planned sale to UnitedHealth (UNH).

Shares of Amedisys (AMED) fell 5% on May 31 after a report that a potential divestiture buyer in its planned sale to UNH dropped out of the process as the companies work to appease antitrust regulators. A private equity-backed company that had agreed to buy more than 100 locations dropped out, according to a Capitol Forum report at the time.

The share of Amedisys (AMED) have the potential to fall to $74 a share, a 20% drop from its Friday close, if the sale to UnitedHealth (UNH) can’t be completed, Jefferies analyst Brian Tanquilut, who has a hold rating and $101 price target on AMED, wrote in a note a little over a week ago.

“Looking at worst-case Scenario, we think AMED trades Down to ~$74 in a no-deal scenario,” Tanquilut wrote in a May 31 note. “Our view is that AME’s valuation will likely settle at ~10x 2025E EBITDA post-deal break, which represents a modest, easily-justifiable premium over peer EHAB (currently trading at 9.5x ’25E EBITDA).

The $74 downside scenario doesn’t reflect the $144 million break-up fee that Amedisys (AMED) will receive if UNH is unable to get regulatory approve for the deal. Including the break-up fee, Amedisys share would be worth $77 a share.

Capitol Forum reported last month that UnitedHealth (UNH) offered a sweetened package of divestitures to try to appease the DOJ for its review of the $3.3 billion deal. The companies had agreed to divest more than 100 locations to a private-equity backed buyer. The report said at the time that the DOJ was said to be having discussions with the companies, while the regulator was also considering suing to block the combination.

Even though the most recent report indicated that AMED/UNH appears to be having issues with potential divestitures, Tanquilut still expects the sale of AMED will get done this year.

The companies appear to have overlaps in Tennessee, Georgia, Louisiana and Kentucky, though these are “attractive” home nursing markets, where buyers of the assets should emerge, including potential strategic acquirers looking to expand or build home nursing operations in those states, Jefferies Tanquilut added.

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