Option Care's next move after lost bid

Infusion therapy provider Option Care Health may do well to stick to its knitting after losing its bid for home health player Amedisys to UnitedHealth-owned Optum.

Why it matters: Infusion services is a fragmented space with a handful of sizable sponsor-backed and independently-owned targets set to come to market.

What they're saying: "The company’s infusion suite strategy continues to fire on all cylinders as the suites scale to full capacity and nursing productivity continues to increase (expected to eventually exceed the current 10% uplift in productivity)," William Blair analysts Matt Larew and Madeline Mollman write.

• "The standalone Option Care can generate high-single-digit organic top-line growth and EBITDA growth in the low double digits to mid-teens," they write.
• "Option Care’s management team has said that should the deal fall through, Option Care will continue to explore strategic M&A opportunities and will be a disciplined acquirer," they continue, noting Optum has said its next acquisition does not have to be a home health asset.
• "The company has no comment on our M&A strategy and broader capital deployment strategy going forward," an Option spokesperson said when replying to a request for comment from Axios.

Between the lines: "If they're smart they get ready to compete for Paragon," says one health care banker.

• Infusion services company Paragon Health was acquired by Peak Rock Capital in 2020.
• Another potential takeout candidate is Senderra, which hired a bank last year and is preparing to launch in the coming months, the banker says.

Catch up fast: Home health and hospice operator Amedisys accepted an approximately $2.8 billion stock-and-cash merger bid from Option Care in May — only to back out this month, after a surprise sweetened offer from UnitedHealth Group-owned Optum.

• Optum is set to acquire Amedisys for $101 a share, or almost $3.29 billion, in an all-cash deal.

• Baton Rouge, Louisiana-based Amedisys provides home health, hospice and higher-acuity care services across 522 locations in 37 states and the District of Columbia. It netted a total service revenue of $2.23 billion in 2022, up slightly from the previous year.

Of note: "Option Care Health benefits from a leading platform in home and alternate site infusion services and a proven track record of execution," CEO John Rademacher said in a statement. "We remain confident in our growth trajectory, which is underpinned by current industry trends and market forces as well as our strong financial position."

What we're watching: Beyond Option Care's next move, the Optum/Amedisys tie-up is likely to draw regulatory scrutiny under a more aggressive FTC.