(Reuters) -The U.S. Department of Justice and three U.S. states filed a lawsuit on Tuesday to block UnitedHealth Group (NYSE:UNH)’s $3.3 billion acquisition of Amedisys Inc (NASDAQ:AMED), citing concerns that the deal would reduce competition in the home health services market.
“Eliminating the competition between UnitedHealth and Amedisys would harm patients who receive home health and hospice services, insurers who contract for home health services, and nurses who provide home health and hospice services,” the DOJ said in a statement.
The attorneys generals of Maryland, New Jersey and New York are also suing to block the merger.
The Amedisys combination with Optum would be pro-competitive and further innovation, a spokesperson for Optum said. “We will vigorously defend against the DOJ’s overreaching interpretation of the antitrust laws.”
UnitedHealth operates Optum, a health services unit that provides analytics, research and pharmacy care services among others.
A spokesperson for Amedisys said the company remains committed to the transaction. “We look forward to supporting Optum in presenting our case,” the company said.
Following the news, UnitedHealth’s shares fell 1.1% in afternoon trading. Amedisys’ stock was down 2.1% at $90.75 in afternoon trading and is now 10% below UnitedHealth’s offer price of $101 per share.
UnitedHealth announced its intention to acquire Amedisys last year, but analysts anticipated regulatory scrutiny due to UnitedHealth’s presence in the home health sector.
The move follows a recent meeting between the companies’ executives and the DOJ aimed at addressing these concerns, according to Bloomberg News, which first reported the story on Tuesday.
To mitigate antitrust issues, Amedisys proposed selling over 100 locations to a private operator in Texas, contingent upon the deal’s completion, Stephens analyst Scott Fidel said.
“These remedies do not seem sufficient to satisfy the hardline Biden DOJ … Clearly, we’ll look to see whether a Trump DOJ decides to pursue or drop this case in 2025,” he added.
The Justice Department sued to halt UnitedHealth’s acquisition of Change Healthcare (NASDAQ:CHNG) in February 2022, but the transaction was completed later that year.