Shareholder sues LHC Group over proposed Optum merger

Photo: Pichsakul Promrungsee EyeEm/Getty Images

A shareholder at in-home healthcare service provider LHC Group, which UnitedHealth Group subsidiary Optum is set to acquire, is suing the latter and its board of directors over the proposed merger, court documents show.

Optum, which manages drug benefits and offers data analytics services and works with more than 100 health plans, announced the acquisition plan in March, saying it would purchase LHC Group for about $5.4 billion.

A month later, according to the lawsuit, LHC Group filed a preliminary proxy statement with the U.S. Securities and Exchange Commission, which recommended shareholders approve the merger. The lawsuit, however, claims the statement omits or misrepresents important information.

Specifically, the complaint alleges the statement leaves out LHC Group's financial projections, analyses performed by the company's financial advisors, the sales process leading up to the merger and any potential conflicts of interest.

The shareholder, David Schuppert, claimed that because the information presented was misleading or faulty, other LHC Group shareholders will vote on the proposed merger without full disclosure of necessary information regarding the merger's background, the board's recommendations for the merger and any potential financial impacts.

Claiming violations of the Securities Exchange Act, Schuppert is seeking an injunction that would prevent Optum and LHC Group from proceeding with the merger until all of the relevant information is shared, and is seeking rescissary damages in the event the merger goes through regardless.

WHAT'S THE IMPACT

Optum positioned the move as helping to advance value-based care, and said it would accelerate the combined companies' ability to deliver integrated care, leading to improved outcomes.

The agreement calls for the acquisition of LHC Group's common stock for $170 per share in cash and is expected to close in the second half of 2022 subject to shareholder approvals, regulatory approvals and other customary closing conditions. 

Co-founders Keith and Ginger Myers will personally invest $10 million in UHG stock following the close of the combination. 

The acquisition is expected to be neutral to UHG's outlook for adjusted net earnings per share in 2022, modestly accretive in 2023, and advancing strongly in subsequent years.

THE LARGER TREND

LHC provides healthcare services in the home for a demographic of mostly older patients dealing with chronic illnesses and injuries. Optum manages drug benefits and offers data analytics services and works with more than 100 health plans.

The Optum and LHC merger is focused on services at home for those who are chronically ill or injured.

LHC Group's 30,000 employees, including frontline care providers and administrative and support personnel, provide more than 12 million annual in-home patient-focused interventions.

The organization's quality scores run about one-third higher than the industry average, the companies said. The LHC Group leadership team will continue forward as part of Optum Health.
 

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com