LHC Group Inc. (Nasdaq: LHCG) was down nearly 3.5% by the close on Thursday after a report indicated that the Federal Trade Commission (FTC) has terminated its pending agreement with UnitedHealth Group (NYSE: UNH). reexamined, this time due to a potential vertical damage theory.
Broadly speaking, concerns about the vertical damage theory are generally associated with concerns about market competition. Other factors could include misusing confidential customer information, preventing or denying access, increasing opportunities for collusion, or evading taxes or regulations.
According to reports from Seeking Alpha, citing traders and a Capitol Forum report, the FTC’s intelligence gathering is almost complete.
In addition, UnitedHealth has reportedly hired an attorney who previously defended the company against the FTC over its Change Healthcare purchase.
The upcoming acquisition was originally announced in March 2022. UnitedHealth Group is set to buy LHC Group for $170 a share. When and if the transaction closes, the company will be integrated into UnitedHealth Group’s Optum.
In June, the FTC asked both companies for additional information about the transaction. Both companies also received a second inquiry from the FTC, reportedly related to the payment of workers in the home healthcare sector.
It was announced last month that UnitedHealth’s acquisition of LHC Group should be completed in the first quarter of 2023, according to a filing with the United States Securities and Exchange Commission (SEC).
“As previously announced, on June 10, 2022, the Company and UnitedHealth Group each received a request for additional information and documentation from the U.S. Federal Trade Commission (FTC) in connection with the FTC’s review of the merger,” reads it in the filing. “On December 6, 2022, the Company and UnitedHealth Group certified to the FTC that they have substantially complied with their respective second filings. As a result, the Company expects closing of the transactions contemplated by the merger agreement, including the merger, to occur in the first quarter of 2023.”
In the end, LHC Group also pushed back the termination date for its sale to UnitedHealth Group to March 28.