Tuesday, 12 December, 2017

UnitedHealth Continues Healthcare Shakeup With DaVita Deal

UnitedHealth's Optum to acquire DaVita Medical Group, DaVita up 3% premarket UnitedHealth Group's Optum to acquire dialysis-center chain DaVita for $4.9B
Nellie Chapman | 06 December, 2017, 19:22

The nation's biggest health insurer is spending almost $5 billion to buy hundreds of clinics, just three days after rival Aetna announced a tie up with CVS Health.

This move is part of a growing shift for health insurers to play a more direct role in actual medical services.

It serves ~1.7M patients per year through ~300 primary care and specialty care clinics, 35 urgent care centers and six outpatient surgery centers. The local offices include doctors offices and dialysis centers.

Reuters reported last month that DaVita was exploring a sale of its medical unit.

The transaction should close in 2018. Its shares gained less than 1 percent to $220.48 on Wednesday, lifting its market capitalization to more than $212 billion. The company already operates medical practices in Southern California and elsewhere, and it owns almost 250 MedExpress urgent-care clinics. In March, UnitedHealth purchased Surgical Care Affiliates for $2.3 billion.

Through its Optum unit, which operates a large pharmacy benefit manager and offers a wide array of health care services, UnitedHealth Group is among the most diversified and the most successful of the large insurers.

"Combining DaVita Medical Group and Optum advances our shared goal of supporting physicians in delivering exceptional patient care in innovative and efficient ways", Larry C. Renfro, Optum's chief executive, said in a news release.

DaVita's physician network unit recorded sales of $4.11 billion a year ago but had become a major drag on the company's financial performance in recent quarters despite contributing 30 per cent to total revenue.

DaVita says it plans to focus on its kidney-dialysis business, and use the money for share repurchases, debt payment and general corporate purposes.

DaVita's medical unit had been a significant drag on the company's financial performance in recent quarters.