UnitedHealth buying DaVita group, including 9 local offices

Yolanda Curtis
December 6, 2017

UnitedHealth Group's (NYSE:UNH) Optum inks an agreement to acquire DaVita's (NYSE:DVA) DaVita Medical Group for ~$4.9B in cash. The deal also includes the purchase of 35 urgent care centers.

The recorded sales of DaVita's physician network is $4.11 billion a year ago and had become a major drag on the company's financial performance in recent quarters.

UnitedHealth's Optum health-services arm has been building up its roster of physician practices, clinics and surgery centers with years of mostly under-the-radar acquisitions, but DaVita's group represents its highest-profile deal so far in the doctor business. CVS stock dipped slightly on Wednesday following the UnitedHealth and DaVita deal.

As Optum continues to build out primary and outpatient services, CVS Health and Aetna struck a $69 billion deal to compete against Optum's growing market share (though some think the merger was inspired by Amazon). It operates in states including California, Washington and Florida.

Thiry said that DaVita will continue to focus on its US and worldwide kidney care businesses and plans to pursue other investments in healthcare services outside of kidney care. The group employs around 2,200 health-care providers, including doctors, nurse practitioners and physician assistants. At the time, HealthCare Partners was the largest US operator of physician groups and networks. It had become a major drag on the company's financial performance in recent quarters as it struggled with low payments from the government's Medicare Advantage program. "Optum's data, analytics, technologies and clinical expertise will help DaVita Medical Group physicians deliver even higher quality care more effectively to the patients they serve". DaVita paid $4.4 billion for the physician-network business in 2012, but has sold small chunks and acquired other businesses since.

DaVita said in the announcement it will use the proceeds from the transaction for significant stock repurchases over the next two years, to repay debt and for general corporate purposes.

And, the deal is expected to close in 2018, but is subject to regulatory approvals.

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