UnitedHealth's Optum to acquire DaVita Medical Group, DaVita up 3% premarket

UnitedHealth's Optum to acquire DaVita Medical Group, DaVita up 3% premarket

UnitedHealth Group Inc (NYSE:UNH) said it is purchasing the kidney dialysis company's DaVita Medical Group in a $4.9 billion all-cash deal, and the primary care unit will become part of UNH's Optum division. That deal stands in contrast to the UnitedHealth mix, which involves a PBM in addition to health coverage and, now increasingly, physicians.

"I am so proud of the DaVita Medical Group accomplishments, including our excellent clinical outcomes as reflected in our star ratings performance, our strong emphasis on growing physician leaders, our teammate engagement, and advancing the care model", Thiry said.

At a time of increasing uncertainty in the health care marketplace, insurers, hospitals, doctors and drugstores are looking outside their traditional businesses to join forces. UnitedHealth bought Surgical Care Affiliates for about $2.3 billion in March is notable.

The acquisition of DaVita Medical Group, which includes such high profile organizations as HealthCare Partners and the Everett Clinic, is the latest move by UnitedHealth to expand into the realm of delivering medical care as a way of reducing costs. Last month, the company told investors that it has medical groups in 30 markets, and a health-care provider presence in 60. DaVita later expanded it.

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.

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But the company has struggled with the physician operation.

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

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

DaVita intends to use the proceeds from the sale for stock repurchases, debt repayment and general corporate purposes.