(Reuters) – UnitedHealth Group Inc., the largest health insurer in the United States, will buy DaVita Inc's primary and emergency care services for $ 4.9 billion in its second acquisition this year to expand its group of physicians from rapid growth, he said on Wednesday.
Insurers they try to reduce medical costs by playing a more direct role in medical services, arguing that they can save money by moving patients to cheaper and more accessible places for routine or non-life-threatening emergency medical services.
On Sunday, health insurer number 3 Aetna Inc. agreed to have CVS Health purchase it as part of a campaign to expand medical services at CVS pharmacies to include more preventive screenings, such as vision and hearing.
DaVita, based in Denver, operates medical groups in six states that serve 1.7 million patients in about 300 clinics, joining the 250 UnitedHealth MedExpress urgent care centers and its 200 surgical centers that are part of Affiliates of recently acquired surgical care.
Shares in DaVita rose 9 percent, a gain of $ 193 million for billionaire investor Warren Buffett, who owns a 20 percent stake in the dialysis company and medical group.
Reuters reported last month that DaVita was exploring the sale of its medical unit. The DaVita kidney dialysis unit is not included in the agreement.
Leerink analyst Ana Gupte said the purchase is likely to increase UnitedHealth's earnings per share by 1 percent to 4 percent in 2018 and from 5 to 7 percent in 2019, the first full year after that the deal be closed.
EvercoreISI analyst Michael Newshal said he thought the additions of short-term gains would be almost neutral since the price UnitedHealth was paying was high.
UnitedHealth did not provide any details on the financial impact of the purchase. Its shares earned less than 1 percent at $ 220.48 on Wednesday, raising its market capitalization to more than $ 212 billion.
UnitedHealth purchased Surgical Care Affiliates for approximately $ 2.3 billion in March.
The acquisition of DaVita will add 2,200 physicians, nurse practitioners and physician assistants and another 15,000 affiliated providers who provide services to their patients to the UnitedHealth Optum unit, which has more than 30,000 physicians who work or are affiliated with its practices. .
Optum includes MedExpress urgent care centers, surgical centers acquired in March from $ 2.3 billion of Surgical Care Affiliates, pharmacy benefit management services and a bank.
DaVita will continue to operate DaVita renal care, which owns or helps manage 2,470 outpatient dialysis centers in the United States.
The DaVita medical group had $ 4.11 billion in sales last year, or 30 percent of the total. It had become a major drag on the company's financial performance in recent quarters, as it had problems with low payments from the government's Medicare Advantage program.
DaVita plans to use the proceeds of the sale for the repurchase of shares and to pay the debt.
Report of Caroline Humer in New York and Divya Grover in Bengaluru; Edition of Sai Sachin Ravikumar and Susan Thomas