UnitedHealth to buy Deerfield's Surgical Care for $2.3 billion
The U.S.'s biggest health insurer, UnitedHealth Group, will buy Deerfield-based Surgical Care Affiliates for about $2.3 billion, adding an outpatient surgery chain to its growing health care-delivery business.
UnitedHealth will pay $57 a share, with 51 percent to 80 percent of that in stock and the rest in cash, the companies said in a statement. The price is a 17 percent premium to Surgical Care's closing value Friday. The two companies previously worked together as partners.
Surgical Care serves about 1 million patients a year at its 205 facilities and will be combined with UnitedHealth's OptumCare unit, which provides urgent and primary care. The deal will give UnitedHealth greater control over one of the most expensive parts of health care, complex operations that are often done in hospitals but are moving to outpatient settings.
"Joining with OptumCare will enable us to better support and empower independent physicians, helping them provide high-quality care for their patients while making health care more affordable. The combination of SCA and OptumCare is another step forward toward our vision of becoming the partner of choice for surgeons," said SCA Chairman and CEO Andrew Hayek. "We already have a strong relationship with OptumCare, so we have seen firsthand that our cultures and strategies are aligned and complementary."
Hayek and the SCA leadership team will continue as part of the combined OptumCare platform.
Surgical Care "could provide a vehicle for UnitedHealth to more aggressively move surgical procedures away from the expensive hospital setting," Matthew Borsch, an analyst at Goldman Sachs, wrote in a note to investors.
Doctors and hospitals are also facing pressure to take more responsibility for the care they provide, as insurers and the government link payments to quality measures. They've also started paying health providers in "bundles" - lump sums for all of the services provided - forcing increasingly tighter collaboration.
Surgical Care rose 16 percent to $56.45 at 11:38 a.m. in New York, after earlier hitting their highest-ever intraday price. The private-equity firm TPG, which owns 30 percent of Surgical Care, has agreed to tender its stock, the companies said, and the deal is expected to close in the first half of the year. UnitedHealth shares were down less than 1 percent to $161.61.
UnitedHealth has outperformed all other major U.S. insurers partly thanks to its diversified business model, which also includes pharmacy-benefits management and consulting services. The deal will further broaden its operations, and comes as hospitals and health systems are making their own forays into the insurance business, threatening to compete with traditional players.
Revenue for Surgical Care is expected to reach $1.48 billion this year, based on an average of analysts' estimates compiled by Bloomberg. The deal will probably have no effect on UnitedHealth's outlook for adjusted earnings per share this year, and boosts them modestly next year, the company said.
UnitedHealth is the latest in a string of strategic buyers for TPG's health assets. TPG bought Surgical Care in 2007 from HealthSouth Corp., then took the business public in 2013 for $24 a share. Other recent TPG deals include the $2 billion sale of pharmacy-benefits manager EnvisionRX to Rite Aid Corp. in 2015, and the $13.4 billion sale of TPG-backed Biomet Inc. to rival Zimmer Holdings Inc. in 2014.
• Business Wire contributed to this report.