The largest health insurer in the U.S. will buy DaVita Medical Group of El Segundo, one of the nation’s largest physician groups, for $4.9 billion.
Minnetonka, Minn.-based UnitedHealth Group Inc. announced last week its Optum health services arm would purchase the primary care subsidiary of DaVita Inc., which is headquartered in Denver, Colo.
Company officials said the deal would enable the Boston-based Optum to expand its market reach of outpatient surgery centers and urgent care clinics into California, Colorado, Florida, Nevada, New Mexico and Washington.
The Dec. 5 agreement calls for the transaction to close in 2018, following regulatory approval.
“The combination of DaVita Medical Group and Optum should lead to even higher levels of performance,” said Kent Thiry, chief executive of DaVita Inc., which moved its headquarters from El Segundo to Colorado in 2009, in a statement.
DaVita, a Fortune 500 company which provides kidney care across the U.S., will not be selling its kidney dialysis unit.
The DaVita Medical group now serves about 1.7 million patients a year through nearly 300 medical clinics, 35 urgent care centers and six outpatient surgery centers. After the sale, it will join Optum’s Optum Care Division, adding to UnitedHealth’s 250 Med Express urgent care centers, 200 surgical centers and 30,000 affiliated physicians.
“This is yet another step forward in UnitedHealth’s strategy to become a vertically integrated, large player in the direct delivery of care,” said Alan Little, Southern California-based vice president for health care consultant Freed Associates. “They've demonstrated a good track record of knowing how to make this type of acquisition successful."
DaVita Inc. plans to use the proceeds from the sale of its medical group to repurchase stock, pay off debt and for other purposes, officials said. Since the sale announcement last week, its stock has risen nearly 14 percent to $69.38 Monday.
Health business reporter Dana Bartholomew can be reached at email@example.com. Follow him on Twitter @_DanaBart.