Optum to Purchase DaVita Medical Group for $4.9B

UnitedHealth Is Buying a Major Doctor Group on the Heels of the CVS-Aetna Deal

UnitedHealth Is Buying a Major Doctor Group on the Heels of the CVS-Aetna Deal

DaVita Medical Group operates almost 300 medical clinics that provide primary and specialist care to approximately 1.7 million patients per year.

UnitedHealth Group's health services company is set to add another acquisition to its trophy room.

UnitedHealth Group's Optum division announced plans to further expand its medical offerings with a proposed $4.9 billion acquisition of dialysis and medical group manager DaVita, Inc.

Kidney-care provider DaVita had previously said that it was "pursuing strategic alternatives" for its physician operation, which has had bumpy financial results and recently surprised investors by driving down earnings for DaVita, which recorded a net loss in the third quarter.

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). DaVita's largest business is kidney care, through the 2,470 outpatient dialysis centers that it runs or provides administrative services to across the USA, serving more than 200,000 patients a year.

Insurers are increasingly working with doctors and hospitals, experimenting with different methods of paying for care and attempting to provide better oversight of potentially expensive chronic conditions like diabetes or heart failure.

"Following this transaction, DaVita will continue to be a leader in population health management, with a focus on our US and worldwide kidney care businesses", Kent Thiry, chairman and CEO of DaVita, said in the news release.

UnitedHealth bought Surgical Care Affiliates for about $2.3 billion in March.

( DVA ), for about $4.9 billion in cash. At the time, HealthCare Partners was the largest US operator of physician groups and networks.

But the company has struggled with the physician operation.

Shares in DaVita rose 9 percent, a $193 million gain for billionaire investor Warren Buffett, who owns a 20 percent stake in the dialysis and medical group company.

DaVita said it would use the proceeds from the deal with Optum for stock buybacks, debt repayment and other purposes.

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