MINNEAPOLIS _ A UnitedHealth Group division is poised to become one of the nation's largest operators of outpatient surgery centers with a $2.3 billion acquisition announced Monday.
It's the latest move by United, which is the nation's largest health insurer, to provide health care directly to patients through its Optum division, which also offers health care IT and a growing business managing pharmaceutical benefits.
Optum, which liked UnitedHealth is headquartered outside the Twin Cities, would acquire all outstanding common stock of Illinois-based Surgical Care Affiliates, Inc., for $57 per share, according to acquisition terms announced Monday.
In 2015, Optum became the nation's largest provider of urgent care services by acquiring West Virginia-based MedExpress, which stock analysts cited while praising the deal on Monday.
"Similar to MedExpress, we expect (Surgical Care Affiliates') broad range of services and ability to lower cost was a strong driver in Optum's interest _ the company previously indicated that MedExpress was able to perform the vast majority of services performed in an ER while lowering the average cost from $1,500 per visit to $150," wrote Christine Arnold, an analyst with Cowen and Company, in a note to investors.
Surgical Care Affiliates, or SCA, operates 205 facilities in 33 states including 197 ambulatory surgery centers. The facilities offer an alternative to hospital care for procedures that don't require an overnight stay.
SCA is based in suburban Chicago and serves about 1 million patients per year. Optum has 20,000 affiliated physicians and operates hundreds of care facilities.
"Combining SCA and OptumCare will enable us to continue the transition to high-quality, high-value ambulatory surgical care, partnering with the full range of health systems, medical groups and health plans," said Larry Renfro, vice chairman of UnitedHealth Group and Optum chief executive, in a statement announcing the deal.
Before Monday's announcement, Optum and SCA launched a partnership in 2016 that covered at least five markets, said Brian Tanquilut, an analyst with Jefferies. In a note to investors, Tanquilut wrote that SCA "has gained great strides in introducing an orthopedic program that we believe is starting to gain traction in shifting patients from inpatient/hospital settings to lower cost (surgery center) settings."
Across the country, there were about 5,400 ambulatory surgery centers in 2015, according to an industry trade group. Hospitals and doctors often are involved with ownership of the centers, which first appeared in the 1970s.
In comments during a November investors conference, SCA's chief financial officer said the company has more than 3,000 physicians who are equity investors in facilities managed by the company. In addition, about 4,000 physicians perform procedures at SCA surgery centers.
Monday's agreement calls for the acquisition of SCA's outstanding common stock for a fixed price of $57 per share, to be funded between 51 percent and 80 percent with UnitedHealth Group common stock. The final percentage will be determined at UnitedHealth Group's option, and the remainder will be in cash.
The cash-stock deal offers SCA shareholders a 17 percent premium to the company's previous share price, said Arnold of Cowen and Company.
"The combination of SCA and OptumCare is another step forward toward our vision of becoming the partner of choice for surgeons," said Andrew Hayek, chairman and chief executive at SCA, in a statement.
The transaction is expected to close during the first half of 2017. It's expected to be neutral to UnitedHealth Group's outlook for adjusted net earnings per share in 2017, the company said, and modestly accretive in 2018.
For UnitedHealth Group, the acquisition is the company's biggest since its purchase of pharmaceutical benefit manager Catamaran Corp, a deal valued at $12.8 billion when it was announced in March 2015.
UnitedHealth Group shares were down 46 cents on Monday, closing at $161.95.
