UnitedHealth will pay $57 a share, with 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.
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, based in Deerfield, Illinois, 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.
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