Eden Prairie-based Optum has forked over $4.9 billion for a Denver-based dialysis company’s network of medical providers.
DaVita Medical Group will split off from DaVita Inc. and join Optum’s OptumCare division. The deal is all cash and is slated to close in 2018 after meeting regulatory approvals and conditions.
Optum is a subsidiary of Minnetonka-based insurer UnitedHealth Group.
“Combining DaVita Medical Group and Optum advances our shared goal of supporting physicians in delivering exceptional patient care in innovative and efficient ways while working with more than 300 health care payers across Optum in ways that better meet the needs of their members,” said Larry C. Renfro, CEO of Optum, in a news release.
DaVita Medical Group serves about 1.7 million patients a year through about 300 medical clinics. It also operates 35 urgent-care centers and six outpatient surgery centers, the release says.
DaVita Medical Group posted a $5 million loss in the third quarter of this year on $1.2 billion in revenue, according to filings with the U.S. Securities and Exchange Commission.
Optum’s OptumCare division works with more than 80 health plans to serve millions of consumers annually through 30,000 affiliated physicians and hundreds of care facilities.
The news release said Joe Mello, chief operating officer of DaVita Medical Group, will continue in a leadership role in the combined entity, as will the DaVita Medical Group leadership team.
DaVita Inc. will retain its kidney care division and plans to use the proceeds from the transaction for significant stock repurchases over one to two years after the closing and to repay debt and for general corporate purposes, the release states.
Stories on the purchase appeared in news outlets from the New York Times to Reuters to Investor’s Business Daily. A month before the sale, Reuters reported that DaVita wanted to sell its medical division for $4 billion.
Many news outlets noted the deal came days after CVS Health announced plans to buy Aetna for $60 million and some spoke to industry analysts who noted the trend of insurers and providers merging.
DaVita Medical Group manages and operates medical groups and affiliated physician networks in California, Colorado, Florida, Nevada, New Mexico and Washington.