UnitedHealth buys Advisory Board’s healthcare division as part of $2.6B deal

The Advisory Board Company has announced a $2.6 billion deal which will see UnitedHealth Group’s Optum health services segment take over its healthcare business.

The separate education business will be sold to Vista Equity Partners for $1.55 billion. UnitedHealth will pay $1.3 billion, including debts, for the division that provides research, consulting and analytics services for more than 4,400 healthcare organizations. Rumblings of the deal were reported by Bloomberg in July, and it had been predicted no announcement would come until August due to the “complicated structure” of the transaction.

“The Advisory Board Company is a strong fit for Optum because they share our mission of making the health care system work better for everyone,” Optum CEO Larry Renfro said in a statement. “We have great admiration for the talent and experience of The Advisory Board’s team and its leaders, and look forward to working alongside them to help its members and our clients solve their biggest challenges.”

Advisory Board’s current CEO, Robert Musslewhite, will continue in that leadership role after the sale is completed, with the former Advisory Board division becoming a wholly-owned subsidiary of Optum.

“Joining Optum will enable us to better serve our members, thanks to Optum’s unmatched data analytics resources, investment capacities and operational experience in delivering large-scale solutions and services to all health care stakeholders,” Musslewhite said. “Our team and I look forward to working with Optum to bring our innovative research capabilities into new, untapped markets.”

UnitedHealth said the deal should close late this year or in early 2018, but much of it is contingent on the sale of Advisory Board’s education arm. In the merger agreement submitted to the Securities and Exchange Commission, both UnitedHealth and Advisory Board can terminate the deal if the education deal falls through or if the healthcare division merger hasn’t been completed within seven months. UnitedHealth has an even earlier out, being able to terminate the deal after Dec. 28, 2017 if all its conditions for completing the merger have been met except for the education division sale.

Advisory Board’s shareholders would get $54.29 per share in cash, including a fixed amount of $52.65 per share and the after-tax value of its 7.6 percent stake in Evolent Health after the sale is closed.