UnitedHealth's Optum will acquire Advisory Board's healthcare business for $1.3B

merger and acquisition
For Optum, the acquisition of The Advisory Board Company's healthcare division will likely further diversify its business and expand the user base of its technology platform, OptumInsight. (istocksdaily)

It’s official: Optum, the healthcare services arm of UnitedHealth Group, will acquire The Advisory Board Company’s healthcare consulting and technology business for $1.3 billion.

The Advisory Board announced (PDF) the definitive merger agreement on Tuesday, confirming a report in July that the consulting firm was nearing a deal to sell its healthcare division to Optum and its education division to Vista Equity Partners.  

The deal with Optum is expected to close by the end of 2017 or in early 2018. It is contingent upon approval from the Advisory Board's shareholders, U.S. antitrust clearance and the closing of the deal with Vista Equity Partners. The firm said the total value of the two transactions is approximately $2.58 billion, including the after-tax proceeds for the sale of its education business. 

The Advisory Board’s healthcare business offers research, technology and consulting services aimed at improving the performance of healthcare organizations. The firm said (PDF) its combination with Optum will enhance its research while offering a broader range of advisory and technology capabilities to its 4,000-plus members. 

“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 healthcare stakeholders,” said Robert Musslewhite, chairman and CEO of the Advisory Board.

Optum CEO Larry Renfro added that Optum looks forward to working alongside the Advisory Board's team and leaders "to help its members and our clients solve their biggest challenges."

For Optum, the acquisition will likely further diversify its business and expand the user base of its technology platform, OptumInsight, according to Leerink Partners analyst Ana Gupte, who deemed the deal “strategically attractive.”

She added that she expects UnitedHealth to continue “successfully managing” any confidentiality concerns across its managed care businesses and Optum.

This is the second major acquisition that Optum has made this year. In January, it acquired the ambulatory surgery center and surgical hospital provider Surgical Care Affiliates for $2.3 billion. The deal expanded OptumCare’s capabilities to include outpatient surgical procedures.