Optum quietly snaps up another specialty pharmacy as UnitedHealth’s Q3 profits balloon

Optum Headquarters
Optum added two specialty pharmacy companies to its PBM last quarter, including a previously undisclosed purchase of Avella. (UnitedHealth Group)

UnitedHealth quietly purchased Avella Specialty Pharmacy last quarter, marking its second such acquisition over the three-month span.

The company disclosed the acquisition in its third-quarter financial filing but did not list the purchase price. Last month, the insurer said it acquired Genoa Healthcare, a specialty pharmacy company that offers telepsychiatry services and medication management for behavioral health patients. The acquisition added 435 pharmacy locations to the insurer’s PBM OptumRx.

Optum spokesperson Matt Stearns said the company is not disclosing the terms of the deal. Avella’s 2017 revenues hit $1.35 billion in 2017, according to Inc. 5000’s annual list of fastest growing companies. Its three-year revenue growth reached 71%.

“The combination of OptumRx and Avella will improve specialty pharmacy care services and health outcomes for consumers, while helping reduce overall healthcare costs,” Stearns said in an emailed statement.

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On Tuesday’s earnings call, Optum CEO Andrew Witty called both acquisitions “important additions” that offer “distinctive contributions,” particularly in behavioral health and oncology. Responding to questions about whether the pharmacy benefit manager was steeling itself for changes to the industry, Witty underscored the importance of PBMs in preventing drugmakers from increasing prices “at will.”

“It’s critical that any environment ensures there is a disciplining mechanism for price increases in the U.S.” he said. “We’re ready to engage in whatever mechanism that is.”

UnitedHealth reported double-digit third-quarter revenue and earnings growth. Revenues reached $56.6 billion. Net earnings reached $3.2 billion, causing UnitedHealth to raise its 2018 guidance to $12.10 per share.

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CEO David Wichmann credited the strong quarter to the companies focus on digitizing all of its business lines. UnitedHealthcare Chief Operating Officer Dan Schumacher also emphasized the company’s ongoing transition from fee for service to value-based care arrangements, noting that UnitedHealthcare spent $69 billion in value-based in 2018, approximately half of its total medical and surgical expenditures.

The insurer plans to increase that total to $75 billion by 2020, he added.