Health insurance giant UnitedHealth Group plans to buy healthcare payments firm Equian LLC from its private equity owner for about $3.2 billion, according to The Wall Street Journal, citing people familiar with the matter.
Equian, owned by New Mountain Capital, offers payment-processing services for healthcare companies and insurers and touts its process for reducing overpayment mistakes. Based in Indianapolis, Equian manages more than $500 billion in claims data, the company said.
There is speculation that UnitedHealth would merge Equian into its Optum health services, a rapidly growing part of its business that caters to insurers, hospitals and other healthcare companies. The addition of Equian could help Optum branch out beyond healthcare, as Equian also serves other types of insurance.
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UnitedHealth, with a market value of roughly $235 billion, is the parent of the largest U.S. health insurer, UnitedHealthcare. Optum has helped boost UnitedHealth's growth: The subsidiary broke $100 billion in revenue in 2018, marking an increase of $10.1 billion over last year, according to the company's year-end earnings report.
UnitedHealth has been growing the healthcare services side of its business by quietly buying specialty pharmacies and folding them into its pharmacy benefit management business, OptumRx. The company acquired Avella Specialty Pharmacy last year as well as Genoa Healthcare, the fifth-largest pharmacy chain in the country that offers telepsychiatry services and medication management for behavioral health patients.
Moody’s Investors Service had a positive take on the reported deal.
"The payment integrity company already serves 20 of the top 25 health plans and will further bolster Optum’s business, a credit positive. However, UnitedHealth’s leverage, which is relatively high, will increase modestly as a result of this deal," Dean Ungar, a Moody's vice president, said in a statement.
This week UnitedHealth's Optum unit completed its $4.3 billion acquisition of DaVita Medical Group after getting the final OK from the Federal Trade Commission. It was first announced in 2017 that Optum would acquire DaVita's medical group, one of the nation’s biggest, for $4.9 billion in cash. The company said DaVita Medical Group will join Optum’s physician-led primary, specialty, in-home, urgent and surgery care delivery services business.
The sale to UnitedHealth is the culmination of a monthslong auction process, according to the WSJ.
New Mountain, based in New York, manages more than $20 billion and has invested in several health IT companies including Ciox Health and Signify Health. One of the company's investments, pharmaceutical-chemicals maker Avantor, recently went public, the WSJ said.
Equian was the result of a merger between its predecessor company and Trover Solutions after both were acquired by New Mountain in 2015. New Mountain paid $225 million for Equian’s predecessor, according to the WSJ.