United-DaVita Deal Complete

UnitedHealth (NYSE: UNH) struck a $4.9-billion deal on Wednesday to acquire the DaVita Medical Group unit of kidney dialysis firm DaVita (NYSE: DVA) in an all-cash transaction.

DaVita Medical Group operates nearly 300 clinics and half a dozen outpatient surgical centers in six states – Florida, California, Colorado, Washington, Nevada and New Mexico.

The DaVita facilities will become part of United's Optum division, the umbrella for all of the non-insurance side of the business: pharmacy benefits, data analytics, consulting, clinics and surgical centers and home care.

Yet, for DaVita, the medical group has significantly underperformed the company's dialysis division. Last month, DMG posted a $5-million operating loss in the third quarter due to higher-than-expected medical costs, prompting the company to put the unit up for sale.

The DMG clinics would become part of Optum's already large outpatient medical care footprint across 60 markets nationally. After completing an earlier $2.3 billion acquisition of Surgical Care Affiliates, the network includes 30,000 affiliated physicians, about 200 urgent care clinics and 200 outpatient surgery centers.

DaVita Medical Group serves approximately 1.7 million patients per year through nearly 300 medical clinics featuring primary and specialist care. DaVita Medical Group also operates 35 urgent-care centers and six outpatient surgery centers.

Optum CEO Andrew Hayek says, "The physicians and clinicians of DaVita Medical Group provide outstanding patient care, and we look forward to supporting their continued success in serving their patients and communities.

"We also look forward to working closely with the leadership team of DaVita Medical Group to combine our capabilities and, supported by the data analytics and technology capabilities of Optum, enhancing patient care and the value we provide to the communities we serve."

United shares took on $1.05 to $221.14, while DaVita shares climbed $7.08, or 11.6%, to $68.01