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Report: UnitedHealth Closing in on Deal to Buy Advisory Board’s Healthcare Division

July 7, 2017
by Rajiv Leventhal
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UnitedHealth Group and Vista Equity Partners are nearing a deal to acquire Advisory Board, the Washington, D.C.-based healthcare consulting and technology firm, according to a July 6 report in Bloomberg.

The report noted that after the sale, Advisory Board would be split up. “The UnitedHealth would acquire Advisory Board’s healthcare division and Vista would buy its education business, said the people, who asked not to be named because discussions are private. The education unit may sell for as much as $1.5 billion, one of the people said,” per the Bloomberg report.

While no deal is guaranteed, and an announcement could be a month away, that didn’t stop action from occurring on Wall Street. According to the report, “Advisory Board jumped as much as 14 percent Thursday to the highest level in two years. The stock was up 4.8 percent at $54.75 as of 3:51 p.m. in New York, giving the company a market value of $2.2 billion.”

The Minnetonka, Minn.-based UnitedHealth Group is the nation’s biggest health insurer and has made major forays into the health IT space before, as it offers products and services through two operating businesses, UnitedHealthcare and Optum, both subsidiaries of UnitedHealth Group. In fact, Optum has gotten so big itself that it was named a Healthcare Informatics Most Interesting Vendor this year, after finishing first on the Healthcare Informatics 100 list of health IT vendors ranked by revenue for the third straight year. Optum reported a health IT revenue of $7.3 billion in 2016.

Meanwhile, Advisory Board ranked 17th on The 100 list with a 2016 health IT revenue of over $800,000,000. The company combines its strengths in consulting, research, and technology to help healthcare organizations improve performance, its officials attest. It was reported earlier this year that the company was exploring a merger with Evolent Health, an Arlington, Va.-based healthcare technology provider. That news came shortly after Advisory Board announced that it was laying off about 200 people following a weak fourth quarter in 2016.

Now, a deal to be acquired could be in store instead. According to Bloomberg, “Vista has focused on high-growth software companies in recent years. First-quarter education revenue at Advisory Board, while comprising only 33 percent of the company’s overall sales, grew 15 percent from a year earlier. Healthcare sales declined 6.6 percent, excluding exited programs.”

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