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UnitedHealth acquires Advisory Board’s consulting operations

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UnitedHealth in August 2017 acquired Advisory Board’s health-care analytics, research and consulting operations for about $1.3 billion including debt. The merger is part of a two-way deal that will also see private equity firm Vista Equity Partners purchase Advisory Board’s education arm for $1.55 billion.

Advisory Board will become a part of UnitedHealth’s Optum pharmacy-benefit and health-care services unit. That business has been a major source of revenue growth for UnitedHealth at a time when sales are sputtering for many of its peers. Adding Advisory Board’s businesses, particularly its research operations, should provide another boost to UnitedHealth, which has a market value of $190 billion.

According to Bloomberg, UnitedHealth’s acquisitions currently account for more than 70 percent of the deals successfully undertaken by North American managed-care providers in the past five years; and while UnitedHealth has been diversifying, other companies attempts at creating megamergers have been rejected by antitrust regulators.

Sales are expected to pick up for the laggards in this group in 2018 and 2019, but UnitedHealth’s more diversified model is proving more resilient, earning it a higher valuation.

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