Wednesday, August 30, 2017

Advisory Board split in $2.6B deal with UnitedHealth's Optum buying healthcare business

By Alex Kacik  | August 29, 2017
(Story updated at 2 p.m. ET) 

The Advisory Board Co. will be acquired by UnitedHealth Group and a private equity firm in an estimated $2.58 billion deal that splits the consulting group's healthcare business from its education arm, the companies announced Tuesday.

UnitedHealth's Optum health-services segment will take over the Advisory Board's healthcare business for an estimated $1.3 billion. The Advisory Board provides independent research, advisory services and data analytics for more than 4,400 healthcare organizations.

Advisory Board shareholders will net estimated cash per share of $54.29, which includes a fixed payment of $52.65 per share and the after-tax value of its 7.6% stake in Evolent Health.

"By working together, The Advisory Board Company and Optum will provide deeper strategic insights and practical operational value to clients who are looking for ways to enhance care and respond to the changing market dynamics of the health care system," Optum CEO Larry Renfro said in a statement.

Private equity firm Vista Equity Partners Management will acquire the Advisory Board's education business known as EAB, which includes the Royall & Co. division, for $1.55 billion. EAB, which provides research and technology services for more than 1,200 educational institutions, will operate as a stand-alone business.

After that deal closes, expected by the end of 2017 or in early 2018 after Advisory Board shareholder and regulatory approval, UnitedHealth will pay $1.3 billion including the assumption of debt for the Advisory Board's health operation.

"We determined that transactions with Optum and Vista Equity Partners allow us to accelerate the success of our healthcare and education businesses while realizing immediate value for stockholders," Robert Musslewhite, chairman and CEO of the Advisory Board, said in a statement. "We believe this is the best course of action for our stockholders, members and employees."

The Advisory Board said in February that it has been shopping the investor-owned company around when Elliott Management Corp. and related entities bought about 8.3% of its shares. The company said in January that it would lay off 220 employees as part of a restructuring process to save approximately $25 million in operating expenses by the end of the year.

Earlier this year, the company blamed some of its difficulties on uncertainty in the industry following the election, "as members reassessed their strategy and path forward."

Alex Kacik is the hospital operations reporter for Modern Healthcare in Chicago. Aside from hospital operations, he covers supply chain, legal and finance. Before joining Modern Healthcare in 2017, Kacik covered various business beats for seven years in the Santa Barbara, California region. He received a bachelor's degree in journalism from Cal Poly San Luis Obispo in Central California.

http://www.modernhealthcare.com/article/20170829/NEWS/170829882?utm_source=modernhealthcare&utm_medium=email&utm_content=20170829-NEWS-170829882&utm_campaign=am

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