Blog Coverage UnitedHealth Acquires Surgical Care Affiliates for $57 per Share

LONDON, UK / ACCESSWIRE / January 10, 2017 / Active Wall St. blog coverage looks at the headline from UnitedHealth Group Inc. (NYSE: UNH) and Surgical Care Affiliates, Inc. (NASDAQ: SCAI). On January 09 2017, UnitedHealth Group’s health- services arm, Optum, announced that it will acquire Surgical Care Affiliates (“SCA”) a leading ambulatory surgery center (ASC) and surgical hospital provider’s outstanding common stock for approximately $2.3 billion in an cash and stock deal. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

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The merger of SCA with OptumCare, Optum’s health care delivery business, which works with more than 80 health plans across the country, will position the combined organization as a more comprehensive provider of ambulatory care services, while continuing the expansion of SCA’s network of ASCs and surgical hospitals in partnership with leading health systems, medical groups and health payers. The combination builds upon the two companies’ successful ASC collaborations and expands OptumCare’s capabilities in outpatient surgical procedures. Adding SCA to its burgeoning portfolio will bring more than $1.5 billion in revenue to OptumCare.

System-wide, SCA and its affiliates serve approximately 1 million patients per year in more than 30 states. Post-completion of the transaction, SCA will become part of the OptumCare platform, which serves millions of consumers annually via 20,000 affiliated physicians and hundreds of primary care facilities. The companies will offer compelling quality and value to patients and payers and support independent doctors’ practices as eligible surgical cases continue to migrate to the ASC and surgical hospital environments.

Larry C. Renfro, Vice Chairman of UnitedHealth Group and Optum’s Chief Executive Officer, said:

“Combining SCA and OptumCare will enable us to continue the transition to high-quality, high-value ambulatory surgical care, partnering with the full range of health systems, medical groups and health plans. We have an incredibly high regard for SCA’s leadership and people, so we look forward to working with them and our payer partners to implement care models that reward independent surgeons and specialists for quality and care efficiency.”

Financial Aspect

As per the agreement details, Optum will acquire SCA’s outstanding common stock for a fixed price of $57.00 per share. The Company will fund this transaction with about 51% to 80% of UnitedHealth Group’s common stock – the final percentage is to be determined at UnitedHealth Group’s option and the remaining amount will be paid in cash. The companies expect the transaction to be complete during H1 2017, subject to the tender of a majority of SCA’s shares, regulatory approvals, and other customary closing conditions. The transaction is expected to be neutral to UnitedHealth Group’s guidance for adjusted net earnings per share in 2017 and modestly accretive in 2018. Affiliates of TPG Capital which owns approximately 30% of SCA’s common stock, have agreed to tender their shares as part of the offer.

Stock Performance

At the closing bell, on Monday, January 09, 2017, the stock closed the trading session at $161.95, slightly down 0.28% from its previous closing price of $162.41. A total volume of 3.04 million shares have exchanged hands. UnitedHealth Group’s stock price surged 18.98% in the last three months, 16.41% in the past six months, and 49.57% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have gained 1.19%. The stock is trading at a PE ratio of 23.92 and has a dividend yield of 1.54%.

Earnings Alert: UnitedHealth Group will release its Q4 2016 and FY16 financial results on January 17, 2017, before the market opens, and will host a teleconference at 8:45 a.m. ET on the same day.

On the other hand, Surgical Care Affiliates’ share price surged 16.21% to finish yesterday’s trading session at $56.65, close to its acquisition price. A total volume of 3.70 million shares exchanged hands, which was higher than the 3 months average volume of 231.81 thousand shares. The stock has rallied 19.21% and 43.71% in the last three months and past twelve months, respectively. Furthermore, since the start of the year, shares of the Company have surged 22.43%. The stock is trading at a PE ratio of 101.52 and currently has a market cap of $2.28 billion.

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