Three Important Healthcare Services M&A Deals

CVS Health Corporation to acquire Aetna for $69b

CVS Health Corporation, a $180.7b retail pharmacy and health care company has agreed to buy Aetna, a $61.4b managed health care company, which sells traditional and consumer directed health care insurance plans and related services for $69b. The combination creates a comprehensive health-care platform for consumers by offering a community-based health hub dedicated to answering questions about patients' health conditions, as well as prescription drugs and health coverage which will be available in several CVS locations. Deal value -- $69b on sales of $61.4b (1.23x) and EBITDA (11.53x)

UnitedHealth Group Inc. to acquire DaVita’s primary and urgent care services for $4.9b

UnitedHealth Group Inc. a $180b diversified health insurance company, agreed to buy DaVita Inc’s. primary and urgent care services. DaVita serves 1.7 million patients through 300 clinics in six states. The acquisition adds to UnitedHealth’s 250 MedExpress urgent care centers and its 200 surgical centers that are part of recently acquired Surgical Care Affiliates. Health insurers are cutting medical costs and saving money by shifting patients to cheaper, more accessible locations for routine or non life-threatening emergency medical services. On December 2017, CVS Health acquired Aetna to expand its medical services to include more preventative screenings such as for vision and hearing. Deal value -- $4.9b

Humana Healthcare to acquire Kindred Healthcare Inc. for $810m

Kindred owns various businesses including home health, hospice, long-term care hospitals and inpatient rehabilitation facilities. Humana and private equity firms TPG Capital and Welsh, Carson, Anderson & Stowe will take over Kindred Healthcare for $4b in cash. The companies plan on splitting Kindred into two separate companies: a larger one that focuses on home healthcare and the other focused on long-term acute care and rehabilitation. Humana will have 40 percent stake in Kindred at Home, which will employ the 40,000 Kindred caregivers who serve about 130,000 patients daily. It will not have a stake in the second Kindred unit. Humana’s insurance business is focused on individuals in the U.S. government’s Medicare program for the elderly and disabled. The deal comes after Aetna Inc. and UnitedHealth Group announced deals that will expand the reach of those insurers into healthcare services in locations and sites that charge less than hospitals. Humana has the right to purchase the 60 percent stake in Kindred at Home owned by the private equity firms at the end of the third year. The acquisition builds on Humana’s focus on using health providers in members’ homes to improve health outcomes and save costs. Deal value -- $800m

Keywords: Healthcare Investment Banking, Healthcare M&A, Healthcare mergers