The Advisory Board Acquired in $2.58B Deal, with Healthcare Business Merging with Optum

Aug. 29, 2017
Following on reports last month that UnitedHealth Group and a private equity firm were nearing a deal to acquire The Advisory Board company comes official news that the Advisory Board will be acquired by UnitedHealth Group's Optum and Vista in an estimated $2.58 billion deal.

Following on reports last month that UnitedHealth Group and Vista Equity Partners were nearing a deal to acquire The Advisory Board company comes official news that the Advisory Board will be acquired by UnitedHealth Group and Vista in an estimated $2.58 billion deal.

The deal will split the Washington, D.C.-based research, technology and consulting group’s healthcare business from its education business, the companies announced Tuesday.

The Advisory Board’s healthcare business will merge with Optum, UnitedHealth’s health services segment, for $1.3 billion. Vista will acquire Advisory Board’s education business, including Royall & Company, for $1.55 billion.

“By bringing together distinctive information and technology solutions with comprehensive data-driven research and advisory capabilities, the combined organization will be better positioned to help its members and clients respond to changing market dynamics and improve the health system for everyone,” the companies stated in a press release.

As previously reported by Healthcare Informatics Managing Editor Rajiv Leventhal, a July 6 Bloomberg report noted that UnitedHealth Group and Vista Equity Partners were nearing a deal to acquire Advisory Board and that after the sale, the company’s healthcare business and education business would be split up.

Robert Musslewhite, CEO of The Advisory Board Company, will continue to lead its health care advisory business.

“Joining Optum will enable us to better serve our members, thanks to Optum’s unmatched data analytics resources, investment capacities and operational experience in delivering large-scale solutions and services to all health care stakeholders,” Musslewhite said in a prepared statement. “Our team and I look forward to working with Optum to bring our innovative research capabilities into new, untapped markets.”

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. Optum serves stakeholders throughout the health care system, including more than 300 health plans and four out of every five U.S. hospitals, as well as life sciences companies, employers, governments and consumers.

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.

Advisory Board provides independent research, advisory services and data analytics for more than 4,400 healthcare organizations. Advisory Board ranked 17th on The 100 list with a 2016 health IT revenue of over $800,000,000.

“The Advisory Board Company is a strong fit for Optum because they share our mission of making the health care system work better for everyone,” Larry Renfro, CEO, Optum, said in a statement. “We have great admiration for the talent and experience of The Advisory Board’s team and its leaders, and look forward to working alongside them to help its members and our clients solve their biggest challenges.”

The Board of Directors of The Advisory Board Company unanimously approved the merger agreement and has recommended that its stockholders adopt the merger agreement. The merger is expected to close by the end of 2017 or in early 2018 and is contingent on the approval of The Advisory Board Company’s stockholders and the satisfaction or waiver of certain other closing conditions, including U.S. antitrust clearance and the closing of the sale of The Advisory Board Company’s education business.

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