UnitedHealth’s acquisition of Brazil’s Amil is another example of healthcare’s globalization and may open door for clinical laboratory acquisitions in Brazil
UnitedHealth Group (NYSE: UNH) is buying an HMO in Brazil. The two players are the largest insurers in their respective countries. For pathologists and clinical laboratory professionals, this merger demonstrates that the trend toward globalization of healthcare—including laboratory medicine—continues one step at a time.
Brazil’s Growing Middle Class Drives Demand for Coverage
On October 8, 2012, UnitedHealth announced in a press release that it would pay $4.9 billion in cash to acquire a 90% stake in Brazil’s Amil Participacoes S.A. (BM&FBOVESPA: AMIL3). Amil is Brazil’s largest private insurer and operator of health clinics. The company provides health benefits and services to more than five million people.
Demand for private health coverage is on the rise in Brazil. Currently, only about 25% of that nation’s 200-million population have managed care plans. “Brazil has emerged as a consistently growing and evolving market for private sector health benefits and services,” stated Stephen J. Hemsley, President and CEO of United Health Group. “Its growing economy, emerging middle class, and progressive policies toward managed care make it a high potential growth market.”
Growth Platform for UnitedHealth in Emerging Markets
Amil had $4.4 billion in net revenue in 2011, according to a write-up in Bloomberg Business Week. The company expects sales to increase by about 15% this year to about $5 billion, the press release stated.
UnitedHealth Group will pay $4.9 billion to acquire a 90% interest in Amil Participacoes S.A., Brazil’s largest private insurance company. Amil insures about 5 million Brazilians. The acquisition demonstrates how healthcare continues its path toward a globalization of services. In recent years, at least a few American medical laboratories have explored opportunities to acquire clinical laboratory companies in Brazil, but, to date, no deal has been announced.
“Our union with UnitedHealth Group will enable us to bring advanced technology, a tradition of practical innovation, service initiatives, and clinical programs to further strengthen healthcare in Brazil, and enable Amil to grow faster,” Edson Bueno, M.D., Amil founder and CEO stated in the release.
According to the release, Amil’s owned delivery network includes:
• 22 hospitals;
• nearly 50 clinics;
• numerous specialty and preventive care outpatient clinics; and,
• emergency care centers.
Its network of providers includes:
• 44,000 doctors;
• 3,300 hospitals;
• nearly 11,000 outpatient clinics; and,
• 12,000 ancillary service facilities.
UnitedHealth Group is the largest health benefits and services company in the United States by revenue. Expected sales for this year are about $110 billion. However, domestic health insurers face new regulations and taxes under the U.S. healthcare overhaul that could squeeze profit margins, a story in The Wall Street Journal (WSJ) reported. As part of its long-term strategy, UnitedHealth seeks to become more of a global force in the healthcare industry, according to a story.
There are other examples of market-leading companies with a strategy to expand globally. Within the clinical laboratory testing industry, Sonic Healthcare remains one of the best examples of the globalization trend. It operates medical laboratory testing businesses in Australia, New Zealand, Europe, and the United States. (See Dark Daily, “Rumors Link Quest Diagnostics and Sonic Healthcare in Some Type of Clinical Pathology Laboratory Deal”).
The Deal Between UnitedHealth and Amil
Clinical laboratory administrators and pathologists should not be surprised to see other cross-border mergers and acquisitions in the future. This will occur as domestic pressures and opportunities in emerging markets open doors for future growth in their respective healthcare markets.
—Pamela Scherer McLeod
Related Information:
UnitedHealth to take 90% stake in Brazil’s Amil
UnitedHealth to buy 90 percent stake in Brazilian managed care company
UnitedHealth to Buy Brazil Insurer Amil for $4.9 Billion
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