UnitedHealth Group Inc (NYSE: UNH) may be
on the brink of acquiring health care and education consulting firm The Advisory Board Company (NASDAQ: ABCO), a move that could give UnitedHealth a major leg up on the
competition.
Reports have
surfaced that UnitedHealth is working with private equity firm Vista Equity Partners and is close to closing a
deal for Advisory Board. The reports suggest that UnitedHealth would acquire the health care segment of advisory board, with Vista
taking over the education unit.
In a new note on Monday, Bernstein analyst Lance Wilkes said the move could signal a major strategy shift for United. Instead of
serving strictly as a managed care organization, United may now be pivoting more into health care services, Wilkes said.
“We believe UNH is already ahead of other MCOs because they have two ways to win, partnering with providers and acquiring care
delivery,” Wilkes wrote. “This acquisition gives [United] a third way to win, as a service provider to providers.”
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While the acquisition could open a door for the health care giant, Wilkes said it likely won’t move the needle much for
investors in the near term due to Advisory Board’s relatively modest revenue.
The deal might have an even larger impact on Evolent Health Inc (NYSE: EVH), which was founded in part by Advisory Board. Reports of the UnitedHealth buyout
gave no indication of what the company would do with Advisory Board’s remaining 25 percent stake in Evolent.
United remains one of Bernstein’s top picks in the health
care services space. Bernstein maintains an Outperform rating on UnitedHealth and has a $190 price target for the stock.
Latest Ratings for ABCO
Date |
Firm |
Action |
From |
To |
Mar 2017 |
Baird |
Upgrades |
|
Outperform |
Mar 2017 |
SunTrust Robinson Humphrey |
Downgrades |
Buy |
Hold |
Jan 2017 |
PiperJaffray |
Downgrades |
Overweight |
Neutral |
View More Analyst Ratings for
ABCO
View the Latest Analyst Ratings
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