Digital Health

Optum’s Digital Health Acquisition Spree


To some investors, this year’s brutal pullback in health company valuations might be hurting their appetite for risk. Others, like UnitedHealth Group’s Optum unit, seem to be treating the lower multiples like it’s Black Friday at the M&A store.

Last week, Optum added home healthcare provider LHC Group and behavioral health clinic operator Refresh Mental Health to its already expansive portfolio of doctor groups, surgery centers, and remote care services.

LHC Group is one of the nation’s largest home health and hospice companies, providing over 12M in-home interventions to 500k patients annually. 

  • The acquisition values LHC Group at $5.4B and will see the company’s staff of 30k front-line care providers and support personnel join Optum after an expected close in the second half of the year.
  • Bolstering home health services aims to support UnitedHealth’s payor division, UnitedHealthcare, in expanding the role of home services as an efficient alternative to nursing homes and a way to reduce unnecessary hospitalizations.

Refresh Mental Health operates a network of over 300 outpatient mental health, substance abuse, and eating disorder clinics across 37 states.

  • Although the terms of the acquisition were net disclosed, Refresh was previously acquired by a private equity firm for $700M in 2020, and was reportedly generating $40M in revenue at the time.
  • Refresh gives Optum a large access point to the growing behavioral health sector, which has proven to see sustained patient demand and telehealth uptake as the pandemic draws on.

The Takeaway

One of the reasons why UniteHealth Group has grown into an industry juggernaut is because it’s successfully been able to create value through synergies between its payor and health services divisions (almost too much success according to the DOJ’s case against its Change Healthcare acquisition). Adding new at-home and behavioral health services through M&A makes perfect sense for companies that can turn a combined service portfolio into more than a sum of its parts, and that’s exactly what UnitedHealth Group is banking on with the addition of LHC and Refresh.

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