EXCLUSIVE UnitedHealth struggling to promote Brazilian unit Amil – sources

The Amil Participacoes SA’s headquarters is pictured in Rio de Janeiro on October 8, 2012 simply earlier than UnitedHealth Group Inc purchased it. REUTERS/Ricardo Moraes/File Picture

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SAO PAULO, Aug 3 (Reuters) – UnitedHealth Group Inc (UNH.N), the highest U.S. healthcare firm by market capitalization, is struggling to promote Brazilian unit Amil as a result of antitrust points and rising losses from particular person well being plans, based on 4 folks with data of the matter.

After finding out methods to divest Amil 10 years after buying it, UnitedHealth determined final month to droop the sale course of, the sources stated, asking for anonymity as a result of the discussions had been non-public.

UnitedHealth had agreed to pay acquirers for Amil’s loss-making items and lose cash on the sale of the entire firm, however didn’t obtain a lovely proposal, the sources added.

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The most recent talks concerned Brazilian medical labs firm Diagnosticos de America SA, or Dasa (DASA3.SA), and the insurance coverage unit of Banco Bradesco SA (BBDC4.SA). As Dasa shares fell 44% this yr, the concept of a deal paid partially in shares turned a lot much less viable, the folks added.

UnitedHealth declined to touch upon particulars of its Brazilian operations or negotiations.

“UHG is a long run investor in Brazil, first getting into the market in 2012, and UHG intends to proceed to serve the Brazilian well being care market,” UnitedHealth spokesman Matthew Stearns stated in an e-mailed assertion.

Personal fairness funds additionally regarded on the deal, however determined to not bid as a result of its complexity, a fifth supply stated.

Dasa and Bradesco proposed delayed fee whereas holding UnitedHealth as minority shareholder, which the U.S. firm rejected, the sources added.

Dasa and Bradesco declined to remark. BTG Pactual, which is dealing with the mandate, didn’t reply to a request for remark.

UnitedHealth had accepted to lose cash on the sale, because it had change into clear that it will not fetch the $5 billion it paid for the corporate 10 years in the past, based on the folks. The worth of the Brazil enterprise is now estimated at $1 billion, stated two of the sources.

UnitedHealth has not booked any loss associated to Amil. In January, the corporate modified the way it experiences worldwide companies. Amil is now a part of the employer & particular person well being plan division, which incorporates operations in the USA.

A few of Amil’s largest rivals, resembling hospital chain Rede D’Or Sao Luiz SA (RDOR3.SA), had regarded into a possible acquisition in January, sources stated, however closed different offers after that, creating potential antitrust restrictions.

Rede D’Or introduced in February acquisition of insurer SulAmerica SA (SULA11.SA)..

Rede D’Or didn’t instantly reply to requests for remark.


UnitedHealth Group CEO Andrew Witty took the choice to promote Amil quickly after taking the helm final yr, one of many sources stated.

UnitedHealth has 3.4 million medical health insurance beneficiaries in Brazil, 2.2 million shoppers of dental advantages, and owns and manages 31 hospitals and 82 clinics. The Brazilian hospitals and a part of the insurance coverage portfolio are worthwhile, sources stated.

Gaps within the public healthcare system have led a rising variety of Brazilians to depend on non-public medical health insurance, which now serves round 49 million folks.

Nevertheless, choices by Brazilian healthcare regulator ANS have created complications for the phase since UnitedHealth acquired Amil. Its portfolio of 340,000 particular person healthcare plans is topic to the regulator’s strict pricing caps, whereas protection has expanded as a result of rulings by courts and regulators.

Many insurers in Brazil stopped promoting particular person well being plans as a result of mounting losses, however Amil can not cancel its present portfolio.

Beneath one proposal, UnitedHealth provided to pay an funding agency $550 million to take over the person insurance coverage portfolio, however regulators blocked the deal. learn extra

In the meantime, UnitedHealth has virtually tripled its international income since buying Amil in 2012, to $290 billion final yr, dwarfing its funding in Brazil. Along with well being plans, UnitedHealth runs pharmacy companies, knowledge analytics and medical practices.

($1 = 5.4039 reais)

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Reporting by Tatiana Bautzer; Enhancing by Caroline Humer, Brad Haynes, Sandra Maler and David Holmes

Our Requirements: The Thomson Reuters Belief Rules.

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