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UnitedHealth Group to sell Brazilian operations to private investor for over $515 million

by John R. Fischer, Senior Reporter | January 04, 2024
Business Affairs Insurance
UnitedHealth Group is divesting its entire Brazilian portfolio enterprise, Amil, to a private investor.
UnitedHealth Group is selling its Brazilian portfolio company, Amil, to private investor José Seripieri Filho, the founder and former CEO of health insurance company Qualicorp.

The U.S. business announced the sale in a regulatory filing on December 29, following reports that it was negotiating a sale for ownership of the health insurance operator, according to Reuters. Unnamed sources told the news outlet that Seripieri bid around R$2.5 billion ($515.24 million).

UHG will record a $7 billion charge related to the non-cash sale, primarily due to foreign currency translation losses, but confirmed that it will not affect its adjusted earnings in 2024. As of November, its adjusted profit forecast for the new year is expected to be $27.50 to $28 per share.

While the total enterprise value of Amil ranges from R$10 billion to R$15 billion, it has liabilities amounting to R$10 billion (over $2 billion), hence, the selling price is substantially lower. Approximately 60% of the liabilities are tax-related while the rest are related to healthcare contingencies, and the individual portfolios are currently operating at a loss, reports Brazilian news outlet Valor International. He agreed to a “lock, stock, and barrel” agreement, taking on both past and future liabilities.

"We believe this agreement will ensure ongoing success, working with a buyer who has the local knowledge and experience to continue the positive momentum of the business," said UHG in an emailed statement to HCB News.

The sale includes Amil Insurance, Amil Integrated Care, Amil Dental, and Americas Hospitals in Brazil, which together provide medical and dental coverage to 5.4 million people in Brazil through a network of 31 hospitals and 28 medical clinics.

Seripieri resigned from Qualicorp in 2019 and has been seeking to buy Amil since 2020. At the time, UHG, which acquired Amil in 2012 for $4.9 billion, was seeking to divest its individuals’ plan portfolios and was willing to pay an interested party to take over the assets. Initially, Seripieri proposed a deal where he would pay R$3 billion (over $610 million), but that proposal was rejected, reported Valor International.

The company chose to divest the entire business after Brazil's National Regulatory Agency for Private Health Insurance and Plans (ANS) vetoed its plan to sell the portfolio separately.

Seripieri beat out the likes of Bain Capital, Dasa (owned by the Bueno family, founders of Amil), and businessman Nelson Tanure, in the bidding war for Amil, according to Valor International. His investment is backed by financers BTG, Bradesco, Santander, BRPartners, and Itaú.

UHG expects to close the sale in the first half of the year.

It did not divulge financial details.

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