* Buys HealthCare Partners in cash & stock deal
* To pay $3.66 bln cash, 9.38 mln DaVita common shares
* Deal to close in early Q4
* DaVita shares up 3 percent
May 21 DaVita Inc, the biggest U.S.
operator of dialysis clinics, sought to better align itself with
government efforts to cut healthcare costs with a $4.42 billion
deal to buy HealthCare Partners, an operator of physician
The deal will allow DaVita to offer a more integrated group
of services that the government is looking to incentivize
through its accountable care organizations (ACO) model.
"We believe this diversification towards a wider patient
population makes sense and follows the government's savings
goals and most recent incentives more closely," Nomura analyst
Martin Brunninger said.
The Medicare reimbursement model was changed last year to
encourage clinical service providers, including dialysis
operators, to reduce costs and use drugs more sparingly.
This could favor large players such as DaVita and its
biggest rival FMC, the U.S. arm of Germany's Fresenius Medical
Care, because they are better placed to cut costs, but
it also creates revenue pressures.
The Healthcare deal helps mitigate this risk through the ACO
model, which integrates patient treatment across care settings,
such as doctors' offices, hospitals and long-term care
Privately held HealthCare Partners, based in Torrance,
California, runs medical practices and physician networks in
Southern California, Central Florida, and Southern Nevada. Its
revenues in 2011 were about $2.4 billion.
"This is not a cost-synergy play at all," a DaVita executive
said on a conference call with analysts.
The purchase price consists of $3.66 billion in cash and
about 9.38 million shares of DaVita common stock, DaVita said.
The company, whose shareholders include Warren Buffett's
Berkshire Hathaway Inc, expects to fund the cash
portion through a combination of available cash, borrowings and
The transaction is expected to close in early fourth
quarter, and the combined company will be named DaVita
HealthCare Partners Inc, DaVita said.
JP Morgan Securities LLC served as financial adviser
for the deal.
DaVita shares, which have lost 10 percent of their value
since the company reported quarterly results earlier this month,
were up 3 percent at $83.24 in morning trade on the New York