Brooke Sutherland is a Bloomberg Gadfly columnist covering deals. She previously wrote an M&A column for Bloomberg News.

When it comes to M&A, UnitedHealth Group Inc. is one of the health-insurance industry's most prolific dealmakers. Its latest purchase is a reminder that it's among the smartest in that category as well.

The company agreed on Tuesday to acquire Advisory Board Co.'s health-care analytics, research and consulting operations for about $1.3 billion including debt. The merger is part of a two-way deal that will also see private equity firm Vista Equity Partners purchase Advisory Board's education arm for $1.55 billion. It's another win for Elliott Management Corp., which disclosed a stake in Advisory Board earlier this year and sought talks on strategic options.

Big Spender
UnitedHealth has made accounted for the vast majority of takeover volume by North American managed-care providers of late after attempted mega-mergers flopped
Source: Bloomberg

The health-care component of this breakup-sale combo is small for UnitedHealth, which has a market value of $190 billion. But it fits with the company's M&A modus operandi: buy and diversify. UnitedHealth has now accounted for more than 70 percent of the deals successfully undertaken by North American managed-care providers in the past five years. That's at least $26 billion in spending, nearly all of it for targets that fall outside of its core managed-care business.

Advisory Board will become a part of UnitedHealth's Optum pharmacy-benefit and health-care services unit. That business has been a major source of revenue growth for UnitedHealth at a time when sales are sputtering for many of its peers. Adding Advisory Board's businesses, particularly its underutilized research operations, should provide another boost. And that all begs the question of why UnitedHealth's managed care rivals -- Aetna Inc., Humana Inc., Anthem Inc. and Cigna Corp. -- weren't even in the running for this deal.

While UnitedHealth has been diversifying, its peers have spent their dealmaking energies on megamergers that were ultimately rejected by antitrust regulators. That's created this dynamic: 

Leader of the Pack
Sales are expected to pick up for the laggards in this group in 2018 and 2019, but UnitedHealth's more diversified model is proving more resilient, earning it a higher valuation.
Source: Bloomberg

As my colleague Max Nisen has noted, it's time for other health insurers to follow UnitedHealth's lead and start branching out with creative deals. They just let another one slip them by.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. At least based on reporting and disclosures to date. 

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Brooke Sutherland in New York at

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Beth Williams at