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UnitedHealth To Acquire Definity For $300 Million

UnitedHealth To Acquire Definity For $300 Million

UnitedHealth Group Inc. has agreed to pay $300 million in cash for Definity Health Corp., a pioneer in the market for health plans that incorporate personal health accounts.

UnitedHealth, which hopes to complete the deal by Dec. 31, is making the deal to accelerate its expansion into the account-based health plan market.

UnitedHealths Uniprise unit expects to be managing account-based plans with 850,000 members starting in January 2005, UnitedHealth says. Definity expects to have about 500,000 members in account-based plans at more than 100 big corporations. Definity has been selling its services mainly through large benefits consultants, according to UnitedHealth spokesman John Penshorn.

UnitedHealth is building account-based health plan capabilities for employers of all sizes in part because of strong demand from the ordinary benefits broker, Penshorn says.

To satisfy customers, "that broker has to have everything from consumer-driven to indemnity," Penshorn adds.

Definity, a privately held company founded in 1998, does not publish detailed financial statements, but the company says it is profitable and is on track to generate $100 million in revenue in 2005.

Definity has accepted UnitedHealths acquisition offer to get access to UnitedHealths provider network, health account management systems and financial backing, according to Definity Chief Executive Tony Miller, who won the 2001 Innovators Award from what is now Americas Health Insurance Plans, Washington, for his effort to organize Definity.

"The assets and support of UnitedHealth Group will allow Definity to maintain its leadership position and better serve its customers," Miller says in a statement.

One of the venture capital firms that has been investing in Definity from the beginning, Alta Partners, San Francisco, is pointing to the deal as evidence that investors in some venture-backed firms are having an easier time cashing in.

The UnitedHealth deal "is a terrific outcome for all parties involved," says Dan Janney, an Alta Partners managing director who serves on the Definity board.




Reproduced from National Underwriter Edition, December 3, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.




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Nichole Morford

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