Fiserv, Inc. (NASDAQ: FISV), a leading provider of information technology services to the financial and insurance industries worldwide, today announced it has signed a definitive agreement to sell substantially all of its Health businesses to UnitedHealthcare, a business of United Health Group (NYSE: UNH), one of Americaâs largest health care companies, for $775 million in cash. The transaction is anticipated to close by the end of 2007 or in the first quarter of 2008, subject to required regulatory approvals and customary closing conditions.
The transaction includes Fiserv Health Plan Administration, the nation's largest Third Party Administrator (TPA) of self-funded health plans; Fiserv Health Plan Management, an outsourcing service for mid-sized health plans and health care payer organizations; Innoviant, a prescription benefits administrator; Innoviant Pharmacy, a prescription mail-order service; Avidyn Health, a care management company; and four other components of Fiserv Health's ancillary businesses. The company will retain its workersâ compensation services organization, which includes the recently announced WorkingRx acquisition. The company will also retain its CareGain, Inc. technology business, which is used to intermediate health banking solutions. Both of these businesses will remain in the insurance segment.
âThis combination will allow Fiserv Health clients to benefit from the wide range of capabilities within UnitedHealth Group, and create more opportunities for our Health group employees,â said Jeffery Yabuki, President and Chief Executive Officer of Fiserv. âNow, Fiserv will be completely focused on expanding its technology leadership position across the financial services landscape.â This transaction will establish UnitedHealthcare as a leading provider of customized benefit services with robust offerings and strong growth potential. âFiserv Health brings significant scale and strong management expertise in serving customers requiring dedicated, specialized benefit solutions. We enthusiastically welcome their employees, their clients and the distinct strengths and future growth opportunities this combination will create,â said Ken Burdick, President and Chief Executive Officer of UnitedHealthcare.
âUnitedHealthcare is an ideal home for Fiservâs Health business,â said Jay Anliker, president of Fiserv Health Plan Services. âWe believe Fiserv customers will benefit from UnitedHealthcareâs robust, national network and will continue to receive the same high quality and flexible personal service that has been a hallmark of Fiserv.â
Fiserv, Yabuki explained, will continue to deliver innovative health care banking and payments products and services to its clients. Over the last several years the company has established a leading position in this growing area in part due to the knowledge and expertise gained by owning these health care businesses.
âOver the last year, we have put together a powerful combination of solutions to enhance our value proposition for clients, employees and shareholders. We intend to operate businesses where we bring unique market value through our technology solutions and product integration. Additionally, through recently announced acquisitions such as CheckFree, we are both expanding our payments leadership position and delivering best-in-class solutions for clients,â added Yabuki.
Fiserv expects to receive approximately $475 million of net transaction proceeds, and depending upon reinvestment, may experience slight dilution to its 2008 earnings per share in a range of 1 to 3 percent. The company also expects the transaction to be accretive to its 2008 revenue, earnings and margin growth rates.
The company will report the operations from the health businesses sold to UnitedHealthcare as discontinued operations beginning with its fourth quarter earnings announcement. The company expects to report a net gain on the sale of the businesses, including transaction-related expenses, upon closing.