Exclusive: UnitedHealth eyes $1 billion deal to exit Latin America as insurer refocuses on US, sources say
NEW YORK, June 9 (Reuters) - UnitedHealth Group (UNH.N), opens new tab is weighing multiple bids for its Latin American operations, according to two people with direct knowledge of the matter, as the insurer buckles down after a series of unprecedented missteps that include the ouster of its CEO and a reported criminal accounting probe.
The largest U.S. health insurer has been trying to exit Latin America since 2022, but the sale of Banmedica has taken on increasing urgency in recent months as the insurer took hits on multiple fronts, according to one of the people.
New CEO Steve Hemsley told shareholders last week that he was determined to earn back their trust after an earnings miss and a Wall Street Journal report that the company was under criminal investigation for alleged Medicare fraud. UnitedHealth has said it was not notified by the Department of Justice and that it stands by the integrity of its operations.
Hemsley replaced Andrew Witty as CEO, who had been in the post for only a matter of months following the murder of his predecessor, Brian Thompson, in New York in December while on his way to a meeting with investors.
The company has four non-binding bids for its Banmedica subsidiary, which operates in Colombia and Chile, for about $1 billion, according to both people, who asked not to be identified because the talks are private.
UnitedHealth's shares tumbled 25.5% in May alone and year-to-date are down 40%. UnitedHealth left Brazil in 2023 and Peru in March. It's aiming to get around $1 billion for Banmedica's operations in Colombia and Chile, the people said.
The two people said the company expects to set a deadline for binding proposals as soon as July.
UnitedHealth received bids from Washington, D.C.-based private equity firm Acon Investments; Sao Paulo-based private equity firm Patria Investments (PAX.O), opens new tab; Texas non-profit health firm Christus Health; and Lima-based healthcare and insurance provider Auna (GZ4.F), opens new tab, the people said. Auna is in talks with a financial partner, one of the sources added.
Banmedica's annual earnings before income taxes, depreciation and amortization, or EBITDA, is more than $200 million a year.
Patria and Christus Health declined to comment. UnitedHealth, Acon and Auna did not respond to requests for comment.
UnitedHealth bought Banmedica in 2018, opens new tab, with CEO David Scott saying he was "establishing a foundation for growth in South America for the next decades."
At the time, UnitedHealth paid around 12 times Banmedica's EBITDA, according to one of the people. Three years later, the insurer decided to leave Latin America as it grappled with losses in its largest operation in the region, Brazil's Amil, which had been acquired a decade earlier. It divested from its Brazilian operations in late 2023.
Banmedica is currently profitable, but is considered too small by UnitedHealth. It serves over 2.1 million consumers through its health insurance programs and has around 4 million patient visits annually across its network of 13 hospitals and 143 medical centers.
UnitedHealth booked an $8.3 billion loss last year related to the sale of its South American operations - $7.1 billion stemming from the Brazil exit and $1.2 billion from Banmedica.
"These losses relate to our strategic exit of South American markets and include significant losses related to foreign currency translation effects," the company said in a February filing.
Brazilian investment bank BTG Pactual (BPAC3.SA), opens new tab is advising UnitedHealth on the sale.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Finextra
12 hours ago
- Finextra
Stablecoin-as-a-Service platform OpenTrade raises $7 million
OpenTrade, a provider of yield-bearing stablecoin products for fintechs, has raised $7 million in funding led by Notion Capital and Mercury Fund, with participation from existing investors AlbionVC, a16z crypto, and CMCC Global. 0 This latest round brings OpenTrade's total funding to more than $11 million, secured within just six months, highlighting growing institutional confidence in the potential of providing wider access to dollar- and euro-denominated yields. OpenTrade offers a B2B2C 'yield-as-a-service' model that lets fintechs, exchanges, and neobanks like Belo, BuenBit, Littio, and Criptan embed risk-weighted yields into everyday user experiences. In countries where inflation has eroded savings and restricted access to stable currencies, OpenTrade is enabling millions to earn meaningful yields on USD and EUR holdings directly from their phones. Across Argentina, Colombia, Mexico, Peru, and Spain, more than 5 million retail users now have access to 3-9% APR on their USD and EUR holdings. OpenTrade currently manages $47 million for clients and has processed nearly $200 million in transaction volume over the past year. Samantha Lewis, partner at Mercury, comments: 'OpenTrade is building core financial infrastructure for the next generation of fintech. Their rapid growth underscores both the scale of demand and the strength of their model. They are solving a fundamental gap in the market with the potential to revolutionize global access to high-quality, yield-bearing accounts'
The Guardian
a day ago
- The Guardian
UnitedHealth faces federal scrutiny into whistleblower claims
US lawmakers on both sides of the aisle are raising concerns and seeking investigations in the wake of Guardian reporting on whistleblower claims about practices within UnitedHealth Group's nursing home partnership programs. One US senator has announced he is launching an investigation and two US representatives are now calling on the US Department of Justice to expand its reported investigations of the nation's largest healthcare conglomerate. Others said they are troubled by whistleblower allegations reported by the Guardian – including claims that UnitedHealth paid bonuses to nursing homes to help reduce residents' hospital transfers and used improper sales tactics to get nursing home residents to sign up for the company's Medicare Advantage plans. Two Democratic members of Congress – representatives Alexandria Ocasio-Cortez of New York and Lloyd Doggett of Texas – filed a letter on Monday that urges the Department of Justice to 'thoroughly review new revelations from investigative reporting and whistleblower complaints, which suggest that UnitedHealth may have engaged in illegal activities'. 'The Guardian's findings reveal the need for a wide-ranging investigation by the Department of Justice into years, if not decades, of potential waste, fraud, and abuse at UnitedHealth,' the letter read. The lawmakers are demanding a briefing on current and planned investigations by 14 July. UnitedHealth vigorously denies the whistleblowers' allegations and says the Guardian's reporting on these issues is 'blatantly false and misleading'. In response to a question about the two representatives' letter, the company said the Department of Justice 'has already declined to pursue the matter' – a reference to the agency's previous decisions not to intervene in two whistleblower lawsuits against UnitedHealth filed under the US False Claims Act. One of those lawsuits was ultimately dropped and the other is pending in federal court in Georgia. Another Democrat, the Oregon senator Ron Wyden, announced last month on X that his office was 'launching a full investigation to verify these whistleblower accounts'. 'This reporting demands further inquiry – nobody deserves to have their medical care jeopardized to pad insurance company profits,' Wyden, the ranking member of the Senate's finance committee, said. 'My staff on the Finance Committee have a decade-long record of thorough and objective investigations that follow the facts towards solutions that improve federal health care policy for all Americans.' Senator Josh Hawley, a Missouri Republican who sits on the Senate investigations subcommittee, said it is 'alarming to hear these serious allegations' about the company's practices. 'I look forward to securing justice for patients, policyholders and whistleblowers alike who've been harmed by insurance companies.' Another Republican, Georgia representative Buddy Carter, expressed similar concerns. 'If these allegations are true, UnitedHealth must be held responsible for their gross abuse of patients,' Carter, chair of the House subcommittee on health, said in a statement. 'Patients should always come before profits.' Senator Richard Blumenthal of Connecticut, ranking member of the Senate investigations subcommittee, said the 'courage and conviction' of the whistleblowers will serve as 'an impetus for reform. Shining a light on abuses of consumer trust is a call to action – and a demand for accountability.' UnitedHealth says its partnerships with nursing homes ensure better care for seniors 'through on-site clinical care, personalized treatment plans, and enhanced coordination among caregivers'. The company says these arrangements have been highly successful in helping nursing homes prevent unnecessary hospital stays that can lead to serious issues such as delirium, falls, pressure injuries and 'sometimes even fatal consequences'. Two whistleblowers who worked for UnitedHealth as nurse practitioners submitted sworn declarations in May alleging that the company had used improper tactics to reduce hospital transfers for ailing nursing home residents. Their declarations were submitted to the Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC), the Washington state attorney general's office and Congress, according to Whistleblower Aid, the non-profit assisting both nurse practitioners. Whistleblower Maxwell Ollivant's declaration, first reported on by the Guardian in May, says he witnessed UnitedHealth 'delay and deny medically necessary emergency care' to vulnerable nursing home residents in order to 'retain more money' from the payments that the company was receiving from the US government's Medicare Advantage program. Under Medicare Advantage, a private alternative to traditional Medicare, the federal government pays insurers a fixed sum to cover seniors' medical services. The less insurers spend on covering medical expenses, the more in public dollars they have left over. Ollivant's declaration alleges that UnitedHealth 'actively avoided medically necessary hospitalizations – hospitalizations in serious life-threatening situations, or situations to avoid imminent death or incredibly catastrophic results – to keep their costs down, and drove vulnerable patients toward signing Do Not Resuscitate (DNRs) and Do Not Hospitalize orders to avoid providing hospital services for life threatening illnesses'. UnitedHealth noted that the Department of Justice declined to join the lawsuit that Ollivant filed against the company and later dropped. The company said Ollivant 'is not in a position to assess the effectiveness of our programs – he lacks both the necessary data and the expertise'. The second whistleblower, whose declaration was filed anonymously, worked with UnitedHealth for several years. Her declaration says her experiences as a nurse practitioner within its nursing home programs gave her 'first-hand insight into the evolution and impact of substandard care practices resulting from the training, culture, processes and bonus system of delays and denials of medically necessary care'. That declaration criticizes the company's '[a]ggressive [p]ush for DNRs' and says 'the decision to receive life-saving care should rest with the patient or their legal representative, not myself, and certainly not the insurance company'. UnitedHealth said the allegations in the anonymous whistleblower's declaration show she 'did not fully understand our clinical model' and that her perspective 'does not reflect the dedication and excellence of the many outstanding clinicians who understand the impact they have in supporting their patients and improving health outcomes'. The company also denies the claims regarding DNRs. 'At no time have we encouraged or pushed' nursing home residents 'to sign a DNR directive', a UnitedHealth representative said. 'Our health care providers are ethically bound to respect patient autonomy and support informed decision-making without coercion.' The Guardian's previous reporting also references allegations relating to the legal claims of a third whistleblower, Brook Gonite, a former salesperson for UnitedHealth's nursing home program. Gonite alleges in a lawsuit in federal court in Georgia that UnitedHealth wrongly solicited and enrolled vulnerable, elderly patients for its nursing home programs through improper marketing tactics, including violations of Hipaa, the federal medical privacy act, and paid kickbacks to nursing homes to obtain illegal referrals of their residents. UnitedHealth denied those allegations and moved to dismiss Gonite's lawsuit. The Department of Justice, which declined to formally intervene in the case, opposed UnitedHealth's motion to dismiss. In April, federal judge Marc Treadwell denied UnitedHealth's motion to dismiss, finding that Gonite's lawsuit puts forth 'substantial and concerning' factual allegations that 'plausibly' assert violations of federal protections meant to ensure vulnerable nursing home residents can make informed decisions about their medical care. The company continues to deny those claims and says Gonite was fired for engaging in illegal sales tactics similar to those alleged in his suit. In a statement, the company said its employees 'are trained on compliant interactions with nursing home staff and nursing home residents, in accordance with the Medicare Marketing Guidelines and other applicable laws'. Last week, shortly before the Guardian was to publish a second story providing additional detail about Gonite's pending lawsuit and the other two whistleblowers' declarations, UnitedHealth filed a lawsuit against the Guardian in Delaware state court, claiming the allegations were false and libelous. In a statement, the company said 'the article published by The Guardian is not only riddled with inaccuracies – it is so blatantly false and misleading that we have filed a defamation lawsuit to hold the publication accountable and bring the full truth to light'. The Guardian has said it stands by its 'deeply sourced, independent reporting, which is based on thousands of corporate and patient records, publicly filed lawsuits, declarations submitted to federal and state agencies, and interviews with more than 20 current and former UnitedHealth employees – as well as statements and information provided by UnitedHealth itself over several weeks'.
The Independent
a day ago
- The Independent
Mexico's security chief says drug cartels are recruiting former Colombian soldiers
Mexico's most powerful drug cartels are recruiting former Colombian soldiers, prompting Mexican authorities to turn away dozens of Colombians trying to enter the country in recent weeks, Mexico's security chief said Tuesday. Security Secretary Omar García Harfuch's comments followed the arrest last week of 12 Colombians in the western state of Michoacan in connection with a mine attack that killed eight Mexican soldiers. Through contact with Colombian authorities, García Harfuch said that nine of the 12 individuals were former soldiers and the remaining three were civilians with weapons training. Close underworld ties have long existed between organized crime groups in Mexico and Colombia. For many years, Colombian drug traffickers produced cocaine and heroin and moved it themselves by boat or plane to the United States. Later, as U.S. authorities cracked down on trafficking in the Caribbean, Mexican cartels' power grew as they moved Colombian drugs over land and via small plane to the U.S. border and smuggled them across. Decades of internal conflict in Colombia have produced tens of thousands of former soldiers, paramilitaries and guerrillas with weapons training and combat experience. Colombians have been hired guns in the 2021 assassination of Haiti President Jovenel Moïse and in the ongoing war in Ukraine. In recent weeks, Mexican immigration authorities rejected 69 Colombians trying to enter Mexico, some of whom in interviews said 'they had been coopted by some criminal group.' García Harfuch said Tuesday that both the Sinaloa and Jalisco New Generation cartels were recruiting Colombians. Colombia's ambassador to Mexico, Fernando García, said last week that he feared the arrests would negatively impact ongoing negotiations with Mexico to reduce the number of Colombians prevented from entering the country at Mexican airports. In March, the Colombian government had said that talks with Mexico were progressing with mechanisms for Mexico and Colombia to verify information about those seeking to enter Mexico. In October 2023, Mexican authorities arrested eight Colombians also in Michoacan state, who allegedly were helping to make explosives dropped by cartel drones. Former soldiers from other countries have worked with Mexican cartels too. More than a decade ago, the fearsome Zetas, whose leaders came from Mexico's military, recruited former members of Guatemala's special forces Kaibiles in their ranks. ____
