TPG Inc. (Nasdaq: TPG) and UnitedHealth Group (NYSE: UNH) have emerged as potential suitors for ambulatory surgery center (ASC) operating company Surgery Partners (Nasdaq: SGRY).
UnitedHealth Group is the parent company of both UnitedHealthcare and Optum, its health care services arm. The health care giant is no stranger to the ASC space, with Optum taking over SCA Health for $2.3 billion in 2017.
Meanwhile, TPG is a global alternative asset manager with $229 billion in assets under management. Some of its notable health care investments include LifeStance Health (Nasdaq: LFST), Monogram Health and Precision Medicare Group, among others.
Citing sources familiar with the matter, Bloomberg reported on Friday that TPG and UnitedHealth Group have separately expressed interest in buying Surgery Partners. Talks are in the early stages, with no transaction certain, according to Bloomberg.
Surgery Partners is also reportedly seeing interest from other buyout shops and strategics.
Friday’s report builds upon a developing story that Bloomberg broke in the middle of July. At that time, Bloomberg reported that Surgery Partners was exploring strategic alternatives for the business, including a possible sale, additionally noting that the ASC company had already engaged a financial adviser to gauge buyout interest.
On its end, the Brentwood, Tennessee-based Surgery Partners has often been the active acquirer.
In fact, through the end of the second quarter of 2024, Surgery Partners deployed nearly $280 million on strategic acquisitions. Historically, the ASC company has targeted about $200 million a year in M&A.
Surgery Partners was formed in 2004, then merged with NovaMed in 2011. A few years later, that combined enterprise merged again – this time with Symbion. On Oct. 1, 2015, Surgery Partners completed its initial public offering. In 2017, the ASC player then merged with National Surgical Healthcare.
Overall, Surgery Partners has more than 200 locations in 33 states, including ASCs, surgical hospitals, multi-specialty physician practices and urgent care facilities.
“We believe our results reflect the strength and durability of our business model as we pursue this highly fragmented market, which currently consists of over 6,000 CMS-certified ASCs and an estimated $150 billion total addressable market, representing both current and expected surgical procedures to be formed in an outpatient setting in the coming years,” Executive Chairman Wayne DeVeydt said during Surgery Partners’ second quarter earnings call.
UnitedHealth Group and its Optum arm have orchestrated several transactions that have reshaped the health care landscape in recent years.
In 2021, for example, Optum purchased Landmark Health for around $3.5 billion, according to reports. In 2023, UnitedHealth Group closed on a $5.4 billion deal to buy home health and hospice company LHC Group.
UnitedHealth Group and Optum are in the process of finalizing a transaction for Amedisys Inc. (Nasdaq: AMED) as well.
In the wake of its health care consolidation activity, UnitedHealth Group has become the target of federal regulators and certain members of Congress. UnitedHealth Group recently abandoned its proposed acquisitions of Stewardship Health Inc. and a related company following scrutiny from the U.S. Department of Justice antitrust team.
“When you ask Americans what keeps them up at night, affording and accessing quality health care is too often at the top of their list,” Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division said in a statement. “These transactions are among UnitedHealth Group’s latest proposed provider-related acquisitions, and they raised questions about quality of care, cost of care and working conditions for doctors, nurses and other health care providers.”
