UnitedHealth Group Seeks 10 Billion Dollar Exit From Latin America Amid 8 Billion Dollar Losses

UnitedHealth Group, the largest health insurance company in the United States, is expediting its withdrawal from the Latin American market. The company has received four non-binding offers for its Banmedica business in Chile and Colombia, with a transaction value of approximately 10 billion dollars. This move is part of an effort to mitigate the 8 billion dollar loss incurred in its Latin American operations.

Since 2022, when UnitedHealth Group initiated its exit plan from Latin America, the company has accumulated losses exceeding 8 billion dollars in the region. The primary cause of these losses is the continuous financial strain from its Brazilian subsidiary, Amil. Acquired a decade ago, Amil resulted in the group recording a 7.1 billion dollar impairment loss for the year. Despite Banmedica currently maintaining profitability, its annual EBITDA scale is only slightly over 200 million dollars, which the group considers "too small in scale."

Newly appointed CEO Steve Helmsley is under significant pressure. Since taking over in May, the company's stock price has plummeted 25.5% in a single month, with a year-to-date decline of 40%. The accounting scandal involving the Brazilian business during the tenure of former CEO Andrew Witty continues to unfold, with reports suggesting that the U.S. Department of Justice has initiated a criminal fraud investigation. Although the group denies receiving a formal investigation notice, Helmsley acknowledged at the shareholders' meeting that "rebuilding trust is the top priority."

Sources reveal that current bidders include Washington-based private equity firm Acon Investments, São Paulo-based Patria Investments, Lima-based medical group Auna, and Texas-based non-profit organization Christus Health. Auna is advancing the transaction in collaboration with financial partners, while UnitedHealth Group plans to initiate a binding offer process as early as July.

Notably, the Banmedica assets slated for sale have significantly depreciated since acquisition. The number of insurance plan members has decreased from 2.1 million to 1.7 million, the hospital network has shrunk from 13 to 7, and the number of medical centers has been reduced by nearly two-thirds.

In 2018, UnitedHealth Group acquired Banmedica at a high valuation of 12 times EBITDA. The then-CEO, David Wichmann, had boldly stated that the acquisition would "lay the foundation for decades of growth in South America." However, the persistent losses in the Brazilian business forced the group to fully withdraw from the country in 2023. In March of this year, it divested its assets in Peru. Financial statements show that the disposal of Latin American businesses last year resulted in an 8.3 billion dollar loss, with a significant portion attributed to foreign exchange translation losses.

As a strategic contraction, the sale of Banmedica is being advised by Brazilian investment bank BTG Pactual. For this medical giant, which is experiencing management turmoil, criminal investigation clouds, and performance setbacks, the ability to turn around the situation through asset liquidation will be a critical test of the new CEO's crisis management capabilities.