The Amil Participacoes SA's headquarters is pictured in Rio de Janeiro on October 8, 2012 just before UnitedHealth Group Inc bought it.
The Amil Participacoes SA's headquarters is pictured in Rio de Janeiro on October 8, 2012 just before UnitedHealth Group Inc bought it. Reuters / Ricardo Moraes

UnitedHealth Group Inc, the top U.S. healthcare company by market capitalization, is struggling to sell Brazilian unit Amil due to antitrust issues and growing losses from individual health plans, according to four people with knowledge of the matter.

After studying ways to divest Amil 10 years after acquiring it, UnitedHealth decided last month to suspend the sale process, the sources said, asking for anonymity because the discussions were private.

UnitedHealth had agreed to pay acquirers for Amil's loss-making units and lose money on the sale of the whole company, but did not receive an attractive proposal, the sources added.

The latest talks involved Brazilian medical labs company Diagnosticos de America SA, or Dasa, and the insurance unit of Banco Bradesco SA. As Dasa shares fell 44% this year, the idea of a deal paid partially in shares became much less viable, the people added.

UnitedHealth declined to comment on details of its Brazilian operations or negotiations.

"UHG is a long term investor in Brazil, first entering the market in 2012, and UHG intends to continue to serve the Brazilian health care market," UnitedHealth spokesman Matthew Stearns said in an e-mailed statement.

Private equity funds also looked at the deal, but decided not to bid due to its complexity, a fifth source said.

Dasa and Bradesco proposed delayed payment while keeping UnitedHealth as minority shareholder, which the U.S. company rejected, the sources added.

Dasa and Bradesco declined to comment. BTG Pactual, which is handling the mandate, did not reply to a request for comment.

UnitedHealth had accepted to lose money on the sale, as it had become clear that it would not fetch the $5 billion it paid for the company 10 years ago, according to the people. The value of the Brazil business is now estimated at $1 billion, said two of the sources.

UnitedHealth has not booked any loss related to Amil. In January, the company changed how it reports international businesses. Amil is now part of the employer & individual health plan division, which includes operations in the United States.

Some of Amil's largest rivals, such as hospital chain Rede D'Or Sao Luiz SA, had looked into a potential acquisition in January, sources said, but closed other deals after that, creating potential antitrust restrictions.

Rede D'Or announced in February acquisition of insurer SulAmerica SA..

Rede D'Or did not immediately respond to requests for comment.


UnitedHealth Group CEO Andrew Witty took the decision to sell Amil soon after taking the helm last year, one of the sources said.

UnitedHealth has 3.4 million health insurance beneficiaries in Brazil, 2.2 million clients of dental benefits, and owns and manages 31 hospitals and 82 clinics. The Brazilian hospitals and part of the insurance portfolio are profitable, sources said.

Gaps in the public healthcare system have led a growing number of Brazilians to rely on private health insurance, which now serves around 49 million people.

However, decisions by Brazilian healthcare regulator ANS have created headaches for the segment since UnitedHealth acquired Amil. Its portfolio of 340,000 individual healthcare plans is subject to the regulator's strict pricing caps, while coverage has expanded due to rulings by courts and regulators.

Many insurers in Brazil stopped selling individual health plans due to mounting losses, but Amil cannot cancel its existing portfolio.

Under one proposal, UnitedHealth offered to pay an investment firm $550 million to take over the individual insurance portfolio, but regulators blocked the deal.

Meanwhile, UnitedHealth has almost tripled its global revenue since acquiring Amil in 2012, to $290 billion last year, dwarfing its investment in Brazil. In addition to health plans, UnitedHealth runs pharmacy services, data analytics and medical practices.

($1 = 5.4039 reais)