UnitedHealth Group Incorporated (UNH.US) is deep in the Latin American quagmire, planning to sell Banmedica assets worth $1 billion.

The UnitedHealth Group Incorporated, the largest health insurance company in the United States, is accelerating its exit from the Latin American market. According to two sources, the company has received four non-binding offers for its Chilean and Colombian subsidiary, Banmedica, with a transaction amount of approximately $1 billion. This healthcare giant, mired in multiple crises, is trying to fill the over $8 billion loss in its Latin American business through asset disposals. Since launching its plan to exit the Latin American business in 2022, the UnitedHealth Group Incorporated has accumulated over $8 billion in losses in the region. The continued bleeding of its Brazilian subsidiary, Amil, which the company acquired a decade ago, eventually led to a $7.1 billion impairment charge in the last quarter of the previous year. Although Banmedica is currently profitable, its annual EBITDA is just over $200 million, deemed "too small" by the group. The newly appointed CEO, Steve Hemsley, is facing unprecedented pressure: since taking office in May, the company's stock price has plummeted by 25.5% in a single month, with a cumulative decline of 40% year-to-date; the accounting scandal in the Brazilian business during former CEO Andrew Witty's tenure continues to escalate, with reports revealing that the U.S. Department of Justice has launched a criminal fraud investigation. Despite the group denying receiving formal investigation notices, Hemsley admitted at a shareholder meeting, "Rebuilding trust is the top priority." According to sources, the bidders currently involved in the acquisition include Washington-based private equity firm Acon Investments, So Paulo-based Patria Investments, Lima-based Auna, and Texas-based nonprofit organization Christus Health. Auna is collaborating with financial partners to advance the deal, while the UnitedHealth Group Incorporated plans to initiate a binding offer process as early as July. It is worth noting that the Banmedica assets to be sold have significantly shrunk since the acquisition: insurance plan members decreased from 2.1 million to 1.7 million, hospital networks reduced from 13 to 7, and the number of medical centers decreased by almost two-thirds. Looking back to 2018, the UnitedHealth Group Incorporated acquired Banmedica at a high valuation of 12 times EBITDA, with then-CEO David Wichmann boldly proclaiming to "lay the groundwork for growth in South America for the next few decades." However, the ongoing losses in the Brazilian business forced the group to fully exit the country by 2023, and it divested its assets in Peru in March of this year. Financial documents show that the disposal of the Latin American business last year resulted in a $8.3 billion loss, with a significant portion attributed to foreign exchange losses. As the final act of strategic contraction, the sale of Banmedica is being advised by the Brazilian investment bank BTG Pactual. For this healthcare giant currently experiencing management turmoil, a criminal investigation cloud, and severe performance setbacks, the ability to turn the tide through asset realization will be a crucial test of the new CEO's crisis management capabilities.