A few weeks after MedCity News reported that UnitedHealth Group (NYSE: UNH) was in acquisition talks with Audax Health Solutions, its health IT services arm Optum has acquired a majority stake in the digital health startup, according to a company statement.
The deal will preserve Audax Health as a freestanding subsidiary, leaving its 24-year old CEO and founder Grant Verstandig in place to run the company with COO David Ko. The financial details were not disclosed.
The move is part of a broader trend by payers to adopt more consumer-friendly products to encourage consumer engagement in healthcare.
Audax Health collaborates with payers to get consumers engaged in managing their health. Its platform combines social networking and gaming and rewards those who achieve personal health and fitness goals. Among its partners are FitBit, Withings, BodyMedia and Polar. Only last year, it raised $20 million for product development, expansions of its mobile and engineering teams in Washington, D.C., and San Francisco, and strategic partnerships with healthcare insurers and providers.
Verstandig started the company after dropping out of Brown University his sophomore year. He said in the statement: “Joining with Optum, especially with its unmatched depth of experience and resources, accelerates our momentum, providing the additional reach and scale required to meaningfully advance health care more rapidly.”
In the run-up to today’s announcement, investors and analysts differed markedly on what the deal mean for the value of digital health companies and how it could impact M&A deals that followed. Although some venture investors speculated that Audax Health could be valued as high as $400 million, others were less convinced and took Audax’s talks with UnitedHealth as a sign that the young company is keen for the exit door in an increasingly crowded market.
John Sculley, the former Apple CEO who sits on the board of Audax and is also an investor, said the deal showed that “consumer engagement and innovation can be the turning point that sets a new trajectory for global health care services.”
In a statement, UnitedHealth Group CFO David Wichmann said the goals of the two companies were aligned. “We believe the combination of our skills and experience serving people across virtually every health care channel can help us reach those goals faster.”