WellCare Health Plans Inc.
) revealed that it has concluded the purchase of some assets of
Arcadian Health Plan Inc.'s Desert Canyon Community Care Medicare
Advantage plans in Arizona from
). The financial terms of the deal, which was announced in July
last year, were not disclosed.
Humana agreed to the divestiture in order to meet the
conditions set by the government for completing its acquisition
of Arcadian Health.
The deal is a part of WellCare's efforts to expand its
operations in Arizona. The company expects the purchase to boost
its Medicare Advantage Prescription Drug Plan business in the
As per the agreement, the members of Desert Canyon living in
the Mohave and Yavapai counties have become a part of WellCare
with effect from January 1, 2013. This implies a membership boost
of about 4,000 for WellCare, according to the company's estimate
of Desert Canyon's membership in January 2013.
Apart from increasing its customer base, the acquisition is
expected to aid the company's net income. WellCare is striving to
provide good quality health care solutions at a reasonable cost
to Desert Canyon's members.
WellCare and Desert Canyon are working together to guarantee a
smooth switch for the members. At the time of announcing the
agreement, WellCare had assured that members availing the Desert
Canyon Medicare Advantage plan will continue to enjoy the same
benefits and coverage as they enjoyed in 2012. In case of any
changes in the plans and benefits for 2013, the members will be
WellCare often acquires companies to expand its business. In
November 2012, the company completed the acquisition of Easy
Choice Health Plan Inc. Earlier, in October last year, the
company announced an agreement to acquire the Medicaid business
of UnitedHealthcare in the South Carolina region from
UnitedHealth Group Incorporated
Currently, the Zacks Consensus Estimate for WellCare's
fourth-quarter earnings is $1.34 per share, down 38% over the
fourth quarter of 2011. For 2012, the Zacks Consensus Estimate
stands at $4.98 per share, down 26% over 2011. The Zacks
Consensus Estimate lies within WellCare's guidance range of
$4.90-$5.05 for its 2012 earnings per share. The company had
reduced its earnings guidance from $5.25-$5.45 per share in
Both WellCare and Humana currently carry a Zacks #3 Rank
(Hold). We maintain a long-term Neutral recommendation on both
WellCare and Humana.
HUMANA INC NEW (HUM): Free Stock Analysis
UNITEDHEALTH GP (UNH): Free Stock Analysis
WELLCARE HEALTH (WCG): Free Stock Analysis
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