In an effort to consolidate its foothold in New Jersey,
WellCare Health Plans, Inc
) agreed to acquire some of the assets of Healthfirst Health plan
of New Jersey, Inc. (Healthfirst NJ) for an undisclosed amount.
Healthfirst NJ is a subsidiary of Healthfirst, a health insurance
organization based in New York. As of Sep 2013, Healthfirst NJ
attends to 47,000 Medicaid members residing in 12 counties in New
Headquartered in Tampa, FL, Wellcare provides managed care
services target to approximately 2.8 million members across the
U.S. Its operations are targeted to government sponsored health
care programs, focusing on Medicare and Medicaid.
In addition, the state of New Jersey approved WellCare's plans
to offer its Medicaid managed care in Hudson, Essex, Passaic,
Middlesex and Union counties effective Dec 1, 2013. This in turn
is expected to ramp up the company's organic growth profile.
However, approval by the centers for Medicare & Medicaid
services (CMS) for the contract is still pending.
With the acquisition of Healthfirst NJ, New Jersey will be the
ninth U.S. state for the expansion of Wellcare's managed care
services. This transaction will enhance WellCare's medical
service portfolio in New Jersey, where it already serves
approximately 14,000 Medicare Prescription Drug Plan members and
2000 Medicare advantage members. The acquisition is targeted to
deliver more cost-effective and quality health care solutions to
the company's existing and potential customers in the state.
As per the Affordable Care Act, a health reform law passed by
Barack Obama in the United States, lower income people will be
eligible to receive Medicaid services in the country. WellCare is
expected to benefit through an enrolment growth in New Jersey,
with the law extending to the state of New Jersey as well.
Following the acquisition, Healthfirst NJ's physician rosters and
members will be taken over by WellCare. Healthfirst NJ will then
wind down its operation. WellCare stated that neither Healthfirst
NJ's current members nor the company's New York operations will
be impacted owing to this acquisition.
The acquisition is expected to culminate in the first quarter of
2014, pending closing conditions. WellCare expects the
acquisition to be accretive to its 2014 net income. The Zacks
Consensus Estimate for 2014 is currently pegged at $5.47,
reflecting a year-over-year increase of nearly 12%.
The stock market also reacted positively to the news of the
acquisition. Shares of WellCare gained nearly 0.9% to close at
WellCare Health has consistently adopted inorganic routes to ramp
up its growth profile. In September, WellCare announced its plans
to acquire Windsor Health Group Inc. from German insurer Munich
The Windsor Health acquisition complements WellCare Health's
Medicare and government health care plans, besides increasing its
membership base and amplifying premium revenues. In April, the
company closed the acquisition of Missouri Care, Incorporated, a
) for an undisclosed amount.
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Among others in the space,
) entered into an agreement to acquire American Eldercare Inc.
for an undisclosed amount in Jul 2013.
Magellan Health Services, Inc
) inked a deal to acquire Partners Rx for $100 million last
There was no earnings estimate momentum over the last 7 days.
With optimism over the latest acquisition, we expect analysts to
raise estimates, exerting upward pressure on the Zacks Rank.
WellCare presently carries a Zacks Rank #2 (Buy).