U.S. health insurer
) announced divestment of its medicare subsidiary, Missouri Care,
WellCare Health Plans, Inc.
) for an undisclosed amount.
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Missouri Care has been operating in Missouri for more than 15
years and serves more than 100,000 members. The sell-off is seen
as being related to Aetna's pending
Coventry Health Care, Inc.
) acquisition due to be completed in the middle of the
Upon acquisition Aetna will operate Coventry's Missouri Medicaid
plan called Health Care USA. If Aetna had continued to
operate Missouri Care, the combined population served by both the
units would cross the permissible limits granted by the state's
Medicaid contracts. Thus, this step had been taken by Aetna
to comply with the state's rules which limit the number of
members served by an insurer.
The deal is a net positive for Aetna since in exchange of
foregoing 100,000, members served by Missouri Care, Aetna will
gain access to 250,000 members served by Health Care USA.
On the other hand, WellCare will gain Missouri Care's extensive
provider network of more than 50 hospitals and 9,500 physicians.
WellCare already has an active presence in Missouri serving 3,000
Medicare Advantage members and 13,000 Medicare Prescription Drug
Plan members. Moreover, for smooth transition of the acquisition
Missouri Care's CEO Pamela Johnson and employees at the Missouri
Care business are set to join WellCare.
) also sells Medicaid plans in Missouri.
Aetna is looking forward to completing the $7.3 billion Coventry
acquisition successfully. The transaction holds compelling
strategic benefits for Aetna and will provide it with direct
access to two of the most exciting business lines: Government
programs and Commercial insured business.
We expect to get more color on the transaction during fourth
quarter earnings scheduled to release on Jan. 31, 2013. The Zacks
Consensus Estimate for the fourth quarter earnings is 96 cents
per share, a penny lower than earnings of 97 cents reported in
the year-ago quarter.
Aetna currently retains a Zacks Rank #3 (Hold).