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Humana to Buy SeniorBridge - Analyst Blog

Posted: 11/30/2011 11:45:00 AM
Referenced Stocks: AET;AMS;HUM;WLP

Yesterday, Humana Inc. ( HUM ) announced an agreement to acquire chronic-care provider SeniorBridge for an undisclosed amount. However, the purchase is subject to state and federal regulatory approvals.

SeniorBridge is an 11-year old New York-based healthcare provider, which offers in-home care to seniors with chronic diseases such as Alzheimer's disease, Parkinson's disease and congestive heart failure. It has a network of 1,500 care managers in the U.S.

SeniorBridge's projected revenue for 2011 is $72 million. However, the deal is not likely to have any material impact on the 2011 earnings of Humana as it is expected to culminate in the first half of 2012.

Further, the acquisition will expand Humana's Health and Well Being segment, which provides primary care, pharmacy, integrated wellness, and home care services. While SeniorBridge currently concentrates on providing care to private-pay customers, the in-home care service will complement the Humana Cares division of the group company, which offers care management services to 185,000 chronically ill people.

SeniorBridge's services will be particularly useful for Humana's Medicare members as professional post-hospitalization home care will significantly reduce readmissions and will also ensure speedy recovery. Moreover, professional care at home will improve the general health of the old and chronically-ill members of Humana.

The demand for in-home care is bound to grow with the increasing age of the baby boomer population. The populace eligible for Medicare is expected to increase to 55 million by 2020 and 72 million by 2030 from 40 million at present. Moreover, current demographic data indicates that about 73% of the senior population has at least two chronic diseases.

Humana Inc. is one of the largest health care plan providers in the U.S. and competes with companies like WellPoint Inc. ( WLP ) and Aetna Inc. ( AET ). The company has been on an acquisition spree this year and has been rapidly expanding its Medicare business.

In September this year, Humana's subsidiary, Concentra Inc., acquired four urgent care medical centers from NextCare Inc. In the same month, the company announced a deal to acquire California-based MD Care, which Care is a privately-held health maintenance organization that operates in southern-California.

Earlier, in August 2011, Humana declared its intention to acquire California-based privately held Arcadian Management Services ( AMS ), a Medicare Advantage health maintenance organization, which has members in 15 U.S. states.

Currently, the company carries a Zacks #2 Rank, implying a short-term Buy rating.

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