Yesterday, WellPoint Inc. (WLP) completed the acquisition of Medicare specialist CareMore Health Group after obtaining approval from various market regulators. The deal was priced at $800 million.
However, other financial details remain undisclosed. The deal, which was announced on June 8, 2011, has closed much before the expected year-end closure. CareMore is now expected to function as a fully-owned operating division of WellPoint.
CareMore specializes in providing Medicare Advantage plans and Special Needs plans for the elderly and the chronically ill. Currently it runs 26 neighborhood care centers in select California, Arizona and Nevada markets.
The neighborhood care centers employ various health care professionals such as podiatrists, nutritionists, care managers, psychologists, physical therapists, who provide high-quality, individualized care to the company’s 54,000 Medicare members.
WellPoint is currently the largest health insurer on membership basis with 34 million members in its health care plans, including 1.3 million Medicare Advantage and Medicare Supplement clientele. Moreover, it estimates more than 1.0 million baby boomers to become eligible for the Medicare program every year through 2030 across the 14 states, where its Blue Cross and Blue Shield plans have a presence.
Expansion of the Medicare market forms an important part of WellPoint’s growth plan and the acquisition will help in strengthening its portfolio. While the deal is not expected to impact the earnings of WellPoint in 2012, it is projected to be accretive to earnings in 2013 and beyond.
The acquisition will help WellPoint to expand the CareMore model both within the Group’s existing markets and to WellPoint markets across the country. It will also strengthen the company’s position against its competitors like Aetna Inc. (AET), CIGNA Corporation (CI) and UnitedHealth Group Inc. (UNH).
WellPoint carries a Zacks #3 Rank, which translates into a short term Hold rating. On Monday, the shares of the company closed at $57.57, down 0.9%, on the New York Stock Exchange.
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