Yesterday Humana Inc. (HUM) announced that it will purchase Arcadian Management Services, a Medicare Advantage health maintenance organization that has members in 15 U.S. states. However, the financial and other terms of purchase remain undisclosed. The acquisition is expected to complete by the end of the year, after obtaining the approval of U.S. federal and state regulators.
Arcadian is a California-based privately held organization established in 1996 and specializes in providing high-quality health care services to its members, most of whom dwell in small and medium-sized communities. The company provides Medicare coverage to about 64,000 people and reported total revenue of $622 million in 2010.
On the other hand, Humana earned $33.87 billion in revenues in 2010, which is more than 5 times the total revenue of Arcadian. Humana is actively working on expanding its size, not just through acquisitions, but also by increasing its employee base.
On Monday, the company had announced its plan to employ 300 new registered nurses, social workers and community health educators in its Humana Cares division by the end of this fall. Additionally, in July this year, the company had announced its plan to hire 200 full-time employees, including customer care specialists and front-line supervisors, at its national Medicare service operations center in Tampa.
While the current-year income of Humana will not be significantly affected by the acquisition, the deal is expected to increase its earnings in the coming years as it will expand the Medicare business of the company. Humana is a leader in insurance and healthcare industry, which has other major players like CIGNA Corporation (CI), Aetna Inc. (AET) and UnitedHealth Group Inc. (UNH).
Humana carries a Zacks #1 Rank, which translates into a Strong Buy rating for the short-term.
On Wednesday, the shares of the company closed at $70.79, down 2.59%, on the New York Stock Exchange.
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