Anthem, Inc. ANTM has completed the acquisition of HealthSun, one of the fastest-growing integrated Medicare Advantage health plans and health care delivery networks in Florida.
Financial terms of the transaction were kept under wraps and the consolidation is expected to be slightly accretive to the company’s earnings in 2018.
Benefits for Anthem
HealthSun is a perfect fit for Anthem given its rapidly-expanding Medicare Advantage (MA) business with vast presence in Florida, the state which houses a large retiree population.
Anthem should benefit from HealthSun’s superior health care services through an effective network of primary care clinics, pharmacy support and transportation services plus a narrow network of physician specialists and integrated medical cost management.
The acquisition aligns with Anthem’s long-term strategy to grow in the thriving Government business. The integration will allow the company to serve more than 650,000 members in Florida.
Share Price Performance
Year to date, the stock has surged 59% outperforming the industry’s growth of 43%. Given its progress on fundamentals, the recently inked buyout deal should keep alive the momentum in the stock going forward.
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Industry Trend
Medicare Advantage, a private version of the Government sponsored health insurance for retirees, which provides extra benefits and services to senior citizens, has been in huge demand of late from the rising population of baby boomers.
A number of small and big acquisitions have been witnessed by the industry with the involved parties scrambling to grow this line of business. Some notable takeovers are Cigna Corp.’s CI acquisition of HealthSpring and UnitedHealth Inc.’s UNH buyout of XL Health Inc.
The unsuccessful mergers of recent times namely Anthem Inc.’s with Cigna Corp. and Aetna’s with Humana Inc. HUM were also aimed at expanding the Medicare Advantage business.
Our Take
The above-mentioned deal comes as no surprise to us, given the company’s desire to flourish in the lucrative MA business. This deal will boost the company to progress in the business line, especially after its blocked merger with Cigna, which could have elevated it as a leading player in the MA market.
The company is also on track to acquire America’s 1st Choice, a privately held Medicare Advantage organization for profit offering HMO products including Chronic Special Needs Plans (C-SNP) and Dual-Eligible Special Needs Plans in Florida.
The company is aggressively seeking to put its capital to fruitful use and is readily open for attractive acquisitions and we expect to hear more from its end on these lines.
Anthem carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
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