Virtual Silence Regarding Sierra Health Services/UnitedHealth Group Merger

Three weeks after the Nevada DOI's second hearing session and there is a virtual silence coming from Sierra Health Services Inc. (SIE), UnitedHealth Group, Inc. (UNH) and the two key regulators (Nevada and DOJ). It is difficult to confidently determine if this is a positive or negative at this point, especially in light of the relatively negative momentum that head developed in conjunction with Nevada's hearings.

This publication continues to believe that there is very little basis for the negative sentiment for this merger, and that it is primarily the result of effective AMA lobbying within Nevada combined with the essentially free publicity a deal like this presents for state politicians. As noted from the beginning of this deal, the merger served in nearly an identical capacity in California. After the obligatory resistance and public outcries, that deal went through fairly easily, relatively quickly, and without conditions.

The Pacificare-UnitedHealth parallel to this case is obvious and more than likely will continue until this deal is ultimately completed.

Again, at this point it is extremely difficult to give a confident assessment of the overall situation. The fact that members of the Nevada legislature have become actively involved does present an aspect which was not present in the Pacificare-UnitedHealth deal, and therefore it must be factored into the current deal. However, the lull in activity is perceived as more of a positive than a negative at this point, as it is assumed that the companies are now working directly with the Nevada DOI and state politicians in their own lobbying efforts. Clearly, UNH has a great deal of experience and successful track record in this particular area.

Until some legitimate indication surfaces from within Nevada (the AMA is certainly not the indicator here), it remains anticipated that the companies will obtain the required regulatory consents before the end of this year, and very possibly before the end of October.

Disclosure: We have no positions of any kind, in any security. We are a completely neutral source of research and analysis.