Yesterday, 2:12 PM
- Humana (HUM +19.6%) surges following a WSJ report that it is exploring a potential sale after receiving indications of takeover interest, and has hired Goldman Sachs to help it explore a potential sale.
- Sources say Aetna (AET +2.2%) and Cigna (CI +5.2%) are among companies that have held preliminary discussions with HUM.
- HUM is one of five health insurers that bankers and analysts have long considered ripe for consolidating the industry, including AET, CI, UnitedHealth (UNH +1%) and Anthem (ANTM +2.6%).
Thu, Mar. 19, 10:34 AM
- According to Bloomberg, major providers of Medicare coverage like Humana (HUM +0.9%), WellCare (WCG +0.6%) and Centene (CNC +1.4%) are high on the acquisition radar of large insurers who have relatively modest exposure to the rapidly growing Obamacare-stoked space. Likely suitors would be Aetna (AET +1.3%) and Anthem (ANTM +0.3%).
- There hasn't been much M&A activity among health insurers due to the uncertainties surrounding the implementation of the Patient Protection and Affordable Care Act. Now that its implications are better understood, the number of deals should perk up.
- No bargains are out there, though. S&P's index of health insurers galloped 57% last year. The current valuations for Humana, WellCare and Centene are $26.9B, $4.1B and $8.3B, respectively, all at record levels since at least 2007.
- Anthem CFO Wayne DeVeydt says his firm will continue to make smaller deals although a larger purchase is not out of the question. Other firms declined to comment.
- Leerink Partners analyst Ana Gupte says a likely scenario is consolidation among the five largest health insurers: UnitedHealth Group (UNH +0.8%), Anthem, Aetna, Cigna (CI +0.6%) and Humana.
- Aging baby boomers, born between 1946 and 1964, are driving the increase in Medicare enrollment. Membership is expected to rise to 68.4M in 2023, up more than 25% from this year's 54.4M. Medicaid is projected to add 9.3M people over the same time frame.
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