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July 31, 2005
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MHMR July 31, 2005; Volume 13, Number 14
United to buy PacifiCare...WellPoint settles class action...Molina lowers ’05 outlook...Cigna to acquire MC Consultants...Chart: selected MCO acquisitions...Phanstiel wins big for PacifiCare...UnitedHealth raises ’05 outlook...Aetna to invest in Medicare...Sierra eyes Medicare gains...WellPoint raises profit outlook...PacifiCare tops expectations...Amerigroup disappoints...Centene posts 41% net gain...GHI to acquire ABC...Cigna offers generic savings...Medicare News Briefs: Aetna, Health America, Health Net, Humana, WellPoint...People: St. Clair, Morgan, Ron...HMO stocks fall 10%...Services stocks rise 2%...and more...
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PACIFICARE GOES FOR 8 TIMES CASH FLOW
In an effort to dramatically boost its already substantial presence in the senior market, UnitedHealth Group (Minnetonka, MN) announced the acquisition of PacifiCare Health Systems (Cypress, CA) for $8.2 billion in cash and stock.
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WELLPOINT SETTLES DOC CLASS ACTION
WellPoint Inc. (Indianapolis) has agreed to pay $198 million to settle class action litigation brought by 700,000 physicians against the managed care industry claiming they were systematically short-changed on claims payments.
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MOLINA LOWERS ’05 OUTLOOK; SHARES DIVE
Molina Healthcare (Long Beach, CA) said that higher-than-expected medical costs—largely because of first-quarter in-but-not-reported claims totaling $13.4 million—would result in a second-quarter 2005 net loss of $0.15 to $0.20 ($4.2 million to $5.6 million based on 28.2 million diluted shares).
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CIGNA TO ACQUIRE MC CONSULTANTS
Cigna Corp. (Philadelphia) has announced a definitive agreement to acquire Managed Care Consultants Inc. (Henderson, NV), a third-party administrator and PPO with a network of 3600 providers and 31 hospitals.
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UNITEDHEALTH RAISES ’05 OUTLOOK; 2Q05 NET SOARS 36%
UnitedHealth Group (Minnetonka, MN) has raised its 2005 earnings forecast to $2.45 to $2.47 per share ($3.236 billion to $3.263 billion based on 1.321 billion shares outstanding), up 25% from 2004, based on strong financial performance in the first half of the year.
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AETNA TO DOUBLE MEDICARE INVESTMENT; NET JUMPS 43%
Aetna Inc. (Hartford, CT) said it expects to invest $50 million to further ramp up its participation in the Medicare Part D drug and individual Medicare Advantage programs, nearly double the company’s originally intended investment.
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SIERRA EYES $100-200 MM BOOST IN MEDICARE REVENUES
Sierra Health Services (Las Vegas) said it could generate a total of $100 million to $200 million in additional revenues in 2006 from its expanded participation in the Medicare Advantage program and its entry into the Part D drug program.
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WELLPOINT RAISES ’05 PROFIT PROJECTIONS
On the strength of better-than-expected second-quarter financial results, WellPoint Inc. (Indianapolis) has raised its full-year 2005 profit projection to $3.91 per share ($2.4 billion based on 623 million diluted shares).
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PACIFICARE BEATS WALL STREET EXPECTATIONS
PacifiCare Health Systems (Cypress, CA), which is being acquired by UnitedHealth (MHMR July 31), beat Wall Street expectations in the second quarter of 2005 by posting net income of $92.577 million, up 22%, on revenues of $3.581 million, up 18%.
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CENTENE REPORTS 41% GAIN IN 2Q05 NET INCOME
Centene Corp. (St. Louis) reported a 41% increase in second-quarter net income to $15.249 million, compared to the same period a year earlier, on revenues of $349.628 million, up 50%.
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GHI TO ACQUIRE ABC, WITH 8000 MEDICAID LIVES
Group Health Inc. (New York) announced that it would acquire the assets of provider-owned ABC Health Plan (New York), a not-for-profit prepaid health services plan with 8000 Medicaid lives in the Bronx and Manhattan, NY. ABC is owned by Beth Israel Medical Center and the Institute for Urban Family Health. The deal was expected to close on Aug. 1.
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CIGNA OFFERS FURTHER GENERIC COPAY REDUCTIONS
Cigna Corp. (Philadelphia) said that it would offer first-time users of generics in eight classes of drugs discounts of $5 to $20 on current copays and coinsurance, with potential total savings to members and employers of $236 million in the first year.
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PEOPLE: ST. CLAIR, MORGAN; RON
Health Net (Woodland Hills, CA) has promoted Scott St. Clair to vice president of sales for small groups (50 of fewer employees) in California.
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MOLINA, AMERIGROUP, CENTENE STOCKS BLUDGEONED
Managed care stocks fell 10% in the two week ended July 22, according to an MHMR tally of 15 issues, with shares of Medicaid managed care companies taking the brunt of the beating.
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