Florida Health News

Aetna would benefit most if it bought WellCare, analyst says

5/12/2008 © Florida Health News 

Among the three companies that have been rumored to be interested in acquiring WellCare Health Plans, Aetna Inc. would benefit most, according to managed-care analyst Carl McDonald of Oppenheimer & Co. But any of the three would benefit somewhat, McDonald wrote in his weekend newsletter, because WellCare's stock is so depressed.

It plummeted in late October after federal and state health-fraud agents raided the Tampa headquarters of the insurer, which contracts with Medicare and state Medicaid programs to manage the treatment for beneficiaries. The price rebounded a bit last week when talk got around that UnitedHealth, Aetna and Humana were looking at the possibility of a purchase. It would take a major player to buy WellCare, which has a market capitalization of $2 billion.

"Strategically, a deal would make sense for all three companies," McDonald wrote in his weekend roundup on the managed care industry.

Some disagree, given that a federal investigation is still going on and it's unclear how much money the company may have to repay. "It seems to me there are many issues that need to be resolved before an acquisition," Brian Wright, an independent analyst who follows WellCare, told Florida Health News on Monday.
 
McDonald acknowledges that the pending settlement will be a factor, but only in making the WellCare acquisition cheaper than it would be otherwise. "We don't think WellCare has to settle the investigation before someone else is willing to buy the company," he said.

Aetna would benefit most from buying WellCare, he said, because its strength lies in the commercial sector and it needs to diversify more into  Medicare and Medicaid. Also, Aetna would gain strength in Florida, a profitable market where WellCare dominates the Medicaid HMO business.

In other WellCare news, the Wall Street Journal Health Blog reported Monday, without citing its source, that talks are under way between the company's new management and the U.S. attorney's office in Tampa. Also, the board will be expanded by up to three seats, the blog said.

 

s wise for any company to jump in until the investigation is resolved. 

 in his weekend newsletter. However, not all analysts think

a Tampa-based managed-care contractor for Medicare and Medicaid programs, Managed-care analyst . ed the future of WellCare Health Plans Inc., the Tampa-based company that offers Medicare and Medicaid managed-care products nationwide.