UnitedHealth Group closed its acquisition of Sierra Health Services on February 25, 2008.
Humana, Inc. and UnitedHealth Group announced that they have signed a definitive merger agreement in which Humana will purchase United’s individual SecureHorizons Medicare Advantage HMO business in Nevada for approximately $185 million in cash and debt.
McCain focuses on increasing the control that individuals and families have over their healthcare dollars and reducing the cost of healthcare.
On February 22nd, CMS released a preliminary estimate of the National Per Capita Growth Percentage for calendar year (CY) 2009, which is used when CMS is rebasing the capitation rates for Medicare Advantage for next year.
On average, health plan stock prices gained 9.3% for the month. However, only one of the fourteen health plans had increases in stock prices. Valuation indicators declined for the month of February.
Ten of the fourteen publicly-traded health plans announced earnings last month. Aetna’s net income increased 3.3%, in part as a result of an increase in revenues of 13.9%. AMERIGROUP Corporation experienced a 30.0% increase in membership, which led to a similar increase in revenues. Centene reported a decline in net income and EPS, despite an increase in revenues. CIGNA’s net income decreased 6.1%, due in part to declines in non-operating income. Coventry Health Care had strong growth in membership which led to an increase in net income of 18.1%. Health Net, Inc. had a 13.2% gain in operating income as a result of higher PMPM revenue yields. HealthSpring reported a 30.4% growth in net earnings despite a loss in non-operating income. Humana experienced a 51.6% increase in operating income due to a significant growth in Medicare Advantage revenues and improvements in health benefits ratios. Molina Healthcare reported a 53.8% increase in net income, due to a 23.3% increase in revenues and improved margins. Universal American Corporation experienced an explosive growth in operating income due to a significant increase in PFFS membership and margin expansion.
Humana received approval for repurchase of its common shares. UnitedHealth Group declared an annual dividend. CIGNA’s board of directors approved a change in the frequency of its dividends from quarterly to annually and declared an annual dividend.
This analysis reviews the capital market activities of health plans over the past year and long term. While net income was strong, share repurchases hit a record high and debt increased, tilting the capital mix in favor of debt. Overall, health plans increased their use of capital markets in 2007 to a record high level.
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