Average health plan stocks increased 4.3% for the month of August.. Valuation indicators increased last month. Since only six of the fourteen plans reported earnings last month, it is reasonable to assume the 4.3% increase in stock price was driven by the improvement of investor sentiment.
Six of the fourteen publicly-traded health plans announced earnings last month. CIGNA’s operating earnings grew on margin improvement despite membership declines. HealthNet’s EPS soared on margin improvement deleveraging and share buybacks. HealthSpring experienced earnings declines on a 25.0% increase in Medicare Advantage revenues, reflecting its changing focus. Universal American reported fast earnings growth on explosive Medicare revenue growth despite margin compression. Molina posted operating earnings declines on Medicaid revenue growth. WellCare had rapid earnings growth and strong revenue trends and margin improvement.
Coventry Health Care, Inc. released a press statement stating it has priced a $400 million offering of senior unsecured notes at a 6.30% coupon rate due 2014.
CIGNA HealthCare. announced on August 1st that it has acquired Sagamore Health Network, Inc. HealthSpring, Inc. signed a definitive agreement on August 9th stating that they will acquire all outstanding capital stock of Leon Medical Centers Health Plans. UnitedHealth Group and Sierra Health Services, Inc. have received approval from the Commissioner of Nevada’s Division of Insurance for the merger. WellPoint, Inc. completed its acquisition of American Imaging Management on August 1st.
Aetna, Inc. announced that Jeffrey Chaffkin has been appointed as vice president of investor relations effective August 13th. UnitedHealth Group recently announced Richard Anderson, executive vice president and president of Commercial Services Group and Lois Quam, executive vice president and president of Public and Social Markets Group will be leaving the company. WellPoint, Inc. appointed Jamie S. Miller as senior vice president and chief accounting officer. WellPoint, Inc. promoted Dennis Casey as president and chief executive officer of UniCare, a life and health insurance subsidiary.
BlueCross BlueShield of South Carolina and WellPoint, Inc. announced that they will be jointly offering a Medicaid managed care product in South Carolina.
This month’s study tests data from the Sherlock Expense Evaluation Report (SEER) for evidence of economies of scale. Our study identifies several functional areas where economies of scale are statistically significant. The study has implications for business process outsourcing and other contractual relationships as well as for business combinations.
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