Average health plan stocks increased by 4.3% for the month of November. Valuation indicators were mixed. Since six of the fourteen plans reported earnings last month and most reported improved performance, but earnings multiples declined, it is reasonable to assume the 4.3% increase in stock price was driven by improved company fundamentals. The broader market, measured by the S&P 500, decreased by 4.4%.
Six of the
fourteen publicly-traded health plans
announced earnings last month.
CIGNA’s net income increased 20.2%,
due in part to gains in non-operating
income. Health Net, Inc. enjoyed a 5.9%
gain in operating income as a result of
higher PMPM revenue yields. Molina
Healthcare reported a 41.9% increase in
net income, due in part to a 5.4%
membership increase. Sierra Health
Services experienced a 14.5% increase
in membership that, in part, led to a
10.4% gain in operating income.
Universal American Corporation saw
operating income decline 5.0% due to
increase health benefits and administration.
WellCare Health Plans reported
net income growth of 53.1%,
which resulted in part from a 39.8%
increase in revenues, with a change in
business mix as a key factor.
UnitedHealthGroup announced that it has entered into an agreement to purchase the health businesses of Fiserv, Inc. for approximately $775 million in cash with proceeds of $475 million net of tax and transaction fees. CIGNA Corporation announced that it had signed a definitive agreement to acquire Great-West Healthcare, the Healthcare division of Great-West Life & Annuity, Inc for $1.5 billion in cash but retains $750 million which represents the amount of equity invested in the business as of the anticipated closing date.
Universal American Corporation has changed its name and the exchange on which it’s traded.
Presbyterian Healthcare Services announced on November 6, 2007 that Dennis Batey, M.D. will serve as the new president of the plan.
Our bi-annual review of the financial performance of Blue Cross Blue Shield Plans reports stable financial performance for 2006 due to increasing revenues and expenses, and projects continuation of the same trends in 2007.
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