City and state officials on Friday said it’s too early to say for certain what the deal will mean for the region. Aetna will be acquiring all the shares of Humana in exchange of cash and their own shares.
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Anthem had weighed a bid for Humana, according to a person familiar with the matter, and could try to outbid Aetna.
The combined company may not retain its title of second-largest insurer for long. While Aetna admitted its somewhat open platform concept, CarePass, was a failed experiment, how it evolves the HumanaVitality offering with its CarePass learnings will be an important space to watch.
Tom Noland, a Humana spokesman, told WAVE 3 News the sale will combine the strengths of both companies.
The combination brings together Humana’s growing Medicare Advantage business with Aetna’s diversified portfolio and commercial capabilities to create a company serving the most seniors in the Medicare Advantage program and the second-largest managed care company in the United States.
A number of the nation’s big health insurers have been rushing toward another round of consolidation, looking to increase more prominent scale and wring out expenses from their operations.
Humana performs strongly in a key measure of Medicare quality known as star ratings, which are tied to government payments.
Humana has almost 3.2 million people enrolled in Medicare Advantage plans, a total that falls just sort of market leader UnitedHealth Group Inc. Those segments are also among the fastest-growing in the insurance business.
Humana has missed analysts’ earnings projections for the past three quarters. On Thursday, people familiar with the matter briefed that this is the first in a series of mergers among the country’s big health insurer. Humana would also suspend its share repurchase program.
Obamacare, or the Patient Protection and Affordable Care Act, created millions of new customers for insurance coverage and encourages insurers to look for savings. The amounts made public so far aren’t complete yet, however. In the meantime, getting bigger would give insurers more clout to negotiate expenses with health systems. The company posted revenue of $48.5 billion in 2014 and had about 57,000 employees.
One of the largest employers in the city of Louisville has agreed to be sold. According to reports, the deal is the largest ever in the insurance industry.
The companies predicted that Aetna’s profit would begin to rise in 2017 from benefits of the acquisition.
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It’s also the latest major merger in an increasingly frantic health care marketplace. “This market fits well with SGI CANADA’s particular expertise in Western Canada’s construction, transportation and oil and gas industries”, said Andrew Cartmell, President and CEO of SGI CANADA, based in Regina, Saskatchewan. McCallister, who took over the company when it was struggling in 2000, is credited with steering it deeply and successfully into the Medicare business, which has remained at the center of the company.
