Health insurer, Aetna Inc. will move out of its Hartford, CT headquarters to New York City. The company, which spent 164 years in Hartford, will take along with it 250 jobs. The intended time for the shift is late 2018.

 

Aetna’s CEO Mark Bertolini commented that the company will leave the state in the lookout for "younger people, technologists, innovation" as it transforms into a digital health entity. The company is also reported to have received a financial assistance package from New York City Economic Development Corporation.

 

The company was in talks with a number of states, but NYC was chosen as Bertolini views it as a ‘‘knowledge economy hub’’ and a driver of innovation.

 

The shift marks one of the major steps in the company’s transformation to grow in the digital space. Aetna’s acquisition of Humana Inc. (HUM Quick QuoteHUM - Free Report) did not materialize as it was blocked by regulators on anti-trust concerns. The company has, however, overcome the failure and is concentrating on growing its business in new verticals. It has stepped back from public exchanges that were making losses. 

 

In the past one year, the stock of Aetna has surged 22.4% compared with the Zacks categorized Medical – Health Maintenance Organization industry’s gain of 20%. The outperformance relative to the sector reflects investors’ optimism over the company’s long-term growth despite the merger failure. Its strong capital position, solid government business and growing ACO collaborations poise it for long-term growth.

 

 

The exit of Aetna will deal a blow to Hartford’s economic health which is already struggling with budget deficit. Last year, another big company General Electric Company (GE Quick QuoteGE - Free Report) left the city for Boston. Aetna, however, commented that the move will not have much impact on Hartford since 6000 of its employees will continue working there. 

 

We believe the decision to move its headquarters to a commercial landmark in the country will serve Aetna well in business transformation. 

 

Aetna carries a Zacks Rank #3 (Hold). A better-ranked stock in the same space is WellCare Health Plans, Inc. , with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

 

WellCare Health Plans beat estimates in each of the last four quarters, with an average positive surprise of 59.23%.