Humana Closes SeniorBridge Purchase

Humana Inc. ( HUM - Analyst Report ) has completed the acquisition of chronic-care provider SeniorBridge for an undisclosed amount. The purchase deal was announced in November last year.

New York-based SeniorBridge is a healthcare provider, which offers in-home care to seniors with chronic diseases such as Alzheimer’s disease, Parkinson’s disease and congestive heart failure. It has a network of 1,500 care managers in the U.S.

The above-mentioned deal is not likely to have any material impact on Humana’s 2012 earnings. With revenues of $72 million in 2011, SeniorBridge is substantially smaller than Humana, which recorded total revenue of $36.83 billion for the same period.

The acquisition will expand Humana’s Health and Well Being segment, which provides primary care, pharmacy, integrated wellness, and home care services. While SeniorBridge currently concentrates on providing care to private-pay customers, the in-home care service will complement the Humana Cares division of the group company, which offers care management services to 185,000 chronically ill people.

SeniorBridge’s services will be particularly useful for Humana’s Medicare members as professional post-hospitalization home care will significantly reduce readmissions and will also ensure speedy recovery. Moreover, professional care at home will improve the general health of the old and chronically-ill members of Humana.

The demand for in-home care is bound to grow with the increasing age of the baby boomer population. The populace eligible for Medicare is expected to increase to 55 million by 2020 and 72 million by 2030 from 40 million in 2011.

Humana Inc. is one of the largest health care plan providers in the U.S. and competes with companies like WellPoint Inc. ( WLP - Analyst Report ) and Aetna Inc. ( AET - Analyst Report ) . The company has been on an acquisition spree since mid-2011 and is rapidly expanding its business with special focus on the expansion of its Medicare business.

Humana completed the acquisition of Arcadian Management Services, a Medicare Advantage health maintenance organization, in April 2012. Earlier, in January 2012, the company announced the completion of its acquisition of California-based MD Care, a three-year old privately-held Medicare Advantage health maintenance organization.

Currently, the company carries a Zacks #3 Rank, implying a short-term ‘Hold’ rating. We maintain a long-term ‘Neutral’ recommendation on the stock.