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Humana to Acquire American Eldercare

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To enhance its Health and well-being services, Humana Inc. (HUM - Free Report) has recently entered into a definitive agreement to buy American Eldercare Inc., one of the leading nursing home diversion services providers in Florida. The deal is pending regulatory approval and is expected to close in the fourth quarter of 2013.

American Eldercare provides Medicaid long-term care services in Florida. It was established in 1993 as a Home Nursing provider. Gradually it has evolved into being one of the leading providers of nursing home diversion services to senior citizens and disabled individuals.

Humana has been serving the elderly and disabled population with healthcare services.  It has participated in the Medicare program for more than 25 years. Medicare is a federal program that provides certain hospital and medical insurance benefits to persons above the age of 65 and disabled persons under the age of 65. The acquisition of American Eldercare is expected to augment the capacities of the company in this regard.  

The company derives 15% of its total premiums from the Medicare Advantage contracts in Florida with the Centers for Medicare and Medicaid Services or CMS. Until last year, Humana provided healthcare services to approximately 384,200 members in Florida and generated revenues worth $5.9 billion. Through its aforementioned endeavor, Humana is expected to occupy a greater share in the market and witness an improvement in revenues with the help of American Eldercare.

Humana has beaten earnings estimates in all the last four quarters with an average beat of 21.2%. Humana is scheduled to release its second quarter 2013 results on Jul 31. The Zacks Consensus Estimate for the second quarter is currently pegged at $2.46, representing a year-over-year improvement of 5.3%.

Humana currently carries a Zacks Rank #1 (Strong Buy). Among other healthcare companies, WellPoint Inc. shares the same Zacks Rank as Humana while Aetna Inc. (AET - Free Report) and Molina Healthcare Inc. (MOH - Free Report) carry a Zacks Rank #2 (Buy).

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