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Anthem's (ANTM) Buyout to Offer Better Healthcare in Puerto Rico

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Anthem, Inc. (ANTM - Free Report) recently inked a deal with InnovaCare Health, L.P., a leading value-based payor and provider service organization, to acquire the subsidiaries of InnovaCare Health in Puerto Rico comprising MMM Holdings, LLC (MMM) and its Medicare Advantage (MA) plan MMM Healthcare, LLC, and affiliated companies and Medicaid plan.

Subject to regulatory and customary approvals, the buyout is anticipated to close by second-quarter 2021. Notably, the transaction will not have an impact on the company’s EPS guidance for this year.

The latest move not only reinforces the company’s position as a valuable healthcare partner but also help Anthem to continue delivering enhanced care management programs and paving way for providing a whole-health experience for its members. This, in turn, is likely to result in improved health outcomes across the communities where Anthem operates.

Moreover, the recent buyout reflects Anthem’s efforts to strengthen presence across several regions. And MMM seems to be a suitable partner in Anthem’s endeavors to expand its footprint across Puerto Rico. Notably, MMM has been one of the rapidly growing vertically integrated healthcare organizations across the United States with a network of over 10,000 healthcare providers.

It is worthy of mentioning that the latest move is likely to help Anthem in foraying further into the Medicare and Medicaid space. This can primarily be attributed to MMM, which is not only Puerto Rico’s largest MA plan but also the ninth-largest MA plan across the United States with more than 267,000 MA members. In fact, it is also the second-largest Medicaid plan across Puerto Rico boasting of more than 305,000 Medicaid members.

Shares of this Zacks Rank #3 (Hold) healthcare provider have gained 9.4% in a year compared with the industry’s growth of 8.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

It has to be noted that Anthem‘s Government Business has been performing well for quite some time on the back of membership gains across Medicare and Medicaid businesses. The last year was no exception to the abovementioned trend, wherein higher Medicare membership gained momentum from rise in sales. The Medicaid business has been buoyed by organic growth in the company’s markets stemming from temporary suspension of eligibility recertification efforts as a result of the COVID-19 pandemic, and the company’s buyout of Medicaid plans in Missouri and Nebraska in January 2020. Case in point, medical enrollment increased 4.7% as of Dec 31, 2020 from 2019-end figure.

Time and again, Anthem has resorted to buyouts and collaborations for enhancing its capabilities. The company’s buyout of Beacon Health in March 2020 is a testament to the same. The above-discussed acquisitions of Missouri and Nebraska Medicaid plans of WellCare last year also added more than 300,000 Medicaid members under Anthem’s coverage. The company has also made every possible effort to help its members amid the pandemic by eliminating certain “out-of-pocket” costs required for treating clients. It has increasingly urged members to adopt telehealth services for seeking medical help, particularly at a time when physical visits to clinics carry the innate risk of contracting the virus.

Among other stocks in the medical space, UnitedHealth Group Incorporated (UNH - Free Report) , Magellan Health, Inc. (MGLN - Free Report) and Humana Inc. (HUM - Free Report) have also developed telehealth services.

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