WellCare Health Plans, Inc. (WCG - Snapshot Report) recently entered into an agreement to acquire the subsidiaries of Care1st Health Plan, a unit of Blue Shield of California, for about $157.5 million including statutory capital. The health maintenance organization will be buying Care1st Health Plan Arizona, Inc. and ONECare by Care1st Health Plan of Arizona, Inc, collectively known as “Care1st Arizona.” This buyout will enable WellCare Health to extend its footprint into Arizona’s thriving Medicaid and Medicare markets.
Shares, however, slipped 0.2% in the last trading session owing to broader market fundamentals.
Care1st Arizona offers Medicaid and Medicare benefits to about 114,000 beneficiaries in Arizona’s largest geographic service areas – Maricopa and Pima counties.
The transaction is anticipated to be financed with available cash on hand. The acquisition is expected to be completed by the first quarter of 2017 pending closing conditions. WellCare expects the buyout to be accretive to earnings per diluted share in the first year post the completion of the transaction.
Care1st Arizona is renowned as a superior quality health plan that has met the criteria of government-sponsored programs in Arizona for more than 13 years. The health plan’s commitment toward community-based relationships and combined delivery of medical care and social services is in line with the acquirer’s objective of providing enhanced health outcomes for low-income families, children, the disabled, seniors and individuals with complex medical needs.
WellCare has been boosting its inorganic growth profile through strategic acquisitions. The company acquired certain assets of Advicare Corp.’s Medicare business on Jun 1, 2016. The buyout will allow the health maintenance organization to expand its footprint to South Carolina and strengthen its partnership with the state via the delivery of quality, cost-effective health care solutions to benefit low-income children and families.
Currently, WellCare sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
Investors interested in other stocks from the same space can consider Aetna Inc. (AET - Analyst Report) , Humana Inc. (HUM - Analyst Report) and UnitedHealth Group Incorporated (UNH - Analyst Report) . Each of these stocks holds a Zacks Rank #2 (Buy).
Aetna, a health and maintenance organization, delivered positive surprises in all of the last four quarters, with an average beat of 7.31%.
Humana, another health and maintenance organization, delivered positive surprises in three of the last four quarters, with an average beat of 1.32%.
UnitedHealth Group, a health and maintenance organization, delivered positive surprises in all of the last four quarters, with an average beat of 2.93%.
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