UnitedHealth Group to merge with PacifiCare in $8 billion deal.UnitedHealth Group UnitedHealth Group Incorporated NYSE: UNH is a managed health care company. It is the parent of United Healthcare, one of the largest health insurers in the U.S. It was created in 1977, as UnitedHealthCare Corporation (it renamed itself in 1998), but traces its origin to a Inc., the nation's second-largest health insurer An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance company and is also known as an underwriter. based on membership, will merge with PacifiCare Health Systems PacifiCare Health Systems (former NYSE: PHS) was a Fortune 500 healthcare company based in Cypress, California. It was acquired by UnitedHealth Group (NYSE: UNH) in late 2005, which continues to market health plans under the PacifiCare name. Inc. in a cash and stock deal that is valued at roughly $8 billion, the companies said. Under the terms of the agreement, PacifiCare shareholders will swap for UnitedHealth Group stock at a fixed exchange ratio of 1.1 shares for each PacifiCare share, plus $21.50 in cash per PacifiCare share. Total consideration for the deal is a combination of about 111.6 million shares, and $2.2 billion in cash. The mix of 73% equity and 27% cash preserves UnitedHealth's balanced capital structure, UnitedHealth said. Additionally, UnitedHealth will retire $1.1 billion of PacifiCare debt at closing. The merger combines the Cypress Cypress, city, United States Cypress (sī`prəs), city (1990 pop. 42,655), Orange co., S Calif. near Long Beach; inc. 1956. Forest Lawn–Cypress, a branch of the famous cemetery in Glendale, Calif. , Calif.-based PacifiCare's extensive network of health-care providers and services across the West with United's system of care providers, its capabilities to support consumers, and its role in making the health-care system work better for multiple consumers, including the uninsured, UnitedHealth said. PacifiCare is also among the nation's largest publicly traded managed care companies. PacifiCare's specialty plan operations include behavioral health Behavioral health was first used in the 1980's to name the combination of the fields mental health and substance abuse. As an example, an organization serving both mental health and substance abuse clients might refer to its practice as behavioral health or , dental and vision and pharmacy benefit management A Pharmacy Benefit Manager (PBM) is a third party administrator of prescription drug programs. They are primarily responsible for processing and paying prescription drug claims. through its Prescription Solutions unit. PacifiCare is the largest publicly traded provider of privately managed Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. services, with 757,900 Medicare members as of the end of the first quarter. Upon completion of the merger, PacifiCare will operate as a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of United-Healthcare, PacifiCare said in a statement. Based in Minneapolis, UnitedHealth is currently the nation's second largest publicly traded managed care company, based on membership. The merger is expected to close in late 2005 or early 2006, subject to regulatory approvals. In the wake of the announced merger, California Insurance Commissioner California Insurance Commissioner is an elected executive office position in California who is in charge of the California Department of Insurance. The current Insurance Commissioner is Steve Poizner. John Garamendi--who held an extensive review before finally approving last year's merger of Anthem anthem [ultimately from antiphon], short nonliturgical choral composition used in Protestant services, usually accompanied and having an English text. The term is used in a broader sense for "national anthems" and for the Latin motets still used occasionally in and WellPoint--said in a statement that he expects to apply "the same close scrutiny and principles used in our examinations of previous applications."
GAAP Analysis, Publicly Traded Health Insurers, 2004
($ Millions)
Total Medical Total Premium
Company Members (000s) Revenue Revenue
Aetna Inc 13,656 $17,193 $14,863
Amerigroup Corp 936 1,824 1,814
Centene Corp 773 1,007 992
Cigna Healthcare Inc 9,701 12,185 10,868
Coventry Health Care Inc 2,509 5,357 5,199
Health Net Inc 6,534 9,718 9,560
Humana Inc 7,033 13,104 12,689
Molina Healthcare Inc 788 1,176 1,167
PacifiCare Health Systems Inc 3,336 12,277 11,497
Sierra Health Services Inc 560 1,257 1,131
UnitedHealth Group 22,425 37,218 36,495
WellCare Health Plans Inc 747 1,395 1,391
WellChoice Inc 4,955 5,827 5,255
WellPoint Health Networks Inc 27,728 20,815 18,772
Total 101,681 $140,353 $131,693
Average 7,263 $10,025 $9,407
Source: A.M. Best Special Report, "Sustainability of Increased Health
Premiums Is Questionable," Published May 2, 2005.
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