WELLPOINT GROWS IN TEXAS FIRM DIVERSIFIES BY ACQUIRING METHODISTCARE.Byline: Evan Pondel Staff Writer THOUSAND OAKS Thousand Oaks, residential city (1990 pop. 104,352), Ventura co., S Calif., in a farm area; inc. 1964. Avocados, citrus, vegetables, strawberries, and nursery products are grown. - WellPoint Health Networks Inc., a monolith in the managed care arena, reached agreement Friday to acquire MethodistCare, an aggressive move to gain a major toehold in Texas. As one of Houston's prominent HMOs, WellPoint will absorb MethodistCare's 78,000 members, enabling the combined entity to take on area players BlueCross BlueShield of Texas and Aetna. Terms of the deal were not disclosed. ``They have to do these acquisitions for strategic reasons,'' said Eric Veiel, analyst with Deutsche Banc Alex. Brown in Baltimore. Veiel said Thousand Oaks-based WellPoint has been swallowing up BlueCross BlueShield plans without acquiring non-Blues. This recent move will inevitably round out WellPoint's barrage of acquisitions, he said. WellPoint has already established a presence in Texas, with the company's Unicare Life Health Insurance Company national operating unit operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon , serving 322,240 medical members. As part of WellPoint's transaction with MethodistCare, the company will sign a five-year agreement to provide covered medical services to all members of Unicare's HMO HMO health maintenance organization. HMO n. A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, and PPO PPO abbr. preferred provider organization PPO Managed care Preferred provider organization, see there Infectious disease Pleuropneumonia-like organism, see there Networks. ``Texas is one of our key strategic areas around the country and we are definitely committed to the Texas market,'' said Larry Bryant, staff vice president, corporate communications Corporate communications is the process of facilitating information and knowledge exchanges with internal and key external groups and individuals that have a direct relationship with an enterprise. for WellPoint. ``This is an opportunity to provide a wider choice of products. We haven't had an HMO in the market, and now we do.'' MethodistCare, which has been contending with Aetna and BlueCross in Texas since its inception, is also looking forward to no longer being dwarfed by the managed care giants. Albert Zimmerli, Methodist Health Care System's chief financial officer and executive vice president, said partnering with WellPoint will give Methodist the edge it needs to surpass the competition. ``We're real excited about it ... and we did a lot of due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. , finding WellPoint to be the right fit,'' Zimmerli said. ``We also found that there was very little duplication between our two companies, so the partnership doesn't requiring downsizing (1) Converting mainframe and mini-based systems to client/server LANs. (2) To reduce equipment and associated costs by switching to a less-expensive system. (jargon) downsizing .'' MethodistCare doesn't anticipate any layoffs stemming from its deal with WellPoint. Zimmerli said that was an important outcome of the transaction, which is expected to close in the second quarter of 2002. In November, WellPoint announced its $1.3 billion acquisition of CareFirst BlueCross BlueShield, an integral step in the company's attempt to propel its standing in the U.S. In the span of three months, the addition of St. Louis-based Right Choice, Maryland-based CareFirst and MethodistCare, total medical membership will swell to around 16 million. Aetna, the nation's leading health care company has about 17.5 million medical members. Of the myriad deals WellPoint has inked since March, most of them involve BlueCross BlueShield Plans. With WellPoint's strategy poised to diversify the company, Blue plans are attractive because of consumer recognition and longevity, Veiel said. As recessional re·ces·sion·al n. 1. A hymn that accompanies the exit of the clergy and choir after a service. 2. A recession from a church. adj. Of or relating to a recession. conditions subside sub·side intr.v. sub·sid·ed, sub·sid·ing, sub·sides 1. To sink to a lower or normal level. 2. To sink or settle down, as into a sofa. 3. To sink to the bottom, as a sediment. 4. and stability slowly returns to Wall Street, Veiel remains bullish Bullish Word used to describe an investor's attitude. Bullish refers to an optimistic outlook, while bearish means a pessimistic outlook. bullish about WellPoint's stock performance. WellPoint Health Networks expects full year 2002 earnings per share estimates in the $7.70 to $7.75 range, on par with analysts' projections. The company had a healthy third quarter, with profits up 21 percent, outpacing expectations, as enrollment in its health plans swelled. The company saw net income climb to $108.4 million, or $1.64 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, from $89.5 million, or $1.38 a share in the same period a year ago. In the fourth quarter, analysts polled by Thomson Financial/First Call are projecting earnings per share of between $1.56 and $1.62, compared with $1.37 for the year-ago period. Fourth-quarter results are due out in February. ``We have a strong buy rating on the stock right now because it's one of the premier names out there,'' he said. WellPoint shares declined $1.40 Friday to close at $124.64. |
|
||||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion