Aetna Inc. announced an agreement Aug. 20Â to purchase Coventry Health Care Inc. for $5.7 billion, enlarging the company’s Medicaid and Medicare footprints.
The Hartford-based insurance provider becomes the latest to increase its government-sponsored health care offerings.
In January, Cigna Corp., based in Bloomfield, Conn., completed its acquisition of HealthSpring Inc. for $3.8 billion and just last month WellPoint Inc. announced an agreement to buy Amerigroup for $4.9 billion.
Coventry Health Care, based in Bethesda, Md., offers a full portfolio of risk and fee-based products, which will add a broader network of value-based providers to Aetna”™s coverage plans, the company said. Once the transaction is completed, roughly 30 percent of Aetna’s revenue will be derived from federal-backed health care plans.
“Integrating Coventry into Aetna will complement our strategy to expand our core insurance business, increase our presence in the fast-growing government sector and expand our relationships with providers in local geographies,” said Aetna chairman and CEO Mark T. Bertolini in a press release.
With the transaction, Aetna will add 5.5 million customers to its current network of 36.7 million members, and the insurer’s share of revenues from government-sponsored health care plans will increase 7 percent.
The deal is expected to close in the middle of next year. Under the agreement, Coventry stockholders will receive $42.08 per share, split between $27.30 in cash and 0.3885 in Aetna common shares.
The acquisition will increase operating efficiencies by $400 million annually after 2015 and create new partnerships to provide high quality and affordable health care, officials say. The larger capital base will also enhance Aetna”™s investments in “innovation, technologies and capabilities to lead the transformation of the U.S. health care industry,” Bertolini said.
