Aetna plans acquisition of Coventry
Aetna, one of the largest health insurance companies in the U.S., has announced its plans to purchase Coventry Health Care. The acquisition is currently estimated to cost $5.7 billion and would increase Aetna’s presence in the health insurance market. The move is expected to improve the company’s standing in the changing landscape of government-funded health insurance. The acquisition is expected to take place months before millions of uninsured Americans become eligible for the Medicaid program, which could mean significant financial gains for Aetna.
Acquisition may improve Aetna’s presence in Medicaid market
Through Coventry Health Care, Aetna expects that its position in the Medicaid program will become much more powerful. The insurer expects to see increased enrollment in the Medicaid space as more Americans become eligible for the program. The acquisition will also help boost Aetna’s Medicare Advantage and prescription drug business as it is expected that the initiative will draw more attention to these sectors.
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Acquisition may cost as much as $7.3 billion
Aetna will pay $42.08 for each share of Coventry, including $27.30 in cash for each portion of stock. Aetna may have to cover the remaining debt that has been accrued by Coventry Health Care, which will bring the deal from $5.7 billion to $7.3 billion. The financial implications of the acquisition are expected to be offset by the gains Aetna could see through its improved position in the Medicaid and Medicare markets. The deal is not yet set in stone, however, so Aetna’s position in these markets is still relatively modest.
Insurers attempt to adapt to changing landscape
Many of the country’s health insurance companies have been working to establish a better foothold in the changing health care landscape. The Affordable Care Act has brought about several significant changes to the insurance industry and the market in an attempt to bring better benefits to consumers. Health insurers, such as Aetna, have been able to adapt relatively well, but smaller insurance companies have had troubling adjusting since the passage of the health care law.