DealSearchOnline.com announces $72.3B committed to fund 291 managed care mergers and acquisitions

More than $72.3 billion was committed to fund 291 managed care mergers and acquisitions announced during the 10-year period ended December 31, 2009, according to DealSearchOnline.com. UnitedHealth Group was the acquirer in 10 of the top 25 managed care mergers and acquisitions announced during 10-year period ended December 31, 2009. However, Anthem Group was the acquirer in the largest acquisition of a managed care company during that decade, with its $16.5 billion acquisition of WellPoint Health Networks, announced in 2003. That deal closed in November 2004 and created the largest managed care company at the time in the United States—placing it ahead of UnitedHealth Group—serving 28 million medical members and generating, pro forma, $36 billion in revenue.

In the second-largest managed care deal of the decade, UnitedHealth Group announced its acquisition of PacifiCare Health Systems for $9.2 billion in 2005. The $6.5 billion acquisition of WellChoice by WellPoint, announced in 2005, was the third-largest acquisition of a managed care company announced in the 10-year period ended December 31, 2009. Next in size among these deals was UnitedHealth Group's acquisition of Oxford Health Plans for $4.9 billion, announced in 2004. Also among the 10 largest deals for the period, UnitedHealth Group announced its $2.95 billion acquisition of Mid Atlantic Medical Services, Inc. in 2003 and its $2.6 billion acquisition of Sierra Health Services in 2007.

For the 10 years ended December 31, 2009, based on managed care mergers and acquisitions for which the target's revenues were disclosed at the time of the acquisition announcement, the managed care companies represented by the targets were producing median annual revenues of $150 million and average annual revenues of $692 million. The target producing the greatest annual revenue at the time of acquisition—$17.34 billion—was WellPoint Health Networks, acquired by Anthem Group in the largest deal of the decade. PacifiCare Health Systems was producing annual revenue of $12.75 billion at the time of its acquisition by UnitedHealth Group in the second-largest deal of the decade.

The average price paid per managed care plan enrollee or plan member was $861 and the median price paid per plan member or enrollee was $291, among managed care mergers and acquisitions announced during the 10-year period ended December 31, 2009 (based on deals for which that figure is immediately available). The highest price paid per member among these deals was $15,564 per member, in the $400 million acquisition of Leon Medical Centers Health Plans by HealthSpring, announced in 2007. Leon Medical Centers Health Plans, a Medicare Advantage HMO serving over 25,700 members in Miami-Dade County, received $269 million in premiums and generated EBITDA of $39 million in 2006. The second-highest price paid per member among the same deals was $8,898 per member, in the acquisition of CarePlus Health Plans of Florida by Humana, Inc., announced at the end of 2004. The acquisition of CarePlus Health Plans, a provider of supplemental Medicare plans to approximately 50,000 members in Miami-Dade, Broward and Palm Beach counties, was valued at $444.9 million.

For the 10 years ended December 31, 2009, the average number of members or plan enrollees involved per deal was 832,277 and the median number of members or plan enrollees was 80,000, among the targets in managed care mergers and acquisitions announced during the same 10 years (based on deals for which that figure is immediately available). For the same time period, six managed care mergers and acquisitions were announced that involved the transfer of covered lives numbering 11,000,000 or more. In the largest of these deals, HCA sold CCN, a non-risk managed care company offering PPO plans to the group health and workers' comp markets, with programs and services extending to 32,000,000 people. The acquisition of CCN by First Health Group Corp., announced in 2001, was valued at $198 million. The second-largest of these deals, the acquisition of American Imaging Management by WellPoint, was announced in 2007 and involved the sale of radiology benefit management services to health plans—representing over 20,000,000 consumers—and was valued at $300 million.

In the third-largest deal based on number of affected consumers, the acquisition of Private Health Care Systems (PHCS) by MultiPlan, Assurant sold its equity interest in PHCS, the largest proprietary PPO network in the United States at the time the transaction was announced in 2006, having contracts with 450,000 providers and 16,000,000 plan members. Also among these deals, the acquisition of WellPoint Health Networks by Anthem involved 14,000,000 enrollees, the acquisition of PacifiCare Health Systems by UnitedHealth Group involved 13,700,000 enrollees and the acquisition of First American Health Concepts by Luxottica Group involved 11,000,000 enrollees.

Geographically, for the 10-year period ended December 31, 2009, the targets in managed care mergers and acquisitions were all based in the United States, concentrated most heavily in Florida, California, Texas, Michigan, Pennsylvania, Wisconsin, Missouri and Illinois. Most of the acquirers were also based in the U.S., although a few were Canada-based, and in many of the transactions the acquirer was based in California, Maryland, Minnesota, Missouri or New York. Several acquirers made multiple managed care acquisitions during the decade, including Coventry Health Care, a Maryland-based company. Centene Corporation, a Missouri-based company, made several of the acquisitions announced during the same period, as did UnitedHealth Group, which is based in Minnesota.