Significantly increasing its
reach in the seniors market, US health insurer Cigna Corporation
has made a successful offer for HealthSpring, one of the largest
players in the Medicare Advantage segment.
Cigna’s cash offer of $3.8bn
for the managed care company was pitched at a 37% premium to
HealthSpring’s share price just prior to the announcement of the
deal.
Go deeper with GlobalData
Commenting on the deal, Cigna
president and CEO David M Cordani said: “HealthSpring is a great
fit with Cigna’s growth plans to expand into the seniors and
medicare segment through a premier business and trusted brand
name.”
HealthSpring will provide
Cigna access to 340,000 Medicare Advantage members in 11 states and
Washington DC, as well as a large, national standalone Medicare
prescription medicine business with over 800,000
customers.
In the US, all citizens over
the age of 65 are entitled to Medicare, a programme administered by
the federal government which provides health insurance covering
basic services. Since 1997, Medicare beneficiaries have had the
option to receive their benefits through private insurers under a
variation of the programme named Medicare Advantage.
Under Medicare Advantage, a
higher level of medical services is provided for with premium costs
in excess of the federal government’s contribution covered by an
additional premiums paid by the insured.
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By GlobalDataHealthSpring has grown
rapidly since its founding in 2000 and in the six months to June
2011 reported a net profit of $128.14m, an increase of 43% compared
with the first half of 2010. Premium revenue of $2.75bn in the
first quarter of 2011 was up 83%. In September, HealthSpring was
ranked 71st among the 100 fastest-growing companies in the US by
Fortune magazine.
Cigna’s acquisition of HealthSpring came a month after
rival health insurer Humana’s announcement that is was to acquire
MD Care, a managed care company serving the Californian Medicare
Advantage market segment. The purchase price MD Care, which serves
some 15,000 members, was not disclosed.
