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Aetna drug plan poised to be WellCare's latest high-profile acquisition

Tampa-based WellCare Health Plans' role in managing prescription drug benefits could grow with the proposed acquisition of a 2.2 million-member standalone Medicare Part D prescription drug plan from insurance giant Aetna. (Times files)
Published Sep. 27, 2018

TAMPA — WellCare Health Plans' run of high-profile acquisitions continues with news that the Tampa-based health plan manager has an agreement to buy a 2.2 million-member standalone Medicare prescription drug plan from insurance giant Aetna.

The purchase price was not included in reports that each company filed with the U.S. Securities and Exchange Commission this week.

"We're not disclosing the purchase price," Aetna executive director of media relations T.J. Crawford said in an email Thursday to the Tampa Bay Times. As stated in its 8-K report on the deal, "the purchase price is not material to Aetna."

And because the deal is subject to approval by state and federal regulators that include the U.S. Department of Justice and the Centers for Medicaid & Medicare Services, WellCare director of corporate communications Alissa Momberg Lawver said she couldn't discuss the price or how it compares to WellCare's recent $2.5 billion acquisition of Meridian Health Plans.

That said, it's big.

In membership terms, the 2.2 million patients in Aetna's drug plan are equal to half of WellCare's current 4.4 million membership base.

By comparison, when WellCare closed the deal earlier this month for Meridian — at the time its biggest acquisition ever — it picked up about 1.1 million members in Medicaid, Medicare Advantage, integrated dual-eligible and health insurance marketplace programs in Michigan, Illinois, Indiana and Ohio.

The Meridian purchase made WellCare the Tampa Bay area's biggest company by stock market value . Late Thursday morning, WellCare's stock price was up 4 percent to $320.17, and its market capitalization was $16 billion, higher than Raymond James Financial at nearly $13.6 billion.

A BIGGER PLAN: $2.5 billion Meridian deal is WellCare's biggest acquisition ever, but also a step in a strategic plan for growth

The Aetna purchase could further expand WellCare's role in running and integrating prescription drug coverage into the other government health-care plans that it manages.

That's no small thing for WellCare. Acquiring a pharmacy benefit management operation was part of the appeal when WellCare bought Meridian because of its potential to help WellCare improve its service in to Medicaid and Medicare Advantage patients, plus save money for the state and federal governments that pay the bills.

Aetna put its Medicare Part D drug plan up for sale to help clear the way for the company's acquisition by CVS.

RELATED: CVS reportedly buying Aetna, which could benefit consumers

As agreed, WellCare would acquire Aetna's drug plan on Dec. 31, but Aetna would continue to administer and retain the financial risk of running the plan through 2019. As a result, WellCare would not expect to see any revenue from the deal until 2020.

WellCare said it plans to finance the purchase through cash it has on hand. The purchase is contingent on the CVS acquisition of Aetna going through.

This latest WellCare acquisition, following Meridian and before that, Care1st Health Plan Arizona, the Arizona Medicaid assets of the Phoenix Health Plan and Universal American, is the kind of thing that WellCare CEO Ken Burdick suggested the company plans to pursue more and more.

"We are just getting started," he told stockholders in May. "We're no longer focused on comparing our results to past WellCare results. We've now earned the right to compare ourselves to our very best competitors, and that's what we plan to do."

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Contact >Richard Danielson

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