Wednesday, September 28, 2005

Deal spree in health benefits management sector continues

Wellpoint is acquiring Wellchoice for a small premium. Wellchoice had a spectacular run this year, so the small premium isn't much of a concern for early buyers.

This spree is likely to continue. We saw a few deals this year, including Pacificare's acquisition, that I detailed here.

A few of the targets I mentioned in that post still are worth buying. Specifically Molina (MOH), Centene (CNC), Amerigroup (AGP) and Medco Health (MHS) are at reasonable prices.

Humana (HUM), Sierra (SIE), Cigna (CI) are not cheap anymore. Wait for signifcant pullbacks to get in.

As a shareholder, I welcome the consolidation in this space. But as a long-suffering customer, I just wish my premiums were used to provide me with some care instead of just enriching the executives way beyond decency permits. Take Aetna for example - their customer account pages are amazingly primitive. Even a ten year kid can come up with a better website than that using free tools, at home, under half an hour. Where is all that premium money going ? Just where ?


Post a Comment

<< Home