NEW YORK, NY -- (Marketwire) -- 07/11/12 -- Medicaid companies soared Monday after major insurer WellPoint announced it had agreed to pay 4.9 billion for Amerigroup. The two companies combined would have approximately 4.5 million Medicaid members across 19 states. Shares of Centene Corp., WellCare Health Plans Inc., and Molina Health Care Inc. all saw increases of 17 percent or more Monday. Five Star Equities examines the outlook for companies in the Health Care Plans Industry and provides equity research on WellPoint, Inc. (NYSE: WLP) and WellCare Health Plans, Inc. (NYSE: WCG).
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"We believe that this combination will create an industry leader in the government sector serving Medicaid and Medicare enrollees," WellPoint CEO Angela F. Braly said in a statement. "This is an opportunity to capitalize on the strengths of both companies to better serve our members and position our companies for future growth as the health insurance industry changes and as we prepare for health insurance exchanges."
The announcement increased speculation that more mergers may be coming. The recent decision by the Supreme Court to uphold "Obamacare" could potentially see Medicaid enrollment increase by 17 million patients over the next 10 years.
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WellPoint's acquisition of Amerigroup brings together two premier organizations with a common goal of creating better health care quality at more affordable prices for their customers. The acquisition also advances the companies' capabilities to more effectively and efficiently serves the growing Medicaid population, including the expanding dual eligible, seniors and persons with disabilities (SPD), and long-term services and support markets. Shares of the company rose nearly 3.5 percent Monday.
WellCare Health Plans, Inc. provides managed care services targeted to government-sponsored health care programs, focusing on Medicaid and Medicare. The company serves more than 2.5 million members nationwide, as of March 31, 2012. Shares of the company surged over 18 percent after WellPoint's announcement.
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