The uncertainties created by the Affordable Care Act (the ACA or
"Obamacare") have affected all of the players in the space, leading to a
drive toward consolidation and scale through acquisitions for Aetna Inc. (NYSE: AET ) , Cigna Corporation (NYSE: CI ) , and WellPoint, (NYSE: WLP )
. But not all of WellPoint's problems can be blamed on the ACA.
WellPoint struggled operationally under the tenure of now-former CEO
Angela Braly and finds itself in need of self-repair at a time when
others like UnitedHealth Group (NYSE: UNH ) can use their cash flow to fund acquisitions outside of the U.S. regulated managed care space.
While WellPoint has been the laggard of the "big four" over the past
two and five years, it is not as though the company's performance has
been disastrous. UnitedHealth is up about 45% over the last two years
and Aetna is up about 55%, while WellPoint's shares have risen about
35%. WellPoint still has meaningful scope to tighten up its operations
and drive synergies from its large acquisition of Amerigroup, and while
the ACA has added a lot of unknowns to the model, the company's
conservatism in these early days is likely to mitigate that risk. I
don't see quite the same potential in WellPoint shares as I do from
UnitedHealth, but there's still enough here to be worth some
consideration.
Follow this link to the full article:
http://www.fool.com/investing/general/2013/12/26/wellpoint-can-new-leadership-and-a-big-acquisition.aspx
No comments:
Post a Comment