Seeking Alpha: Coventry Makes Sense For Aetna

If at first you don't succeed in M&A, keep bidding until you do. That might be the mantra that Aetna (AET) followed, letting other players in the health insurance space pay more for other assets, but ultimately getting a pretty solid company of its own in Coventry Health (CVH). While there are certainly some risks in buying a health insurance company about two months away from the U.S. presidential election, the long-term logic of the deal seems likely to hold.

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Coventry Makes Sense For Aetna

Investopedia: WellPoint Buys More Medicaid Exposure

Funny how a Supreme Court ruling can change strategic priorities. Not all that long after management stated that it had no plans to expand its Medicaid business, WellPoint (NYSE:WLP) announced Monday that it was acquiring Medicaid managed care company Amerigroup (NYSE:AGP) in a nearly $5 billion deal. Not only does this deal look as though it can be very accretive over time (even with a 43% premium), but it arguably represents a best-of-breed buyout in a sector that could soon see more activity.

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http://stocks.investopedia.com/stock-analysis/2012/WellPoint-Buys-More-Medicaid-Exposure-WLP-AGP-MOH-CNC0709.aspx

Investopedia: No Rattle At HUM

Managed care, that bizarre euphemism for health insurance, has twisted up investors for a while now. Although there are ever-present worries about the future profitability of this industry, none of the plans on the table would seem to be all that big of a risk. So while Humana (NYSE:HUM) has joined many of its brothers in a healthy rally over the past year, Wall Street still does not seem to be giving full credit to this stock.

Solid Third Quarter Results 

Humana reported that overall revenue rose about 11% this quarter, with operating revenue up a like amount. Growth was underpinned by premium growth of nearly 9% and membership growth above 6%. Profitability was likewise encouraging. The company's medical loss ratio, that is, what it pays out in claims, improved by roughly a full point to 80.7%, and the company's earning before interest, taxes, depreciation and amortization (EBITDA) rose 13%. Operating income was up a similar amount, growing 12% from the year-ago level. (To know more about EBITDA, read: EBITDA: Challenging The Calculation.)

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http://stocks.investopedia.com/stock-analysis/2011/No-Rattle-At-Humana-HUM-AET-WLP-UNH-APG-MOH-CNC-LNCR1101.aspx

Investopedia: Fear And Uncertainty Still Keeping A Lid On WellPoint

It seems as though investors have made their peace with health insurance reform to some extent, as WellPoint (NYSE:WLP) shares have more than doubled off of their bottom in late 2008/early 2009. That said, major health insurance names like WellPoint, Unitedhealth (NYSE:UNH), Aetna (NYSE:AET) and Coventry (NYSE:CVH) still seem to be trading below their inherent earning power as investors try to digest the impact of upcoming regulation on their medical costs and membership expansion potential. 

A Surprisingly Strong First Quarter 

WellPoint's first quarter once again highlights the difference between absolute and relative performance. On an absolute basis, it would seem that revenue contraction of over 1% would be something of a disappointment. In this case, though, analysts were expecting a bigger decline and WLP's top line and profit performance were surprisingly strong.

While WellPoint did see a small increase in administrative fees, premium revenue dropped more than 1% (and that's more than 85% of the revenue base). Membership did grow over 1%, though, with strong performance in national and senior categories. (For more, see 5 Health Insurance Considerations.)

Looking at the profit picture, WellPoint saw operating profits rise almost 5% despite a small uptick in the medical loss ratio (up to 82.1). Especially noteworthy was the better than 5% year-on-year decline in general and administrative expenses, and it is impressive to consider that the company is still finding that amount of cost savings in the system. 

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http://stocks.investopedia.com/stock-analysis/2011/Fear-And-Uncertainty-Still-Keeping-A-Lid-On-WellPoint-WLP-UNH-AET-CVH-CNC-MGLN-KV.A0429.aspx