UnitedHealth jumps into Medicare market, buying XLHealth
In the most recent attempt of an insurer trying to gain a foothold in the burgeoning senior healthcare market, UnitedHealth announced it is acquiring XLHealth Corp, a privately-owned sponsor of Medicare Advantage health plans.
Although the purchase price wasn't disclosed, a person familiar with the deal said it's about $2 billion, Bloomberg reports.
XLHealth serves 113,000 Medicare Advantage plan members, specializes in patients with chronic illnesses, as well as those who are dually eligible for Medicare and Medicaid, which is "the most profitable segment of the Medicare Advantage program," according to the Wall Street Journal.
"Combining XLHealth's substantial capabilities and outstanding employees serving high-risk, chronically-ill Medicare beneficiaries with UnitedHealthcare's breadth in both Medicare and Medicaid will significantly enhance our ability to serve older Americans," said Gail Boudreaux, chief executive of UnitedHealthcare's health insurance unit.
XLHealth, which is owned by private equity firm MatlinPatterson, currently operates in six U.S. states and is expanding into six more next year. It estimates its 2012 revenue will exceed $2 billion, according to Reuters.
"This deal makes a lot of sense for UnitedHealth," Sheryl Skolnick, an analyst at CRT Capital LLC, told Bloomberg. Managed care is "likely to get a lot more attention from the federal and state governments in an effort to reduce costs. This will give UnitedHealth even more expertise in an area that's apt to be growing and more certain than the commercial side of the business."
To learn more:
- read the Bloomberg article
- see the Reuters article
- check out the Baltimore Business Journal article
- read the Wall Street Journal article
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