WellCare to buy UnitedHealth Medicaid unit as earnings drop 57%
WellCare has reached an agreement with UnitedHealthcare to buy its South Carolina Medicaid unit, the former announced yesterday.
UnitedHealthcare provides Medicaid benefits in South Carolina for about 65,000 members, who will switch over to WellCare when the deal closes at the end of the year.
Financial terms weren't disclosed, the Tampa Bay Business Journal reported.
"This acquisition offers us a promising growth opportunity in the attractive South Carolina government programs market, and is well-aligned with our multi-product strategy," WellCare CEO Alec Cunningham said in a statement.
The WellCare-UnitedHealth agreement comes alongside news that WellCare's third-quarter earnings fell 57 percent, decreasing from $88.3 million last year to $38.3 million this year, Reuters reported.
The earnings decline was primarily caused by WellCare's Medicaid programs in Georgia and Kentucky that yielded results below the insurer's target. In Georgia, for example, the Centers for Medicare & Medicaid Services reduced WellCare's premium revenue by $18 million related to a 2011 settlement, reported Dow Jones Newswires.
Insurance stocks dive with reform ruling
WellCare says it's changed since $138M fraud settlement
WellCare to pay $138M in Medicare fraud settlement
Coventry loses contracts with state's largest health system
Does Aetna-Coventry deal signal end of M&A activity?