Managed care provider UnitedHealth Group Inc., which has major operations in the state, said Monday it will pay about $510 million to buy rival Health Net Inc.’s operations in the northeastern U.S., which include 578,000 members in Connecticut, New York and New Jersey and are expected to generate 2009 revenue of about $2.7 billion.
The transaction is expected to close within a year and will add modestly to both companies’ profits. After closing, UnitedHealth said it will transfer $290 million to Health Net. The remaining portion of the operations’ value – currently estimated at $160 million – will be distributed over the next two years as Health Net members shift to UnitedHealthcare plans.
UnitedHealth, the largest commercial health insurer as measured by revenue, said it also will pay Health Net $60 million for its Medicare and Medicaid businesses and commercial membership renewal rights. The Minnetonka, Minn.-based company will pay additional funds on a per member basis as Health Net’s customers transition to UnitedHealthcare, potentially totaling as much as $120 million.
Health Net President and CEO Jay Gellert said the deal allows the company to focus on its health plans in the West. Los Angeles-based Health Net also now plans to retain its Arizona health plan.
“We determined that there are greater synergistic opportunities among our three Western health plans than we originally thought,” said Gellert. “Also, Arizonas performance is improving significantly. The commercial market has become much more rational, our provider network is stable, and Medicare is achieving anticipated improvements.”
Health Net currently provides health benefits to approximately 6.6 million people through group, individual, Medicare, Medicaid and TRICARE and Veterans Affairs programs. (AP)
