HMO’s claims that the loss of a key in merger control discussions
Minnetonka, Minn. - United Healthcare Corp. ’surprise announcement last week of $ 900 million of a tax against the outcome of the second quarter has thrown the future of their Humana Inc. Deal questioned and is likely to lead to higher prices for its customers employers.
“I think that both companies have much sense of analysis and research a lot to do,” said Todd B. Richter, an analyst health at Morgan Stanley Dean Witter in New York. He added, however: “I think it is much too early to speculate on what will happen.”
“I think United will very carefully about how all the prices of their products” following the announcement, “said Bill Gibson, Client Services Manager for Sedgwick Noble Lowndes in Philadelphia.
From a business perspective, they must not exceed dollars they cost, “said Gibson.
United Health Care, last week said the additional $ 900 million - which led to a loss of $ 565 million per quarter and a loss of $ 433 million for the half - is in part because of its unprofitable Medicare plans.
The company also said that, as part of its reorientation initiatives, “he plans to quit or significantly change the nature of its operational presence in several Undetermined commercial health plan markets in which its intrusion is insufficient or if its profits and Potential growth seems uncertain. The company would not comment further.
The fee for $ 900 million reflects $ 620 million for the withdrawal of certain product markets and management of fortunes and contractual “non-strategic”, $ 190 million for the consolidation of operational activities and systems platforms and $ 90 million in reduced operating costs, including saving clause.
The stock market reacted strongly to the announcement. United Health Care share has decreased by $ 15 or 28.4% to $ 37.88 on Thursday, the day of its merits were announced. It is $ 36.31 Friday. The announcement has also had repercussions on other assets of the organization of health maintenance, which fell by 13.4% last week, after the Bank Insurance Industry Business Report.
The message means United’s Louisville, Ky.-based Humana, to create a certificate, that the nation’s largest Managed Care Organization and was a cause worth about $ 5.5 billion, or restructured or killed Total (BI, June 1).
Humana said in a statement that their comments on the states of the announcement only after having had the opportunity to work with United’s Management “to understand the problem of the underlying measures today and their impact on business . “We have not yet something more to say until we have a better understanding of the problem,” said a spokesman Friday.
Humana reported $ 52 million in net earnings for the quarter to 23.8% from $ 42 million for the comparable quarter a year ago.
A hearing on the proposed treatment by the insurance Kentucky Department on Friday was cancelled. Both Humana and United Health Care officials met informally with officials of the Kentucky Insurance Department Friday.
“Humana is not back and very, very carefully for the financial commitment, which is involved,” said Sedgwick’s Gibson. “I would not be surprised if a reassessment of treatment and the restructuring of the Deal. Many of these depend on what they find, “he added. If that announcement is just the tip of the iceberg, the operation can be quite dead, “he said.
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