Content area
Full Text
INDIANAPOLIS-The nation's largest health insurer, WellPoint Inc., moved last week to further strengthen its foothold in the consumer driven health care market through its purchase of CDHP pioneer Lumenos Inc.
The $185 million acquisition is the first WellPoint has announced since its completion of a multi-billion dollar merger with Indianapolisbased Anthem Inc. in November. It also comes on the heels of competitor UnitedHealth Group's purchase late last year of Minneapolis-based Definity Health Corp. in a $300 million cash deal (BI, Dec. 6, 2004).
The WellPoint-Lumenos marriage is a mutually advantageous one, industry sources say, allowing Indianapolis-based WellPoint to buy into the consumerist niche through a known provider, while giving Alexandria, Va.-based Lumenos a capital boost and a massive platform for its products.
Under the terms of the transaction-expected to close in the second quarter and subject to approval under federal antitrust laws-publicly traded WellPoint will pay Lumenos' private investors approximately $185 million in cash. The deal will not impact WellPoint's 2005 earnings, the firm said.
WellPoint, which had a total enrollment of 28.5 million as of March 31, is the biggest managed care firm in the country, operating under the Blue Cross and Blue Shield name in 13 states, and through non-Blue branded operations in other states.
Formed in 1999, Lumenos has projected revenues of nearly $45 million for 2005, and an enrollment of about 214,000 among 88 self-funded clients, of which roughly one-third are Fortune 1000 and Global Fortune 500 companies. The company was ranked the thirdlargest consumer-driven health plan by Business Insurance's 2005 ranking of the nation's leading CDHP providers.
"Lumenos is already an established CDHP, so WellPoint can use what Lumenos already has, and offer it to their customers," said Sally Rosen, a senior financial analyst with Oldwick, NJ.-based...