Merger Monday lived up to its moniker today with news that WellPoint Inc. (NYSE: WLP), one of the largest U.S. health insurers, inked a deal to acquire Amerigroup Corp (NYSE: AGP).
The $4.9 billion deal would make the Indianapolis-based company the top private manager of Medicaid benefits.
The strategic move underscores WellPoint's bid to shore up its Medicaid business following the recent Supreme Court decision upholding Obamacare. The combined company will have a Medicaid business presence in 19 states, the largest in the nation.
The transaction is expected to close in early 2013. Under the terms of the all-cash deal, WellPoint will pay a lofty $92 a share for all outstanding shares of Amerigroup, a nearly 43% premium to the company's closing price prior to announcement.
WellPoint CEO Angela F. Braly said in a statement, "We believe that this combination will create an industry in the government sector serving Medicaid and Medicare enrollees. This is an opportunity to capitalize on the strengths of both companies to better serve our members and position our companies for future growth as the health insurance industry changes."
WellPoint has been on a buying spree of late. In May, the company purchased contact lens retailer 1-800-Contacts, and last year it picked up CareMore, a provider of managed care for the elderly.
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WellPoint (NYSE: WLP) Rides the Obamacare Profit Wave Even Higher
Healthcare Stocks: What Happens if Obamacare is Overturned
With the Supreme Court ruling on President Barack Obama's healthcare reform law just three weeks away, investors in healthcare stocks need to be prepared.
While some are confident the Supreme Court will rule in favor of the Patient Protection and Affordable Care Act, a rejection of the law -- or at least of the mandate requiring everyone to buy insurance -- may be more likely.
If so, Obamacare could be toast.
Based on tough questioning from moderate Justice Anthony Kennedy in Supreme Court hearings in March, the odds of that happening are rising. In close cases, Kennedy is often the swing vote.
At InTrade - where people can bet on the outcome of real world events -the probability of Obamacare being overturned has risen to about 70%.
So what would happen to healthcare stocks if Obamacare was overturned?
Surprisingly, it is less than you'd think.
In fact, most healthcare stocks will benefit simply by having a definitive answer on the fate of the law. A decision would lift the uncertainty hanging over the sector since Obamacare passed in 2009.
"Coming off the market lows of 2009, you saw multiple expansion in virtually every sector of the S&P 500, but very little in health care," Eddie Yoon, Fidelity Investment's top health-care analyst, told Barron's.
Still, some healthcare stocks would gain more than others if Obamacare gets torpedoed. And a few could get a little dinged.
While some are confident the Supreme Court will rule in favor of the Patient Protection and Affordable Care Act, a rejection of the law -- or at least of the mandate requiring everyone to buy insurance -- may be more likely.
If so, Obamacare could be toast.
Based on tough questioning from moderate Justice Anthony Kennedy in Supreme Court hearings in March, the odds of that happening are rising. In close cases, Kennedy is often the swing vote.
At InTrade - where people can bet on the outcome of real world events -the probability of Obamacare being overturned has risen to about 70%.
So what would happen to healthcare stocks if Obamacare was overturned?
Surprisingly, it is less than you'd think.
In fact, most healthcare stocks will benefit simply by having a definitive answer on the fate of the law. A decision would lift the uncertainty hanging over the sector since Obamacare passed in 2009.
"Coming off the market lows of 2009, you saw multiple expansion in virtually every sector of the S&P 500, but very little in health care," Eddie Yoon, Fidelity Investment's top health-care analyst, told Barron's.
Still, some healthcare stocks would gain more than others if Obamacare gets torpedoed. And a few could get a little dinged.
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What the Government Isn't Telling You About the New Healthcare Bill
In a vote that was held at 1 a.m. Monday, the Senate approved a procedural measure that makes it likely a version of the national healthcare bill will make it into law.
In fact, by taking advantage of an obscure rule that allowed lawmakers to start their day and vote on the measure well before dawn, Senate leaders were able to approve the measure and keep alive the possibility that the healthcare bill will be passed by Christmas.
But if you study the Senate bill carefully - no matter what your political persuasion may be - you have to wonder why they even bothered.
In fact, by taking advantage of an obscure rule that allowed lawmakers to start their day and vote on the measure well before dawn, Senate leaders were able to approve the measure and keep alive the possibility that the healthcare bill will be passed by Christmas.
But if you study the Senate bill carefully - no matter what your political persuasion may be - you have to wonder why they even bothered.
Senate Healthcare Bill Headed for Christmas Eve Vote Without Public Option
Shares of health insurers and pharmaceutical companies gained yesterday (Monday) after a new version of the Senate's healthcare reform bill eliminated the so-called public option. But it's the next few weeks on Capitol Hill that will determine the long-term effects that Congressional reforms will have on health-related sectors.
As one of the worst December snowstorms on record passed over Washington last weekend, Senate Democrats successfully negotiated to get the 60 votes needed to clear the first of three motions to thwart further debate on the bill and pave the way for final passage of the bill on Christmas Eve.
"It defies logic that we are now expected to vote on the overall, final package before Christmas with no opportunity to amend it, so we can adjourn for a three-week recess even as legislation will not fully go into effect until 2014," said U.S. Sen. Olympia Snow, R-ME.
As one of the worst December snowstorms on record passed over Washington last weekend, Senate Democrats successfully negotiated to get the 60 votes needed to clear the first of three motions to thwart further debate on the bill and pave the way for final passage of the bill on Christmas Eve.
"It defies logic that we are now expected to vote on the overall, final package before Christmas with no opportunity to amend it, so we can adjourn for a three-week recess even as legislation will not fully go into effect until 2014," said U.S. Sen. Olympia Snow, R-ME.
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