Health Care Deal News: Spotlight on Managed Care

Despite rumblings to repeal what is now being called Obamneycare and roll back recent reforms, the Medicare Advantage market remains an attractive one. UnitedHealth Group (NYSE: UNH) is acquiring XLHealth Group from MatlinPatterson Global Advisors for an estimated $2.0 billion. Based in Baltimore, Maryland, XLHealth is a Medicare Advantage plan that serves 113,000 members in six states, and  projects 2012 revenue of $2.0 billion. This acquisition gives UNH a strong platform in the Medicare Advantage market. XLHealth’s members are in Arkansas, Georgia, Maryland, Missouri, South Carolina and Texas. The company plans to expand to Illinois, Indiana, Iowa, New Mexico, New York and Wisconsin in 2012; UNH’s large coffers will allow it to do so. Jefferies Group provided XLHealth with financial advice.

An investor group is selling Central Health Plan of California, a Knox-Keene Health Care Service Plan, to AHMC Healthcare, which operates six hospitals in California, for an undisclosed price. Central Health Plan provides a Medicare Advantage HMO plan to 11,000 members in Los Angeles, Orange and San Bernardino counties. This acquisition gives the buyer, a hospital management company, access to Medicare Advantage enrollees. It also allows AHMC the opportunity of building an ACO by using the health plan’s information to improve quality of care and lower costs.

Nashville-based Council Capital is selling its stake in Senior Whole Health (SWH) to Boston-based TA Associates, a private equity firm focused on the middle market for an undisclosed price. SWH is a senior care organization that coordinates health care benefits and other services for both Medicare and Medicaid in Massachusetts and New York. It generates annual revenue of $300.0 million. This sale allows the seller to cash out of its investment in Senior Whole Health, originally made in 2004. The deal gives the buyer access to a business that focuses on the “dual eligible” market. UBS provided Senior Whole Health with financial advice on this transaction.

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