The Zacks Analyst Blog Highlights: CIGNA, UnitedHealth Group, Aetna, CH Robinson Worldwide and Expeditors International of Washington

Zacks


For Immediate Release

Chicago, IL – October 18, 2012 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include CIGNA Corp. (CI), UnitedHealth Group Inc. (UNH), Aetna Inc. (AET), CH Robinson Worldwide Inc. (CHRW) and Expeditors International of Washington Inc. (EXPD).

 

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Here are highlights from Wednesday’s Analyst Blog:

 

CIGNA Advances CAC Initiative

 

In an effort to improve the quality of patient care and make health care more affordable, U.S. health insurer CIGNA Corp. (CI) has recently formed an ‘Accountable Care Organization’ (“ACO”) with Brown & Toland Physicians.

An ACO is a group effort by health care providers, who voluntarily form alliances to provide coordinated high quality care to patients. An ACO is accountable for the quality, cost, and overall care offered to members. By focusing on the needs of patients and linking payments to outcomes, this model of care is intended to improve the health of individuals and communities and curb the rising health care costs.

Cigna calls its ACO-like initiatives Collaborative Accountable Care (CAC). ACOs or Collaborative Accountable Care is one of the several ways by which President Obama has sought to improve the quality of health for all Americans. It is viewed as a tool that would deliver seamless, high quality care for the entire population.

Cigna’s newly formed CAC program, head quartered in San Francisco, is first of its kind commercial PPO-based ACO initiative with an independent practice association (:IPA).

Cigna is engaged in 42 collaborative accountable care initiatives in 18 states. These programs encompass more than 390,000 Cigna customers and more than 5,500 primary care physicians. Cigna launched its first CAC program in 2008. The company aims to have 100 of these and bring its customer base to 1 million by the end of 2014.

The Health Care Reform called for such an arrangement in order to control the unnecessary expenses associated with lack of coordination between multiple physicians and other providers. Most Americans with multiple chronic conditions receive care from multiple physicians, which often resulted in patients not getting proper attention from the physicians.

A large percentage of the sick population ended up being victims of medical errors and faced hospital readmissions within days of their discharge. Thus, ACOs were formed to reduce the exorbitant amounts spent due to lack of managed care.

Companies like UnitedHealth Group Inc. (UNH) and Aetna Inc. (AET) are also aggressively forming ACOs. Going forward, we expect acceleration in the formation of such patient-centered collaborations.

 

 

CHRW Sells Payment Processing Arm

 

Leading third party logistic company CH Robinson Worldwide Inc. (CHRW) has reached a definitive agreement to sell its payment service business, T-Check Systems Inc., to Electronic Fund Source LLC (:EFS) for a cash consideration of $302.5 million. It is expected that the CHRW will utilize the net proceeds to fund its planned acquisition of Phoenix international.

T-Check, which has been a subsidiary of CHRW since 1984, is a business-to-business provider of payment processing services and supports fund transfer, vendor payment, fuel purchasing and online expense management among others.  

T-Check primarily caters to transportation industry. However, because of a change in industry dynamics, the Minnesota-based company has expanded into the financial service sector, thereby handling fund transfer and expense management for other industries. After the deal, EFS expects to retain most of T-Checks Minnesota employees but hasn’t declared any specific number.

Management of CHRW has argued that the strategic rationale for selling the unit is to bring long term success for T-Check. They believe that as the financial service sector continues to consolidate, the integration with EFS will provide T-Check with the scale and size it requires. On a different note the company hasn’t performed very well in the preceding three quarters registering a topline growth of only 3.125% which could be one of the key factors responsible for the sell.

Recently, CHRW announced that it plans to buy privately-held global freight forwarding company Phoenix International Inc. in a cash and equities deal worth $635 million. This was required to thwart stiff competition from a large number of entities competing in the international logistics industry like Expeditors International of Washington Inc. (EXPD). We believe, CHRW will use the fund to buyout Phoenix International Inc, which will give it a strong foothold in the freight forwarding industry.  

We maintain our long-term Neutral recommendation on C.H. Robinson Worldwide Inc. The company also retains a Zacks #3 Rank, implying a short-term Hold rating.

 

 

 

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Read the analyst report on CI

Read the analyst report on UNH

Read the analyst report on AET

Read the analyst report on CHRW

Read the analyst report on EXPD

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