The Zacks Analyst Blog Highlights: Roche, Aetna, WellCare Health Plans, Coventry Health Care and Humana

Zacks


For Immediate Release

Chicago, IL – January 25, 2013 – 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 Roche (RHHBY), Aetna Inc. (AET), WellCare Health Plans, Inc. (WCG), Coventry Health Care, Inc., (CVH) and Humana Inc. (HUM).

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Here are highlights from Thursday’s Analyst Blog:

Label Expansion for Roche’s Avastin

The US Food and Drug Administration (:FDA) recently approved Roche’s (RHHBY) Avastin (bevacizumab) in combination with fluoropyrimidine-based irinotecan or oxaliplatin chemotherapy for treating patients suffering from metastatic colorectal cancer (mCRC).

Patients suffering from mCRC and initially treated with Avastin along with an irinotecan or oxaliplatin containing chemotherapy may now continue to receive Avastin plus a different irinotecan or oxaliplatin containing chemotherapy if the cancer worsens (second-line treatment).

We note that the FDA’s approval was based on encouraging results from a phase III study (ML18147). Results from the study showed that patients continuing with an Avastin-based regimen, even after the worsening of their cancer, survived longer than those who underwent chemotherapy alone. The risk of death for patients who received Avastin plus standard chemotherapy as both the first- and second-line treatment of mCRC, was 19% lower in comparison to patients receiving chemotherapy alone.

Notably, this is Roche’s third approval for Avastin as a treatment of mCRC. The drug is already approved by the FDA for treating patients suffering from mCRC in combination with intravenous 5FU-based chemotherapy. Roche has also gained approval for Avastin for treating patients whose cancer worsened after chemotherapy alone.

 

 

Aetna Sheds Medicare Unit

 

U.S. health insurer Aetna Inc. (AET) announced divestment of its medicare subsidiary, Missouri Care, Inc. to WellCare Health Plans, Inc. (WCG) for an undisclosed amount.

Missouri Care has been operating in Missouri for more than 15 years and serves more than 100,000 members. The sell-off is seen as being related to Aetna’s pending Coventry Health Care, Inc., (CVH) acquisition due to be completed in the middle of the year.

Upon acquisition Aetna will operate Coventry’s Missouri Medicaid plan called Health Care USA.  If Aetna had continued to operate Missouri Care, the combined population served by both the units would cross the permissible limits granted by the state’s Medicaid contracts.  Thus, this step had been taken by Aetna to comply with the state’s rules which limit the number of members served by an insurer.

The deal is a net positive for Aetna since in exchange of foregoing 100,000, members served by Missouri Care, Aetna will gain access to 250,000 members served by Health Care USA.

On the other hand, WellCare will gain Missouri Care’s extensive provider network of more than 50 hospitals and 9,500 physicians.

WellCare already has an active presence in Missouri serving 3,000 Medicare Advantage members and 13,000 Medicare Prescription Drug Plan members. Moreover, for smooth transition of the acquisition Missouri Care’s CEO Pamela Johnson and employees at the Missouri Care business are set to join WellCare.

Another insurer Humana Inc. (HUM) also sells Medicaid plans in Missouri.

Aetna is looking forward to completing the $7.3 billion Coventry acquisition successfully. The transaction holds compelling strategic benefits for Aetna and will provide it with direct access to two of the most exciting business lines: Government programs and Commercial insured business.

We expect to get more color on the transaction during fourth quarter earnings scheduled to release on Jan. 31, 2013. The Zacks Consensus Estimate for the fourth quarter earnings is 96 cents per share, a penny lower than earnings of 97 cents reported in the year-ago quarter.

Aetna currently retains a Zacks Rank #3 (Hold).

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Read the analyst report on RHHBY

Read the analyst report on AET

Read the analyst report on WCG

Read the analyst report on CVH

Read the analyst report on HUM

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