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Anthem (ANTM) Buys MMM & Other Units From InnovaCare Health

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Anthem, Inc. ANTM completed the previously-announced acquisition of Puerto Rico-based MMM Holdings, LLC and its Medicare Advantage (MA) plan MMM Healthcare, LLC. along with its affiliated companies and Medicaid plan.

The leading health insurer purchased these units from InnovaCare Health, L.P., a leading value-based payor and provider service organization. The deal, previously announced in February, adds more than 275,000 Medicare Advantage members and 314,000 Medicaid members to Anthem’s existing members.

Notably, MMM is the ninth largest MA plan in the country and is also Puerto Rico’s second-largest Medicaid plan. It is one of the fastest-growing vertically integrated healthcare organizations in the United States.

By adding MMM’s beneficiaries, Anthem is increasing its Medicaid and Medicare enrolment by 3% and 18%, respectively.

Rationale Behind the Deal

The latest move not only reinforces Anthem’s position as a valuable healthcare partner but also helps it constantly deliver enhanced care management programs and pave the way for a whole-health experience for its members.

Medicare and Medicaid members can gain traction from a wide range of medical services.

Both companies share the commitment to serve communities. The combination of Anthem’s approach to whole-person health along with MMM’s provider network and wholly-owned independent physician associations (IPAs) Castellana Physicians Services, PHM as well as independent IPAs is expected to improve health outcomes.

It is worth mentioning that the recent strategic action is likely to aid Anthem in penetrating deeper into the Medicare and Medicaid space. The purchase reflects the currently Zacks Rank #3 (Hold) company’s efforts to strengthen its presence across several regions.

The company's Medicare business has been witnessing a surge over the last few quarters. In 2020 and during the first quarter of 2021, MA enrollment at Anthem increased 17.6% and 15% year over year, respectively. Riding on such initiatives on a continuous basis, we expect this business line to bolster going forward.

With this step, the health insurer is doubling its government business, a major driver of its enrollment growth noticed last year amid the pandemic. Notably, this government business has been witnessing robust growth for a while now.

The leading health insurance provider also closed its buyout of Beacon Health Options, previously the biggest independent behavioral health organization in the United States, in February.

Later in April, it further bought myNEXUS, Inc., a comprehensive home-based nursing management company for payors.

All these initiatives bode well for the long haul.

Price Performance

Shares of the company have gained 43% in the past year, outperforming its industry’s growth of 31.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Stocks to Consider

Some better-ranked stocks in the same space are UnitedHealth Group Incorporated UNH, The Joint Corp. JYNT and Select Medical Holdings Corporation SEM, each holding a Zacks Rank #2 (Buy) at present.

UnitedHealth Group, Joint Corp. and Select Medical Holdings managed to deliver a trailing four-quarter surprise of 20.2%, 199.17% and 245.91%, on average, respectively.

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