WellPoint (WLP) to Drop from Georgia Medicare Advantage and Be Replaced by UnitedHealth (UNH) - Deutsche Bank

Deutsche Bank maintained a Buy rating on UnitedHealth Group (NYSE: UNH) with a price target of $95. In a research note, analyst Scott Fidel said WellPoint (NYSE: WLP) will drop out of Medicare Advantage in Georgia and be replaced by UnitedHealth Group.

"Georgia Health News is reporting that WLP is dropping its group Medicare Advantage (MA) plan for next year in the Georgia State Health Benefit Plan (SHBP) for state workers and retirees. WLP is the sole provider to the State of Georgia account in 2014 and roughly 102k retirees are enrolled in MA plans under Georgia’s SHBP. We have also confirmed today with UNH that they will become the sole provider of the group MA benefits for 2015," said Fidel.

"Recall, WLP won the entire SHBP contract for 2014 (includes both active employees and retirees) which displaced UNH and CI and covered more than 600k active employees on an ASO basis. However, the state shifted course to provide SHBP members with more choices in 2015 by adding UNH back to the program state-wide as well as selecting Kaiser for Commercial HMO products in the Atlanta metro area. While we were already aware that UNH would be re-entering the State of Georgia account, the big news out this week is that WLP will no longer participate in the Group MA component which helps sets UNH up for more substantial MA growth while creating a significant enrollment headwind for WLP’s MA book of business in 2015," he added.

For an analyst ratings summary and ratings history on UnitedHealth Group click here. For more ratings news on UnitedHealth Group click here.

Shares of UnitedHealth Group closed at $87.16 yesterday.

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