UnitedHealth Group to acquire "duel eligible" care management company

UnitedHealthcare, a UnitedHealth Group (NYSE:UNH) company, has agreed to acquire XLHealth Corp., a sponsor of Medicare Advantage health plans with a primary focus on Medicare recipients with special needs, such as those with chronic illness, and those also eligible for Medicaid (“dual eligibles”).

XLHealth’s expertise in improving care for Medicare beneficiaries with elevated health risks, which includes its innovative and nationally recognized clinical model of care, will enhance UnitedHealthcare’s already strong Medicare Advantage portfolio. This acquisition will allow UnitedHealthcare to better serve chronically ill and dual eligible members. Ninety percent of Medicare beneficiaries have at least one chronic condition and nearly half of all beneficiaries have three or more conditions. In addition, dual eligible individuals represent a disproportionate share of Medicare beneficiaries with chronic diseases. With this acquisition, UnitedHealthcare will seek to build on the XLHealth model of care to better serve Medicare Advantage members in markets across the country.

The all cash transaction is subject to customary regulatory approvals. The acquisition is expected to close during the first half of 2012, and is expected to be accretive to UnitedHealth Group earnings per share.

XLHealth currently serves approximately 113,000 Medicare Advantage members in Arkansas, Georgia, Maryland, Missouri, South Carolina and Texas, and will expand its presence to Illinois, Indiana, Iowa, New Mexico, New York and Wisconsin in 2012. In addition to chronic conditions special needs plans, XLHealth also offers dual eligible special needs plans, and traditional Medicare Advantage plans. The company estimates its 2012 revenues will exceed $2 billion.

“Combining XLHealth’s substantial capabilities and outstanding employees serving high-risk, chronically-ill Medicare beneficiaries with UnitedHealthcare’s breadth in both Medicare and Medicaid will significantly enhance our ability to serve older Americans,” said Gail Boudreaux, CEO of UnitedHealthcare. “As more Americans enter Medicare with multiple chronic conditions, including many who are also eligible for Medicaid, health plans that deliver effective complex care management can make an enormous difference in the quality of care beneficiaries receive. We greatly admire the work of the XLHealth team and look forward to leveraging XLHealth’s clinical management expertise to better serve our membership.”

“We are excited to be joining forces with UnitedHealthcare and look forward to realizing the many benefits of this merger,” said Frederick C. Dunlap, Chairman and Chief Executive Officer of XLHealth. “UnitedHealthcare recognizes the value of the outstanding care management model that we have built and offers XLHealth the opportunity to grow as part of the leading health and well-being enterprise in the United States. Importantly, we share a common mission of service as we work to provide solutions that improve quality and reduce health care costs. Together, we can expand our ability to serve our members and physician partners, as well as provide growth opportunities for our employees as part of a larger organization. We look forward to working with the UnitedHealthcare team to ensure a smooth transition.”