Health Care Insurer Mergers: Who Got the Best Deal?

You’ve heard the prices, now here are the multiples. After hours of teasing about a definitive agreement, Anthem, Inc. (NYSE: ANTM) finally reached an agreement to acquire Cigna Corp. (NYSE: CI) for $54.2 billion. That works out to 1.5x price/revenue and 13.9x price/EBITDA. The deal followed Aetna’s (NYSE: AET) $37 billion acquisition of Humana Inc. (NYSE: HUM), which gives us a multiple of 0.7x price/revenue and 13.7x price/EBITDA. Cigna is more “administrative services only” versus “full risk” insurance. ASO is lower revenue, but higher margin business than is full risk, which helps explain the P/R difference between the two deals. The much smaller combo between Centene Corp. (NYSE: CNC) and Health Net, Inc. (NYSE: HNT) for $6.8 billion, which started the whole parade on July 1, works out to 0.5x price/revenue and 19.5x price/EBITDA.



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