- Anthem on Wednesday announced it had completed its acquisition of Puerto Rico-based MMM Holdings, a vertically integrated health plan, in a move that will expand the payer's presence in Medicare and Medicaid.
- Anthem nabbed MMM from value-based payer InnovaCare Health in a deal first announced in February that represents the payer's first foray into Puerto Rico. Financial terms of the acquisition were not disclosed.
- MMM is the ninth-largest MA plan in the U.S. and the biggest in Puerto Rico, with more than 275,000 members, and Puerto Rico's second-largest Medicaid plan, with 314,000 beneficiaries.
With the acquisition, Anthem is doubling down on its government business, which fueled the majority of its enrollment growth last year amid COVID-19 as commercial rolls stayed largely stagnant.
The Indianapolis-based payer's commercial business makes up about three-fourths of its membership, but its government products have been growing rapidly, according to recent financial filings. At the end of the first quarter, Anthem covered 9.2 million people in Medicaid and 1.5 million people in MA.
With the addition of MMM's beneficiaries, the payer is swelling its Medicaid rolls by 3% and its Medicare Advantage rolls by 18%.
In statements announcing the news, Anthem executives said MMM's vertically integrated organization fit well with Anthem's whole-person approach. MMM operates a series of physician groups and specialized clinics, which all together gives it a network of more than 10,000 providers across Puerto Rico.
Anthem, which covers 43 million Americans, said when announcing the acquisition earlier this year it wouldn't have a material effect on 2021 earnings. The payer did originally cut its 2021 outlook after experiencing a rebound in care in the fourth quarter, depressing net income, but its finances had largely bounced back by the first quarter of this year.
In the quarter, Anthem reported year-over-year profit growth of over 9% — helped significantly by a major increase in Medicaid membership.
Now, Anthem expects 2021 net income to be greater than $24.05 a share. Part of its strategy to drive income growth coming out of the tumultuous economic and coverage environment created by the pandemic is building up its end-to-end care offerings and diversifying into health services, a step most major insurers are also taking as the line between traditional payers and providers increasingly blurs.
As part of that strategy, Anthem in February completed its acquisition of Beacon Health Options, previously the biggest independent behavioral health organization in the U.S., serving more than 34 million people. Two months later, Anthem finalized a second acquisition, this time of post-acute benefits management company myNexus.
The insurer has also been upping its tech investments in a bid to streamline back-end functions and create more cohesive consumer platforms. In February, Anthem pledged to invest at least $25 million in Sharecare, a digital health company that aims to help consumers manage different elements of their health in one platform. Then, in April, Anthem launched a joint venture in partnership with investment giant Blackstone and digital health startup K Health focused on leveraging technology to better triage patient care and cut costs.
Anthem is now grabbing MMM from White Plains, New York-based InnovaCare, which manages more than 500,000 lives. InnovaCare is a portfolio company of global growth equity investor Summit Partners, which has invested in a number of healthcare companies, including dialysis operator U.S. Renal Care and MD VIP, a concierge physician practice.