and has received interest from potential buyers, their stock sky rocketed. Their previous all-time high of $183.05 was shattered when shares peeked at $219.79 before settling at $214.65, a 20.3% gain.
Low interest rates and the possibility of another wave of consolidation in the health insurance industry have analysts speculating that a significant acquisition may soon occur. If this dealer friendly market were to generate another wave of consolidation, then Humana would be a top target.
With their base of operations in Louisville, KY, Humana has become one of the nations biggest health insurers since opening their doors in 1961. They offer commercial coverage and insurance for military members and their families, but what makes them such an attractive prospect for acquisition is that they are the second largest provider of Medicare Advantage plans.
Medicare Advantage plans are federally funded, privately run health insurance plans for people over the age of 65 or for those with some sort of disability. Recently, these plans have been becoming more and more lucrative as more people begin to become eligible to sign up.
This trend shows no sign of slowing down as the baby boomer generation is now becoming eligible and companies across the country continue to drop retiree benefits. These two factors ensure that Medicare Advantage plans will remain a profitable area of the health care industry. Meaning that if Humana did decide to sell, then they would be a major acquisition for anyone willing to pay.
It is impossible to know for sure what will happen, but if another wave of consolidation does occur, then Humana will undoubtedly be involved. Thomas Carroll, who covers the health care industry for the investment bank Stifel, says, “There's got to be another wave of consolidation that occurs, and our view is that Humana would either be the first to go or be one of the first to actually make an acquisition themselves.”