Coventry Health Care Inc. announced yesterday that it will acquire WellPath Community Health Plans, the managed care subsidiary of Duke University Health System, for approximately $25.5 million.
WellPath has 152,000 members and annual premiums of $230 million. Bethesda-based Coventry serves more than 50 counties in North and South Carolina, with concentrations in Charlotte, Greensboro and Raleigh-Durham, home of Duke University.
Coventry expects to retain 130,000 of WellPath's current members, bringing its subscribers in North Carolina to 170,000. Coventry attributes the reduction in subscribers to WellPath's decision to vacate the Medicare HMO business and some changes in long-term commercial contracts. The company predicts a revenue stream of $185 million in 2001 for WellPath.
The WellPath acquisition is the third and largest Coventry has made in the past year. In the spring, it acquired 14,000-member Maxicare Louisiana Inc. from Maxicare Health Plans of Los Angeles. Terms in that deal were undisclosed.
Last September, it closed on a deal to buy Carelink, a West Virginia HMO, for about $8 million in cash. Carelink has 58,000 members and premium revenue of $93 million.
"This is very much more of the same," Coventry Chief Financial Officer Dale B. Wolf said of the WellPath deal.
WellPath was attractive to Coventry because of its relationship with Duke and because Coventry already was in the North Carolina market. "And WellPath was for sale," Wolf added.
Coventry previously was based in Nashville, Tenn., but moved to Bethesda in 1998 after it merged with Principal Health Care. Subsequently, it has sold health plans in areas where it had only a small presence, including Illinois and Florida. Wolf said the company is considering more acquisitions.