Aetna (NYSE: AET) is acquiring Prodigy Health Group, a third-party administrator of self-funded healthcare plans, for $600 million.
The deal is expected to close in the second half of this year and add modestly to earnings next year. Aetna CEO Mark Bertolini said the acquisition extends the insurer's reach into the third-party administrator business and provides options for mid-sized and small businesses and customers that are primarily price-focused, reports the Wall Street Journal.
Bertolini added that the acquisition of Prodigy Health is in keeping with Aetna's strategy of diversifying its product offerings and adding new revenue streams, according to Insurance Business Review.
Aetna CFO Joseph Zubretsky said the company's core businesses continue to "generate significant cash flow to fund our investments in profitable growth opportunities, such as the acquisitions of Medicity and Prodigy Health Group."
Prodigy Health Group operates in 15 states under three business names--Meritain Health for third-party-administrator benefits, American Health for medical management, and Scrip World for pharmacy benefits management, according to the Hartford Courant. It has nearly 600,000 medical members and 450,000 pharmacy members.
After the deal is complete, Prodigy Health will be a subsidiary of Aetna and will operate as a separate business. Prodigy Health will retain the same brand name, current management and operating structure, IBR notes.