Metropolitan Health Networks, Inc. (AMEX: MDF) seemed to have gone the wrong way when the company reported a net loss for the first quarter of 2008. However the clients of company's AdvantageCare service can be at ease as the provider will soon be part of a much larger organization, Humana Inc. (NYSE: HUM) , which will continue flawless services. The companies announced on June 30, 2008, Humana will acquire MetCare Health Plans, a wholly owned subsidiary of Metropolitan Health Networks for $14 million. Metropolitan Health Networks operates as a provider of AdvantageCare health care services in Florida. The company has established a large base of clients in its region and Humana expects to get access to around 7,000 membership accounts.
The deal is expected to be closed during the third quarter 2008, when Humana will acquire all of the common stock of Metropolitan Health. Following the agreement, Metropolitan Health will also enter into a provider-risk agreement with Humana for the AdvantageCare customers, as well as future customers of Humana.
The Chief Executive Officer of Metropolitan Health, Michael Earley, commented: "We anticipate that the transition will be relatively seamless for AdvantageCare customers and that they will benefit from Humana's expertise and leadership in this marketplace. We are also optimistic that, as a result of Humana's existing contracts with various service providers, the new provider-risk arrangement will assist us to reduce medical costs."
Metropolitan Health Networks share price shot up 20% after the announcement on June 30, 2008. The price however returned nearly to its previous close at the end of the day.
References:
http://www.metcare.com/
http://www.humana.com/
Press release on acquisition
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