HealthSpring Shares Sprung: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of HealthSpring (NYSE: HS  ) soared more than 30% on Monday after insurer Cigna (NYSE: CI  ) said it would buy the health-maintenance specialist for about $3.8 billion.

So what: The all-cash deal values HealthSpring at $55 per share and represents a whopping 37% premium to its Friday closing price. Cigna is making the move to boost its presence in the increasingly attractive Medicare segment, and judging by its stock's small gain today, investors seem to be satisfied with the strategy, as well as the purchase price.

Now what: While HealthSpring shares are likely all sprung out, Cigna might just be getting started. Cigna's Medicare customer count is set to triple thanks to the deal, with management expecting earnings to increase in just the first full year of operations. Of course, for enterprising investors looking for the next big buyout, Medicare specialists like Humana (NYSE: HUM  ) and WellCare (NYSE: WCG  ) -- both of which are also rallying on the news -- may be worth looking into.

Interested in more info on HealthSpring? Add it to your watchlist.

Interested in more info on Cigna? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1575336, ~/Articles/ArticleHandler.aspx, 12/22/2014 5:03:54 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement