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Last month, ObamaCare got the green light from the Supreme Court. Now healthcare stocks are taking advantage.
Today’s $4.46 billion merger between WellPoint (NYSE: WLP) and Amerigroup (NYSE: AGP) was the latest evidence of that. Well Point, a managed-care company, plans to buy Amerigroup, a Medicaid insurer on the expectation that the number of people receiving Medicaid coverage will grow once ObamaCare is enacted.
The deal sent both healthcare stocks soaring in Monday trading.
Amerigroup made the biggest move, of course, since it was the company being bought out. AGP shares climbed 38% today to close at an all-time high of $88.80 per share – a good $15 more than the stock’s previous high.
Meanwhile, WellPoint also jumped, rising 3.4% on news of its latest acquisition. The stock had fallen close to 10% this year prior to today.
The deal to buy Amerigroup will help WellPoint more than double its Medicaid enrollment numbers – helping the company surpass UnitedHealth Group (NYSE: UNH) as the biggest Medicaid insurer in the U.S.
Medicaid companies are a hot commodity right now. As our own Jason Cimpl wrote last week, Molina Healthcare (NYSE: MOH) – a provider of Medicaid solutions for low-income families – has been on a tear of late. The stock has risen 27% since June 27, punctuated by a 17.5% gain today.
So don’t be surprised if more Medicaid companies get bought out in the coming weeks.