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Elevance Health (ELV) Hits Pause on $2.5B BCBSLA Acquisition

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Elevance Health, Inc. (ELV - Free Report) and Blue Cross Blue Shield of Louisiana’s $2.5 billion mega-merger move has been temporarily paused after several key stakeholders raised concerns, per reports. The move is expected to enable the companies to address questions raised by policymakers and lawmakers.

The companies agreed to the acquisition this January to build on their existing partnership. BCBS Louisiana serves 1.9 million policyholders in the state, per reports. The deal was expected to bring in more footfall to Elevance Health’s network and expand its Healthy Blue business. Its healthcare services business, Carelon, was expected to significantly gain from this deal.

The BCBSLA acquisition was scheduled to close later this year. The companies opted to withdraw the acquisition application from the Louisiana Department of Insurance, along with the non-profit BCBSLA’s reorganization plan. The companies are expected to continue working with customers, providers, leaders and policyholders before refiling for the acquisition.

Concerns from state regulators regarding increased premiums, lower provider reimbursement, reduction in competition and other factors are creating hurdles for the deal. Arguments for the deal include improving technology, quality of care, pharmacy benefits, affordability, new programs and others.

Price Performance

Elevance Health’s shares have gained 0.5% in the past year against the 6.1% fall of the industry.

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Zacks Rank & Key Picks

Elevance Health currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Medical space are Atai Life Sciences N.V. (ATAI - Free Report) , Tenet Healthcare Corporation (THC - Free Report) and Select Medical Holdings Corporation (SEM - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Atai Life Sciences’ current-year earnings implies a 16.3% improvement from the year-ago reported figure. It has witnessed four upward estimate revisions over the past 60 days against no movement in the opposite direction. ATAI beat earnings estimates in two of the last four quarters, met once and missed on one occasion.

The Zacks Consensus Estimate for Tenet Healthcare’s 2023 bottom line is pegged at $5.73 per share, which rose 2.3% in the past 60 days. During this time, THC has witnessed four upward estimate revisions against none in the opposite direction. It beat earnings estimates in all the last four quarters, with the average surprise being 25.9%.

The Zacks Consensus Estimate for Select Medical’s 2023 earnings indicates a 56.9% year-over-year increase to $1.93 per share. It has witnessed one upward estimate revision over the past 60 days against no movement in the opposite direction. The consensus mark for SEM’s 2023 revenues indicates 4.2% growth from a year ago.

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