Aetna ‘Agnostic’ on Acquisition Size, CFO Zubretsky Says

Aetna Inc. (AET) is open to an acquisition of any size as long as it’s a “strategic fit,” the health insurer’s chief financial officer said, amid multibillion dollar deals by rivals including WellPoint Inc. (WLP) and Cigna Corp. (CI)

Aetna, the third-biggest U.S. health plan, can access financing to pull off a purchase even after approving $750 million in additional share repurchases last week, CFO Joseph Zubretsky said today in a telephone interview.

WellPoint said this month it would buy Medicaid insurer Amerigroup Corp. (AGP) for $4.9 billion, and Cigna bought Medicare specialist Healthspring Inc. for $3.8 billion in January. While Aetna sees other Medicaid-management companies as too expensive right now, the Hartford, Connecticut-based company isn’t swearing off similar deals, Zubretsky said.

“We’re agnostic as to size,” he said. “And we can use our balance sheet and the capital markets to advance something bigger. It’s just a question of strategic fit.”

Aetna declined 2.9 percent to $36.06 at the close in New York. The company’s shares have declined 15 percent this year.

Medicare is the U.S. government health plan for the elderly and disabled while Medicaid is a joint federal-state program for the poor. Medicaid insurer Centene Corp. (CNC) has risen 31 percent since WellPoint announced the Amerigroup purchase July 9. WellCare Health Plans Inc. (WCG), which specializes in both programs, has gained 23 percent.

WellCare is based in Tampa, Florida, while Centene is based in St. Louis. WellPoint is based in Indianapolis.

Zubresky said recent deals have been made by rivals that needed to diversify.

‘Well Diversified’

“I would argue that Aetna is already very well diversified across geographies, across customer segments, across product lines,” he said. “I like the diversified portfolio of businesses we have.”

Second-quarter net income fell 15 percent to $457.6 million, or $1.32 a share, Aetna said today in a statement. That beat analyst estimates. The insurer also raised the upper end of its full-year profit forecast, citing growing Medicare rolls along with improved profit margins.

To contact the reporter on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net