United HealthCare Corp. continued its advance into the Southeast by announcing an agreement to buy Ramsay-HMO, a southern Florida health maintenance organization with more than 170,000 enrollees, in a $501 million deal.
Minnetonka, Minn.-based United recently agreed to acquire closely held Complete Health Services of Alabama, with operations in seven Southern states, as well as Focus Healthcare, a Nashville, Tenn.-based medical and disability management firm.
Under the terms of the agreement, Ramsay shareholders will receive 0.67 of a United HealthCare share for each of their 5.9 million shares. At the current price of United's common stock, which was $85 on the New York Stock Exchange at the close of trading on Feb. 15, the day of the announcement, the deal was valued at $501 million.
At that exchange ratio, Ramsay shareholders would receive stock valued at $55.95 for their shares. Ramsay's shares rose $9.38, or 20%, to close at $55.25 on Feb. 15.
"That's a nice way to get into Florida quickly," said Mary O'Connell, vice president of the investment firm of Louis Nicoud & Associates, San Francisco. "Ramsay has a unique franchise and they have a good relationship with hospitals."
Coral Gables, Fla.-based Ramsay caters primarily to the Cuban populations in Miami, Fort Lauderdale and Palm Beach and recently announced it would expand its Medicaid operations into Orlando.
In addition, the company has begun assisting a handful of southern Florida hospitals in developing closer operating relationships with many local physicians. United said Ramsay would be operated as a wholly owned subsidiary.
HMOs have pinpointed Southeastern states for market expansion. For example, last year Concord, N.H.-based Healthsource said it would create new managed-care plans in Little Rock, Ark., with St. Vincent Infirmary Medical Center and Candler Health System in Savannah, Ga. (Aug. 9, 1993, p. 33).
Enrollment in United's nine owned health plans rose 87% last year to 1.5 million. In 1993, the company acquired Chicago (Ill.) HMO and Western Ohio Health Care, Dayton. The company also manages another nine HMOs, which brought its total enrollment to 2.5 million as of Jan. 31, 1994.