Foundation Health Corp. of Rancho Cordova, Calif., signed an agreement to acquire CareFlorida Health Systems in a transaction valued at $250 million.
Privately held CareFlorida, based in Miami, serves 146,000 individuals through a Medicare risk HMO, a commercial HMO and a PPO.
The companies described the acquisition as a tax-free pooling of interests. Under terms of the pact, CareFlorida's stock would be converted into $250 million of Foundation's common stock.
The combined companies, with annual revenues approaching $1.7 billion, will provide managed care for more than 690,000 individuals in four states.
With the acquisition of CareFlorida, Foundation "can rapidly increase its market share as the Florida HMO market consolidates," said Daniel D. Crowley, Foundation president and CEO. "The acquisition is part of our strategy to expand our commercial operations into markets throughout the South and Southwest," he said.
Foundation plans to introduce point-of-service plans, individual and family HMO coverage, and managed-care workers' compensation products in the state, he said.