Cobalt Corp., Milwaukee, a public company formed in March when Blue Cross and Blue Shield of Wisconsin merged with United Wisconsin Services, said last week that it's contemplating a sale to unidentified Blues plans and has hired Bear, Stearns to "consider strategic alternatives."
The 2.8 million-member insurer will post a second-quarter loss exceeding earlier predictions because of higher medical costs in the Milwaukee area and changes in provider contracts, said Thomas Hefty, Cobalt's chairman, chief executive officer and president. Cobalt earned $1.7 million, or 4 cents per share, on revenue of $416.8 million in the first quarter of 2001.
A Cobalt spokesman declined to name the Blues plans that expressed interest in Cobalt. Chicago-based Health Care Services Corp., the parent of Blue Cross and Blue Shield of Illinois, and WellPoint Health Networks, Thousand Oaks, Calif., have been identified as possible suitors, according to news reports.
Blues plans around the country have been converting to for-profit companies in an effort to gain capital, but the strategy has been controversial because of the Blues' not-for-profit origins.