NU Online News Service, April 29, 7:45 p.m. – Anthem Inc., Indianapolis, has agreed to acquire Trigon Healthcare Inc., Richmond, Va., for a combination of $1.1 billion in cash and $2.8 billion in Anthem stock.
Anthem, which recently demutualized, already holds Blue Cross and Blue Shield licenses in nine states, and it provides or administers major medical coverage for 8.1 million U.S. residents.
Trigon is a for-profit, publicly traded company that holds the Blue Cross and Blue Shield licenses for most of Virginia. It ranks first in the Virginia market, with 2.2 million major medical members and a 35% market share.
Completing the deal would give Anthem a total of 10.3 million members, a leading market share in nine states, and a market share over 30% in seven states.
Larry Glasscock, Anthem’s president, emphasizes the value of Trigon as a door into the thriving Southeastern health insurance market.
The Trigon acquisition “solidifies Anthem as a top-tier health benefits industry leader,” Glasscock said at a conference scheduled to explain the deal. “By leveraging best practices from both organizations and extending our geographic reach, we expect to achieve further economies of scale that will enable us to continue to grow profitably.”
Trigon is reporting $35 million in net income for the first quarter on $826 million in revenue, up from $32 million in net income on $728 million in revenue for the first quarter of 2001.
The price Anthem has agreed to pay would be equal to about $1,800 per major medical member and $3,500.
The price is also equal to a rich 34 times total net income for the last 12 months, and 369% of book value, according to SNL Financial L.C., Charlottesville, Va.