Making good on its stated intention to diversify its product mix and revenue streams, Aetna announced today it will acquire account-based health plan administrator PayFlex Holdings for $202 million.
"This acquisition fits well with Aetna's core business, which has a strong focus on consumer-directed product offerings," said Mark T. Bertolini, chairman, CEO and president in a press release announcing the deal. "With an increased focus on consumerism, the acquisition of PayFlex will extend Aetna's ability to provide members with flexible, customized, easy-to-use tools and solutions to better manage their health care expenses."
The planned acquisition of PayFlex is the second announced by Aetna in the past two weeks. Earlier this month, the company also made public an agreement to acquire the Medicare Supplement business of Genworth Financial for $290 million.
[See also: Aetna to acquire Genworth's Medicare supplement business for $290M; Consumer-directed health plan enrollment increases in 2010]
With PayFlex, Aetna is acquiring a company serving the growing niche of employers that offer consumer-based products that include Health Savings Accounts (HSAs), Health Reimbursement Accounts (HRAs) and Flexible Spending Accounts (FSAs), and also provides COBRA direct-billing services. The company counts more than 3,300 direct employer customers representing approximately 1 million individual consumer accounts.
"This acquisition will significantly strengthen Aetna's existing Consumer Fund Services (CFS) business and we believe it offers potentially attractive returns over time," said Joseph M. Zubretsky, senior executive vice president and CFO in a prepared statement. "Clearly, changes resulting from healthcare reform are on the horizon, such as healthcare exchanges requiring account-based health plans and tax-advantaged accounts."
PayFlex, located in Omaha, Neb., has more than 420 employees at its headquarters and additional locations in Chicago, Denver, Shelton, Conn. and Bethesda and Hagerstown, Md. Aetna intends to keep the PayFlex management team and employees intact and will fold business into its CFS business as a single unit.
When the deal is closed, expected in the fourth quarter this year, Aetna will effectively double the number of individual accounts in the CFS business to roughly 2 million. The company plans to have PayFlex continue to sell and market its products as stand-alone offerings, but will also integrate the sales with Aetna's existing product lines.
"We firmly believe our proprietary HealthHub technology platform will be a great addition to the Aetna portfolio of products and will create unique market advantages for our existing and future potential customers," said Robert L. Natt, CEO of PayFlex in an announcement of the deal.