WellPoint Inc.'s acquisition of fellow health insurer Amerigroup will help the company's business in a Medicaid market primed for growth, but it still faces challenges from the health care overhaul's upcoming coverage expansions, according to a Goldman Sachs analyst.
Analyst Matthew Borsch said in a research note he restored a "neutral" rating to WellPoint shares after removing his rating when the insurer said in July it would buy Amerigroup in a $4.46 billion deal. WellPoint completed that deal last month.
Borsch said he sees the acquisition as a positive for WellPoint, in part because Amerigroup is a Medicaid coverage provider that excels at winning new business and has a strong geographic reach.
Medicaid is the state and federally funded program that provides medical coverage for the needy and disabled people. Analysts see growth potential in Medicaid partially because more people will become eligible for the program starting next year due to the overhaul.
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