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Jan
1

Coventry – FH deal nearing completion

The pending acquisition of First Health by Coventry is due to close within the month. First Health’s shareholders are scheduled to vote on the deal Jan 28th (evidently there is no need for a Coventry shareholder vote).
The announcement signals that all regulatory approvals have been obtained.
The deal had received a response from the analysts and financial markets that can only be described as lukewarm to downright cold, as Coventry’s stock value plummeted after the announcement on October 14. However, the price has recently recovered, and is now essentially unchanged from the pre-announcement level.
While it is impossible to precisely identify the reason for the increase, one can only assume it is due to confidence in Coventry’s management and their ability to turn around an under-performing asset. To quote S&P;
“Standard & Poor’s believes Coventry maintains a good financial and market profile, partly because of its sustained pricing discipline and strong focus on the fundamentals of its business. Standard & Poor’s also believes Coventry is capable of integrating First Health in a methodical way that limits operational disruption to the consolidated enterprise. ”


Joe Paduda is the principal of Health Strategy Associates

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