I’m going to go slightly off message today and discuss a new initial public offering (IPO) of stock that caught my attention today. The reason this IPO interests me is because the company is one I’m quite familiar with: Extend Health Inc.
Unlike Medicare plan sponsors such as Medco Health Solutions (MHS), Aetna (AET), or WellPoint (WLP), Extend Health is more of a pure-play Medicare company. It also stands to benefit greatly from healthcare reform.
Extend Health, which bills itself as a health benefit management company, is actually a private healthcare exchange that helps retirees find Medicare plans that meet their needs and budgets. In effect, it is very similar to the health insurance exchanges mandated by the Patient Protection and Affordable Care Act.
Extend Health helps employers transition Medicare-eligible retirees from group-based, defined benefit plans (those sponsored by the employer) to individual, defined contribution health plans. According to the Securities and Exchange Commission (SEC) filing, Extend Health serves more than 30 Fortune 500 company clients and offers more than 4,000 health plans on its exchange. It generates most of its revenue from commissions it receives from insurance carriers for enrolling individuals into these plans.
According to a registration statement filed with the SEC, Extend Health hopes to raise about $75 million through the IPO. Extend Health’s proposed ticker symbol for the New York Stock Exchange is XH.
Please do your own due diligence
Keep in mind, I am not a financial expert and I do not have any authority to recommend or disapprove a stock. However, because I work in the Medicare industry, I do know a lot about retiree health benefits. So here’s something I can share with you: Due to a little-known provision of healthcare reform that affects Medicare Part D retiree drug subsidy payments to employers in 2013, more employers will be dropping retiree healthcare coverage this year and seeking alternatives. One alternative will be to seek the services of a company like Extend Health to help transition retirees into Medicare.
Whether you like to play the stock market or you’re a retiree with group health benefits who is (or will soon be) Medicare eligible, you may want to become familiar with Extend Health and the services it offers.