UPDATE 1-Humana buys MD Care to expand California presence

Fri Sep 23, 2011 11:44am EDT

* Deal adds Medicare members in Southern California

* Humana expects to close deal in late 2011

Sept 23 (Reuters) - Health insurer Humana Inc (HUM.N) agreed to acquire privately held MD Care for an undisclosed amount on Friday to expand its Medicare plans for the elderly in California.

Humana, one of the largest Medicare plan providers, said it expects the deal to close in late 2011 and the acquisition is not expected to materially impact its 2011 earnings outlook.

MD Care, whose Medicare Advantage plan has about 15,000 members in Southern California, recorded revenue of $155 million in 2010, Humana said.

"We view the acquisition favorably as it provides Humana with another opportunity to expand its Medicare Advantage footprint, which should help it continue to leverage its infrastructure," Oppenheimer & Co analyst Michael Wiederhorn wrote in a note.

Last month, Humana said it would acquire California-based Arcadian Management, which also specializes in Medicare Advantage plans, for an undisclosed sum. [ID:nL4E7JP3XK]

Humana shares were down 0.28 percent at $76.06 on Friday on the New York Stock Exchange. (Reporting by Anand Basu in New York; Editing by Phil Berlowitz)

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