Blue Shield Will Buy Care1st Health

San Francisco-based Blue Shield of California has broken into the Medi-Cal market with the purchase of Care1st Health Plan.

Care1st, is based in Monterey Park, just east of downtown Los Angeles, and was founded by a group of physicians and hospitals in 1994.

The plan has total enrollment of about 519,000 lives, of which 473,000 are enrolled in the Medi-Cal program. Care1st’s enrollment is up about 50% compared to the comparative period from a year ago, according to company's filings with the California Department of Managed Health Care.

The for-profit Care1st's bottom line has enjoyed similar growth: Through the first nine months of this year, its net income was $30.1 million on revenue of $1.2 billion, according to DMHC filings. That compares to net income of $5.9 million on revenue of $820.7 million for the same period last year.

Blue Shield said it will pay all cash to acquire Care1st, although the terms of the transaction were not disclosed..

The deal comes as Blue Shield has seen rival carriers Health Net and Molina Health Care enter into rapid growth modes following the expansion of Medicaid eligibility in California over the past couple of years under the Affordable Care Act. It was one of the few states that allowed expanded enrollment prior to last year, although more than 2 million Californians have enrolled in the program during 2014 alone.

"Acquiring Care1st -- a growing, values-based company with deep Medicaid experience -- is the ideal way for us to not only enter a new market, but also to help transform it together," said Paul Markovich, Blue Shield's chief executive officer. "There are more than 11 million Californians in the Medi-Cal system today, and we can fulfill our not-for-profit access and affordability mission by serving this population."

In a statement, Blue Shield said it would integrate Care1st into its non-profit operations in multiple stages over several years. The deal is subject to various regulatory approvals.