Healthcare ETFs Moving On UnitedHealth Deal

The merger mania in biotech has been well documented, but as of late it has branching out to the healthcare insurance sector. On Monday, UnitedHealth Group Inc. UNH has agreed to buy the pharmacy benefits manager Catamaran Corp (USA) CTRX for $13 billion in cash – or $61.50 a share – a 27 percent premium over the stock's close of $48.32 a share last Friday.

One in every five prescriptions in the U.S. is serviced by Catamaran, accounting for more than 35 million people or 400 million prescriptions a year, reported UnitedHealth. The newly combined company will now be facing off against pharmacy benefit management titans, such as CVS Health Corp CVS and Express Scripts Holding Company ESRX.

Related Link: Stocks Hitting 52-Week Highs

Moves In Biotech

Biotech was not to be outdone by UnitedHealth on Merger Monday, as a number of deals in the sector were announced.

Horizon Pharma PLC HZNP has agreed to buy the outstanding shares of Hyperion Therapeutics Inc HPTX for $1.1 billion, or $46 per share.

Teva Pharmaceuticals Industries Ltd (ADR) TEVA has agreed to buy Auspex Pharmaceuticals Inc ASPX at $101 per share in cash (a price 42 percent higher than its Friday closing price), totaling $3.5 billion.

Finally, Cellular Dynamics International Inc ICEL will be purchased by Tokyo-based FUJIFILM Holdings Corp. (ADR) FUJIY for $16.50 a share, or about $307 million.

Highlighted below are a number of ETFs that have been affected by the UnitedHealth acquisition, as well as a number of other deals within the healthcare sector.

iShares U.S. Healthcare Providers ETF

The iShares Dow Jones US Health Care(ETF) IHF is made up of 49 U.S. companies that provide health insurance, diagnostics and specialized treatment. The holdings are broken down into five sectors, with healthcare providers and services at 96 percent and life sciences and services at less than 1 percent.

The top individual holdings include:

• UnitedHealth, with a 13.9 percent holding
• Express Scripts, making up 9.1 percent of the ETF
• Anthem Inc ANTM coming in at 7 percent

The healthcare ETF is up 28 percent over the last 12 months and up 16 percent over the last six months. IHF has an expense ratio of 0.43 percent.

Related Link: Catamara To Be Acquired By UnitedHealth

SPDR Healthcare Sector ETF

The Health Care SPDR (ETF) XLV consists of 57 companies in the healthcare sector.

The top individual holdings include:

• Johnson & Johnson JNJ at 10 percent
• Pfizer Inc. PFE with an 8 percent holding
• Merck & Co., Inc. MRK, coming in at 6 percent

XLV is up 25 percent over the last 12 months and up 14 percent over the last six months. The ETF has an expense ratio of 0.15 percent.

iShares U.S. Healthcare ETF

The iShares Dow Jones US Healthcare (ETF) IYH provides investors exposure to 107 U.S. healthcare equipment and services, pharmaceuticals and biotechnology companies.

The top individual holdings include:

• Johnson & Johnson, making up 9.6 percent
• Pfizer, with a 7.2 percent holding
• Merck, coming in at 5.6 percent

The healthcare ETF is up 26 percent over the last 12 month and up 15 percent over the last six months. The ETF has an expense ratio of 0.15 percent.