TAMPA, Fla., May 29, 2018
/PRNewswire/ -- WellCare Health Plans, Inc. (NYSE: WCG)
announced today that it has entered into a definitive agreement to
acquire Meridian Health Plan of Michigan, Inc., Meridian Health Plan of
Illinois, Inc., and MeridianRx, a
pharmacy benefit manager (PBM), (collectively, "Meridian") for
$2.5 billion in cash. The transaction
is expected to close by the end of 2018, subject to customary
closing conditions, including regulatory approvals.
Meridian expects to generate more than $4.3 billion in total revenue in 2018. As a
result of this transaction, WellCare will diversify its Medicaid
portfolio through the addition of Michigan, where Meridian has the No. 1
Medicaid market position; deepen its Medicaid business in
Illinois; and acquire an
integrated PBM platform.
Meridian is one of the largest privately held, for-profit
managed care organizations in the U.S. and serves approximately 1.1
million Medicaid, Medicare Advantage (MA), integrated dual-eligible
and Health Insurance Marketplace members as of May 1, 2018 in Michigan, Illinois, Indiana and Ohio. With a high-performing culture, Meridian
has dedicated more than 20 years to providing compassionate and
quality care to its members as demonstrated by achieving high
quality ratings from the widely respected National Committee for
Quality Assurance (NCQA) for its Medicaid health plans in
Michigan and Illinois.
"Meridian is a well-performing health plan, and WellCare and
Meridian share a similar commitment to serving our members through
a comprehensive, integrated approach to healthcare," said
Ken Burdick, WellCare's CEO. "This
transaction strategically aligns with our focus on
government-sponsored health plans, will strengthen our capabilities
and growing business, and will meaningfully advance our growth
agenda."
"WellCare's unwavering commitment to improving the lives of its
members makes it an ideal partner," said David B. Cotton, CEO of Meridian. "Our similar
missions, values and goals, combined with WellCare's dedication to
providing an unparalleled member experience, including access to
high quality healthcare, were key factors in our decision."
Meridian has approximately 508,000 Medicaid members in
Michigan and 565,000 Medicaid
members in Illinois as of
May 1, 2018.1 Upon
closing, WellCare will have the No. 1 Medicaid membership market
share in Michigan and Illinois, increasing its leading market
position from four to six states. WellCare will also expand its MA
business through the addition of Meridian's 27,000 MA members in
Michigan, Illinois, Indiana and Ohio.1 In addition, as a
result of this transaction, the company will add an integrated PBM
platform that provides a wide range of services and product
offerings to both Meridian's members and third parties.
Financial Benefits and Transaction Details
The transaction is expected to produce $0.40 to $0.50 of
accretion to WellCare's adjusted earnings per share in 2019,
$0.70 to $0.80 of accretion in 2020, and $1.00+ of
accretion in 2021, inclusive of $30
million to $40 million in
synergies that will ramp up over the next few years and exclusive
of one-time transaction-related expenses of $75 million to $85
million and cumulative integration-related expenses of
$50 million to $60 million.
WellCare expects to fund the transaction through a combination
of cash on hand, the company's undrawn $1.0
billion revolving credit facility, and, subject to market
conditions, new debt of $600 million
to $1.0 billion and new equity of
$800 million to $1.2 billion. The transaction is not contingent
upon financing, and WellCare has secured $2.5 billion in committed bridge
financing.
WellCare's presentation describing the highlights of the
transaction can be accessed via the following link:
http://ir.wellcare.com/Presentations.
Presentation and Webcast
WellCare will host a conference call and live webcast today at
5:00 p.m. EDT to discuss the
transaction.
The conference call will be webcast live from the company's
website and will be available at the following
link: https://services.choruscall.com/links/wcg180529.html.
The webcast should be accessed a few minutes prior to the
conference call start time. A replay of the webcast will be
available for one year following the conclusion of the live
broadcast and will be accessible on the company's website at
http://ir.wellcare.com/Event.
The conference call can also be accessed by pre-registering
using the following link: http://dpregister.com/10120892. Callers
who pre-register will be given dial-in instructions and a unique
PIN to gain immediate access to the call. Participants may
pre-register now, or at any time prior to the call, and will
receive simple instructions via email.
For those parties who do not have internet access or are unable
to pre-register, the conference call may be accessed by
calling:
Domestic participant dial-in number
(toll-free):
1-844-492-3724
International participant dial-in
number: 1-412-542-4185
A telephonic replay will be available until midnight EDT on Tuesday, June 5, 2018. This
replay may be accessed by dialing either of the numbers below and
entering the replay access code 10120892:
Domestic replay (toll-free) number:
1-877-344-7529
International replay
number: 1-412-317-0088
About WellCare Health Plans, Inc.
Headquartered in Tampa, Fla.,
WellCare Health Plans, Inc. (NYSE: WCG) focuses on providing
government-sponsored managed care services, primarily through
Medicaid, Medicare Advantage and Medicare Prescription Drug Plans,
to families, children, seniors and individuals with complex medical
needs. The company served approximately 4.3 million members
nationwide as of
March 31, 2018. For more information
about WellCare, please visit the company's website at
www.wellcare.com.
About Meridian
Meridian is a family-owned, family-operated group of health
plans with offices in Michigan and
Illinois. Meridian's affiliates
include MeridianHealth (Medicaid), MeridianCare (Medicare),
MeridianComplete (Medicare-Medicaid), MeridianChoice (Health
Insurance Marketplace), and MeridianRx, a pharmacy benefit
management company. The National Committee for Quality Assurance
has rated Meridian Health Plan of Michigan, Inc. and Meridian Health Plan of
Illinois, Inc. 4 out of 5
according to NCQA Medicaid Health Insurance Plan Ratings 2017-2018.
Meridian serves more than 1.0 million members in four states. For
more information, visit www.mhplan.com.
Basis of Presentation
In addition to results determined under GAAP, WellCare provides
certain non-GAAP financial measures that management believes are
useful in assessing the company's performance. Non-GAAP financial
measures should be considered in addition to, but not as a
substitute for, or superior to, financial measures prepared in
accordance with GAAP.
Earnings per share have been adjusted for the effect of certain
expenses, and as appropriate, the related tax effect, related to
previously disclosed government investigations and related
litigation and resolution costs ("investigation costs");
amortization expense associated with acquisitions
("acquisition-related amortization expenses"); and certain one-time
transaction and integration costs related to the acquisition of
Universal American and Meridian ("transaction and integration
costs").
Although the excluded items may recur, WellCare believes that by
providing non-GAAP measures exclusive of these items, it
facilitates period-over-period comparisons and provides additional
clarity about events and trends affecting its core operating
performance, as well as providing comparability to competitor
results. The investigation costs are related to a discrete incident
which management does not expect to reoccur. WellCare has adjusted
for acquisition-related amortization expenses as these transactions
do not directly relate to the servicing of products for our
customers and are not directly related to the core performance of
its business operations. The transaction and integrations costs are
related to a specific 2017 and 2018 events, which do not reflect
the underlying ongoing performance of the business.
The company is not able to project at the time of this news
release the amount of expenses associated with investigation costs,
the timing of transaction and integration costs and, therefore,
cannot reconcile projected non-GAAP measures affected by these
items to projected GAAP measures.
Cautionary Statement Regarding Forward-Looking
Statements
This news release and related presentation contain
"forward-looking" statements that are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. Statements that are predictive in nature, that depend upon
or refer to future events or conditions, or that include words such
as "expects," "anticipates," "intends," "plans," "believes,"
"estimates," "will," and similar expressions are forward-looking
statements. For example, statements regarding the company's
financial outlook, and the timing, closing, manner of payment and
financial impact of the pending transaction contain forward-looking
statements. Forward-looking statements involve known and unknown
risks and uncertainties that may cause WellCare's actual future
results to differ materially from those projected or contemplated
in the forward-looking statements. These risks and uncertainties
include, but are not limited to, the ability to complete the
transaction in a timely manner or at all (which may adversely
affect WellCare's business and the price of the common stock of
WellCare), the failure to satisfy the conditions to the
consummation of the transaction(including the receipt of certain
governmental and regulatory approvals), any requirements that may
be imposed by governmental or regulatory authorities as a condition
to approving the transaction, adjustments to the purchase price,
the ability to achieve expected synergies within the expected time
frames or at all, the ability to achieve accretion to WellCare's
earnings, revenues or other benefits expected, disruption to
business relationships, operating results, and business generally
of WellCare and/or Meridian and the ability to retain Meridian
employees, the availability of debt and equity financing,
WellCare's progress on top priorities such as improving health care
quality and access, ensuring a competitive cost position, and
delivering prudent, profitable growth, WellCare's ability to
effectively estimate and manage growth, WellCare's ability to
effectively execute and integrate acquisitions, potential
reductions in Medicaid and Medicare revenue, WellCare's ability to
estimate and manage medical benefits expense effectively, including
through its vendors, its ability to negotiate actuarially sound
rates, especially in new programs with limited experience, the
appropriation and payment by state governments of Medicaid premiums
receivable, the outcome of any protests and litigation related to
Medicaid awards, the approval of Medicaid contracts by CMS, any
changes to the programs or contracts, WellCare's ability to address
operational challenges related to new business, and WellCare's
ability to meet the requirements of readiness reviews. Given the
risks and uncertainties inherent in forward-looking statements, any
of WellCare's forward-looking statements could be incorrect and
investors are cautioned not to place undue reliance on any of our
forward-looking statements.
Additional information concerning these and other important
risks and uncertainties can be found in the company's filings with
the U.S. Securities and Exchange Commission, included under the
captions "Forward-Looking Statements" and "Risk Factors" in the
company's Annual Report on Form 10-K for the year ended
December 31, 2017, and in the
company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2018, which contain
discussions of WellCare's business and the various factors that may
affect it. Subsequent events and developments may cause actual
results to differ, perhaps materially, from WellCare's
forward-looking statements. WellCare's forward-looking statements
speak only as of the date on which the statements are made.
WellCare undertakes no duty, and expressly disclaims any
obligation, to update these forward-looking statements to reflect
any future events, developments or otherwise.
1 Includes approximately 6,000 integrated
dual-eligible members in Michigan
and nearly 8,000 integrated dual-eligible members in Illinois.
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SOURCE WellCare Health Plans, Inc.