TAMPA, Fla., April 28, 2017
/PRNewswire/ -- WellCare Health Plans, Inc. (NYSE: WCG)
("WellCare") announced today that it has completed its acquisition
of Universal American Corp. (NYSE: UAM) ("Universal American")
following the receipt of all required regulatory approvals. With
approximately 119,000 Medicare Advantage (MA) members in
Texas, New York and Maine, Universal American is now a wholly
owned subsidiary of WellCare.
"We are very pleased to complete our acquisition of Universal
American," said Ken Burdick,
WellCare's CEO. "This transaction strengthens our business by
increasing our Medicare Advantage membership by a third, deepening
our presence in two key markets—Texas and New York—and diversifying
our business portfolio. Importantly, we look forward to leveraging
Universal American's core competency in physician engagement to
strengthen and grow our value-based provider relationships."
"We also welcome Universal American employees, members, agents,
and providers to WellCare," continued Burdick. "WellCare and
Universal American have a shared commitment to serving Medicare
beneficiaries, and we look forward to working together to ensure a
smooth transition."
Burdick added, "As part of the transaction, Richard Barasch, Universal American's chairman
and CEO, will be leaving the company. Under his leadership,
Universal American built a strong business and talented team
committed to delivering quality care and service. I thank him for
his leadership and support throughout the transaction."
The transaction is expected to be $0.60
to $0.70 accretive in the first year following the close and
an incremental $0.10 accretive in the
second year following the close, excluding one-time
transaction-related expenses of approximately $30 million and integration costs of
approximately $25 million to $30
million, to WellCare's adjusted earnings per diluted share.
WellCare continues to expect annual synergies of approximately
$25 million to $30 million by 2019.
The company will provide more details regarding the transaction on
its first quarter 2017 earnings conference call that is scheduled
for May 3, 2017.
Under the terms of the agreement, Universal American
stockholders received $10.00 in cash
for each share of Universal American common stock they held at
closing. Consistent with WellCare's announcement on November 17, 2016, the total transaction value is
approximately $800 million, including
the assumption of debt and the make-whole premium payable on
conversion of Universal American's convertible debt. WellCare
funded the transaction with unrestricted cash available from both
entities.
Universal American has approximately 69,000 Medicare Advantage
(MA) members in a 4.5-Star plan in
Houston-Beaumont, Texas and more than 20,000 MA
members in a 4.0-Star plan in the
Northeast, primarily in New York,
as of March 31, 2017. In addition,
Universal American partners with Accountable Care Organizations
(ACO) in 10 states, five of which are WellCare Medicare Advantage
markets.
BofA Merrill Lynch served as financial advisor to WellCare.
Kirkland & Ellis LLP and Bass, Berry & Sims PLC served as
legal advisers to WellCare. MTS Health Partners, LP served as
financial advisor to Universal American. Paul, Weiss, Rifkind,
Wharton & Garrison LLP served as legal advisor to Universal
American.
Leadership Update
Under WellCare, Erin Page,
president, Medicare, will continue to have responsibility for the
Universal American Medicare Advantage business in Texas, New
York and Maine as well as
the ACO business in Texas.
Additionally, she will now have responsibility for WellCare's
Medicare Advantage business in Texas and Louisiana. In this role, she will oversee
strategy, regulatory compliance, network management, sales and
marketing, medical management, and administration for these
businesses. Page will report to Michael
Polen, executive vice president of WellCare's Medicare
business. Page was the president of Universal American's Medicare
business for 4 years. She joined Universal American in 2001 and
held roles with increasing responsibility.
Jeff Spight will continue to lead
the Management Services Organization/Accountable Care Organization
(MSO/ACO) business, which operates as Collaborative Health Systems.
As president, MSO/ACO, Spight will report to Polen. In this role,
Spight will set strategy, drive implementation and create market
opportunities to grow value-based provider relationships for
WellCare. Spight joined Universal American in 2013.
"Erin and Jeff are seasoned Medicare leaders who we expect will
significantly contribute to our growth and quality goals," said
Polen. "I look forward to working with them to leverage the best
from both organizations for the benefit of our members and provider
partners."
About WellCare Health Plans, Inc.
Headquartered in Tampa, Fla.,
WellCare Health Plans, Inc. (NYSE: WCG) focuses exclusively 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 4.0 million members
nationwide as of January 1, 2017. For
more information about WellCare, please visit the company's website
at www.wellcare.com.
Basis of Presentation
In addition to results determined under GAAP, WellCare provides
certain non-GAAP financial measurements that management believes
are useful in assessing the company's performance. Adjusted
earnings per diluted share exclude the effect of certain expenses
related to previously disclosed government investigations and
related litigation and resolution costs ("investigation costs") and
amortization expense associated with acquisitions
("acquisition-related amortization expenses"). Management believes
these items are not indicative of long-term business operations
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. The company is not
able to project at the time of this release the amount of future
investigation costs or acquisition-related amortization expenses
and, therefore, cannot reconcile projected adjusted earnings per
diluted share to projected GAAP earnings per diluted share.
Cautionary Statement Regarding Forward-Looking
Statement
This news release contains "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," and similar
expressions are forward-looking statements. For example, statements
regarding the company's financial outlook, and the financial impact
of the acquisition 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, WellCare's progress on top priorities such
as integrating care management, advocating for our members,
building advanced relationships with providers and government
partners, 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 ("SEC"), 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, 2016, and other filings
by WellCare with the SEC, 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.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/wellcare-completes-acquisition-of-universal-american-corp-300447974.html
SOURCE WellCare Health Plans, Inc.; Universal American Corp.
