WellCare Expands Medicaid Footprint - Acquires Meridian Health
WellCare Inc, a health insurance provider based in Tampa, Florida, offers health plans backed by the state and federal government. WellCare offers Medicaid plans for individuals who qualify based on income, along with Medicare Advantage and Part D prescription plans for American seniors. As of 31st March 2018, nationwide it has over 4 million members.
Meridian Health, a health insurance provider based in Detroit, Michigan, also offers Medicaid plans. In fact, Meridian Health is the largest Medicaid provider in the state of Michigan and is also one of the largest Medicaid providers in the state of Illinois. Meridian Health also has ownership over MeridianRx, which is a pharmacy benefit management company.
WellCare recently revealed that an agreement to acquire Meridian’s health plans is being processed. The transaction cost $2.5 billion in cash, and it is expected to close by the end of the year, subject to regulatory approvals. The deal will bring 1.10 million new customers to WellCare Health Plans. Meridian has over 500,000 members in Michigan, along with over 560,000 members in Illinois.
This acquisition will help boost its portfolio of Medicaid and Medicare Advantage customer base in Ohio, Illinois, Indiana, and Michigan, where they are the number one Medicare provider. This will also see their leading market share rise to over five states. The inclusion of a pharmacy benefit manager, the company agreed to create an incorporated platform (BPM) to offer various services as well as products to all members and non-members.
The funding is to go through on cash transactions by hand; it has an undrawn credit facility, new debt and new sprite, subject to market conditions. It acquired $2.5 billion in serious overpass financing, with the transaction not being reliant upon being financed.
The announcement comes in the wake of big-name consolidations in the health insurance industry. The pandemic has to see health plans merge and take over other insurers, care providers, and PBMs. Currently, WellCare has a PBM contract with CVS up to 2020, and those in the know are cautious to comment on the future of the relationship.
The cash deal is set to create a company with projected annual revenue of $23 billion, in 2017; it had revenue of $17 billion in 2017 and a profit of $373.7 million. Analysts from the company project an enhancement increase in 2019 of $0.10 to its earnings per share, with $0.10 rise in 2020, as well as $1.00 in 2021. It opted out of the Affordable Care Act exchanges I the two states is traded in 2016, but the CEO Kenneth Burdick still had the capabilities and hinted that the deal might lead the company back provided the exchanges become more stable in the future.
Meridian has been around for more than two decades and was dedicated to the provision of compassionate and quality care to its members and this was achieved when respected National Committee recognized it for Quality Assurance (NCQA) for its Medicaid services in Michigan as well as Illinois. WellCare CEO Kenneth Burdick agreed to these sentiments when he made the announcement, and he said that the acquisition aligned with his company’s focus on government-sponsored health plans.
Meridian will keep its name after the deal closes due to its strong presence as a recognized brand, officials at WellCare said, but CEO David Cotton and the rest of the Cotton family opted not to stay on. A discussion of the transaction is set to be broadcast from the company’s website. At the time release of the news, no one at the insurer could project the expected cost incurred in the follow up of due process.