Company Release - 9/4/2018 6:00 AM ET
TAMPA, Fla.,
Sept. 4, 2018 /PRNewswire/ -- WellCare Health Plans, Inc. (NYSE: WCG)
("WellCare") announced today that, effective September 1, 2018, it
completed its acquisition of Meridian Health Plan of Michigan, Inc., Meridian
Health Plan of Illinois, Inc., and MeridianRx, a pharmacy benefit manager (PBM)
(collectively, "Meridian") following the receipt of all required
regulatory approvals. With the closing of the acquisition, Meridian is now a
wholly-owned subsidiary of WellCare.
"We
are excited to complete our acquisition of Meridian," said Ken Burdick,
WellCare's CEO. "This transaction grows and diversifies our Medicaid
membership by nearly 40 percent, increases our Medicare Advantage presence in
new markets, adds a proprietary PBM platform, and enhances WellCare's
integrated dual-eligible and Marketplace capabilities, positioning us for
further growth within government-sponsored programs."
"WellCare
and Meridian have a shared commitment to quality - with Meridian maintaining
high quality and accredited Medicaid plans in both Michigan and Illinois. We
look forward to leveraging best practices across the entire company in order to
improve quality for all of our members," continued Burdick. "We also
want to welcome Meridian associates, members, agents, and providers to
WellCare."
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.
Meridian
was one of the largest privately-held, for-profit managed care organizations in
the U.S. and served approximately 1.1 million Medicaid, Medicare Advantage
(MA), integrated dual-eligible and Health Insurance Marketplace members as of
June 30, 2018 in Michigan, Illinois, Indiana and Ohio. Meridian 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.
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 4.4 million members nationwide as of June 30, 2018. 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 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 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,"
"will," and similar expressions are forward-looking statements. For
example, statements regarding the company's financial outlook and financial
impact of the 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 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, 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 June 30, 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.
SOURCE WellCare Health Plans, Inc.
