WellCare to Buy Privately Held Health Plans, PBM for $2.5B

The deal includes Meridian Health Plan of Michigan, Inc., Meridian Health Plan of Illinois, Inc., and MeridianRx, and is expected to close by the end of the year, subject to regulatory approval.

WellCare Health Plans, Inc. said Tuesday that it will buy two state health plans and a pharmacy benefits management company owned by Meridian for $2.5 billion in cash.

The deal includes Meridian Health Plan of Michigan, Inc., Meridian Health Plan of Illinois, Inc., and MeridianRx, and is expected to close by the end of the year, subject to regulatory approval, Tampa-based WellCare said in a media release.

"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," WellCare CEO Ken Burdick said in prepared remarks.

"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," Burdick said.

The Details:

• Meridian is one of the largest privately held, for-profit managed care organizations in the nation, with 1.1 million Medicaid, Medicare Advantage, dual-eligible, and marketplace members in Michigan, Illinois, Indiana, and Ohio. The MCO is expected to generate more than $4.3 billion in total revenue this year.
    
• Meridian has 508,000 Medicaid members in Michigan and 565,000 Medicaid members in Illinois.
   
• When the deal is finalized, WellCare will have the largest Medicaid membership market share in Michigan and Illinois, increasing its market position from four to six states.
   
• WellCare will expand its MA business through the addition of Meridian's 27,000 MA members in Michigan, Illinois, Indiana and Ohio.
   
• WellCare will add an integrated PBM platform that provides services and products to Meridian members and third parties.
   
• WellCare willl fund the transaction through a combination of cash on hand, the company's undrawn $1 billion revolving credit facility, new debt of $600 million to $1 billion, and new equity of $800 million to $1.2 billion.