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WellCare Health Plans to Acquire Meridian Health Plan and MeridianRx

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WellCare Health Plans in June 2018 announced that it has acquired Meridian Health Plan of Michigan, Meridian Health Plan of Illinois, and MeridianRx, a pharmacy benefit manager (PBM) for $2.5 billion in cash. The transaction is expected to close by the end of 2018.

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 state, where Meridian has the #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 about 1.1 million Medicaid, Medicare Advantage, integrated dual-eligible and Health Insurance Marketplace members as of May 1, 2018 in Michigan, Illinois, Indiana and Ohio.

As a result of this transaction, WellCare will have the No. 1 Medicaid membership market share in Michigan and Illinois. In addition, the company will add an integrated PBM platform for both Meridian’s members and third parties.

Financial Impact and Transaction Details

WellCare expects to generate $30 million to $40 million per year in synergies and 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.

Headquartered in Tampa, Florida, WellCare Health Plans provides 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 about 4.3 million members in the U.S. as of March 31, 2018.

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