WellCare Health Plans Inc. said it will acquire Universal American Corp. in a deal that could be worth about $800 million.
WellCare is a Tampa, Florida-based company that focuses on selling Medicaid plans, Medicare Advantage plans and Medicare Part D prescription drug plans.
WellCare provides or administers benefits for about 3.8 million people.
Universal American is a White Plains, New York-based Medicare Advantage plan provider. The company also has an arm, Collaborative Health Systems, that helps physicians set up and run Medicare accountable care organizations.
Universal American covers 114,000 Medicare Advantage plan enrollees, and it helps run accountable care organizations in 11 states.
Both WellCare and Universal American have avoided getting involved with the Affordable Care Act public exchange system.
The $800 million deal value would include a cash payment of $10 per share of Universal American common stock. WellCare has also agreed to move to retire about $200 million in Universal American preferred shares and convertible debt.
Lawyers in the New York City office of Kirkland & Ellis LLP and the New York City office of Bass, Berry & Sims PLC are representing WellCare.
Lawyers in the New York City office of Paul, Weiss, Rifkind, Wharton & Garrison LLP are representing Universal American.
Kenneth Burdick, WellCare’s chief executive officer, said in a public memo about the deal that Erin Page, the head of Universal American’s Medicare Advantage unit, will continue to lead that team. He said Jeff Spight, the head of the Universal American ACO team, will keep that role.
The Universal American deal “expands our Medicare position and valued relationships with loyal provider and agent partners in key markets, including Texas, New York and Maine,” Burdick wrote in the memo.
“WellCare is a people-focused company,” Burdick added. “That means we know what it takes to build the kind of deep and personal relationships that Universal American has with its employees, members, providers, agents and brokers like you. It’s truly exciting to think about what we can do together.”
Richard Barasch, the chairman and chief executive officer of Universal American, confirmed in a similar memo to his company’s employees that Page and Spight will stay with the business.
“Please know that I would not support a transaction that did not further our mission of providing exceptional care of our Medicare members and beneficiaries and to being reliable partners with the doctors who place their trust in us,” Barasch wrote.
Barasch also praised Universal American employees’ commitment to the beneficiaries. He said that, over the years, “through good times and bad, every person in the company has answered every bell… While there may be changes along the way, our highest priority is to communicate timely and to fairly treat our employees, physician partners, agents and brokers.”
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