WellCare in Tampa Completes Acquisition of Detroit’s Meridian Health Plan for $2.5B
WellCare Health Plans Inc. has completed the acquisition of Detroit's Meridian Health Plan of Michigan Inc., Meridian Health Plan of Illinois Inc., and MeridianRx. The companies entered into the agreement in May.
WellCare Health Plans Inc. in Tampa today announced it has completed the acquisition of Detroit-based Meridian Health Plan of Michigan Inc., Meridian Health Plan of Illinois Inc., and MeridianRx, a pharmacy benefit manager (collectively "Meridian") following the receipt of all required regulatory approvals.
With the closing of the acquisition, effective on Sept. 1, Meridian is now a wholly-owned subsidiary of WellCare. Meridian will remain at its headquarters at One Campus Martius in downtown Detroit.
In May, WellCare announced it had entered into a definitive agreement to acquire Meridian for $2.5 billion in cash. Founded by Dr. David Cotton in 1997 as Health Plan of Michigan, Meridian (the name change came in 2008) is one of the largest privately held, for-profit managed care organizations in the United States and serves about 1.1 million members as of May 1 in Michigan, Illinois, Indiana, and Ohio.
Meridian was expected to generate more than $4.3 billion in total revenue in 2018. WellCare will diversify its Medicaid portfolio through the addition of Michigan, where Meridian has the No. 1 Medicaid market position.
"We are excited to complete our acquisition of Meridian," says Ken Burdick, CEO of WellCare. "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. 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.
WellCare Health Plans 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.
Cotton is the renowned former specialist-in-chief of obstetrics and gynecology at the Detroit Medical Center, but he gave up that profession in 1997 to get into the health care business. He was joined at Meridian by his wife, Shery, and three sons — Jon, Sean, and Michael.
Occupying four floors and more than 250,000 square feet of space at One Campus Martius, in 2014 the Cotton family joined Dan Gilbert’s Bedrock Real Estate Services in acquiring the 15-story, 1.1-million-square-foot office building (originally the Compuware Building).
For more information on the Cotton family and Meridian, click here.