Tampa, Florida-based managed care company WellCare has announced a deal to buy Detroit’s Meridian Health Plans and its pharmacy benefit manager, MeridianRx, in a $2.5 billion cash transaction.
One of the largest insurers in the U.S. behind the Big Five of UnitedHealthcare, Aetna, Anthem, Cigna and Humana, WellCare would add more Medicaid and Medicare Advantage (MA) members with the purchase. Meridian is the No. 1 Medicaid managed care insurer in Michigan with 508,000 members and covers 565,000 Medicaid beneficiaries in Illinois.
“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 a statement. “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.”
WellCare will also add Meridian’s 27,000 MA members in Michigan, Illinois, Indiana and Ohio, as well as the smaller Affordable Care Act business (with 6,000 members) that Meridian operates in Michigan.
Fitting in with recently proposed megamergers like Cigna-Express Scripts and CVS-Aetna, the deal isn’t entirely a horizontal merger between insurers. By acquiring Meridian’s PBM business, WellCare will have a “platform that provides a wide range of services and product offerings to both Meridian’s members and third parties.”
WellCare has been expanding in recent years, acquiring two Arizona health plans in 2017 and reportedly bidding for Aetna’s MA business before its merger with Humana was abandoned.
In a conference call with investors, WellCare said the current owners of Meridian, the Cotton family, won’t stay with the company after the deal closes. The company had been founded by CEO David Cotton, MD, and his wife Shery in 1997, and his three sons currently serve as senior executives.
The transaction is expected to be completed by the end of 2018. The addition of Meridian’s operations will raise WellCare’s annual revenue to $21.3 billion.
John joined TriMed in 2016, focusing on healthcare policy and regulation. After graduating from Columbia College Chicago, he worked at FM News Chicago and Rivet News Radio, and worked on the state government and politics beat for the Illinois Radio Network. Outside of work, you may find him adding to his never-ending graphic novel collection.