WellCare Health Plans, a Tampa-based managed care provider, has closed its acquisition of Meridian Health Plans of Michigan, Meridian Health Plans of Illinois and MeridianRx in a deal worth about $2.5 billion.
Meridian, which includes a pharmacy benefits manager (PBM), was one of the nation’s largest privately-held, for-profit managed care organizations with 1.1 million members as of June 30, 2018. With the closing of the deal, it is a wholly-owned subsidiary of WellCare.
"We are excited to complete our acquisition of Meridian," Ken Burdick, WellCare's CEO, said in a statement. "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."
The deal was originally announced in May and is expected to be accretive to WellCare by 2020. One-time transaction expenses were estimated at $75 million to $85 million and cumulative integration-related expenses were estimated at $50 million to $60 million.
Meridian’s marketplace members were in Michigan, Illinois, Indiana and Ohio. WellCare is focused primarily on providing services through Medicaid, Medicare Advantage and Medicare Prescription Drug Plans and served approximately 4.4 million members nationwide as of June 30, 2018.
"WellCare and Meridian have a shared commitment to quality—with Meridian maintaining high quality and accredited Medicaid plans in both Michigan and Illinois,” Burdick said. “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 deal brings WellCare into the PBM space and also represents a similar integration between health insurers and PBMs happening across healthcare.
Cigna’s $67 billion acquisition of Express Scripts and CVS Health’s $69 billion takeover of Aetna are two mega mergers with similar vertical integration between payers and PBMs.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."