WellCare completed its $2.5 billion acquisition of Meridian on Tuesday, the latest in an ongoing string of acquisitions by major insurance providers.
The Tampa, Florida-based insurer acquired Meridian Health Plan of Michigan, Meridian Health Plan of Illinois and pharmacy benefit manager MeridianRx.
WellCare will now cover 6,000 people through the individual market in Michigan. With this move, WellCare is re-entering the marketplace: It hasn’t offered exchange plans since 2016.
WellCare CEO Ken Burdick acknowledged the ACA re-entrance in the announcement, adding that it positions the company “for further growth within government-sponsored programs.”
This also increases its Medicaid membership by 40% and expands its presence in Medicare Advantage (MA), he said. About 1.1 million people were enrolled in Meridian’s Medicaid, MA and Marketplace plans.
WellCare financed the deal using more than $2 billion in stocks and bonds, including $4.5 million in common stock to generated the cash necessary to fund the purchase.
The insurer expects to generate $4.8 billion in revenue from this acquisition. It expects accretion to its adjusted earnings of $0.40 to $0.50 per share in 2019, climbing over the next few years to more than $1 per share in 2021.
Burdick said WellCare and Meridian have “a shared commitment to quality,” and they will be “leveraging best practices across the entire company in order to improve quality for all of our members.”