WellCare headquarters in Tampa, FL. Credit: Google Street View
WellCare Health Plans in Tampa, Florida, is acquiring Meridian health plans as well as pharmacy benefit manager MeridianRx for $2.5 billion, in a move that will strengthen its managed Medicaid and Medicare Advantage businesses.
The definitive agreement includes the acquisition of Meridian Health Plan of Michigan, Meridian Health Plan of Illinois, and PBM MeridianRx, in a transaction expected to close by the end of 2018.
Upon completion, WellCare will have the top Medicaid membership market share in Michigan and Illinois, increasing its leading market position from four to six states, the company said.
WellCare will also expand its MA business through the addition of Meridian's 27,000 MA members in Michigan, Illinois, Indiana and Ohio.
"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," said WellCare CEO Ken Burdick. "This transaction aligns with our focus on government-sponsored health plans, will strengthen our capabilities and growing business, and will advance our growth agenda."
Meridian serves approximately 1.1 million Medicaid, Medicare Advantage, integrated dual-eligible and Affordable Care Act marketplace members in Michigan, Illinois, Indiana and Ohio.
One-time transaction-related expenses of $75 to $85 million and integration-related expenses of $50 to $60 million will be partially offset by $30 to $40 million in synergies that are expected to ramp up over the next few years, WellCare said.
Revenue of $4.3 billion is projected for the family-owned, for-profit Meridian in 2018.
Meridian has achieved high quality ratings from the National Committee for Quality Assurance for its health plans in Michigan and Illinois.