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WellCare's $2.5 billion purchase of Meridian makes it the Tampa Bay area's biggest company by market cap

WellCare Health Plans is based on Henderson Road in Tampa. (Times files)
Published Sep. 4, 2018

TAMPA — WellCare Health Plans has closed on its biggest acquisition ever, a $2.5 billion purchase of three Midwestern health plans and, along the way, has become the Tampa Bay area's biggest company by market value.

WellCare, a Fortune 200 company that focuses on providing government-sponsored managed care services, has seen its market capitalization rise from less than $10 billion when the purchase of Meridian Health Plans was announced in May to $15.2 billion by the close of markets Tuesday. That put its market cap ahead of Raymond James Financial's $13.6 billion. Tech Data remains the largest company in the bay area — and Florida — by revenue.

The acquisition of Meridian's plans in Michigan and Illinois, plus its MeridianRx pharmacy benefits manager, puts WellCare in a position for further growth within government-sponsored programs, WellCare CEO Ken Burdick said in announcing that the deal had cleared all regulatory approvals.

"This transaction grows and diversifies our Medicaid membership by nearly 40 percent, increases our Medicare Advantage presence in new markets, adds a proprietary (pharmacy benefits manager) platform and enhances WellCare's integrated dual-eligible" — meaning patients who qualify for both Medicare and Medicaid — "and marketplace capabilities," he said.

Increasingly, insurers have been developing or buying pharmacy benefits manager programs to improve how they share data, manage care and control prescription drug costs. Meridian years ago created its own in-house program, which is now expected to help WellCare manage pharmacy costs and integrate pharmacy services and medical care — both of which could help lower costs.

The Meridian acquisition is expected to boost WellCare's adjusted earnings per share by 40 to 50 cents next year, ramping up to more than $1 in 2021. As part of its financing, WellCare said last month that it would sell more than 3.9 million shares of common stock to help raise money for the Meridian purchase. On Tuesday, WellCare's stock closed at $304.24 a share, up about half a percent.

FINANCING THE DEAL: WellCare selling common stock and borrowing to raise cash for Meridian purchase

Meridian, now a wholly owned subsidiary of WellCare, was one of the nation's largest privately-held, for-profit managed care organizations, with about 1.1 million members in Medicaid, Medicare Advantage, integrated dual-eligible and health insurance marketplace programs in Michigan, Illinois, Indiana and Ohio. WellCare has 4.4 million members nationwide.

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