Orlando, FL 1/11/12 (StreetBeat)-- Universal American Corp. (NYSE: UAM) today announced that it has entered into a definitive agreement to acquire APS Healthcare, Inc., a leading provider of specialty healthcare solutions for $227.5 million.The transaction significantly enhances Universal American’s breadth of capabilities to participate in the emerging growth opportunities in healthcare, including the large dual eligible opportunity. APS Healthcare brings a full range of healthcare solutions, including disease management and care coordination, clinical quality and utilization review, and behavioral health services, that enable its customers to reduce healthcare costs and improve the quality of their care. APS Healthcare’s 400 customers include Medicaid Agencies, state and local governments, health plans, employers and labor trust groups and it serves approximately 30 government programs in 25 states and Puerto Rico covering over 17 million members, making it one of the largest specialty healthcare services companies in the country. APS Healthcare is headquartered in White Plains, NY with 2011 revenues of more than $300 million.
APS Healthcare is led by CEO Greg Scott, formerly Chief Financial Officer of PacifiCare Health Systems, Inc. and Jerry Vaccaro, M.D., formerly President and CEO of PacifiCare Behavioral Health, Inc., who will continue to lead the business following the transaction. APS Healthcare is currently owned by funds affiliated with GTCR LLC, a leading private equity firm.
The purchase price for the transaction is (i) $227.5 million, consisting of $147.5 million in cash to retire APS Healthcare’s outstanding indebtedness and other liabilities, and $80 million in Universal American common stock, plus (ii) up to $50 million in potential performance based consideration, payable in cash in March 2014 to the extent APS Healthcare’s financial results exceed certain thresholds. Universal American expects the transaction to be accretive to earnings in 2012. The transaction, which is expected to close within sixty days, is subject to customary closing conditions, including regulatory approvals.
“We are very excited about the APS Healthcare transaction. Companies who demonstrate the ability to improve cost and quality metrics, especially in government programs will thrive in the rapidly changing healthcare environment,” said Richard Barasch, Chairman and CEO of Universal American. “We have been successful in our Medicare Advantage programs and APS Healthcare has been successful as well in its Medicaid programs. We are particularly focused on the emerging opportunities to service dual eligibles. Moreover, we are delighted to welcome the APS Healthcare management team, led by Greg Scott and Jerry Vaccaro. They bring a wealth of expertise and experience that will no doubt inure to the benefit of the people we serve and our combined companies.”
“We believe that the combination of APS Healthcare’s industry leading population health management capabilities with Universal American's strong Medicare Advantage franchise and balance sheet position the combined company to capitalize on a range of emerging opportunities, including the market for dual eligibles,” said GTCR Principal David Katz. “We look forward to partnering with the Universal American team to build upon their strong track record of success.”
“This is a combination of two companies with very complementary skill sets,” added Greg Scott, CEO of APS Healthcare. “The combined company will be an exciting growth platform to put our technology and clinical solutions to work across multiple populations. Higher quality care for those most in need of that care will result in lower cost across the healthcare system.”
Goldman Sachs is acting as exclusive financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal counsel to Universal American. Credit Suisse is acting as exclusive financial advisor and Kirkland & Ellis LLP is acting as legal counsel to GTCR LLC and APS Healthcare.
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