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Universal American Closes $227.5 Mln buy of APS Healthcare

Universal Amercan said Friday that it has closed its $227.5 million buy of APS Healthcare. The seller was GTCR. APS provides specialty healthcare solutions primarily to Medicaid agencies. The sale was announced in January.

PRESS RELEASE

Universal American Corp. (NYSE: UAM) today announced that it has completed its acquisition of APS Healthcare, a leading provider of specialty healthcare solutions primarily to Medicaid agencies.

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 case 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. The company 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, headquartered in White Plains, NY, had 2011 revenues of more than $300 million and 2011 EBITDA1 estimated at approximately $31 million.

“We are delighted to welcome the talented APS Healthcare team into the Universal American family,” said Richard Barasch, Chairman and CEO of Universal American. “With this transaction, we now have the capabilities to participate in the large and growing Medicaid market, including the dual eligible opportunity.”

Additional Transaction Details

The purchase price for the transaction is (i) $227.5 million, consisting of approximately $150.5 million in cash to retire APS Healthcare’s outstanding indebtedness and other liabilities and approximately $77.0 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.
To fund the equity portion of the purchase price, at closing, Universal American issued 6,504,461 shares of its common stock to funds affiliated with the private equity firm GTCR and other former equity holders of APS Healthcare, representing approximately 7.4% of Universal American’s outstanding common stock. At closing, David Katz, a Principal at GTCR, was appointed to the Universal American board of directors.
To fund the cash portion of the purchase price, at closing, Universal American entered into a new $225 million Credit Facility with a group of lenders led by BofA Merrill Lynch, consisting of a $150 million term loan and a $75 million revolving credit facility, which was undrawn at closing.
1 The Company has not included a reconciliation of 2011 estimated EBITDA for APS Healthcare to net income because certain of the components of this reconciliation are not finalized at this time.

About Universal American Corp.

Universal American (NYSE: UAM), through our family of healthcare companies, provides health benefits and services to people covered by Medicare and/or Medicaid. We are dedicated to working collaboratively with healthcare professionals in order to reduce healthcare costs and improve the health and well-being of those we serve. For more information on Universal American, please visit our website at www.UniversalAmerican.com.