VIRGINIA BEACH, Va., Oct. 26 /PRNewswire-FirstCall/ -- AMERIGROUP Corporation announced today that it has signed a definitive agreement with the owners of CarePlus, LLC to acquire CarePlus Health Plan (“CarePlus”), one of the largest for-profit Medicaid managed care companies in New York City. At the close of the transaction, which is subject to regulatory approval, AMERIGROUP will serve CarePlus’ approximately 114,000 members in New York State’s Medicaid, Child Health Plus and Family Health Plus programs and initially will continue to operate under the name CarePlus.
The acquisition is expected to be accretive to earnings by $0.15 to $0.20 per share over 12 months, which includes amortization of intangible assets, continued integration costs, and bringing certain liabilities to required levels. In addition, the acquisition will add over $200 million of revenues on an annualized basis. In years subsequent to integration, the acquisition is expected to have profit margins consistent with AMERIGROUP’s existing business.
AMERIGROUP is acquiring CarePlus for $107 million, a price that reflects a cash payment of approximately $125 million for CarePlus, which will have estimated net assets of $18 million upon closing. Additional payments may be made based on the achievement of specific criteria or earnings thresholds. The purchase price will be funded through available unregulated cash. The transaction is subject to regulatory approvals and other closing conditions and is expected to become effective in early 2005.
CarePlus’ service area includes New York City (Brooklyn, Manhattan, Queens and Staten Island) and Putnam County. CarePlus is also authorized to offer a managed long-term care program in New York City subject to final regulatory approval and other considerations.
“A key part of AMERIGROUP’s growth strategy is to move into major urban areas by acquiring other health plans, and New York has been at the top of our list,” said Jeffrey L. McWaters, AMERIGROUP chairman and chief executive officer. “AMERIGROUP’s acquisition of CarePlus will enable us to take full advantage of significant growth opportunities in New York and it will strengthen AMERIGROUP’s presence in the Northeast, adding to our existing operations in New Jersey, Maryland and the District of Columbia.”
“With more than 3.7 million recipients, New York State has the nation’s second largest number of people enrolled in Medicaid and the State has clearly recognized the positive contributions of Medicaid managed care in serving these citizens,” McWaters continued. “We are excited about entering this market and building on CarePlus’ quality service and award-winning programs.”
“We at CarePlus are delighted to join AMERIGROUP, the nation’s leader in Medicaid managed care,” said Karin Ajmani, president of CarePlus. “Like AMERIGROUP, CarePlus is a strong organization with a history of consistent growth. Both have succeeded in bringing our members excellent, preventive healthcare. With the additional resources and support that AMERIGROUP brings, we will be able to increase access to quality healthcare and offer more innovations to our members, providers and State partners.”
Senior management of AMERIGROUP will discuss the transaction during their previously scheduled third quarter earnings conference call on Friday, October 29th, at 9:30 a.m. Eastern Time. The conference can be accessed by dialing 1-800-289-0528 and entering confirmation code 992237. A recording of this conference call will be available from 12:00 p.m. Eastern Time on Friday, October 29th, until 11:59 p.m. Eastern Time on Thursday, November 4th. To access the recording, dial 1-888-203-1112 and enter confirmation code 992237. A live webcast of the call also will be available through the investors’ page on the AMERIGROUP Web site at http://www.amerigroupcorp.com/, or through CCBN at http://www.companyboardroom.com/. A 30-day replay of this webcast will be available on these Web sites approximately two hours following the conclusion of the live broadcast.
AMERIGROUP Corporation, headquartered in Virginia Beach, Virginia, is a multi-state managed healthcare company focused on serving people who receive healthcare benefits through publicly sponsored programs including Medicaid, State Children’s Health Insurance Program and FamilyCare. The Company operates in Texas, Florida, Maryland, New Jersey, the District of Columbia and Illinois. For more information about AMERIGROUP Corporation, visit the Company’s Web site at http://www.amerigroupcorp.com/.
This release is intended to be disclosure through methods reasonably designed to provide broad, non-exclusionary distribution to the public in compliance with the Securities and Exchange Commission’s Fair Disclosure Regulation. This release contains certain “forward-looking” statements, including statements related to expected 2004 and 2005 performance such as membership, revenues, same-store premium revenues, operating cash flows, health benefits expenses, seasonality of health benefits expenses, selling, general and administrative expenses, days in claims payable, income tax rates, earnings per share, and net income growth, as well as expectations on the effective date, purchase price, estimated membership levels and successful integration of acquisitions and debt levels, made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward- looking statements involve known and unknown risks and uncertainties that may cause the Company’s actual results in future periods to differ materially from those projected or contemplated in the forward-looking statements. These risks and uncertainties include, but are not limited to, national, state and local economic conditions, including their effect on the rate-setting process, timing of payments, as well as the availability and cost of labor, utilities and materials; the effect of government regulations and changes in regulations governing the healthcare industry, including our compliance with such regulations and their effect on our ability to manage our medical costs; changes in Medicaid payment levels, membership eligibility and methodologies and the application of such methodologies by the government; liabilities and other claims asserted against the company; our ability to attract and retain qualified personnel; our ability to maintain compliance with all minimum capital requirements; the availability and terms of capital to fund acquisitions and capital improvements; the competitive environment in which we operate; our ability to maintain and increase membership levels; and demographic changes.
Investors should also refer to our Form 10-K for the year ended December 31, 2003 filed with the Securities and Exchange Commission on March 9, 2004, for a discussion of risk factors. Given these risks and uncertainties, we can give no assurances that any forward-looking statements will, in fact, transpire and, therefore, caution investors not to place undue reliance on them. We specifically disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.
CONTACT: Julie Loftus Trudell Vice President, Investor Relations AMERIGROUP Corporation 757-321-3535
AMERIGROUP Corporation
CONTACT: Julie Loftus Trudell, Vice President, Investor Relations, ofAMERIGROUP Corporation, +1-757-321-3535
Web site: http://www.amerigroupcorp.com/