Humana Receives Antitrust Clearance to Proceed with Pending Acquisition of Metropolitan Health Networks, Inc.
November 28 2012 - 4:50PM
Business Wire
Humana Inc. (NYSE: HUM) and Metropolitan Health Networks, Inc.
(NYSE: MDF) today announced that early termination of the waiting
period under the Hart-Scott-Rodino Anti-Trust Improvements Act of
1976, as amended, has been received in connection with Humana’s
previously announced pending acquisition of Metropolitan.
Completion of the acquisition remains subject to approval by
Metropolitan shareholders and other customary closing
conditions. A meeting of the shareholders of Metropolitan to
consider approval of the acquisition is scheduled to be held on
December 21, 2012. The acquisition is expected to close by the end
of the year.
Headquartered in Boca Raton, Fla., Metropolitan is a Medical
Services Organization and coordinates medical care for
approximately 87,500 Medicare Advantage, Medicaid, and other
beneficiaries, primarily in Florida, utilizing a primary
care-centric business model.
Cautionary Statement
This news release includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
When used in investor presentations, press releases, Securities and
Exchange Commission (“SEC”) filings, and in oral statements made by
or with the approval of one of Humana’s executive officers, the
words or phrases like “expects,” “anticipates,” “intends,” “likely
will result,” “estimates,” “projects” or variations of such words
and similar expressions are intended to identify such
forward-looking statements. These forward-looking statements are
not guarantees of future performance and are subject to risks,
uncertainties, and assumptions, including, among other things,
information set forth in the “Risk Factors” section of Humana’s and
Metropolitan’s respective SEC filings, as well as the other
information that Humana and Metropolitan may provide with respect
to the pending merger, a summary of which includes but is not
limited to the following:
- If Humana does not design and price its
products properly and competitively, if the premiums Humana charges
are insufficient to cover the cost of health care services
delivered to its members, if the company is unable to implement
clinical initiatives to provide a better health care experience for
its members, lower costs and appropriately document the risk
profile of its members, or if its estimates of benefit expenses are
inadequate, Humana’s profitability could be materially adversely
affected. Humana estimates the costs of its benefit expense
payments, and designs and prices its products accordingly, using
actuarial methods and assumptions based upon, among other relevant
factors, claim payment patterns, medical cost inflation, and
historical developments such as claim inventory levels and claim
receipt patterns. These estimates, however, involve extensive
judgment, and have considerable inherent variability because they
are extremely sensitive to changes in payment patterns and medical
cost trends.
- If Humana fails to effectively
implement its operational and strategic initiatives, including its
Medicare initiatives, the company’s business may be materially
adversely affected, which is of particular importance given the
concentration of the company’s revenues in the Medicare
business.
- If Humana fails to properly maintain
the integrity of its data, to strategically implement new
information systems, to protect Humana’s proprietary rights to its
systems, or to defend against cyber-security attacks, the company’s
business may be materially adversely affected.
- Humana’s business may be materially
adversely impacted by CMS’s adoption of a new coding set for
diagnoses.
- Humana is involved in various legal
actions and governmental and internal investigations, including
without limitation, an ongoing internal investigation and
litigation and government requests for information related to
certain aspects of its Florida subsidiary operations, any of which,
if resolved unfavorably to the company, could result in substantial
monetary damages. Increased litigation and negative publicity could
increase the company’s cost of doing business.
- As a government contractor, Humana is
exposed to risks that may materially adversely affect its business
or its willingness or ability to participate in government health
care programs.
- Recently enacted health insurance
reform, including The Patient Protection and Affordable Care Act
and The Health Care and Education Reconciliation Act of 2010, could
have a material adverse effect on Humana’s results of operations,
including restricting revenue, enrollment and premium growth in
certain products and market segments, restricting the company’s
ability to expand into new markets, increasing the company's
medical and operating costs by, among other things, requiring a
minimum benefit ratio on insured products (and particularly how the
ratio may apply to Medicare plans, including aggregation,
credibility thresholds, and its possible application to
prescription drug plans), lowering the company’s Medicare payment
rates and increasing the company’s expenses associated with a
non-deductible federal premium tax and other assessments; financial
position, including the company's ability to maintain the value of
its goodwill; and cash flows. In addition, if the new
non-deductible federal premium tax and other assessments, including
a three-year commercial reinsurance fee, were imposed as enacted,
and if Humana is unable to adjust its business model to address
these new taxes and assessments, such as through the reduction of
the company’s operating costs, there can be no assurance that the
non-deductible federal premium tax and other assessments would not
have a material adverse effect on the company’s results of
operations, financial position, and cash flows.
- Humana’s business activities are
subject to substantial government regulation. New laws or
regulations, or changes in existing laws or regulations or their
manner of application could increase the company’s cost of doing
business and may adversely affect the company’s business,
profitability and cash flows.
- Any failure to manage administrative
costs could hamper Humana’s profitability.
- Any failure by Humana to manage
acquisitions and other significant transactions successfully may
have a material adverse effect on its results of operations,
financial position, and cash flows.
- If Humana fails to develop and maintain
satisfactory relationships with the providers of care to its
members, the company’s business may be adversely affected.
- Humana’s pharmacy business is highly
competitive and subjects it to regulations in addition to those the
company faces with its core health benefits businesses.
- Changes in the prescription drug
industry pricing benchmarks may adversely affect Humana’s financial
performance.
- If Humana does not continue to earn and
retain purchase discounts and volume rebates from pharmaceutical
manufacturers at current levels, Humana’s gross margins may
decline.
- Humana’s ability to obtain funds from
its subsidiaries is restricted by state insurance regulations.
- Downgrades in Humana’s debt ratings,
should they occur, may adversely affect its business, results of
operations, and financial condition.
- Changes in economic conditions could
adversely affect Humana’s business and results of operations.
- The securities and credit markets may
experience volatility and disruption, which may adversely affect
Humana’s business.
- Given the current economic climate,
Humana’s stock and the stock of other companies in the insurance
industry may be increasingly subject to stock price and trading
volume volatility.
In making forward-looking statements, neither Humana nor
Metropolitan are undertaking to address or update them in future
filings or communications regarding their respective business or
results. In light of these risks, uncertainties, and assumptions,
the forward-looking events discussed herein may or may not occur.
There also may be other risks that Humana and Metropolitan are
unable to predict at this time. Any of these risks and
uncertainties may cause actual results to differ materially from
the results discussed in the forward-looking statements.
Humana and Metropolitan advise investors to read the following
documents as filed by the respective companies with the SEC for
further discussion both of the risks they face and their respective
historical performance:
- Form 10-Ks for the year ended December
31, 2011;
- Form 10-Qs for the quarters ended March
31, 2012; June 30, 2012; and September 30, 2012;
- Form 8-Ks filed during 2012.
In addition to the foregoing, Metropolitan investors and others
are cautioned that (i) Metropolitan and Humana may not be able to
complete the proposed transaction on the terms contained in the
merger agreement,, or at all, due to a number of factors, including
but not limited to as a result of the occurrence of any event,
change or other circumstances that could give rise to the
termination of the merger agreement, and Metropolitan will incur
significant fees and expenses regardless of whether the merger is
consummated; (ii) if the merger is not consummated under certain
specified circumstances, Metropolitan may be required to pay Humana
a termination fee plus reimbursement for fees and expenses and
(iii) the consummation of the merger is subject to satisfaction of
the closing conditions to the proposed merger, including approval
of the pending transaction by the shareholders of Metropolitan.
Additional Information about this
Transaction
In connection with the pending transaction with Humana, on
November 26, 2012, Metropolitan filed with the SEC a definitive
proxy statement and commenced the mailing of the definitive proxy
statement to Metropolitan’s shareholders of record as of the record
date of November 16, 2012. METROPOLITAN URGES INVESTORS AND
SECURITY HOLDERS TO READ THE DEFINITIVE PROXY STATEMENT REGARDING
THE PENDING TRANSACTION IN ITS ENTIRETY BECAUSE IT CONTAINS
IMPORTANT INFORMATION. You may obtain a free copy of the proxy
statement and other related documents filed by Metropolitan with
the SEC at the SEC’s website at www.sec.gov. The proxy statement
and the other documents filed by Metropolitan with the SEC may also
be obtained for free by accessing Metropolitan’s website at
www.metropolitanhealthnetworks.com and clicking on the “Investors”
link then clicking on the link for “SEC Filings”.
Copies of the proxy statement and Metropolitan’s other filings
with the SEC can also be obtained, free of charge, by directing a
request to Metropolitan, 777 Yamato Road, Suite 510, Boca Raton,
Florida 33431 Attention: Al Palombo.
Participants in this
Transaction
Metropolitan and its directors, executive officers and certain
other members of management and employees may be deemed to be
participants in the solicitation of proxies from shareholders of
Metropolitan in favor of the pending transaction. Information
regarding the persons who may, under the rules of the SEC, be
considered participants in the solicitation of shareholders in
connection with the pending transaction is set forth in the
definitive proxy statement filed by Metropolitan with the SEC on
November 26, 2012. You can find information about Metropolitan’s
executive officers and directors in its definitive proxy statement
filed with the SEC on May 3, 2012. You can obtain free copies of
these documents by directing a request to Metropolitan, 777 Yamato
Road, Suite 510, Boca Raton, Florida 33431 Attention: Al
Palombo.
About Humana
Humana Inc., headquartered in Louisville, Kentucky, is a leading
health care company that offers a wide range of insurance products
and health and wellness services that incorporate an integrated
approach to lifelong well-being. By leveraging the strengths of its
core businesses, Humana believes it can better explore
opportunities for existing and emerging adjacencies in health care
that can further enhance wellness opportunities for the millions of
people across the nation with whom the company has
relationships.
More information regarding Humana is available to investors via
the Investor Relations page of the company’s web site at
www.humana.com, including copies of:
- Annual reports to stockholders;
- Securities and Exchange Commission
filings;
- Most recent investor conference
presentations;
- Quarterly earnings news releases;
- Replays of most recent earnings release
conference calls;
- Calendar of events (including upcoming
earnings conference call dates and times, as well as planned
interaction with research analysts and institutional
investors);
- Corporate Governance information
About Metropolitan Health Networks,
Inc.
Metropolitan is a growing health care company that provides and
coordinates comprehensive health care services for Medicare
Advantage, Medicaid, and other customers through its primary
care-centric businesses, MetCare of Florida, Inc., Continucare
Corporation, and Symphony Health Partners, Inc. Metropolitan
currently owns and operates 35 medical centers and contracts with a
network of independent primary care practices. To learn more about
Metropolitan Health Networks, Inc., please visit its website at
www.metropolitanhealthnetworks.com.
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