Health insurer Universal American Corp. will acquire health care software and services provider APS Healthcare Inc., for about $227.5 million, to diversify into Medicaid programs.
According to the deal, Universal American will pay $147.5 million in cash and $80 million in common stock and make further payments of up to $50 million to APS Healthcare in March, 2014, on achieving certain milestones.
The deal, which is expected to be agreed upon within the next sixty days, will add to Universal's earnings in 2012, the company has said.
Privately-held APS Healthcare caters to Medicaid agencies, health plans, employers and labor trust groups. It serves about 30 government programs covering over 17 million members.
"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," the Chief Executive Officer of Universal American Corp. said in a statement.
The health insurer, which sold its Medicare prescription drug business to CVS Caremark in 2010, said it has entered into a commitment letter with Bank of America Merrill Lynch, for a fully underwritten $150 million term loan to repay APS's Healthcare's outstanding indebtedness.