-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, MJLyTB5txPrN6aX0U4vE6/x8QD/30oJgQgRCc8j9/o2PdiWHHzqw5KD6s5OHDFD2 7w1g9FKzaWkONE7cVz/N6w== 0000731766-95-000015.txt : 199507070000731766-95-000015.hdr.sgml : 19950707 ACCESSION NUMBER: 0000731766-95-000015 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950625 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19950706 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED HEALTHCARE CORP CENTRAL INDEX KEY: 0000731766 STANDARD INDUSTRIAL CLASSIFICATION: HOSPITAL & MEDICAL SERVICE PLANS [6324] IRS NUMBER: 411321939 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10864 FILM NUMBER: 95552190 BUSINESS ADDRESS: STREET 1: 300 OPUS CENTER STREET 2: 9900 BREN ROAD EAST CITY: MINNETONKA STATE: MN ZIP: 55343 BUSINESS PHONE: 6129361300 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): June 25, 1995 UNITED HEALTHCARE CORPORATION (Exact name of registrant as specified in charter) MINNESOTA (State or other jurisdiction of incorporation) 0-13253 41-1321939 (Commission File Number) (IRS Employer Identification No.) 300 Opus Center, 9900 Bren Road East, Minnetonka, MN 55343 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (612) 936-1300 Item 5. Other Events On June 26, 1995 United HealthCare Corporation ("Registrant"), announced that it and a wholly owned subsidiary of Registrant ("Acquiror Sub"), executed and delivered an Agreement and Plan of Merger on June 25, 1995, with The MetraHealth Companies, Inc., a Delaware corporation ("MetraHealth"), and certain of its shareholders and their affiliates, The Travelers Insurance Company ("Travelers"), The Travelers Insurance Group, Inc., MetLife HealthCare Holdings, Inc. and Metropolitan Life Insurance Company, a New York mutual life insurance company ("MetLife"), to acquire MetraHealth. Upon the terms and subject to the conditions set forth in the Agreement, Acquiror Sub shall be merged with and into MetraHealth. As a result of the Merger, the separate corporate existence of Acquiror Sub shall cease and MetraHealth shall continue as the surviving corporation of the Merger. MetraHealth, which is privately held, was formed in January 1995 by combining the group health care operations of MetLife and Travelers. MetraHealth covers more than 10 million individuals, including 4.6 million in network-based care programs, approximately 450,000 of whom are health maintenance organization (HMO) members. It provides health-related services to 58,000 companies, including more than 40 of the Fortune 100. In addition, MetraHealth covers approximately 18 million individuals through its specialty care programs. Under the terms of the Agreement, Registrant will pay $1.15 billion in cash and $0.5 billion of 5.75% convertible preferred stock, for a total consideration at closing of $1.65 billion. The convertible preferred stock will be convertible into Registrant's common stock at $49.48, will have a three-year no-call provision, and will have a ten-year mandatory redemption. In addition, the current owners of MetraHealth will be eligible to receive up to an additional $350 million if, based on MetraHealth's 1995 results, as defined, MetraHealth achieves certain operating results. Any consideration payable for this 1995 earnout over and above the initial $1.65 billion may, at Registrant's sole discretion at that time, be in the form of cash, covertible debt, convertible preferred stock, or straight debt. Moreover, if Registrant's post-acquisition combined net income for 1996 and 1997 reaches certain specified levels, MetraHealth's current owners will be eligible to receive up to an additional $175 million in cash for each of those years. The agreement was negotiated at arms-length and the cash portion of the consideration will be paid from Registrant's available cash resources. The anticipated closing date of the acquisition is during Registrant's 1995 fourth quarter. Registrant and MetraHealth issued a joint press release on June 26, 1995, a copy of which is attached hereto as Exhibit 99. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (c) Exhibits Exhibit 99--United HealthCare Corporation and MetraHealth Companies, Inc. press release, dated June 26, 1995. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. UNITED HEALTHCARE CORPORATION (Registrant) By /s/David P. Koppe David P. Koppe Chief Financial Officer Date: July 5, 1995 EXHIBIT INDEX Exhibit Number Description Page No. 99 United HealthCare Corporation and MetraHealth Companies,Inc.press release dated June 26, 1995. 5 EX-99 2 (For Immediate Release) UNITED HEALTHCARE TO ACQUIRE METRAHEALTH FOR $1.65 BILLION Nation's Largest Health Care Management Services Company Will Have Strong Local Focus MINNEAPOLIS, Minn., and McLEAN, Va. (June 26, 1995) --United HealthCare Corporation (NYSE: UNH), of Minneapolis, and The MetraHealth Companies Inc. ("MetraHealth"), of McLean, Virginia, today announced that they have signed a definitive agreement under which United HealthCare will acquire MetraHealth. The transaction will create the nation's largest health care management services company, with annual revenues of more than $8 billion and more than 40 million enrollees in a variety of programs providing health care management products and services. United HealthCare, founded in 1974, is one of the nation's largest, most experienced health care management services companies and a leader in data- driven quality-of-care and accountability initiatives. It has more than 3.7 million owned and managed health plan members and more than 27 million persons covered by various specialty services. MetraHealth, which is privately held, was formed in January 1995 by combining the group health care operations of Metropolitan Life Insurance Company ("MetLife") and The Travelers Insurance Company ("Travelers"). MetraHealth covers more than 10 million individuals, including 4.6 million in network-based care programs --approximately 450,000 of whom are health maintenance organization (HMO) members. It provides health-related services to 58,000 companies, including more than 40 of the Fortune 100. In addition, MetraHealth covers approximately 18 million individuals through its specialty care programs. William W. McGuire, M.D., president, chairman and chief executive officer of United HealthCare Corporation, said: "The most successful health care management companies in the next decade will be those that best address the need for lower costs and better quality of care, flexibility in choice of providers, and greater access to services for a broader spectrum of the American population. Recognizing this, we are creating a unique health care management company, one that will be truly consumer-driven: national in scope and local in focus. The strengths of our existing businesses and platforms for growth, along with our respective assets and capabilities in serving complementary markets, will enhance customer value by providing affordable coverage while offering more choice and greater access across a diverse group of products and markets, including government, Fortune 500 companies and other large employers, mid-size to small businesses, individuals and rural America." Dr. McGuire added that United HealthCare approached MetraHealth this spring as MetraHealth's increasingly strong position -- evidenced by client service and retention, national account revenue, network integration and resultant enhanced value to customers, as well as financial results -- became apparent. "Our two companies complement and strengthen each other in terms of geographic presence, product strengths, distribution channels and core competencies, and both have built outstanding management teams. It was clear early on that MetraHealth could be an outstanding asset to our company." The combined enterprise will provide its existing and new customers with access to a broad range of high-quality, affordable health care products, from integrated network based care--including HMOs, point-of-service (POS), preferred provider organization (PPO) products and others--to diverse indemnity insurance offerings and a broad range of specialty care programs. Under the terms of the proposed acquisition, which will be accounted for as a purchase transaction, United HealthCare will pay $1.15 billion in cash and $0.5 billion of 5.75 percent convertible preferred stock, for a total consideration at closing of $1.65 billion. The convertible preferred stock will be convertible into United HealthCare common stock at $49.48, will have a three-year no-call provision, and will have a ten-year mandatory redemption. In addition, MetraHealth's current owners will be eligible to receive up to an additional $350 million if, based on MetraHealth's 1995 results, as defined, MetraHealth achieves certain operating results. Any consideration payable for this 1995 earnout over and above the initial $1.65 billion may, at United HealthCare's sole discretion at that time, be in the form of cash, convertible debt, convertible preferred stock, or straight debt. Moreover, if United HealthCare's post-acquisition combined net income for 1996 and 1997 reaches certain specified levels, MetraHealth's current owners will be eligible to receive up to an additional $175 million in cash for each of those years. The transaction is expected to be additive to United HealthCare's earnings immediately upon closing. The company also expects to benefit from marketing, operating, medical cost management and administrative synergies. The additive nature of the transaction and the potential for even greater EPS growth are expected to be sustained over the long term as a result of efficiencies to be achieved by combining operations, by leveraging the strengths of the companies' respective capabilities and product lines, and by building in new markets on an existing client base. Dr. McGuire said: "While an increasing number of MetraHealth's non-HMO customers are expected to take advantage of United HealthCare's HMO products, the success of the merger is not dependent on this. The company will provide its expanded customer base with a broad continuum of managed health care products and services, and insurance options that can incorporate managed health care principles and tools. Additionally, the company will focus resources on markets served by MetraHealth where significant growth opportunities exist. We will be careful to focus our efforts on those markets and product areas that offer the greatest future benefit to the company and its clients." Kennett L. Simmons, chairman and chief executive officer of The MetraHealth Companies, said: "MetraHealth brings to the new company many important strengths. We have a nationwide presence, with owned provider networks -- which we have restructured over the past six months-- in 90 metropolitan markets. We also have a major position in serving large corporate customers, a strong leadership position in the small group business segment that is particularly focused on rural markets, and 29 HMO licenses. And we bring a superb management team representing excellent, seasoned talent from Travelers and MetLife as well as external recruits -- the best of all worlds. "By creating this new company, we will be in an even better position to respond proactively to the changing needs of our multi-site customers across the country by offering additional and larger, locally-competitive provider networks and additional managed care products as well as a broad range of indemnity and other insurance products. At the same time, we will enhance the local-market focus and results so critical to our mission." Dr. McGuire said: "We are creating a company with a unique set of products, skills, people and new marketing opportunities--a company singularly positioned for growth and long-term success in a rapidly evolving and competitive business environment. By offering our combined products and services and leveraging the strengths of both companies, we will better serve our customers while creating new avenues for revenue and earnings growth." Key benefits of the transaction include the potential for new business opportunities. First, nearly 2.8 million MetraHealth covered lives now in states where United HealthCare has owned health plans will have access to these plans and other United HealthCare programs. Second, United HealthCare will be well-positioned to serve commercial, Medicare and Medicaid clients in major new markets where it will have a critical mass of network and non-network lives, including New York, Connecticut's Fairfield County, Boston, Phoenix, Los Angeles, San Francisco, Houston, Dallas, Austin, San Antonio, Orlando, Tampa, Cincinnati, Seattle and Denver. Third, building on MetraHealth's expertise and existing programs, United HealthCare will provide very strong national account service and offerings. Fourth, the quality and breadth of the combined specialty programs offered by the two companies will be unsurpassed in the industry, further facilitating the reintegration of health care services for clients now served by multiple "carve-out" suppliers. In short, the new company will greatly increase its ability to compete at all levels of the local and national markets with an optimal, integrated product line and service capability. It is expected that at closing MetraHealth will have a book value of approximately $860 million. United HealthCare plans to amortize the goodwill generated by the transaction over a thirty-year period. Both MetraHealth and United HealthCare are well-capitalized companies, and United HealthCare will remain well-capitalized, with no long-term debt and more than $2.3 billion in total cash when the transaction is completed. Strong positive cash flow is expected from future operations. United HealthCare's current corporate headquarters will remain in Minneapolis. Key MetraHealth locations in Virginia, Connecticut and New York will be retained as well as major-market operation sites. Dr. McGuire will serve as chairman and CEO of the company. Mr. Simmons will, following completion of the transaction, leave management and join the company's board as a director and will serve as chairman of the executive committee of the board. The organization's new senior management team will be formed from existing senior management of both United HealthCare and MetraHealth. "As a former chief executive officer of United HealthCare, I know, and have the highest regard for, both the company and Bill McGuire," Mr. Simmons said. "The senior management team at MetraHealth has been extraordinarily excited about MetraHealth, its recent performance, and its potential for future success. I am even more excited about the competitive potential created by combining MetraHealth and United HealthCare. Under Bill's leadership, the combined organization has an exciting future. I will remain actively involved with the company as a member of United HealthCare's board of directors." Dr. McGuire said: "Ken Simmons has done an outstanding job in launching MetraHealth. He has made great strides in assembling one of the industry's brightest management teams, in moving to strengthen managed care applications for the business, and in streamlining the organization to fit the realities of a competitive health care marketplace. We intend to continue his efforts and would like to welcome MetraHealth employees to join United HealthCare employees as partners in a unique health care enterprise." The transaction is subject to customary federal and numerous state regulatory approvals and other customary closing conditions and is expected to close in the fourth quarter of 1995. (more) Following the completion of the transaction, United HealthCare will be able to offer, under a separate agreement with Metropolitan Life, life and other insurance policies and products from the nation's largest life insurance company along with United HealthCare's own health care products. United HealthCare will also explore opportunities to develop new business by working with MetLife in the area of disability cost management and long- term care and with The Travelers in the area of workers' compensation cost management. "I am particularly excited about these and additional joint opportunities as we move ahead. MetLife and Travelers are leaders in these areas, and their participation with us will tremendously enhance our product offerings," Dr. McGuire said. United HealthCare is a national leader in health care management, serving purchasers, users, managers and providers of health care since 1974. The company's broad range of products is offered through 21 locally-based, owned and managed health plans, whose membership exceeds 3.8 million, and its non-geographically-bounded specialty care management companies, which serve the needs of 27 million-plus lives. The company's offerings include HMOs; PPOs; health plan management; managed mental health and substance abuse services; utilization management; workers' compensation and disability management services; specialized provider networks; employee assistance services; Medicare and managed care programs for the aged; managed Medicaid services; health care evaluation services; information systems; and administrative services. MetraHealth--formed in January 1995 through the combination of the group health care businesses of Metropolitan Life Insurance Co. and The Travelers Insurance Co.--finances, manages and administers health insurance plans and delivers managed health care services for its customers. The company serves millions of Americans with its health care plans and operates in all 50 states. Its managed care networks include 29 HMO licenses, 72 point-of- service networks, and MetraHealth managed PPOs in more than 90 markets nationwide. In addition to its full range of both managed care and indemnity plans, the company offers managed behavioral health, managed pharmacy, data analysis, demand management, managed workers' compensation and third-party administrator (TPA) services. # # # CONTACTS United HealthCare Corporation The MetraHealth Companies Noreen Conway, Vice President Elliot Gerson Public Relations & Communications Executive Vice President 612-936-1125 703-918-4015 Bernard F. McDonagh Virginia Quarti Vice President, Investor Relations Senior Vice President 612-936-7214 203-277-4930 Summary Data MetraHealth Companies Inc. For the three Unaudited Pro Forma months ended Income Statement March 31, 1995 (In millions) Revenues Premiums $ 696 Fees/other income 287 Net investment income 27 -------------- Total Revenues 1,010 Expenses Medical costs 563 Selling, general and administrative 385 -------------- Total Expenses 948 Income before income taxes 62 Income taxes 22 -------------- Net income $ 40 -------------- -------------- Unaudited Pro Forma Summary Balance Sheet Data March 31, 1995 (In millions) Total investments $1,981 -------------- -------------- Total assets $2,579 -------------- -------------- Total liabilities $1,797 -------------- -------------- Total shareholders'equity $ 782 -------------- -------------- Membership Data by Product March 31, 1995 HMO Commercial 447,000 Medicaid 2,000 -------------- Total HMO 449,000 POS 1,894,000 PPO 2,548,000 -------------- Total network based products 4,891,000 Indemnity 5,250,000 TPA 533,000 -------------- Total 10,674,000 -------------- -------------- Membership Data by Funding Arrangement/Segment March 31, 1995 Insured: HMO 413,000 POS 243,000 PPO 865,000 Indemnity 783,000 -------------- Total insured 2,304,000 Self-funded-ASO: HMO 36,000 POS 1,651,000 PPO 1,563,000 Indemnity 4,467,000 TPA 653,000 -------------- Total Self-funded-ASO 8,370,000 -------------- Total 10,674,000 -------------- -------------- -----END PRIVACY-ENHANCED MESSAGE-----