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8-K - FORM 8-K - HealthSpring, Inc. | g28128e8vk.htm |
Exhibit
99.1
Contacts:
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Ted Detrick, Investor Relations (215) 761-1414, Edwin.Detrick@cigna.com | |
Mariann Caprino, Media Relations (860) 226-7251, Mariann.Caprino@cigna.com | ||
Karey L. Witty, EVP & CFO (615) 236-6197, karey.witty@healthspring.com |
CIGNA TO ACQUIRE HEALTHSPRING
| Cigna Adds Industry Leading Medicare Solution to Its Global Portfolio | ||
| Combination Highly Aligned with Expanded Consumer Strategy in a High Growth Segment | ||
| Leverages Shared Commitment to Innovation and Clinical Excellence | ||
| Customers Continue to Benefit from Best-in-Class Physician Engagement and Access a Broader Portfolio of Services | ||
| Accretive to Earnings and Improves Long Term Growth Profile for Cigna Shareholders |
BLOOMFIELD, CT and NASHVILLE, TN, October 24, 2011 Cigna Corporation (NYSE: CI) and
HealthSpring, Inc. (NYSE:HS) today announced that they have signed a definitive agreement under
which Cigna will acquire all the outstanding shares of HealthSpring for $55 per share in cash, a
37% premium over the closing stock price on Friday October 21, 2011, representing a total
transaction value of approximately $3.8 billion. HealthSprings proven leadership team, headed by
its Chairman and Chief Executive Officer Herb Fritch, will lead Cignas expansion in our rapidly
growing Seniors and Medicare segments. The business combination is expected to be accretive to
Cigna earnings per share in the first full year of operations. The agreement has been approved by
the boards of directors of both companies and is subject to required regulatory approvals and
customary closing conditions. The transaction is expected to close during the first half of 2012
and is not subject to a financing condition.
HealthSpring is a great fit with Cignas growth plans to expand into the Seniors and Medicare
segment through a premier business and trusted brand name, said David M. Cordani, President and
Chief Executive Officer. Our two companies share a common strategic vision and philosophy that we
create customer value by partnering with health care professionals, and use information and
incentives to deliver high-quality, differentiated programs.
We are thrilled to announce this transaction with Cigna, said Herb Fritch. Following a review
undertaken by our Board of Directors of the companys strategic options, we concluded that the
combination is in the best interests of our shareholders. The combination will also expand our
ability to serve our physician partners and customers. Cigna
recognizes the value in HealthSprings
differentiated model of physician engagement, and shares our commitment to
providing high quality, cost effective care to the members and communities we serve. We truly look
forward to continuing and expanding upon this mission.
The combination provides Cigna with several significant opportunities to further expand upon its
successful growth strategy:
| Scaled presence in the highly-attractive Seniors segment, with a highly differentiated Medicare Advantage business that currently has approximately 340,000 Medicare Advantage members in 11 states and Washington, D.C., as well as a large, national stand-alone Medicare prescription drug business with over 800,000 customers; | ||
| One of the most trusted and well-respected brands offering Seniors quality care through its highly differentiated physician partnerships; | ||
| Future growth opportunities to expand HealthSprings customer base by leveraging Cignas current client relationships and to further the expansion of HealthSpring into new geographic regions, leveraging Cignas nationwide presence, customer base and distribution capabilities; | ||
| Ability to offer Cignas current commercial and individual customers the opportunity to experience HealthSprings differentiated physician coordination model; and | ||
| Further leverage Cignas diverse portfolio of specialty programs for the benefit of HealthSprings customers. |
HealthSprings talented team, led by Herb and his senior leadership team, have built an
innovative business, and a strong reputation for service excellence, while effectively partnering
with health care professionals to deliver differentiated value and quality to the individuals they
serve, continued David M. Cordani. By combining our businesses, we have an opportunity to
create substantial value for our customers, shareholders, employees and other key stakeholders as
we extend our health solutions and programs across the government, employer-sponsored and consumer
segments.
Consistent with its strategy, Cigna expects to continue to create meaningful near-term earnings
growth and expects this transaction to enhance its revenue growth and profitability over time.
Cigna has obtained a commitment for bridge financing provided by Morgan Stanley that, combined
with available liquidity, is sufficient to fund the acquisition. Cigna intends to raise
approximately 20% of the purchase price through the issuance of new equity, with the balance
funded from additional debt issuance and internal cash resources. This permanent financing
structure is expected to enable Cigna to maintain its financial flexibility, a strong balance
sheet and its current credit ratings.
Cigna noted that it is filing this morning a Form 8-K that will outline its increased outlook for
its 2011 full year results, as well as detailing certain third quarter information ahead of its
full earnings announcement scheduled for October 28, 2011.
Cignas financial adviser is Morgan Stanley and its legal adviser is Davis Polk. Goldman, Sachs &
Co. is acting as financial adviser to HealthSpring, and its legal advisers are Skadden, Arps,
Slate, Meagher & Flom, LLP and Bass, Berry & Sims PLC.
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Conference Call
Cigna will be hosting a conference call this morning, beginning at 8:45 a.m. ET to discuss the
acquisition of HealthSpring. The call-in numbers for the conference call are as follows:
Live Call
(877) 419-6600 (Domestic)
(719) 325-4759 (International)
Passcode: 3305644
(877) 419-6600 (Domestic)
(719) 325-4759 (International)
Passcode: 3305644
Replay
(888) 203-1112 (Domestic)
(719) 457-0820 (International)
Passcode: 3305644
(888) 203-1112 (Domestic)
(719) 457-0820 (International)
Passcode: 3305644
It is strongly suggested you dial in to the conference call by 8:30 a.m. ET. The operator will
periodically provide instructions regarding the call. Additionally, the conference call will be
available on a live Internet web cast at http://www.cigna.com under Investors, Investor Events
section or at http:// http://www.media-server.com/m/p/w27n7p9m. Please note that this feature will
be in listen-only mode.
About Cigna
Cigna is a global health service company dedicated to helping people improve their health,
well-being and sense of security. Cigna Corporations operating subsidiaries in the United States
provide an integrated suite of health services, such as medical, dental, behavioral health,
pharmacy and vision care benefits, as well as group life, accident and disability insurance. Cigna
maintains sales capability in 30 countries and jurisdictions and has approximately 66 million
customer relationships throughout the world. All products and services are provided exclusively by
such operating subsidiaries and not by Cigna Corporation. Such operating subsidiaries include Cigna
Health and Life Insurance Company, Cigna Life Insurance Company of New York, Connecticut General
Life Insurance Company and Life Insurance Company of North America.
About HealthSpring
HealthSpring is based in Nashville, Tennessee, and is one of the countrys largest Medicare
Advantage coordinated care plans. HealthSpring currently owns and operates Medicare Advantage plans
in Alabama, Delaware, Florida, Georgia, Illinois, Maryland, Mississippi, New Jersey, Pennsylvania,
Tennessee, Texas and Washington, D.C. Beginning in 2012, the Company will also operate Medicare
Advantage plans in West Virginia. HealthSpring also offers a national stand-alone Medicare
prescription drug plan. For more information, visit http://www.healthspring.com/.
CIGNAS CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
Cigna Corporation and its subsidiaries (the Company) and its representatives may from time to
time make written and oral forward-looking statements, including statements contained in press
releases, in the Companys filings with the Securities and Exchange Commission, in its reports to
shareholders and in meetings with analysts and investors. Forward-looking statements may contain
information about financial prospects, economic conditions, trends and other uncertainties. These
forward-looking statements are based on managements beliefs and assumptions and on information
available to management at the time the statements are or were made. Forward-looking statements
include but are not limited to the information concerning possible or assumed future business
strategies, financing plans, competitive position, potential growth opportunities, potential
operating performance improvements, trends and, in particular, the Companys strategic initiatives,
litigation and other legal matters, operational improvement initiatives in its Health Care
operations, and the outlook for the Companys full year 2011 and beyond
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results. Forward-looking statements include all statements that are not historical facts and can
be identified by the use of forward-looking terminology such as the words believe, expect,
plan, intend, anticipate, estimate, predict, potential, may, should or similar
expressions.
By their nature, forward-looking statements: (i) speak only as of the date they are made, (ii) are
not guarantees of future performance or results and (iii) are subject to risks, uncertainties and
assumptions that are difficult to predict or quantify. Therefore, actual results could differ
materially and adversely from those forward-looking statements as a result of a variety of factors.
Some factors that could cause actual results to differ materially from the forward-looking
statements include:
1. | the ability of the parties to satisfy conditions to the closing of the transaction with HealthSpring, including obtaining required regulatory approvals and the approval of HealthSpring stockholders; | |
2. | the possibility that HealthSpring may be adversely affected by economic, business and/or competitive factors before or after closing of the transaction; | |
3. | the ability to successfully complete the integration of acquired businesses, including the businesses being acquired from HealthSpring by, among other things, operating Medicare Advantage coordinated care plans and HealthSprings prescription drug plan, retaining and growing membership, realizing revenue, expense and other synergies, renewing contracts on competitive terms, successfully leveraging the information technology platform of the acquired businesses, and retaining key personnel; | |
4. | the ability of the Company to execute its growth plans by successfully leveraging its capabilities and those of the businesses being acquired in serving the Seniors segment; | |
5. | any adverse effect to the Companys business or the business being acquired from HealthSpring due to uncertainty relating to the transaction; and | |
6. | the Companys plans to permanently finance the acquisition with internal cash resources and through issuance of new equity; and additional debt that would remain outstanding even if the transaction was ultimately not completed. |
This list of important factors is not intended to be exhaustive. Other sections of the Companys
most recent Annual Report on Form 10-K, including the Risk Factors section, the Quarterly Reports
on Form 10-Q for the quarters ended March 31, 2011 and June 30, 2011, and other documents filed
with the Securities and Exchange Commission include both expanded discussion of these factors and
additional risk factors and uncertainties that could preclude the Company from realizing the
forward-looking statements. The Company does not assume any obligation to update any
forward-looking statements, whether as a result of new information, future events or otherwise,
except as required by law.
Additional Information and Where to Find It
This communication is being made in respect of the proposed transaction involving HealthSpring and
Cigna. The proposed transaction will be submitted to the stockholders of HealthSpring for their
consideration. In connection with the proposed transaction, HealthSpring will prepare a proxy
statement to be filed with the Securities and Exchange Commission (the SEC). HealthSpring and
Cigna plan to file with the SEC other documents regarding the proposed transaction. STOCKHOLDERS
OF HEALTHSPRING ARE URGED TO READ THE PROXY STATEMENT REGARDING THE PROPOSED TRANSACTION AND ANY
OTHER RELEVANT DOCUMENTS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The final proxy statement will
be mailed to HealthSprings stockholders. You may obtain copies of all documents filed with the
SEC concerning the proposed transaction, free of charge, at the SECs website at www.sec.gov. In
addition, stockholders may obtain free copies of the documents filed with the SEC by HealthSpring
by going to the Companys Investor Relations website page at www.healthspring.com or by sending a
written request to the Companys Secretary at HealthSpring, Inc., 9009 Carothers Parkway, Suite
501, Franklin, Tennessee 37067, or by calling the Secretary at (615) 291-7000.
Interests of Participants
HealthSpring and its directors and executive officers may be deemed to be participants in the
solicitation of proxies from the stockholders of the Company in connection with the proposed
transaction. Information regarding the Companys directors and executive officers is set forth in
the Companys proxy statement for its 2011 annual meeting of stockholders and its Annual Report on
Form 10-K for the fiscal year ended December 31, 2010, as amended by Amendment No. 1 on Form
10-K/A, which were filed with the SEC on April 15, 2011, February 25, 2011 and September 22, 2011,
respectively. Additional information
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regarding persons who may be deemed to be participants in the
solicitation of proxies in respect of the proposed transaction will be contained in the proxy
statement to be filed by the Company with the SEC when it becomes available.
HealthSprings Cautionary Statement Regarding Forward-Looking Statements
Statements contained in this communication that are not historical fact are forward-looking
statements which HealthSpring intends to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.
Statements that are predictive in nature, that depend on or relate to future events or conditions,
or that include words such as anticipates, believes, could, estimates, expects,
intends, may, plans, potential, predicts, projects, should, will, would, and
similar expressions are forward-looking statements. The forward-looking statements involve
significant known and unknown risks, uncertainties and other factors that could cause actual
results to differ materially from those expressed in or implied by the forward-looking statements,
and undue reliance should not be placed on such statements. Important factors that could cause
actual results to differ materially from those in the forward-looking statements include, among
other things, the following risks and uncertainties: the failure to receive, on a timely basis or
otherwise, the required approvals by HealthSprings stockholders and government or regulatory
agencies; the risk that a condition to closing of the proposed transaction may not be satisfied;
HealthSprings and Cignas ability to consummate the Merger, including the financing thereof; the
possibility that the anticipated benefits and synergies from the proposed transaction cannot be
fully realized or may take longer to realize than expected; the failure to obtain the necessary
debt financing arrangements set forth in the commitment letter received in connection with the
Merger; the possibility that costs or difficulties related to the integration of the Company and
Cigna operations will be greater than expected; operating costs and business disruption, including
difficulties in maintaining relationships, may be greater than expected; the ability of the Company
or the combined company to retain and hire key personnel and maintain relationships with providers
or other business partners; the impact of legislative, regulatory and competitive changes and other
risk factors relating to the industry in which the Company and Cigna operate, as detailed from time
to time in each of the Companys and Cignas reports filed with the SEC. There can be no assurance
that the proposed transaction will in fact be consummated.
Additional information about these factors and about the material factors or assumptions underlying
such forward-looking statements may be found under Item 1.A in of HealthSprings Annual Report on
Form 10-K for the fiscal year ended December 31, 2010, and Item 1.A of HealthSprings most recent
Quarterly Report on Form 10-Q for the quarter ended June 30, 2011. HealthSpring cautions that the
foregoing list of important factors that may affect future results is not exhaustive. When relying
on forward-looking statements to make decisions with respect to the proposed transaction,
stockholders and others should carefully consider the foregoing factors and other uncertainties and
potential events. All subsequent written and oral forward-looking statements concerning the
proposed transaction or other matters attributable to HealthSpring or any other person acting on
its behalf are expressly qualified in their entirety by the cautionary statements referenced above.
The forward-looking statements contained herein speak only as of the date of this communication.
HealthSpring does not undertake any obligation to update or revise any forward-looking statements
for any reason, even if new information becomes available or other events occur in the future,
except as may be required by law.
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