Universal American acquired by WellCare Health Plans: fairness opinion by MTS Health Partners
Deal terms
Opinion of MTS Health Partners to the target board
Discounted cash flow assumptions
MTS reviewed and analyzed, based on the Company financial projections, the cash flows generated by the Company to determine the present value of the Company's discounted cash flows. Numerical detail of the DCF is not included in the provided sections.
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| Selected Publicly Traded Companies Analysis | Compared the financial and operating performance of the Company with publicly available information concerning other publicly-traded companies and reviewed current and historical market prices of UAM common stock and of securities of such other companies. Companies and multiples not detailed in the provided sections. | — |
| Selected Business Combinations (Precedent Transactions) Analysis | Reviewed and analyzed the proposed financial terms of the merger as compared to the financial terms of certain selected business combinations and the consideration paid in such transactions. Transactions and multiples not detailed in the provided sections. | — |
| Historical Stock Price / Equity Research Review | Reviewed current and historical market prices of UAM common stock and certain publicly available financial analyses and forecasts relating to the Company prepared by equity analysts who report on the Company. | — |
Filing sections provided do not disclose MTS's fee arrangement; MTS was retained as financial advisor to the Board of Directors and its opinion was reviewed and approved by an MTS Securities fairness committee.
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | Year 4 | CAGR |
|---|---|---|---|---|---|
| Revenue | $1.6B | $1.8B | $1.9B | $2.0B | 7.4% |
| Revenue growth | 9.3% | 8.4% | 7.2% | 6.6% | |
| EBITDA | $60.5M | $72.8M | $81.8M | $89.6M | 14.0% |
| EBITDA growth | -26.7% | 20.3% | 12.4% | 9.5% | |
| EBITDA margin | 4% | 4% | 4% | 4% | |
| Implied EV / EBITDA | 12.7x | 10.6x | 9.4x | 8.6x |
Year-1 growth is against LTM at announcement ($1.5B revenue, $82.5M EBITDA); later years are year over year.
Management prepared low case and high case financial forecasts for fiscal years 2016E through 2021P, which were provided to the Board and to MTS; only high case forecasts for 2016E-2017P were shared with WellCare. Low case: total revenue of $1,407.2M in 2016E rising to $2,013.1M in 2021P, with EBITDA of $31.4M in 2016E rising to $89.6M in 2021P and net income of $2.1M rising to $34.4M. High case: total revenue of $1,407.2M in 2016E rising to $2,026.1M in 2021P, with EBITDA of $31.4M rising to $128.9M and net income of $2.1M rising to $58.8M.
Process notes
Other Managed Care fairness opinions
- Apollo Medical Holdings / Network Medical Management 2016
- Aetna / CVS Health 2017 · 12.1x EV/EBITDA
- Health Net / Centene 2015 · 9.3x EV/EBITDA
- Catamaran / United HealthGroup 2015 · 15.2x EV/EBITDA
- Express Scripts Holding / Cigna 2018 · 11.6x EV/EBITDA
- WellCare Health Plans / Centene 2019 · 14.5x EV/EBITDA