LOUISVILLE, Ky.--(BUSINESS WIRE)--Humana Inc. (NYSE: HUM) announced today it has signed an agreement to acquire SeniorBridge, a New York-based chronic-care provider best known for providing in-home care for seniors. Terms were not disclosed.
Since its founding in 2000, SeniorBridge has been managing complex chronic care for seniors across the U.S. SeniorBridge’s care-management teams of nurse practitioners, nurses, social workers and certified caregivers help seniors maintain and improve their health while remaining in their homes. A typical SeniorBridge patient is 65 or older and has multiple chronic conditions.
“SeniorBridge fills a growing market need and is consistent with Humana’s focus on delivering clinical care for seniors in their homes,” said Michael B. McCallister, Humana’s Chairman and Chief Executive Officer. “Acquiring SeniorBridge will immediately expand Humana’s existing clinical capabilities with the addition of SeniorBridge’s national network of 1,500 care managers. The company does a terrific job of reducing hospital readmissions and emergency-room utilization, all while helping seniors achieve lifelong well-being.”
“We are excited to join the Humana family,” said Eric Rackow, M.D., President and Chief Executive Officer of SeniorBridge. “Both of our companies are dedicated to ensuring the lifelong well-being of seniors. Together, Humana and SeniorBridge can transform how we care for adults with chronic conditions to help them stay safely at home.”
While SeniorBridge’s current focus is private-pay customers, Humana also intends to fully leverage SeniorBridge’s capabilities across Humana’s current health plan membership – especially with Humana’s Medicare members and growing population of members enrolled in Special Needs Plans by seeking the appropriate certification as a Medicare provider.
Professional senior-care services can greatly improve health outcomes, alleviate stress and increase function. When patients with complicated medical, functional and cognitive conditions receive care coordination in the home by specially trained geriatric care managers, hospitalizations and emergency-room admissions can be substantially reduced.
“With SeniorBridge services available for Humana members in the years ahead, Humana will enable more seniors to stay in their homes while spending less for their overall care,” said Paul Kusserow, Humana’s Chief Strategy and Corporate Development Officer. “The acquisition will also increase Humana’s clinical knowledge and strengthen the company’s offerings for members with complex chronic-care needs – expanding the continuum of care options for its sickest members.”
Current demographic trends indicate an increased need for a depth of care-management services available to seniors. As the baby boomer generation ages into Medicare, the 65+ population is expected to grow from more than 40 million today to 55 million by 2020 and 72 million by 2030.* Meanwhile, people are developing more chronic conditions – 73 percent of people who are 65 or older have two or more chronic conditions.**
Through its Humana Cares division, Humana has strong programs in place to provide care management to chronically ill members. SeniorBridge will enable Humana to provide care services directly, particularly to support activities of daily living (i.e. eating, dressing) and instrumental activities of daily living (i.e. housework, money management, grocery shopping). This combination of care management and custodial care services will enhance Humana’s ability to meet the holistic needs of seniors, their families and caregivers.
The acquisition also demonstrates Humana’s commitment to grow its overall Health and Well-Being Services segment, as the company’s in-home-care reach will expand with SeniorBridge joining Humana.
SeniorBridge’s 2011 revenue is projected to be approximately $72 million. The transaction is subject to both state and federal regulatory approvals and is expected to close in the first half of 2012. Humana’s acquisition of SeniorBridge is not expected to have a material impact on Humana’s financial earnings guidance for the year ending December 31, 2012.
* Source: U.S. Commerce Department, Bureau of the Census
** Source: The Robert Wood Johnson Foundation analysis of 2006 Medical Expenditures Survey
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 the company’s SEC filings, a summary of which includes but is not limited to the following:
- Health insurance reform legislation, 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, increasing the company's medical and administrative costs by, among other things, requiring a minimum benefit ratio, lowering the company’s Medicare payment rates and increasing the company’s expenses associated with a non-deductible federal premium tax; 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 is imposed as enacted, and if Humana is unable to adjust its business model to address this new tax, there can be no assurance that the non-deductible federal premium tax would not have a material adverse effect on the company’s results of operations, financial position, and cash flows.
- 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, 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 that is extremely sensitive to 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, or to protect Humana’s proprietary rights to its systems, the company’s business may be materially adversely affected.
- Humana is involved in various legal actions and governmental and internal investigations, including without limitation, an ongoing internal investigation related to certain aspects of its Florida subsidiary operations, the outcome of any of which could result in substantial monetary damages, penalties, fines or other sanctions. Increased litigation or regulatory action and any related negative publicity could increase the company’s cost of doing business.
- Humana’s business activities are subject to substantial government regulation and related audits for compliance, including, among others, existing audits regarding Medicare risk adjustment data. New laws or regulations, or changes in existing laws or regulations or their manner of application, including the methodology that may be used by the government in implementing results of risk adjustment audits, could increase the company’s cost of doing business and may adversely affect the company’s business, profitability and financial condition. In addition, as a government contractor, Humana is exposed to additional risks that may adversely affect the company’s business or the company’s willingness to participate in government health care programs.
- On February 25, 2011, the Department of Defense TRICARE Management Activity, or TMA, awarded the TRICARE South Region contract to Humana. On March 7, 2011, the competing bidder filed a protest of the award with the Government Accountability Office. Also on March 7, 2011, as provided in the Federal Acquisition Regulations, TMA issued a stop work order to Humana in connection with the award. On June 14, 2011, the GAO upheld the award of the contract to Humana and TMA subsequently lifted the stop work order. On June 21, 2011, the competing bidder filed a complaint in the United States Court of Federal Claims objecting to the award of the contract to Humana. On October 14, 2011, the Court upheld the award of the contract to Humana, and the competing bidder has until December 13, 2011, to appeal it in the Court of Appeals for the Federal Circuit. As a result of the award of the TRICARE South Region contract to the company, Humana no longer expects a goodwill impairment to occur during the second half of 2011. Ultimate disposition of the contract award is, however, subject to the resolution of any additional actions the unsuccessful bidder may take.
- 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 home-delivery 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.
- Federal government contracts account for a substantial portion of Humana’s revenue and earnings. A delay by Congress in raising the federal government’s debt ceiling, should it occur, could lead to a reduction, suspension or cancellation of federal government spending that could, in turn, have a material adverse effect on Humana’s business and profitability.
- 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, Humana is not undertaking to address or update them in future filings or communications regarding its 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 the company is 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 advises investors to read the following documents as filed by the company with the SEC for further discussion both of the risks it faces and its historical performance:
- Form 10-K for the year ended December 31, 2010;
- Form 10-Q for the quarters ended March 31, 2011, June 30, 2011, and September 30, 2011;
- Form 8-Ks filed during 2011.
SeniorBridge is a leading national care management company with an 11-year heritage in helping people cope with the challenges of complex chronic illnesses such as congestive heart failure, chronic obstructive pulmonary disease, Parkinson’s disease, and Alzheimer’s disease. The company’s 44 offices and national care management network works with families, physicians, hospitals and health plans to address the total well-being of its clients through a comprehensive process of care assessment, planning, coordination and advocacy. The company is headquartered in New York City and benefits from the support of its advisory board of internationally known experts in geriatrics.
For more information about SeniorBridge, visit www.seniorbridge.com.
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