Aetna To Acquire PayFlex
PayFlex provides proprietary web-based benefit administration services and solutions for customers with consumer-based products
Acquisition will significantly strengthen Aetna’s existing Consumer Fund Services business
HARTFORD, Conn., — Aetna (NYSE: AET) today announced that it has entered into an agreement to acquire PayFlex Holdings, Inc., one of the nation’s largest independent account-based health plan administrators, with approximately 1 million accounts and approximately 3,300 direct employer customers.
The purchase price is approximately $202 million. Aetna expects to finance the acquisition with available resources. The transaction is subject to customary closing conditions, including Hart-Scott-Rodino antitrust regulatory approval. The transaction is expected to close in the second half of 2011 and to be neutral to Aetna’s financial results in 2011 and 2012.
“This acquisition fits well with Aetna’s core business, which has a strong focus on consumer-directed product offerings,” said Mark T. Bertolini, chairman, CEO and president. “With an increased focus on consumerism, the acquisition of PayFlex will extend Aetna’s ability to provide members with flexible, customized, easy-to-use tools and solutions to better manage their health care expenses.”
Joseph M. Zubretsky, senior executive vice president and CFO, added, “This acquisition will significantly strengthen Aetna’s existing Consumer Fund Services (CFS) business and we believe it offers potentially attractive returns over time. Clearly, changes resulting from health care reform are on the horizon, such as health care exchanges requiring account-based health plans and tax-advantaged accounts.”
PayFlex provides proprietary web-based benefit administration services and solutions for plan sponsors who offer consumer-based products such as Health Savings Accounts (HSAs), Health Reimbursement Accounts (HRAs) and Flexible Spending Accounts (FSAs), and also provides COBRA direct-billing services. Its key features include:
*An integrated financial and wellness consumer portal called HealthHub;
*A fully integrated consumer-based product technology platform;
*Real-time authorization of qualified medical expenses; and
*Preferred debit card relationship with more than 600,000 active participants.
Founded in 1987, PayFlex is located in Omaha, NE, with offices in Chicago, Denver, Shelton, CT, Bethesda and Hagerstown, MD. The company has approximately 423 employees.
“We are all excited to join the Aetna team,” said Robert L. Natt, chief executive officer of PayFlex. “We firmly believe our proprietary HealthHub technology platform will be a great addition to the Aetna portfolio of products and will create unique market advantages for our existing and future potential customers.”
PayFlex’s management team and employee base are an important part of the company’s current success in the marketplace and will remain with the company going forward. Aetna expects to combine PayFlex and its existing CFS business into a single unit with approximately 2 million accounts. The combination of these businesses will allow PayFlex to continue to sell its products on a standalone basis as well as on an integrated basis with Aetna products. Importantly, the combined business will be able to offer a comprehensive solution on a single platform.
Aetna is one of the nation’s leading diversified health care benefits companies, serving approximately 33.8 million people with information and resources to help them make better informed decisions about their health care. Aetna offers a broad range of traditional, voluntary and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, group life and disability plans, and medical management capabilities and health care management services for Medicaid plans. Our customers include employer groups, individuals, college students, part-time and hourly workers, health plans, governmental units, government-sponsored plans, labor groups and expatriates. For more information, see www.aetna.com.
CAUTIONARY STATEMENT – Certain information in this press release is forward-looking, including but not limited to, the projected impact of the transaction on Aetna’s Consumer Funds Services business, the projected timing of the closing of the transaction, the projected impact of the transaction on Aetna’s 2011 and 2012 financial results, and the projected returns from the transaction. Forward-looking information is based on management’s estimates, assumptions and projections, and is subject to significant uncertainties and other factors, many of which are beyond Aetna’s and PayFlex’s control. Important risk factors could cause actual future results and other future events to differ materially from those currently estimated by management. Those risk factors include, but are not limited to: the ability to successfully develop and integrate the business operations described herein in a timely and cost-efficient manner (including obtaining the required regulatory approvals on a timely basis to close the transaction); the ability to realize projected revenue; the ability to retain PayFlex’s current customers and provider networks and the ability to grow PayFlex’s customer base and provider networks in the future; retention of key personnel of PayFlex; intellectual property disputes or claims or other litigation; and adverse government regulation or review or enhanced government enforcement.
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