HealthEquity-WageWorks Merger

health equity wageworks merger

When a company merges with another one, it is essential to take several factors into consideration. Some of these factors include cash on hand, fees, and the interest rate. These factors can make or break a merger. In this article, we’ll review these key elements and help you decide which merger would be best for your company.

Synergies

The HealthEquity-WageWorks merger has created substantial synergies in both businesses. The combined company will become a single provider of HSAs and CDBs, which will help both companies grow their business. The company will also be able to offer more HSA options, including flexible spending accounts, health reimbursement plans, and commuter accounts. In addition to expanding its offerings, the combination of the two companies will also improve its operational efficiencies. The combined company is expected to generate more than $50 million in annualized savings over the next few years.

The HealthEquity-WageWorks merger has generated an estimated $50 million in annual synergies ahead of expectations, and the companies expect to achieve another $30 million in savings in the next 18 months. The two companies expect to close the deal in the first quarter of 2019, and the two companies have already received approval from the boards of both companies. Shareholders of WageWorks must also approve the merger before the deal closes.

HealthEquity continues to see strong growth in revenues and cash flow, and the combined company is extending its gross margins and expanding its customer base. It also has more accounts moving into investment vehicles, making it uniquely positioned for success in the HSA market. HealthEquity’s long-term growth prospects are based on its ability to position itself as a trusted intermediary in the health savings account market. In addition, the WageWorks acquisition will allow HealthEquity to enter the COBRA market and gain access to a much larger client base.

Cash on hand

The HealthEquity and WageWorks merger will combine both companies’ services in a new organization. The merger would create a larger administrator of employee benefit and consumer-directed health plans in the U.S., but no one knows if the deal will go through yet.

HealthEquity has made an all-cash offer for WageWorks. This represents a 28% premium over WageWorks’ share price. The offer was publicly announced on April 29, 2019. It represents a 28% premium over WageWorks’ volume-weighted average closing price.

The deal will increase HealthEquity’s addressable market and improve its competitive position in the health care industry. The combined company will offer a broader range of consumer-directed benefit products and services, such as health savings accounts and COBRA. In addition, the combined organization will gain access to more health brokers.

The transaction has been approved by the boards of directors of both companies. HealthEquity expects to provide financial guidance prior to closing. The deal is subject to regulatory approvals. However, the companies expect to provide guidance on the transaction’s impact on future earnings and cash flow. HealthEquity has engaged Perella Weinberg Partners LP and Wells Fargo Securities as legal and financial advisers for the transaction.

HealthEquity expects to realize substantial incremental revenue synergies from the merger. It also expects to increase direct distribution to employers and benefits advisors. In addition, it will expand its offerings to include CDBs, HSAs, and commuter accounts. The merger will result in the creation of an end-to-end proprietary platform that will help the company better serve customers and employees.

Fees

The HealthEquity-WageWorks merger will bring the two companies together to offer a broader range of benefits to employers. The companies will combine their HRA and CDB services, providing employers with a comprehensive benefits package. The combined company will also offer health reimbursement plans, flexible spending accounts, and commuter accounts. HealthEquity plans to use its expanded suite of services to help members save for health care and retire comfortably.

The transaction was approved by the boards of directors of both companies and is subject to regulatory approvals. If the transaction is consummated, HealthEquity expects to provide future guidance regarding the financial impact of the combined entity. It is currently engaged with Perella Weinberg Partners LP and Wells Fargo Securities to advise on the transaction. HealthEquity also engaged the services of Evercore and Wilson Sonsina Goodrich & Rosati P. to provide legal and financial advice for the merger.

WageWorks offers pre-tax spending accounts and flexible spending accounts through its subsidiary companies. The company also offers health insurance and dependent care flexible spending accounts. HealthEquity also expects to incur one-time transition fees of between $80-100 million over the next two years. These expenses include costs for IT integration and the unification of the brand.

HealthEquity will be required to pay certain fees to the Lenders. These fees are calculated using a leverage-based pricing grid. The fees may range from 0.20% to 0.40%. The combined company will be able to use the money for general corporate purposes and to finance acquisitions and other investments.

Although HealthEquity is confident that the expectations it has for the merger are reasonable, the actual events and results may differ materially from these estimates. These differences are due to known and unknown risks and uncertainties. The companies’ SEC filings provide information regarding these risks. You should review these documents carefully before making an investment decision.

Interest rate

HealthEquity has approved the merger with WageWorks. The transaction is subject to regulatory approvals and is not contingent on the availability of financing. The companies expect to provide guidance on the financial impact of the merger prior to its closing. Perella Weinberg Partners LP and Wells Fargo Securities are serving as HealthEquity’s legal and financial advisors. For its part, WageWorks has engaged Wilson Sonsina Goodrich & Rosati P. and Evercore to act as its financial advisors.

HealthEquity is required to pay certain fees to Lenders. One of these fees is a commitment fee, based on the average unused amount of the Revolving Credit Facility. The fee ranges between 0.20% and 0.40% and is calculated according to a leverage-based pricing grid.

Another risk factor that HealthEquity faces is low interest rates. Although it has successfully mitigated short-term interest rate fluctuations through the diversification of its deposits across partners and contract terms, long-term interest rate declines can significantly impact custodial revenues. For this reason, it may be necessary to negotiate new agreements with custodial depository providers.

HealthEquity will account for the Merger as a business combination. For financial reporting purposes, HealthEquity will use the acquisition method of accounting, which is based on Accounting Standards Codification Topic 805, Business Combinations. Upon completion of the transaction, the combined company’s total estimated purchase price will be allocated to net assets and liabilities. The valuation is based on information available at the time of the transaction and on reasonable assumptions.

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Author: Yayan

The good news: a healthy lifestyle can help you feel better. Even better, you don’t have to overhaul your entire life overnight. It’s pretty easy to make a couple of small changes that can steer you in the direction of improved well-being.