Your Healthy Living Health Equity HealthEquity’s Acquisition of Health Equity WageWorks

HealthEquity’s Acquisition of Health Equity WageWorks

health equity wageworks

HealthEquity has made an offer to acquire WageWorks. What is the deal’s potential for synergies? And, what are the terms of the acquisition? These are just a few of the questions that will be addressed in this article. It also explains why the deal is attractive for both companies.

HealthEquity’s offer to acquire WageWorks

HealthEquity has submitted an offer to acquire WageWorks, an online health workforce management software company. The proposed transaction has the support of the boards of directors of both companies. The proposed transaction is subject to regulatory approvals, but the availability of financing is not an issue. HealthEquity expects to provide guidance on the financial implications of the transaction shortly before it closes. HealthEquity has retained Perella Weinberg Partners LP as legal counsel, and Wells Fargo Securities as financial advisor. The companies intend to engage in discussions with WageWorks’ management teams, but cannot guarantee that a final deal will be reached.

The deal is subject to shareholder approval and the approval of the boards of both companies. The acquisition is expected to close by the end of the year. The combined firm expects to incur one-time expenses of $80-100 million over the next two-to-three years for integration fees. This includes costs related to unifying the brand and IT integration.

The combined company will have access to a more diverse client base, including health brokers and pre-tax spending accounts. This will broaden HealthEquity’s addressable market and add to its strong growth momentum. It is also expected to benefit from the secular growth of the HSA industry, as WageWorks has a complementary product offering.

HealthEquity expects to realize significant incremental revenue synergies through this acquisition. Its plans to become the largest HSA provider will allow the company to provide a more comprehensive suite of products and services to employers. It will also be able to cross-sell services to existing customers.

WageWorks employees are eligible for a comprehensive benefits package that includes discounted parking and transit passes. It also offers its employees the option to purchase public transit passes online and have them mailed to their home address. These benefits are available for full-time and part-time employees, but full-time faculty members are not eligible.

Terms of the acquisition

The health care company HealthEquity has approved the terms of the acquisition of WageWorks. The transaction is subject to regulatory approvals and closing conditions. The two companies expect to close the deal by the end of this year. The deal is expected to generate annual synergies of $50 million. The companies also expect to realize future financial benefits from the transaction. HealthEquity expects the transaction to add value to its shareholders.

HealthEquity is required to make certain payments to the Lenders. These include a quarterly commitment fee based on the average unused portion of its Revolving Credit Facility. This fee varies from 0.20% to 0.40% and is determined using a leverage-based pricing grid.

The combined company will provide a complete health care benefit solution for employers. HealthEquity’s product line includes health reimbursement plans, flexible spending accounts, COBRA administration, and commuter accounts. The combined company will also provide health insurance and other benefits to individuals and their families. Its goal is to enhance the health care experience of individuals and employers, while increasing its market share in HSAs.

However, the acquisition has several risks and uncertainties associated with it. These risks and uncertainties may make it difficult for HealthEquity to successfully integrate the WageWorks operations into its own. The company may also have difficulty retaining key employees. It may also face challenges in servicing its debt associated with the acquisition.

The deal also includes a credit facility with a five-year term. Its principal amount is $350 million, with a $25 million sublimit for letters of credit. The proceeds from the Revolving Credit Facility may be used to fund working capital, acquisitions, or other investments.

HealthEquity has also been considering the acquisition of WageWorks, a health savings account administrator that specializes in complementary consumer-directed benefits. WageWorks offers flexible spending accounts, health reimbursement arrangements, COBRA benefits, and commuter benefits for employees. The combination of the two companies will create a larger health and retirement benefits administration organization. HealthEquity also has a new CEO, who helped to launch WageWorks in the first place.

Potential synergy opportunities

Potential synergy opportunities with health equity wagesworks have been identified. As a result, HealthEquity expects to achieve $50 million in annualized synergies within 24 to 36 months of closing. These synergies are expected to come from operational efficiencies and incremental revenue over time. Further, HealthEquity has received a debt commitment from Wells Fargo Bank.

HealthEquity earns revenue through service fees from health plans and subscription revenue from employers. Additionally, it provides investment advisory services through its registered investment advisor subsidiary. These revenue streams are predictable and robust. The company believes it has a favorable strategic fit with WageWorks and is prepared to engage in further discussions.

HealthEquity has expanded its direct distribution to health benefits advisors and employers. With this expansion, the company hopes to become the single source provider for HSAs and CDBs. It will also offer flexible spending accounts, COBRA administration, commuter accounts, and other products to help consumers save for healthcare.

HealthEquity has a growing client base. Nearly 115,000 employers use its products and services, and 2/3 of its clients are Fortune 100 companies. The company expects its revenues to double or triple within five years, thanks to increased demand for its products. Further, the company expects the number of HSA accounts to rise as well.


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.