WAYNE, PA – The way David St. Clair sees it, MEDecision’s merger agreement with the Health Care Service Corporation, announced in June, couldn’t have come at a better time.
The Wayne, Pa.-based provider of healthcare management services had taken a beating on the stock market over the past two years, and St Clair, the company’s founder and CEO, was steadfastly maintaining that the company was being “woefully undervalued.” The stock, which sold for $10 a share when the company went public in 2006, had been selling for between $1 and $2 a share.
“The pressures on public companies to meet or exceed expectations are very difficult,” said St Clair, who assumed some of the blame for setting those high expectations. He said the company’s contracts, particularly with health plans like Blue Cross and Blue Shield, aren’t negotiated with stock prices or quarterly reports in mind.
“None of that … allows for the company to be predictable,” he said.
In April, MEDecision signed a contract with Blue Cross and Blue Shield of Florida to deliver its Alineo collaborative healthcare management platform. The integration, expected to continue into 2009, will allow BCBSF members to analyze, apply and automate payer-driven best practices. That deal, St. Clair said, illustrated industry support for the company regardless of its stock price.
That was followed up with the HCSC announcement.
The deal allows the Chicago-based Health Care Service Corporation, one of MEDecision’s biggest customers, to acquire all outstanding MEDecision shares for $7 per share in cash, a transaction valued at approximately $121 million. HCSC, which operates Blue Cross and Blue Shield plans in Illinois, New Mexico, Oklahoma and Texas, is the largest customer-owned health insurer in the United States and fourth largest health insurer in the country overall, with an estimated 12.4 million members.
St Clair said the deal gives MEDecision the needed capital to market and expand its two solutions, Alineo and Nexalign. Most important, he said, is the development of reimbursement methodology to drive healthcare providers further into the healthcare IT mainstream, empowering doctors and improving chronic care management and clinical outcomes.
“We clearly now have access to capital that will allow us to develop new features and functions,” he said. “We now have the ability to explore.”
HCSC officials also feel the merger will be beneficial.
“HCSC is committed to promoting accessible, cost-effective, quality healthcare through innovation and collaboration,” said Pat Hemingway Hall, the company’s president and chief operating officer. “We are excited about joining forces with MEDecision, who for two decades has demonstrated the same commitment to improving overall health outcomes with creative solutions that foster collaborative relationships between patients, payers and providers.”
That attitude has been reflected in MEDecision’s stock price, which soared more than 200 percent following news of the merger and now stands roughly $6.60 a share.