Leading provider of benefit products for part-time and hourly workers
Continues Aetna efforts to expand product offerings, serve new customers
HARTFORD, Conn., August 20, 2004 ― Aetna (NYSE: ΑET) today announced that it has agreed to acquire Strategic Resource Company (SRC), a privately held administrator of group benefit products for part-time and hourly workers, headquartered in Columbia, S.C.
Aetna will acquire 100 percent of the stock of SRC as well as the insurance contracts administered by SRC’s underwriter for approximately $250 million. Aetna will finance the transaction from available cash. The transaction is subject to customary closing conditions, including Hart-Scott-Rodino and other applicable regulatory approvals. Aetna expects to close the transaction during the fourth quarter. Once that occurs, the company expects that this transaction will be accretive to earnings.
Founded in 1976, SRC is one of the largest providers of limited benefits to part-time and hourly workers, currently administering benefits to more than 700 employers in 46 states and the District of Columbia. SRC provides individuals and their families with benefits for many of their most frequent health care expenses. SRC’s customers employ between 4 and 200,000 workers. SRC itself has 320 employees at its Columbia location.
"In keeping with our stated strategy, this acquisition is another targeted, prudent use of Aetna capital. It reflects Aetna’s commitment to enhance the scope of our product and service capabilities, and increases our ability to serve new market segments," said John W. Rowe, M.D., chairman and CEO of Aetna. "We are especially pleased to be acquiring a premier player, which offers affordable benefit plans that provide access to health care to individuals who otherwise would have no insurance coverage at all."
"Similar to our acquisition of Chickering, which serves the student health market, where there is a high percentage of uninsured, we now will be able to offer another segment of the uninsured population -- part-time and hourly employees -- access to affordable health and preventive care," said Tim Brown, senior vice president and head of Aetna’s Middle Market business. Research indicates the uninsured market includes nearly 4 million college and university students and 24 million part-time and hourly workers, the majority of whom do not have any type of employer-sponsored health insurance.
Under terms of the agreement, several of SRC’s senior operations executives and the remaining staff will be retained to continue in similar capacities. The business will report into Brown. Aetna and SRC have established an integration team that will work to ensure solid continuity for customers and employees.
As one of the nation’s leading providers of health care, dental, pharmacy, group life, disability and long-term care benefits, Aetna puts information and helpful resources to work for its approximately 13.4 million medical members, 11.4 million dental members, 8.1 million pharmacy members and 12.6 million group insurance members to help them make better informed decisions about their health care and protect their finances against health-related risks. Aetna provides easy access to cost-effective health care through a nationwide network of more than 633,000 health care professionals, including over 377,000 primary care and specialist doctors and 3,866 hospitals. For more information, please visit www.aetna.com. (Figures as of June 30, 2004)
ADDITIONAL INFORMATION; CAUTIONARY STATEMENT -- Certain information in this press release is forward looking, including, but not limited to, the earnings and other future benefits expected to be derived from this transaction and the expected timing of the closing. 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 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 required regulatory approvals on a timely basis to close the transaction and operate the business); the ability to retain current membership and grow membership in the future; retention of key personnel; unanticipated increases in medical costs (including increased medical utilization, increased pharmacy costs, and increases resulting from unfavorable changes in contracting or re-contracting), and adverse government regulation.