United Payors accepts buyout by BCE Emergis

Montreal firm to pay $580 million for Rockville company

Managers, workers to stay

Managed care

February 08, 2000|By M. William Salganik | M. William Salganik,SUN STAFF

United Payors & United Providers Inc., the Rockville managed-care middleman, announced yesterday that it had agreed to be acquired by BCE Emergis of Montreal for $580 million cash, or $27 a share.

The announcement pushed shares of UP&UP up $5.0625 to $25.5625, a jump of 19.8 percent.

UP&UP has grown rapidly since it was founded in 1995 and went public in 1996 -- from less than a dozen employees to about 650 and from $35.2 million in revenue in 1996 to $108.7 million in 1999. The company offers a variety of services to health insurers and self-insured employers (the payers) and to doctors and hospitals (the providers).

Its core business has been assembling networks of doctors and hospitals who agree to offer, in effect, volume discounts, while bringing together enough small and medium-size insurers to generate that volume. It also provides claim-processing and other services.

Thomas L. Blair, chairman and chief executive officer of UP&UP, said he welcomed the acquisition because the price provided "a nice premium over trading value" and BCE Emergis offers "an excellent technology our payer clients will embrace."

BCE Emergis, an Internet commerce company, plans to keep UP&UP management and employees in place, said Anne Belliveau, general manager for public affairs and communications. About 450 of UP&UP's employees are in Rockville, Blair said.

The Canadian firm, Belliveau said, sees UP&UP as "opening a door for us in the U.S market," and fitting with its strategic plan of developing e-commerce in the areas of health, financial services, telecommunications and transportation. The transaction is expected to close in the second quarter.

Adam Bergman, a health care analyst with the Norfolk, Va., office of Scott and Stringfellow, said the $27-a-share deal was "great in the short-term for [UP&UP] stockholders who saw the stock languishing in the teens."

Also yesterday, UP&UP posted earnings of $7.1 million, or 36 cents a share, for the quarter that ended Dec. 31.

That beat analysts' consensus estimates by a penny and was an increase of 34 percent over the comparable quarter of 1998.

Revenue for the quarter was $29.5 million, up 40 percent from the year-earlier period.

For the year, earnings were $25.9 million, up 32 percent, or $1.36 a share. Revenue was $108.7 million, up 39 percent.

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