Health Insurance Innovations (HII) (Nasdaq:HIIQ) announced today
that it completed the acquisition of privately-held, Silicon Valley
based HealthPocket, Inc. for approximately $32 million in cash and
stock.
The transaction is expected to bring significant competitive
advantages, merging HII's industry-leading health plan development,
virtual-administration and agent distribution of affordable health
insurance plans with HealthPocket's powerful big-data-aggregation
technology. HealthPocket analyzes and aggregates the largest
repository (of any kind) of health insurance information and uses
it to power its consumer website, HealthPocket.com.
HealthPocket's game-changing technology, for the first time,
provides free, one-click access for consumers to review on-and
off-exchange individual major medical, Medicare, employer-sponsored
and ancillary health plans, ranked by price, by doctor or hospital
provider, and even by their personal prescription drug needs. This
unbiased, straightforward information empowers consumers to choose
from the largest set of health insurance plans and make informed
health plan decisions. HealthPocket's business model features
selling highly targeted consumer referrals to health insurers and
their agent distributors.
HealthPocket, a healthcare technology company founded in 2012
under the leadership of Bruce Telkamp and Dr. Sheldon Wang, two
former senior executives of eHealth, Inc. offers the only
technology available to provide consumers independent comparisons
and ranking of all health plans available — all in one place and
with an intuitive interface. Its website, HealthPocket.com
aggregates vast amounts of government, non-profit and private data
for the U.S. health insurance, Medicare and Medicaid markets, as
well as healthcare provider, network and cost data.
The HealthPocket Research & Data division is a leading
source of analysis on the current health insurance market and
ongoing market changes following the Affordable Care Act. Its
state-of-the-art reports have gained national press attention,
including the Wall Street Journal, Bloomberg, USA Today,
CNN, Forbes, Kaiser Health News, Huffington Post, and
NPR.
"The incorporation of HealthPocket into Health Insurance
Innovations fits with our growth strategy of continued innovation
of unrivaled products and technology solutions within the insurance
industry to further enhance our competitive advantage," said Mike
Kosloske, CEO of Health Insurance Innovations. "HII has achieved a
track record of rapid year-over-year growth since 2009. This
transaction will significantly increase leads, drive sales and
enable us to more swiftly expand into lucrative market adjacencies
such as the $402B Medicare marketplace, the $35B ACA segment of
individual major medical and the $220B employer-sponsored market,
positioning the combined company for long-term leadership in our
dynamic industry."
"Most Americans overpay for health insurance and the plans they
choose often don't meet their unique needs. We founded HealthPocket
to solve this national problem using new and highly scalable
technology," stated Bruce Telkamp, CEO of HealthPocket. "Having the
resources of HII behind us will allow us to further accelerate our
technology investment and rapid growth in consumer utilization."
Telkamp continued, "Both Sheldon Wang and I have known Mike
Kosloske for over a decade, and we share Mike's deep passion for
bringing much needed innovation to the health insurance
industry."
Strategic Benefits of the Transaction
- Strong Position and Competitive Advantage as Health
Insurance Integrates HIT Mandates of the Affordable Care
Act (ACA) have accelerated consumers' adoption of the online
research and purchase of their health insurance plans. The health
insurance industry is merging with Health Information Technology
(HIT) at an incredible pace. This acquisition elevates HII's strong
position with consumers, insurance brokers and carriers in the new,
big-data-driven marketplace including and beyond current (ACA)
reforms.
- Highly Complementary Businesses With Unparalleled
Consumer Solutions The combined company is strongly
positioned to capitalize on consumers' growing need for reliable
information that is easily understood and access to flexible
insurance coverage options. "Aggregated comparison is what
consumers want. Just look at what Amazon, Kayak, Edmunds and eBay
have done by putting consumers in control and offering a vast
amount of transparent options," said Kosloske. "Our research into
adding this capability to our existing technology stack led us
directly to HealthPocket, which is years ahead of the market. They
know the industry from the inside-out and have built an
unparalleled data and technology foundation that would take years
to recreate. This was a key driver in this acquisition decision.
HealthPocket is an ideal partner for continued growth and achieving
our mission—to empower consumers with the latest technologies to
research, purchase and manage their health insurance."
- Valuable In-House Lead Generation Most health
insurance industry call-center distribution is dependent upon leads
purchased from a few large industry sources. This acquisition will
provide HII and our distribution with an ongoing, owned source of
referrals from consumers who have explicitly asked for a
consultation after having the opportunity to consider all plan
options based on their personal needs. These leads have higher than
average close ratios and will allow HII to capture both lead sales
and manufacturing profits.
- Big Data-Driven Insights to Enter New Markets and
Expand in Others The acquisition of HealthPocket allows
HII expedited entry into the large Medicare, Affordable Care Act
and employer-sponsored insurance plan marketplaces as well as
expanded access to the individual major medical markets.
HealthPocket is expected to generate significant consumer demand
for HII in all of these market segments. "We now have the ability
to gain insights into the market that no individual carrier or
online health insurance marketplace can. No one else has both the
insights and the capability to transact business based on
geography, demographics, psychographics and price points across
multiple types of plans. We've proven that we know how to use those
data points to create products distributors and consumers love—our
top-line growth reflects this," said Kosloske.
- Bolstering a Leadership Team for Strategic
Growth Bruce Telkamp and Sheldon Wang will continue to run
HealthPocket as an independent entity and consumer brand of HII.
Additionally, we are pleased to announce that Telkamp and Wang have
joined the senior leadership team of Heath Insurance Innovations,
as its Chief Operating Officer and Chief Technical Officer
respectively. Telkamp and Wang will also serve in alternate years
on HII's Board of Directors.
Transaction Terms
Pursuant to the Agreement and Plan of Merger executed by the
parties, the aggregate merger consideration paid by HII was
approximately $30.8 million, consisting of ~$20.8 million in cash,
~788,000 shares of HII common stock, and options to purchase
~113,000 shares of HII common stock. As part of the
transaction, HII also repaid HealthPocket's outstanding bank debt
in the amount of ~$1.2 million. More details will be available in
HII's Form 8-K related to this transaction.
Conference Call
HII will host a conference call and webcast on Tuesday July 15th
at 8:30 a.m. Eastern Time. The toll-free dial-in number is
877-312-8797; the toll number is 678-8236; the passcode is
70127701. Please connect at least 15 minutes prior to the call to
ensure adequate time for any software or slide download that may be
required to join the webcast.
The recorded webcast of the conference call will be available at
HII's website investor.hiiquote.com/events.cfm.
About Health Insurance Innovations, Inc.
Headquartered in Tampa, Florida, Health Insurance Innovations,
Inc. creates customizable and affordable, high-quality health
insurance products and supplemental services through partnerships
with best-in-class carriers. We are an industry leader in the sale
of short-term and limited medical insurance plans, which provide an
economical alternative to Individual Major Medical plans. HII
pioneered and engineered its cloud-based technology platform to
provide broker distributors and consumers with real-time health
insurance solutions, allowing them to tailor plans to fit
consumers' budgets and needs in one click. Additional information
about HII can be found at www.hiiquote.com.
About Health Pocket, LLC
Headquartered in Sunnyvale, California, HealthPocket, Inc. is a
technology company that aggregates vast amounts of government,
non-profit and private data to provide unbiased information and
creates powerful tools for consumers to compare and rank health
insurance plans. HealthPocket was co-founded by Bruce Telkamp and
Dr. Sheldon Wang in May 2012, and was backed financially by
Lightspeed Venture Partners and Silicon Valley Bank. For more
information, visit www.healthpocket.com.
Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995. Forward-looking statements are statements other than
historical fact, and may include statements relating to goals,
plans and projections regarding new markets, products, services,
growth strategies, anticipated trends in our business and
anticipated changes and developments in the United States health
insurance system and laws.
Forward-looking statements are based on the Company's current
assumptions, expectations and belief are generally identifiable by
use of words "may," "might," "will," "should," "expects," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential" or
"continue," or similar expressions and involve significant risks
and uncertainties that could cause actual results, developments and
business decisions to differ materially from those contemplated by
these statements. These risks and uncertainties include, among
other things, our ability to maintain relationships and develop new
relationships with health insurance carriers and distributors, our
ability to retain our members, the demand for our products, the
amount of commissions paid to us or changes in health insurance
plan pricing practices, competition, changes and developments in
the United States health insurance system and laws, and HII's
ability to adapt to them, the ability to maintain and enhance our
name recognition, difficulties arising from acquisitions or other
strategic transactions, and our ability to build the necessary
infrastructure and processes to maintain effective controls over
financial reporting. These and other risk factors that could cause
actual results to differ materially from those expressed or implied
in our forward-looking statements are discussed in HII's Annual
Report on Form 10-K for the year ended December 31, 2013 and
subsequent Quarterly Reports on Form 10-Q, all as filed with the
Securities and Exchange Commission as well as other documents that
may be filed by HII from time to time with the Securities and
Exchange Commission.
Any forward-looking statement made by us in this press release
is based only on information currently available to us and speaks
only as of the date on which it is made. You should not rely on any
forward-looking statement as representing our views in the future.
We undertake no obligation to publicly update any forward-looking
statement, whether written or oral, that may be made from time to
time, whether as a result of new information, future developments
or otherwise.
CONTACT: For more information, please contact:
Health Insurance Innovations, Inc.:
Mike Hershberger
Senior VP of Business Development
(877) 376 5831 ext. 313
mhershberger@hiiquote.com
Investor Contact:
Susan Noonan
S.A. Noonan Communications, LLC
(212) 966 3650
susan@sanoonan.com
Media Contact:
Kevin Pchola
Zeno Group
(212) 299-8950
kpchola@zenogroup.com
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