NeueHealth Announces Merger Agreement with NEA for Acquisition

NeueHealth's Transition to Private Ownership

NeueHealth, Inc. (NYSE: NEUE), a prominent value-driven healthcare company, has recently reported a significant milestone in its corporate journey. The company has confirmed that it will be acquired by an affiliate of New Enterprise Associates (NEA) at an impressive enterprise value estimated at $1.3 billion. Once this transaction finalizes, NeueHealth will be transformed into a privately held company, allowing it the necessary flexibility to enhance its value-driven, consumer-centric healthcare model.

Details of the Merger Agreement

The terms outlined in the merger agreement indicate that shareholders of NeueHealth will receive $7.33 per share in cash. This figure marks a notable premium, approximately 70%, over the company’s closing stock price from a date earlier this year. Notably, a number of current investors in NeueHealth, including NEA, have opted to continue their financial involvement through rollover agreements, thereby exchanging their shares for newly issued equity in the private entity. It's also important to note that the company's existing secured loan agreement with Hercules Capital, Inc. will remain intact following the acquisition.

Leadership Continuity Post-Acquisition

After the transaction's completion, the current executive leadership team of NeueHealth will retain their positions. They have expressed intentions to roll over 100% of their equity interests into the newly established private company, ensuring a continuity of vision and operational strategies moving forward.

Executive Insights on the Merger

Mike Mikan, the President and CEO of NeueHealth, conveyed his optimistic view regarding this merger, emphasizing its potential to bolster the company's growth trajectory while also safeguarding the interests of public stockholders. He acknowledged NEA as a key strategic partner, which underscores their confidence in the future of NeueHealth as a leader in the value-based care sector.

In alignment with Mikan's sentiments, Mohamad Makhzoumi, Co-CEO of NEA, expressed a strong belief in NeueHealth's distinctive care model. He noted how this model is poised to deliver exceptional value for all stakeholders involved—consumers, providers, and payors alike. Makhzoumi highlighted their longstanding partnership with NeueHealth, dating back to 2016, reiterating a shared commitment to making quality healthcare accessible and affordable.

Committee and Regulatory Approval Process

The transaction has undergone thorough scrutiny. A special committee consisting exclusively of independent directors recommended the merger, believing it to be in the best interests of all stockholders not affiliated with NEA. After considering the committee's recommendation, the board of directors unanimously approved the deal, pushing forward towards securing stockholder votes to ratify the merger agreement.

Next Steps and Conditions

In order to finalize this merger, approval from the stockholders of NeueHealth is mandatory, along with other customary conditions, including meeting specific regulatory requirements. The financing for this transaction is backed by substantial equity commitments from NEA, which ensures that the deal does not hinge upon any additional financing conditions.

To provide the board with flexibility, the merger agreement also contains a 30-day “go-shop” period. This allows the special committee and its financial advisors to seek and evaluate other potential acquisition offers. However, NeueHealth has not committed to disclosing any updates during this exploration unless deemed necessary.

Legal and Financial Advisory Support

In this critical phase, Lincoln International, LLC is serving as the financial advisor and Richards, Layton & Finger, P.A. as legal counsel to the special committee. To further supplement the transaction’s legalities, Simpson Thacher & Bartlett LLP is representing NeueHealth. Moreover, NEA is advised by Latham and Watkins LLP, along with Sidley Austin LLP providing counseling on insurance regulatory matters.

The Future of NeueHealth

As NeueHealth navigates this transition, they are poised to enhance their healthcare services further. The company champions a belief that quality healthcare should be within reach for all consumers and is committed to making this a reality through their coordinated care approach. With a network that extends across various populations, including those in the ACA Marketplace, Medicare, and Medicaid, NeueHealth serves over 500,000 health consumers, thanks to more than 3,000 affiliated providers in their system.

By leveraging technology and strategic partnerships, NeueHealth aims to empower independent healthcare providers, ensuring they can thrive in performance-oriented arrangements. This transformational model reflects their commitment to optimizing the healthcare experience and delivering value across the entire healthcare ecosystem.

Frequently Asked Questions

What is the value of the acquisition of NeueHealth?

The acquisition has an estimated enterprise value of approximately $1.3 billion.

What will happen to NeueHealth's stock?

After the transaction is completed, NeueHealth’s common stock will cease to be publicly traded or listed on any public market.

Who will continue in leadership roles after the merger?

The current executive leadership team of NeueHealth will remain in their positions and has expressed commitment to the new company.

What percentage premium will shareholders receive?

Shareholders will receive $7.33 per share, representing a 70% premium over the stock's closing price before the announcement.

What is the “go-shop” period?

The “go-shop” period allows the special committee to seek and consider alternative acquisition proposals for 30 days following the merger agreement.

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