The BlueCross BlueShield licensee for Maryland, the District of Columbia and parts of Northern Virginia has invested $20 million in wellness services provider Healthways.
CareFirst BlueCross BlueShield CEO Chet Burrell said the investment in Franklin-based Healthways “helps secure long-term services for our customers and will enhance the opportunities for growth and innovation” in the insurer’s quality initiatives. The $20 million investment from CareFirst is in the form of a six-year convertible promissory note with an interest rate of 4.75 percent and a conversion price of $22.41, which is 20 percent above the stock’s Tuesday close. Healthways executives plan to use the money to retire some debt covered by their main credit agreement.
CareFirst also has the chance to be granted warrants to buy Healthways shares based on the local company hitting certain revenue targets with its CareFirst work as well as any business the insurer refers to Healthways. The maximum number of warrants available under the program 1.6 million between now and the fall of 2017.
CareFirst works with 3.4 million individuals and groups in its service area. The insurer last fall expanded and extended its contract with Healthways, which covers its patient-centered medical home program as well as its traditional disease management work.
“CareFirst is both acknowledging our mutual success to date and at the same time challenging us to continue to improve and scale our solutions,” said Healthways President and CEO Ben Leedle. “We expect that the length of both our services and investment agreements coupled with the joint expectation we have in pursuing growth can serve as an example to other health insurance plans around the country. In the post-healthcare reform environment, we continue to believe that services and solutions tailored to a geographic market focus will allow for the greatest success.”
Shares of Healthways (Ticker: HWAY) closed Tuesday trading at $18.69 and have risen 75 percent so far this year.
Date: October 2, 2013