ABOUT HIGHMARK
Highmark Inc. is among the largest health insurers in the United States and the fourth-largest Blue Cross and Blue Shield-affiliated company. Highmark and its subsidiaries and affiliates operate health insurance plans in Pennsylvania, Delaware and West Virginia that serve 5.3 million members. Its diversified health businesses serve group customer and individual health needs across the United States through dental insurance, vision care and other related health businesses. Highmark is an independent licensee of the Blue Cross and Blue Shield Association, an association of independent Blue Cross and Blue Shield companies.
ABOUT ALLEGHENY HEALTH NETWORK AND WEST PENN ALLEGHEMY HEALTH SYSTEM
The Allegheny Health Network is Highmark's new seven-hospital provider wing, made up of the former West Penn Allegheny Health System, Jefferson Regional Health System and Saint Vincent Health System in Erie.
West Penn Allegheny Health System is a not for profit healthcare organization based in Pittsburgh, Pa, now operating as a part of Allegheny Health Network. Recognized as a healthcare quality and personalized service leader in its market, the organization’s sole purpose is to improve the health of people in the Western Pennsylvania region. West Penn Allegheny Health System’s specialty programs continually receive national and international recognition – particularly in the areas of Bone and Joint, Cardiovascular, Neurosciences and Oncology, which make up the organization’s four Institutes of Excellence. It also owns a nearly 700 person multi-specialty physician group practice. As of the fiscal year ending June 30, 2013 WPAHS operated over 1,280 acute care beds and reported over $1.48 billion in total revenue.
ABOUT HAMMOND HANLON CAMP LLC
Hammond Hanlon Camp LLC (“H2C”) is an independent strategic advisory and investment banking firm committed to providing superior advice as a trusted advisor to healthcare organizations throughout the United States. H2C’s professionals have a long track record of success in healthcare mergers & acquisitions, capital markets, real estate and restructuring transactions, acting as lead advisors on hundreds of transactions representing billions of dollars in value. Hammond Hanlon Camp LLC offers securities through its wholly-owned subsidiary H2C Securities Inc., member FINRA/SIPC. For more information, go to h2c.com
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Dara Litwin
Hammond Hanlon Camp LLC
212.257.4527
dlitwin@h2c.com
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H2C Advises on Highmark's Affiliation with West Penn Allegheny Health System
posted on January 1, 2014
NEW YORK – In April 2013, Highmark Inc. (“Highmark”), one of the nation’s largest insurers, completed its affiliation with the West Penn Allegheny Health System (“WPAHS”) forming Allegheny Health Network (“AHN”), one of the nation's largest integrated healthcare systems. Hammond Hanlon Camp LLC (“H2C”), a healthcare-focused strategic advisory and investment banking firm, served as exclusive restructuring advisor to Highmark during its successful affiliation with WPAHS.
The affiliation has received significant national attention, both as a breakthrough transaction in the movement to assemble integrated healthcare delivery systems and as a complicated acquisition of a hospital system with a history of significant financial problems. In fact, in December 2013, the M&A Advisor, a leading network of finance professionals and provider of market research, nominated the affiliation of WPAHS with Highmark as a finalist for “Corporate / Strategic Acquisition of the Year (Over $1 Billion)” at its 12th Annual M&A Advisor Awards. This yearly recognition honors the leading deal teams, firms and professionals whose activities set the standard for M&A transactions.
“The H2C team provided outstanding judgment and service in assisting Highmark with restructuring its affiliation with West Penn Allegheny Health System,” said Nanette DeTurk, CFO of Highmark.
In its role as restructuring advisor, H2C acted in several capacities, including: advising on strategy on the WPAHS capital structure, leading discussions with certain institutional investors regarding debt reduction, providing an analysis of financial alternatives used in conjunction with a filing with the Pennsylvania Insurance Department (“PID”), providing Highmark with an opinion concerning the fairness of Highmark’s purchase of WPAHS’s Bond debt and extension of secured loans to WPAHS under the Affiliation Agreement, and acting as dealer manager on the tender offer for outstanding WPAHS Bonds.
“Hammond Hanlon Camp’s experience and industry knowledge were invaluable in helping us navigate a complicated process,” said John Paul, CEO of Allegheny Health Network.
H2C began advising Highmark in February 2012; approximately three months after Highmark signed an affiliation agreement with WPAHS in November 2011. When certain unanticipated costs at WPAHS were discovered, Highmark decided to seek concessions from certain creditors as a means to reduce the cost of the affiliation, making it more likely to receive approval from the PID. Through a carefully managed process, H2C negotiated with major Bondholders to secure significant savings.
“It was a terrific capstone to a longstanding relationship that H2C professionals have had with both WPAHS and Highmark,” said Michael Hammond, Principal at H2C. “Members of the H2C team began their relationship in 1999 and worked on the formation of WPAHS through the combination of West Penn Hospital and Allegheny General with financial support from Highmark. We now believe that AHN has the complete resources of an integrated delivery system and can offer a high value, high quality alternative to the residents of western Pennsylvania. We are proud to have advised Highmark and played a role in the recapitalization of WPAHS as part of the creation of AHN.”