BPO Management Services To Merge With Healthaxis
Anaheim, CA - BPO Management Services Inc. and Healthaxis Inc. announced recently a definitive agreement under which BPO Management Services (BPOMS) will acquire Healthaxis. As a result of the transaction, Healthaxis will become the Healthcare division of BPOMS, complementing BPOMS' existing operations for Human Resources Outsourcing (HRO) consulting, Enterprise Content Management (ECM), and IT infrastructure outsourcing (ITO).
Healthaxis is an innovative provider of technology-enhanced, integrated business process solutions and services, including claims and benefit administration applications, web-enabled software solutions and outsourced claims related services for health benefit administrators and health insurance claims processors. Healthaxis is one of the industry's longest serving providers of ASP hosted healthcare IT solutions and BPO services, dating back over 30 years.
BPO Management Services is a business process outsourcing (BPO) service provider that offers a diversified range of on-demand services, including Human Resources (HRO), Information Technology (ITO), Enterprise Content Management (ECM), and finance and accounting, to support the back-office business functions of middle-market enterprises on an outsourced basis. The company supports middle-market businesses new to the BPO market, as well as businesses that already outsource or are seeking to maximize their return-on-investment from their in-house workforce.
As a result of the transaction, the combined company is projected to have an annual revenue run rate of approximately $50 million, over 400 customers, in excess of 350 employees, and operations in the United States, Canada, Jamaica, India, and Russia. Consistent with BPOMS' long-term revenue strategy, a substantial portion of the combined company's revenues will be from recurring sources and multi-year contracts. BPOMS' management estimates that the combination will produce significant opportunities for organic growth from the Healthaxis core business and multiple cross-selling opportunities. It is expected that the combined company will benefit from a number of synergies that will be realized shortly following the closing of the transaction, including the elimination of redundant corporate level expenses.
Under the terms of the transaction, which is structured as a reverse merger, each share of BPOMS common stock will be exchanged for 0.3393 shares of Healthaxis common stock, while shares of BPOMS preferred stock and other BPOMS securities will be exchanged for a mix of shares of Healthaxis common stock, preferred stock and other securities based on various fixed exchange ratios. On a fully diluted basis, BPOMS securityholders will own about 80% of the resulting publicly-held company and Healthaxis securityholders will own about 20% of the company. Healthaxis will effect a reverse stock split in connection with the closing of the transaction, and the surviving public company's capital structure will be significantly streamlined in comparison to that of either predecessor company. The surviving publicly-held company will be re-named BPO Management Services, Inc. Patrick Dolan, the current Chairman and CEO of BPOMS, will become Chairman and CEO of the merged companies and John Carradine, CEO of Healthaxis, will assume the new position of Managing Director, Healthcare Division, overseeing the Company's healthcare operations offerings.
Patrick Dolan, chief executive officer of BPOMS, said, "This transaction is a significant win for the stockholders, customers and employees of both BPOMS and Healthaxis. The combination is clearly a strategic fit for both companies and we believe it will provide quantifiable opportunities to accelerate the growth of both organizations."
Mr. Dolan added, "The Healthaxis transaction is part of BPOMS strategy to expand into vertical markets and deliver its on-demand capabilities into one of the largest sectors of the economy where we believe our combined resources provide compelling solutions for healthcare payer organizations."
John M. Carradine, Healthaxis CEO, who will head the new Healthcare Division of BPOMS commented, "Healthaxis is a proven leader in providing claims and benefits administration solutions and services to the healthcare industry. By combining our operations with BPOMS, we not only improve our internal operating capability, but we also broaden our reach within the healthcare payer industry. Additionally, we believe that BPOMS' on-demand solutions in Human Resources (HRO), Enterprise Content Management (ECM), IT Infrastructure (ITO), and service capabilities can be extended into the healthcare industry with great success."
Mr. Dolan continued, "We are putting in place a dedicated BPOMS sales force that will aggressively sell Healthaxis products and services to our mid- market target customers with annual sales of $500 million to $3 billion. In addition, our intention is to partner with leading integrators, who are seeking on-demand solutions for a proven healthcare claims and benefit administrative platform. Simultaneously, we are actively evaluating other technologies and platforms that we could offer to these same integrators to further expand our indirect sales channels, diversify our services and differentiate BPOMS within this emerging industry. The combination of BPOMS' on-demand HRO, tier 1 infrastructure, ECM solutions, and sales model, coupled with Healthaxis' robust products and services will create an end-to-end on- demand platform with the capability to serve large healthcare payers in addition to the middle market and TPA's. We are excited for the opportunity to target a larger portion of the $100 billion annual industry for healthcare claims processing and benefits administration."
The transaction is expected to close during the fourth quarter and is subject to the approval of the stockholders of both BPOMS and Healthaxis, the completion of certain regulatory processes and other customary conditions.
SOURCE: BPO Management Services Inc.