Item 8.01 - Other Events
Agreement and Plan of Merger
On December 20, 2020, HMS Holdings Corp.,
a Delaware corporation (“HMS”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with
Gainwell Acquisition Corp., a Delaware corporation (“Gainwell”), Mustang MergerCo Inc., a Delaware corporation and
wholly owned subsidiary of Gainwell (“Merger Sub”), and Gainwell Intermediate Holding Corp., a Delaware corporation.
The Merger Agreement provides that, upon the terms and subject to the satisfaction or waiver of the conditions set forth therein,
Merger Sub will merge with and into HMS (the “Merger”), with HMS continuing as the surviving corporation and a wholly
owned subsidiary of Gainwell. A copy of the press release containing the announcement is attached hereto as Exhibit 99.1 and is
incorporated herein by reference.
Item 9.01 Financial
Statements and Exhibits.
(d) Exhibits
Additional Information and Where to Find It
This communication relates to the proposed
merger (the “Merger”) of HMS Holdings Corp., a Delaware corporation (“HMS”), with Gainwell Acquisition
Corp., a Delaware corporation (“Gainwell”) and Mustang MergerCo Inc., a Delaware corporation and wholly owned subsidiary
of Gainwell (“Merger Sub”), pursuant to the terms of that certain Agreement and Plan of Merger, dated as of December
20, 2020, by and among HMS, Gainwell, Merger Sub and Gainwell Intermediate Holding Corp., a Delaware corporation (the “Merger
Agreement”).
This communication may be deemed solicitation
material in respect of the Merger. This communication does not constitute a solicitation of any vote or approval. In connection
with the proposed merger, HMS plans to file with the Securities and Exchange Commission (the “SEC”) and mail or otherwise
provide to its stockholders a proxy statement regarding the proposed transaction. HMS may also file other documents with the SEC
regarding the proposed transaction. This document is not a substitute for the proxy statement or any other document that may be
filed by HMS with the SEC. BEFORE MAKING ANY VOTING DECISION, HMS’S STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT
IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS FILED BY HMS WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION
OR INCORPORATED BY REFERENCE THEREIN BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE PROPOSED TRANSACTION BECAUSE
THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED TRANSACTION. Investors and
stockholders may obtain a free copy of the proxy statement and other documents HMS files with the SEC (when available) through
the website maintained by the SEC at www.sec.gov. HMS makes available free of charge at www.hms.com (in the “SEC Filings”
subsection of the “Financials and Filings” section under the “Investors” heading), copies of materials
it files with, or furnishes to, the SEC.
Participants in the Solicitation
HMS and its directors, executive officers
and certain employees and other persons may be deemed to be participants in the solicitation of proxies from HMS’s stockholders
in connection with the proposed merger. Security holders may obtain information regarding the names, affiliations and interests
of HMS’s directors and executive officers in HMS’s Annual Report on Form 10-K for the fiscal year ended December 31,
2019, which was filed with the SEC on February 24, 2020, and its definitive proxy statement for the 2020 annual meeting of stockholders,
which was filed with the SEC on April 17, 2020. To the extent the holdings of HMS securities by HMS’s directors and executive
officers have changed since the amounts set forth in HMS’s proxy statement for its 2020 annual meeting of stockholders, such
changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. Additional information
regarding the interests of such individuals in the proposed merger will be included in the proxy statement relating to the proposed
merger when it is filed with the SEC. These documents (when available) may be obtained free of charge from the SEC’s website
at www.sec.gov and HMS’s website at www.hms.com.
Cautionary Statement Regarding Forward-Looking Statements
This communication contains certain information,
including financial estimates and statements as to, among other things, the expected timing, completion and effects of the Merger,
which may constitute forward-looking statements within the meaning of the “safe harbor” provisions of the U.S. Private
Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties, and actual results may materially
differ. The forward-looking statements contained in this communication, including without limitation statements regarding anticipated
benefits and effects of the anticipated merger of HMS and Gainwell, relate to our current expectations, projections and assumptions
about our business, the economy and future events or conditions. All statements other than statements of historical fact or relating
to present facts or current conditions included in this communication are forward-looking statements.
Forward-looking statements may include words such as “aim,”
“anticipate,” “assume,” “believe,” “estimate,” “expect,” “forecast,”
“future,” “intend,” “likely,” “may,” “outlook,” “plan,”
“potential,” “project,” “seek,” “strategy,” “target,” “trend,”
“will,” “would,” “could,” “should,” and variations of such terms and similar expressions,
although some forward-looking statements may be expressed differently.
Forward-looking statements are not guarantees
and involve risks, uncertainties and assumptions that are difficult to predict. Actual results may differ materially from past
results and from those indicated by such forward-looking statements if known or unknown risks or uncertainties materialize, or
if underlying assumptions prove inaccurate. These risks and uncertainties include, among other things: the inability to consummate
the Merger within the anticipated time period, or at all, due to any reason, including the failure to obtain required regulatory
approvals or the failure to satisfy the other conditions to the consummation of the Merger; the failure by Gainwell or Merger Sub
to obtain the necessary financing arrangements set forth in the commitment letters received in connection with the Merger; the
risk that the Merger Agreement may be terminated in circumstances requiring HMS to pay a termination fee; the risk that the Merger
disrupts HMS’s current plans and operations or diverts management’s attention from its ongoing business; the effect
of the announcement of the Merger on the ability of HMS to retain and hire key personnel and maintain relationships with its customers,
suppliers and others with whom it does business; the effect of the announcement of the Merger on HMS’s operating results
and business generally; the amount of costs, fees and expenses related to the Merger; the risk that HMS’s stock price may
decline significantly if the Merger is not consummated; the nature, cost and outcome of any litigation and other legal proceedings,
including any such proceedings related to the Merger and instituted against HMS and others; the course of the COVID-19 pandemic
and the responses to the pandemic, and their effects on our business and operations, including those of our customers and partners,
and general economic, business and market conditions; our ability to execute our business plans or growth strategy; our ability
to innovate, develop or implement new or enhanced solutions or services; the nature of acquisition, investment, strategic relationship
and divestiture opportunities we are pursuing, and our ability to successfully execute on such opportunities; our ability to successfully
integrate acquired businesses and operations and realize synergies; significant and increased competition related to our solutions
and services; variations in our results of operations; our ability to accurately forecast the revenue under our contracts and solutions;
our ability to protect our systems from damage, interruption or breach, and to maintain effective information and technology systems
and networks, including during a catastrophic or extraordinary event, such as COVID-19; our ability to protect our intellectual
property rights, proprietary technology, information processes and know-how; our failure to maintain a high level of customer retention
or the unexpected reduction in scope or termination of key contracts with major customers; customer dissatisfaction or our non-compliance
with contractual provisions or regulatory requirements; our failure to meet performance standards triggering significant costs
or liabilities under our contracts; our inability to manage our relationships with data sources and suppliers; our reliance on
subcontractors and other third party providers and parties to perform services; our ability to secure future contracts and favorable
contract terms through the competitive bidding process; pending or threatened litigation; unfavorable outcomes in legal proceedings;
our success in attracting and retaining qualified employees and members of our management team; our ability to generate sufficient
cash to cover our interest and principal payments under our credit facility; changes in tax laws, regulations or guidance and unexpected
changes in our effective tax rate; unanticipated increases in the number or amount of claims for which we are self-insured; accounting
changes or revisions; risks relating to our international operations, including political, regulatory, economic, foreign exchange,
tax compliance and other risks; changes in the healthcare environment or healthcare financing system, including regulatory, budgetary
or political actions that affect healthcare spending or the practices and operations of healthcare organizations; our failure to
comply with applicable laws and regulations governing individual privacy and information security, domestically and internationally,
or to protect such information from theft and misuse; our ability to comply with current and future legal and regulatory requirements;
negative results of government or customer reviews, audits or investigations; state or federal limitations related to outsourcing
of certain government programs or functions; restrictions on bidding or performing certain work due to perceived conflicts of interests;
the market price of our common stock and lack of dividend payments; anti-takeover provisions in our corporate governance documents;
and the other important factors discussed under the headings “Business,” “Risk Factors,” “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and “Quantitative and Qualitative Disclosures
About Market Risk” of our 2020 Form 10-K, and in other documents we file with the SEC.
Any forward-looking statements made by us
in this communication speak only as of the date on which they are made. We undertake no obligation to publicly update forward-looking
statements, whether as a result of new information, future events or otherwise, except as may be required by law. We caution readers
not to place undue reliance upon any of these forward-looking statements. You are advised, however, to consult any further disclosures
we make on related subjects in our reports and other filings with the SEC.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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HMS HOLDINGS CORP.
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Date: December 21, 2020
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By: /s/ Jeffrey S. Sherman
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Jeffrey S. Sherman
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Executive Vice President,
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Chief Financial Officer and Treasurer
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Exhibit 99.1
hms
to be acquired by veritas capital-backed gainwell for $37.00 PER share
Transaction Expands Gainwell’s
Capabilities as an Analytics-Driven Healthcare Technology Provider
Cotiviti to Subsequently Acquire Certain
Business Lines, Expanding Health Plan Solutions
All-Cash Transaction Values HMS at Approximately
$3.4 Billion
IRVING, Texas – December 21,
2020 – HMS (Nasdaq: HMSY) (“HMS”), an industry-leading technology, analytics and engagement solutions provider
helping organizations reduce costs and improve health outcomes, and Veritas Capital (“Veritas”)-backed Gainwell Technologies
(“Gainwell”), a leading provider of solutions that are vital to the administration and operations of health and human
services programs, today announced that they have entered into a definitive agreement whereby Gainwell will acquire HMS. Under
the terms of the agreement, HMS shareholders will receive $37.00 in cash per share. The per share purchase price represents a 52%
premium to HMS’ unaffected share price as of October 2, 2020, the last trading day prior to when reports of a possible
transaction were published, and a 17% premium over the 30-day volume-weighted average price per share of HMS’ common stock
through the close of trading on December 18, 2020, the last trading day before the announcement of the transaction. The transaction
is expected to close in the first half of 2021.
Veritas will look to optimize the HMS solution
set across Gainwell and Veritas-backed Cotiviti, Inc. (“Cotiviti”), a leading provider of data-driven healthcare
solutions. Gainwell will acquire the HMS capabilities focused on the Medicaid market, including solutions delivered to states and
managed care organizations, and Cotiviti will acquire the HMS capabilities focused on the commercial, Medicare, and federal markets.
The addition of the HMS business lines will further expand Gainwell’s and Cotiviti’s capabilities with unique, data-driven
technology and service solutions expected to drive greater impact in the healthcare market. Clients will be offered a broad range
of complementary, scalable and flexible solutions that improve outcomes and quality as well as reduce waste and inefficiencies
through technological innovation, service excellence and unparalleled industry expertise.
“HMS has built a market-leading healthcare
technology and analytics enterprise, and we believe this transaction delivers compelling and certain value to our shareholders
while enhancing our ability to provide clients with world-class, data-driven analytics solutions,” said Bill Lucia, Chairman
and CEO of HMS. “Our board of directors and executive leadership team conducted a thorough review of a wide range of strategic
alternatives and, after careful consideration, we determined this outcome to be the best path forward for our shareholders, clients
and employees.”
Ramzi Musallam, CEO and Managing Partner
of Veritas, a leading investor in government and healthcare technology businesses, said, “HMS has developed a highly differentiated
set of capabilities that deliver tangible value across the government and commercial healthcare payer spectrum. By aligning HMS’
market focus with Gainwell and Cotiviti, these organizations can become even more strategically aligned to their customers’
missions. We look forward to working closely with the talented teams at HMS, Gainwell and Cotiviti to ensure successful combinations
while advancing the collective goal of reducing costs and improving health outcomes nationwide.”
Paul Saleh, President and CEO of Gainwell,
said, “We are thrilled to bring together two exceptional heritages in the healthcare technology marketplace. Through this
partnership, our continuum of capabilities will enable us to deliver more value to our clients as we work together to bend the
healthcare cost curve and improve outcomes. With the support and strategic guidance of Veritas, we look forward to bringing together
our teams, technologies and solutions to continue to innovate for our clients.”
Emad Rizk, President and CEO of Cotiviti,
said, “HMS’ capabilities are highly complementary to Cotiviti’s product portfolio. We are excited to broaden
our impact by reaching more customers and introducing new technologies to the marketplace. Together, our commitment to helping
organizations better assess, manage, and improve clinical and financial outcomes is more compelling than ever."
Transaction Details
The transaction will result in an enterprise
value for HMS of approximately $3.4 billion. The transaction, which was unanimously approved by HMS’ Board of Directors,
is expected to close in the first half of 2021. The closing of the transaction is subject to the approval of HMS shareholders and
the satisfaction of customary closing conditions, including applicable regulatory approvals.
Advisors
Barclays is acting as financial advisor
to HMS, and Latham & Watkins LLP is serving as legal advisor to HMS.
Goldman Sachs & Co. LLC is acting
as exclusive financial advisor to Gainwell, and Schulte Roth & Zabel LLP is serving as legal advisor to Gainwell.
About HMS
HMS advances healthcare by helping organizations
reduce costs and improve health outcomes. Through our industry-leading technology, analytics and engagement solutions, we save
billions of dollars annually while helping consumers lead healthier lives. HMS provides a broad range of payment accuracy and
population health management solutions that help move healthcare forward. For more information, visit www.hms.com.
About Gainwell Technologies
With over 7,500 employees, Gainwell Technologies
supports clients across 42 U.S. states and territories with offerings including Medicaid Management Information Systems (MMIS),
fiscal agent services, program integrity, care management, immunization registry and eligibility services. With over 50 years
of proven experience, Gainwell carries forward a reputation for technological innovation, service excellence and unparalleled
industry expertise in offering clients scalable and flexible health and human services solutions for their most complex challenges.
For more information, visit www.gainwelltechnologies.com.
About Cotiviti
Cotiviti is a leading solutions and analytics
company that is reshaping the economics of healthcare, helping its clients uncover new opportunities to unlock value. Cotiviti’s
solutions are a critical foundation for healthcare payers in their mission to lower healthcare costs and improve quality through
higher performing payment accuracy, quality improvement, risk adjustment, and network performance management programs. Cotiviti’s
healthcare solutions are powered by Caspian Insights, a proprietary data and analytics platform spanning thousands of unique member
and provider data types across financial and clinical domains, representing the most comprehensive longitudinal data set in healthcare.
The company also supports the retail industry with data management and recovery audit services that improve business outcomes.
For more information, visit www.cotiviti.com.
About Veritas Capital
Veritas is a leading private investment
firm that invests in companies that provide critical products and services, primarily technology and technology-enabled solutions,
to government and commercial customers worldwide, including those operating in the healthcare, national security, software, education,
aerospace & defense, government services, communications and energy industries. Veritas seeks to create value by strategically
transforming the companies in which it invests through organic and inorganic means. For more information, visit www.veritascapital.com.
Additional Information and Where to Find It
In connection with the proposed merger,
HMS plans to file with the Securities and Exchange Commission (“SEC”) and mail or otherwise provide to its stockholders
a proxy statement regarding the proposed transaction. HMS may also file other documents with the SEC regarding the proposed transaction.
This document is not a substitute for the proxy statement or any other document that may be filed by HMS with the SEC. BEFORE
MAKING ANY VOTING DECISION, HMS’ STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE
AND ANY OTHER DOCUMENTS FILED BY HMS WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION OR INCORPORATED BY REFERENCE THEREIN
BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND THE PARTIES TO THE PROPOSED TRANSACTION. Investors
and stockholders may obtain a free copy of the proxy statement and other documents HMS files with the SEC (when available) through
the website maintained by the SEC at www.sec.gov. HMS makes available free of charge at www.HMS.com (in the “Investors”
section), copies of materials it files with, or furnishes to, the SEC.
Participants in the Solicitation
This document does not constitute a solicitation
of proxy, an offer to purchase or a solicitation of an offer to sell any securities. HMS and its directors, executive officers
and certain employees and other persons may be deemed to be participants in the solicitation of proxies from HMS’ stockholders
in connection with the proposed merger. Security holders may obtain information regarding the names, affiliations and interests
of HMS’ directors and officers in HMS’ Annual Report on Form 10-K for the fiscal year ended December 31,
2019, which was filed with the SEC on February 24, 2020 and its definitive proxy statement for the 2020 annual meeting of
stockholders, which was filed with the SEC on April 30, 2020. To the extent the holdings of HMS securities by HMS’ directors
and executive officers have changed since the amounts set forth in HMS’ proxy statement for its 2020 annual meeting of stockholders,
such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. Additional
information regarding the interests of such individuals in the proposed merger will be included in the proxy statement relating
to the proposed merger when it is filed with the SEC. These documents (when available) may be obtained free of charge from the
SEC’s website at www.sec.gov and HMS’ website at www.HMS.com.
Safe Harbor Statement
This press release contains certain information,
including statements as to, among other things, the expected timing, completion and effects of the proposed merger, which may constitute
“forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such
statements relate to our current expectations, projections and assumptions about our business, the economy and future events or
conditions. They do not relate strictly to historical or current facts. All statements other than statements of historical fact
or relating to present facts or current conditions included in this communication are forward-looking statements. Forward-looking
statements can be identified by words such as “believes,” “expects,” “future,” “may,”
“plans,” “will,” and similar references, although some forward-looking statements may be expressed differently.
Factors or events that could cause actual results to differ may emerge from time to time and are difficult to predict. Should known
or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results may differ materially
from past results and those anticipated, estimated or projected. We caution you not to place undue reliance upon any of these forward-looking
statements. Factors that could cause or contribute to such differences, include, but are not limited to: our ability to execute
our business plans or growth strategy; our ability to innovate, develop or implement new or enhanced solutions or services; the
nature of investment and acquisition opportunities we are pursuing, and the successful execution of such investments and acquisitions;
our ability to successfully integrate acquired businesses and realize synergies; and other factors, risks and uncertainties described
in our most recent Annual Report on Form 10-K and in our other filings with the Securities and Exchange Commission. Any forward-looking
statements are made as of the date of this press release. Except as may be required by law, we disclaim any obligation to publicly
update forward-looking statements, whether as a result of new information, future events or otherwise.
The forward-looking statements contained
in this communication, including without limitation statements regarding anticipated benefits and effects of the proposed merger,
are based on assumptions that HMS has made in light of its industry experience and its perceptions of historical trends, current
conditions, expected future developments and other factors that HMS believes are appropriate under the circumstances. These statements
are not guarantees of performance or results. Forward-looking statements are not guarantees and involve risks, uncertainties and
assumptions that are difficult to predict. Actual results may differ materially from past results and from those indicated by such
forward-looking statements if known or unknown risks or uncertainties materialize, or if underlying assumptions prove inaccurate.
These risks and uncertainties include, among other things: the inability to consummate the proposed merger within the anticipated
time period, or at all, due to any reason, including the failure to obtain required regulatory approvals or the failure to satisfy
the other conditions to the consummation of the proposed merger; the failure by Gainwell to obtain the necessary financing arrangements
set forth in the commitment letters received in connection with the proposed merger; the risk that the proposed merger may be terminated
in circumstances requiring HMS to pay a termination fee; the risk that the proposed merger disrupts HMS’s current plans and
operations or diverts management’s attention from its ongoing business; the effect of the announcement of the proposed merger
on the ability of HMS to retain and hire key personnel and maintain relationships with its customers, suppliers and others with
whom it does business; the effect of the announcement of the proposed merger on HMS’s operating results and business generally;
the amount of costs, fees and expenses related to the proposed merger; the risk that HMS’s stock price may decline significantly
if the proposed merger is not consummated; the nature, cost and outcome of any litigation and other legal proceedings, including
any such proceedings related to the proposed merger and instituted against HMS and others; the course of the COVID-19 pandemic
and the responses to the pandemic, and their effects on our business and operations, including those of our customers and partners,
and general economic, business and market conditions; our ability to execute our business plans or growth strategy; our ability
to innovate, develop or implement new or enhanced solutions or services; the nature of acquisition, investment, strategic relationship
and divestiture opportunities we are pursuing, and our ability to successfully execute on such opportunities; our ability to successfully
integrate acquired businesses and operations and realize synergies; significant and increased competition related to our solutions
and services; variations in our results of operations; our ability to accurately forecast the revenue under our contracts and solutions;
our ability to protect our systems from damage, interruption or breach, and to maintain effective information and technology systems
and networks, including during a catastrophic or extraordinary event, such as COVID-19; our ability to protect our intellectual
property rights, proprietary technology, information processes and know-how; our failure to maintain a high level of customer retention
or the unexpected reduction in scope or termination of key contracts with major customers; customer dissatisfaction or our non-compliance
with contractual provisions or regulatory requirements; our failure to meet performance standards triggering significant costs
or liabilities under our contracts; our inability to manage our relationships with data sources and suppliers; our reliance on
subcontractors and other third party providers and parties to perform services; our ability to secure future contracts and favorable
contract terms through the competitive bidding process; pending or threatened litigation; unfavorable outcomes in legal proceedings;
our success in attracting and retaining qualified employees and members of our management team; our ability to generate sufficient
cash to cover our interest and principal payments under our credit facility; changes in tax laws, regulations or guidance and unexpected
changes in our effective tax rate; unanticipated increases in the number or amount of claims for which we are self-insured; accounting
changes or revisions; risks relating to our international operations, including political, regulatory, economic, foreign exchange,
tax compliance and other risks; changes in the healthcare environment or healthcare financing system, including regulatory, budgetary
or political actions that affect healthcare spending or the practices and operations of healthcare organizations; our failure to
comply with applicable laws and regulations governing individual privacy and information security, domestically and internationally,
or to protect such information from theft and misuse; our ability to comply with current and future legal and regulatory requirements;
negative results of government or customer reviews, audits or investigations; state or federal limitations related to outsourcing
of certain government programs or functions; restrictions on bidding or performing certain work due to perceived conflicts of interests;
the market price of our common stock and lack of dividend payments; anti-takeover provisions in our corporate governance documents;
and the other important factors discussed under the headings “Business,” “Risk Factors,” “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and “Quantitative and Qualitative Disclosures
About Market Risk” of our 2020 Form 10-K, and in other documents we file with the SEC.
Any forward-looking statements made by
HMS in this communication speak only as of the date on which they are made. HMS undertakes no obligation to publicly update forward-looking
statements, whether as a result of new information, future events or otherwise, except as may be required by law.
Contacts
HMS
Investors:
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Media:
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Robert Borchert
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Lacey Hautzinger
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SVP, Investor Relations
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Sr. Director, External Communications
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robert.borchert@hms.com
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lacey.hautzinger@hms.com
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469-284-2140
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469-284-7240
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Gainwell, Cotiviti and Veritas Capital
Andrew Cole/Julie Rudnick/Julie Casale
Sard Verbinnen & Co
veritascapital-svc@sardverb.com