Triple S deal continues GuideWell expansion

Florida Blue’s parent is buying the Puerto Rican licensee of the Blue Cross brand.


  • By Mark Basch
  • | 5:00 a.m. September 2, 2021
  • | 5 Free Articles Remaining!
Triple S Management Corp. is becoming part of GuideWell Mutual Holding Corp., the parent company of Florida Blue.
Triple S Management Corp. is becoming part of GuideWell Mutual Holding Corp., the parent company of Florida Blue.
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As the Puerto Rican licensee of the Blue Cross Blue Shield insurance brand, Triple S Management Corp. seems like a natural merger fit for GuideWell Mutual Holding Corp., parent of Florida Blue.

However, Triple S said the shared branding was not the impetus for the $900 million merger agreement announced last week.

“Blue system consolidation was not the driver for this transaction. The transaction was driven by what we believe we can accomplish together through collaboration,” publicly traded Triple S said in an FAQ (frequently asked questions) posted in a Securities and Exchange Commission filing.

Jacksonville-based GuideWell is a not-for-profit mutual holding company. Its main business is operation of Florida Blue, one of 35 independent Blue Cross Blue Shield health insurance companies.

However, the company has been expanding in the past decade beyond its primary mission of insuring Floridians.

“To reimagine health care, increase access and create healthier communities for our members, we have taken steps to diversify and grow our business, both vertically as a Florida-focused insurer and horizontally as a health solutions enterprise with an increasingly national footprint,” GuideWell said in an FAQ sent to employees last week.

“That diversification has taken us from an $8 billion company in 2011 to a $20 billion company in 2020,” it said.

Triple S reported $3.7 billion in 2020 revenue.

“Florida Blue and Triple S have complementary capabilities, cultures and expertise,” GuideWell CEO Pat Geraghty said in a video message as the merger was announced.

“Joining forces will strengthen Florida Blue’s ability to grow in the Medicare Advantage segment and in the rapidly growing Puerto Rican and Hispanic segments across commercial markets given Triple S’s strengths in both areas,” he said.

Although they are independent companies under the Blue Cross Blue Shield brand, Geraghty and Triple S Chief Executive Bobby Garcia-Rodriguez have worked together in the past, Triple S said in its FAQ.

“Our organizations and leadership teams have long known and respected each other. Pat and Bobby have served on the BCBSA Board together for a number of years,” it said.

“The idea for the combination is rooted in that relationship and shared values. In addition, the number of Puerto Ricans who have come to Florida since Hurricane Maria has advanced the natural synergy between the Puerto Rican market and the Puerto Rican and Hispanic markets in Florida.”

Upon completion of the merger, expected in the first half of 2022, Triple S will continue operating as a subsidiary of GuideWell with its current management.

“We do not expect that employees will be asked to relocate as a result of this announcement,” GuideWell said in its FAQ.

“Following the closing, we expect little to no impact for our teams as a result of this transaction,” it said.

Medtronic touts ENT strength

Medtronic plc’s Jacksonville-based division, which makes surgical instruments for ear, nose and throat physicians, produces a fraction of the global medical device company’s revenue.

However, as Medtronic reported earnings last week, it touted the performance of that business.

“ENT is one of our stronger businesses,” CEO Geoff Martha said in the company’s quarterly conference call with analysts.

Medtronic highlighted the ENT business because the earnings report came three weeks after the company announced a $1.1 billion acquisition of Intersect ENT, which will add new products to the division.

California-based Intersect will bring drug-eluting sinus implants to the ENT business. Such an implant slowly releases medication.

“Our ENT business has quietly been a strong performer for us, led by a great team with a track record of consistently outperforming the market,” Chief Financial Officer Karen Parkhill said, according to a transcript of the conference call posted by the company. 

“With the addition of Intersect’s complementary products, we can accelerate the growth profile of this business for years to come,” she said.

Martha said the Intersect deal is an example of a “tuck-in” acquisition strategy to grow existing businesses.

“This segment within ENT is growing in the mid-teens and the returns are strong, well above our weighted average cost of capital,” he said.

“So these are the kinds of deals that we like to see.”

Medtronic does not report sales figures for the ENT business, but it said ENT sales rose by a mid-30s percentage in its first quarter ended July 30, as it recovered from a COVID-19 pandemic-related slump last year.

The pandemic caused delays in elective surgical procedures last year, reducing demand for ENT instruments.

The ENT business is part of Medtronic’s specialty therapies group, which had total first-quarter revenue of $641 million.

Medtronic’s global first-quarter revenue was $7.99 billion.

Dublin, Ireland-based Medtronic has had an ENT business headquartered in Jacksonville since it acquired Xomed Surgical Products Inc. in 1999 for about $800 million in stock.

Shoe Carnival earnings jump

Shoe Carnival Inc., the footwear chain controlled by former Jacksonville Jaguars owner Wayne Weaver, reported a big jump in second-quarter earnings last week.

Sales rose 10.5% to $332.2 million in the second quarter ended July 31 and earnings rose to $1.54 a share, compared with 35 cents in the second quarter of 2020.

Shoe Carnival said comparable-store sales (sales at stores open for more than one year) were 25.5% higher than the second quarter of 2019, a more normal pre-pandemic quarter.

“Footwear customers have resoundingly returned to shopping at Shoe Carnival stores all across the country. Sales and profit results are far exceeding our expectations for fiscal 2021,” incoming CEO Mark Worden said in the company’s conference call.

“To provide some additional context, for the first three weeks of August, overall store traffic is up over 50% compared to 2020 when schools did not return normally due to COVID-19,” he said.

Worden said comparable-store sales were almost 60% higher than last year in the three-week period and 23% higher than the first three weeks of August 2019.

With the strong recent results, Shoe Carnival raised its earnings forecast for all of fiscal 2021 to $4.35 to $4.50 a share, up from its previous forecast of more than $3.

Worden will become CEO of the chain of 378 stores when Cliff Sifford retires Sept. 30.

Weaver is chairman of Evansville, Indiana-based Shoe Carnival and its largest shareholder. He and his wife, Delores, own 29% of the stock.

Cadre withdraws SEC registration

Cadre Holdings Inc. requested last week that the SEC withdraw its registration statement for an initial public offering, after the stock sale was postponed Aug. 5.

The New York Stock Exchange approved Cadre’s application to certify its listing  Aug. 4.

However, last week’s filing said Cadre is withdrawing its registration because it does not expect its registration statement to become effective within 30 days of the NYSE’s approval.

The filing does not say if Cadre will try again to bring its IPO to the market.

Cadre had filed plans to sell 7.1 million shares of stock at $16 to $19 each.

Cadre, which does business mainly under the name Safariland, makes safety and survivability products for the law enforcement, first responder and military markets.

The business formerly was part of Jacksonville-based Armor Holdings Inc., which was sold to BAE Systems Inc. for $4.5 billion in 2007.

Former Armor CEO Warren Kanders led an investor group that bought the law enforcement products business back from BAE for $124 million in 2012.

Cadre was the third Jacksonville-based company to call off an IPO this year. Specialty insurance company Fortegra Group Inc. pulled its stock sale in April and withdrew its registration, telling the SEC it had no plans to pursue the IPO.

Southeastern Grocers Inc., parent of Winn-Dixie and three other supermarket chains, called off its IPO in January. The company did not file a withdrawal statement but hasn’t made any new filings with the SEC since January.

Grebe-chaired firm files for IPO

A company chaired by former Interline Brands Inc. CEO Michael Grebe filed plans last week for an initial public offering.

New York-based Sterling Check Corp., which provides technology-enabled background and identity verification services, filed a registration statement to sell an unspecified amount of shares.

Sterling reported revenue of $454 million in 2020 and $299 million in the first half of 2021.

Affiliates of The Goldman Sachs Group Inc. and Caisse de dépôt et placement du Québec own a majority of Sterling’s stock and will continue to have a controlling interest after the IPO, according to the filing.

Grebe has served on Sterling’s board of directors since 2015 and is expected to become nonexecutive chairman when the IPO is completed.

Grebe was chairman and CEO of Jacksonville-based Interline before it was acquired by The Home Depot in August 2015.

Global Claims Services acquired

Private equity firm GTCR said last week it acquired Global Claims Services, a Jacksonville-based insurance technology company.

Terms of the deal were not announced.

Chicago-based GTCR said it will work with Global Claims Services’ management to grow the business, including committing more equity to fund possible acquisitions.

Rayonier AM completes lumber and newsprint sale

Rayonier Advanced Materials Inc. completed the sale Aug. 30 of its lumber and newsprint assets to GreenFirst Forest Products Inc. for $235 million.

Jacksonville-based Rayonier AM said 85% of the purchase price was paid in cash and the rest in stock. Rayonier AM now owns 16.2% of Vancouver, British Columbia-based GreenFirst, which is publicly traded in Canada on the TSX Venture Exchange.

Rayonier AM said it has no current plans to buy or sell additional GreenFirst shares.

Rayonier AM sold the assets as part of a plan to divest noncore businesses and focus on its cellulose specialties products business. 

 

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