HealthSpring announces acquisition of Bravo Health

HealthSpring, Inc. (NYSE:HS):

Highlights of Transaction:

• Adds Over 100,000 Medicare Advantage and 290,000 PDP Members
• Creates Seventh Largest Medicare Advantage Plan in the Country
• Immediately Accretive to Earnings
• Transaction Expected to Close by Year-end

HealthSpring, Inc. (NYSE:HS) today announced that it has entered into a definitive agreement to acquire all of the outstanding capital stock of Bravo Health, Inc., an operator of Medicare Advantage coordinated care plans in Pennsylvania, the Mid-Atlantic region, and Texas, and Medicare Part D stand-alone prescription drug plans in 43 states.

HealthSpring will acquire Bravo Health, a privately held company, for $545.0 million. The transaction will be financed through the use of unrestricted cash and borrowings under an amended revolving credit facility and new term loan facilities that will be established simultaneously with the closing of the transaction. The Company has entered into a $750 million financing commitment with JPMorgan Chase Bank, N.A.; Bank of America Merrill Lynch; and Raymond James Bank, FSB. The commitment consists of an amendment to HealthSpring's existing $350 million credit facility combined with $400 million of new loans.

Commenting on the transaction, Herb Fritch, Chairman and Chief Executive Officer of HealthSpring, said, "I cannot think of a better way to demonstrate our commitment to Medicare Advantage and our confidence in the long-term future of the program than the transaction we are announcing today. Bravo Health has operated Medicare plans committed to the same basic philosophies as HealthSpring: improving the quality of care for members, engaging providers in managing medical costs, and growing profitability. This acquisition will extend HealthSpring's reach into new geographies, including an immediate and sizable presence in the Philadelphia market. This transaction will create the largest company in the country focusing exclusively on the Medicare Advantage population, including the seventh largest Medicare Advantage plan and the ninth largest stand-alone prescription drug plan. With diversified geography and increased membership scale, the combined companies will be even better positioned in the new environment created by health insurance reform."

Jeff Folick, Chairman and Chief Executive Officer of Bravo Health, also commented, "This is the right next step for our company, and we are fortunate to be aligning ourselves with an organization that is so similar to ours. Our members, providers, and employees will all benefit from the combined size and efficiency of the new organization. Because of HealthSpring's passion for serving the needs of the Medicare population and their commitment to improving health care quality, Bravo Health will continue and build upon what we have worked diligently towards for the past few years."

Bravo Health's August 2010 plan payment reports reflected aggregate Medicare Advantage and PDP membership of over 100,000 and 290,000, respectively. For the first six months of 2010, Bravo Health generated premium revenue of approximately $832.8 million.

Assuming the transaction closes as anticipated on or before year end, the transaction should add $0.45 to $0.55 to HealthSpring's 2011 earnings per share, after taking into account expected cost savings. HealthSpring expects that expenses associated with the transaction, including financing commitment, financial advisory, and other fees, will impact 2010 earnings by approximately $0.20. The transaction is not subject to HealthSpring stockholder approval. It is subject, however, to other usual and customary conditions, including federal and state regulatory approvals.

Bass, Berry & Sims PLC is acting as legal advisor and Goldman, Sachs & Co. is acting as financial advisor to HealthSpring. Cooley LLP is acting as legal advisor and UBS Investment Bank is acting as financial advisor to Bravo Health.