Beyond Benefits, a Long Beach, Calif.-based PPO launched in the spring, has agreed to buy the Chicago-based HealthStar PPO for more than $10 million in cash and stock.
HealthStar's parent company, Phoenix-based HealthStar Corp., will get $10 million in cash and 5% of Beyond Benefits' stock upfront as payment for its health plan. An additional payment of $1.25 million is contingent on the PPO's reaching revenue goals over the next 18 months. The deal is expected to close by mid-November.
Beyond Benefits was incorporated in April by George Bregante, former president and chief operating officer of Beech Street, one of the nation's largest PPOs, and two other PPO veterans, with financial backing from venture capital firms.
In May, it acquired the 4 million PPO enrollees of Preferred Health Network from Woodland Hills, Calif.-based Foundation Health Systems (June 7, p. 50). The HealthStar PPO has 2 million enrollees in 39 states.
If the HealthStar deal is completed, Beyond Benefits would cover more than 6 million enrollees in all 50 states, said company officials. That would make it the sixth-largest PPO in the country.
Like Preferred Health Network, HealthStar will operate under its own name as a separate wholly owned subsidiary of the parent company.