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For those who listen to the rebroadcast of this presentation, we remind you that the remarks made herein, are as of today, October 28, 2011 and is not been updated subsequent to our initial earnings call. During this call, we will make forward-looking statements including statements relating to our growth prospects, rate, medical cost trends, the closing of the health class acquisition, as well as our 2011 and 2012 outlook.Listen with caution that these are statements and are subject to certain risks and uncertainties, many of which are difficult to predict and generally beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. And we advice listeners to review the risk factors discussed in our press release this morning, and in documents we have filed or furnished to the SEC. I would now like to turn the call over to our Chairman and Chief Executive Officer James Carlson. James? James Carlson Thank you Julie. Good morning and thank you for joining our call. This morning, I’d like to talk for a few minutes about growth in both 2011 and 2012 including our recently announced Health Plus acquisition and our view of the future. But before I do, let me first start with a couple of highlights from the quarter. This morning, we reported third quarter net income of $48 million or $0.96 per share. So our revenues for the quarter were $1.6 billion reflecting a $77 million sequential increase. A year ago, I shared with you our perspective that 2011 would be a year with pretty modest growth at least by our standards. But more importantly, it would largely be a year in which we set the stage for significant growth in 2012 and beyond. Well that has certainly been born out during the year, so let’s review for a minute. In February, we expanded into an addition star plus service area in Texas.
In the summer, we were successful in significantly expanding our business in Texas which we estimate will add more than $1 billion in incremental annualized revenue. We were also awarded the new opportunity in Louisiana. We added, through legislative changes, additional populations and services in Ohio, New Jersey and New York.In September, we expanded our service areas in Texas and lastly, we announced an important acquisition in New York earlier this week. At last month’s investor day, we commented that we expect to significantly exceed our normal 50% compared full year 2011. We identified the key drivers of revenue growth in 2012 to be the reason for wins in Louisiana and Texas, as well as expansion in existing markets. With the announcement of our planned acquisition in New York, those updated scenarios suggest revenue growth for next year in excess of 40%. Of course, there are a variety of timing factors that could affect the actual results. But the point is, the potential exists for pretty significant growth. Managing this growth is obviously a key operational objective. And actually we have been preparing for it for much of this year. It’s important to remember we have successfully executed on the specific types of growth opportunities we are discussing. Existing market expansion, a new market start up, and a Bolton acquisition having done more than 80 implementations in our test. Furthermore, the growth is nicely distributed across our three regions which are led by very capable regional leaders who will personally tie their efforts. Other than Louisiana, the growth is occurring in places where you have expanded the associates in place which means not only an ability to keep the ground running, but also to leverage existing infrastructure. Our most recent development is the acquisition in New York that we announced on Tuesday. Health Plus has approximately 320,000 members in New York State’s Medicaid, Family Health Plus and Child Health Plus program and also includes approximately 3,000 Medicare Advantage members.
As you will recall, New York has the second highest number of Medicaid enrollees in the nation. It accounts for fully 13% of the nation’s Medicaid spent. Health Plus expects to generate approximately $1 billion of revenue in 2011. The acquisition is expected to be slightly diluted to our earnings per share in 2012 due to integration and one time transaction related cost, but earnings beginning in 2013.Of course this transaction cost are front-end loaded, much depends upon the timing of the actual closing of the transaction. The purchase price of $85 million will be funded through available cash. The transaction is subject to regulatory approvals and other closing conditions is expected to close in the first half of 2012. Our existing health plan are relatively small in New York terms has consistently been a strong performer managing medical costs as evidenced by a consistently favorable MLR. However, since we entered the market 2005, we have wanted to expand our presence in New York. Our reasons for this go beyond just the benefit of a larger and more efficient operation. Over the year the state has implemented changes and the rules for distribution, advertising and marketing. From a strategic perspective, we concluded we needed more significant scale to compete effectively. Read the rest of this transcript for free on seekingalpha.com