Universal American Corp. Announces Proposed $100 Million Private Offering of Convertible Senior Notes and Stock Repurchase

WHITE PLAINS, N.Y.–(BUSINESS WIRE)–Universal American Corp. (NYSE: UAM) announced today its intention to
offer up to $100 million principal amount of Convertible Senior Notes
due 2021 through a private offering to qualified institutional buyers
pursuant to Rule 144A under the Securities Act of 1933, as amended.
Universal American expects to grant the initial purchaser of the notes a
30-day option to purchase up to an additional $15 million aggregate
principal amount of the notes on the same terms and conditions.

The notes will be convertible, subject to certain conditions, into cash,
shares of Universal American’s common stock or a combination of cash and
shares of Universal American’s common stock, at Universal American’s
option. The interest rate, conversion rate and other terms of the notes
will be determined by negotiations between Universal American and the
initial purchasers of the notes.

Universal American plans to use the net proceeds from the offering of
the notes, together with cash on hand, to repurchase common stock from
certain of its significant stockholders and as a part of its stock
repurchase program, each as described below.

Universal American also announced that it has entered into stock
purchase agreements with affiliates of Perry Capital and Welsh, Carson,
Anderson & Stowe (“WCAS”) whereby it has agreed to purchase at least 75%
of the shares of the common stock held by these stockholders at a
purchase price of $6.80 per share (the “Share Repurchase”). Currently,
affiliates of Perry Capital and WCAS hold 11,011,515 and 7,098,775
shares, respectively, of Universal American common stock. In the event
Universal American acquires less than 100% of the shares held by such
shareholders, it will have a 35-day option to purchase any remaining
shares held by such shareholders at the same price and terms. Universal
American’s obligation to purchase these shares is subject to the
consummation of the convertible notes offering and certain customary
conditions. Richard C. Perry, Chief Executive Officer of Perry Corp. and
Sean M. Traynor, General Partner at Welsh, Carson, Anderson & Stowe,
have each agreed to resign from the Universal American Board of
Directors upon closing of the Share Repurchase.

In addition, Universal American’s board of directors authorized a $40
million stock repurchase program to repurchase shares of our common
stock (i) from purchasers of notes in this offering concurrently with
the pricing of this offering in privately negotiated transactions
effected through the initial purchaser or one of its affiliates and (ii)
in open market, privately negotiated or other transactions after the
pricing of the notes.

The Company expects the transaction to be accretive to future earnings.

This notice does not constitute an offer to sell or a solicitation of an
offer to buy any security. Any offers of the securities will be made
only by means of a private offering circular. The notes and Universal
American common stock issuable upon the conversion of the notes have not
been registered under the Securities Act of 1933, as amended, or the
securities laws of any other jurisdiction and may not be offered or sold
absent registration or an applicable exemption from registration
requirements.

About Universal American Corp.

Universal American (NYSE: UAM), through our family of healthcare
companies, provides health benefits to people covered by Medicare and
Medicaid. We are dedicated to working collaboratively with healthcare
professionals, especially primary care physicians, in order to improve
the health and well-being of those we serve and reduce healthcare costs.

Forward Looking Statements

This news release and oral statements made from time to time by our
executive officers may contain “forward-looking” statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as
amended, and the Private Securities Litigation Reform Act of 1995, known
as the PSLRA. Such statements that are not historical facts are hereby
identified as forward-looking statements and intended to be covered by
the safe harbor provisions of the PSLRA and can be identified by the use
of the words “believe,” “expect,” “predict,” “project,” “potential,”
“estimate,” “anticipate,” “should,” “intend,” “may,” “will,” and similar
expressions or variations of such words, or by discussion of future
financial results and events, strategy or risks and uncertainties,
trends and conditions in our business and competitive strengths, all of
which involve risks and uncertainties.

Where, in any forward-looking statement, we or our management expresses
an expectation or belief as to future results or actions, there can be
no assurance that the statement of expectation or belief will result or
be achieved or accomplished. Our actual results may differ materially
from our expectations, plans or projections. We warn you that
forward-looking statements are only predictions and estimates, which are
inherently subject to risks, trends and uncertainties, many of which are
beyond our ability to control or predict with accuracy and some of which
we might not even anticipate. We give no assurance that we will achieve
our expectations and we do not assume responsibility for the accuracy
and completeness of the forward-looking statements. Future events and
actual results, financial and otherwise, may differ materially from the
results discussed in the forward-looking statements as a result of many
factors, including the risk factors described in the risk factor section
of our SEC reports.

A summary of the information set forth in the “Risk Factors” section of
our SEC reports and other risks includes, but is not limited to the
following: risks and uncertainties related to whether Universal American
will consummate the offering and share repurchases, including the final
terms of the notes, the offering, and share repurchases; the pending
sales of our Traditional Insurance business and Total Care Medicaid
business are each subject to numerous closing conditions and there can
be no assurance that either transaction will ultimately be consummated;
the impact of the Centers for Medicare and Medicaid Services’ (“CMS”)
final Medicare Advantage reimbursement rates for calendar year 2017
could have a material adverse effect on Universal American’s MA
business; we are subject to extensive government regulation and the
potential that CMS and/or other regulators could impose significant
fines, penalties or operating restrictions on Universal American,
including with respect to False Claims Act matters or Risk Adjustment
Data Validation (“RADV”) audits; the results of the 2016 presidential
election, the Affordable Care Act and subsequent rules promulgated by
CMS could have a material adverse effect on our opportunities for growth
and our financial results; we are investing significant capital and
management attention in new and unproven business opportunities,
including our Accountable Care Organizations (“ACOs”), where we will
begin to take two-sided risk in 2016, that may not be profitable; we may
experience higher than expected medical loss ratios or lower revenues,
especially with our new members in our Northeast markets, which could
materially adversely affect our results of operations; If we are
unable to develop and maintain satisfactory relationships with the
providers of care to our members and ACO beneficiaries, our business and
overall profitability could be materially adversely affected; if we fail
to design and price our products properly and competitively or if the
premiums and fees we charge are insufficient to cover the cost of health
care services delivered to our members, our profitability may be
materially adversely affected; our significant shareholders may have
interests that are different than other shareholders and may sell or
distribute their stock which could cause the price of our stock to
decline; changes in governmental regulation or legislative reform could
increase our costs of doing business and adversely affect our
profitability; reductions in funding for Medicare programs
could materially reduce our profitability; failure to reduce our
operating and corporate costs could have a material adverse effect on
our financial position, results of operations and cash flows; we may not
be able to maintain or improve our CMS Star ratings which may cause
certain of our plans to receive less bonuses or rebates than our
competitors; changes in governmental regulation or legislative reform,
including the impact of Sequestration, could reduce our revenues,
increase our costs of doing business and adversely affect our
profitability; a substantial portion of our revenues are tied to our
Medicare businesses and regulated by CMS and if our government contracts
are not renewed or are terminated, our business could be substantially
impaired; we no longer sell long-term care insurance and the premiums
that we charge for the long-term care policies that remain in force may
not be adequate to cover the claims expenses that we incur; any failure
by us to manage our operations or to successfully complete or integrate
acquisitions, dispositions and other significant transactions could harm
our financial results, business and prospects; we could be subject to a
cyber-attack or similar network breach that could damage our reputation
and have a material adverse effect. Other unknown or unpredictable
factors could also have material adverse effects on future results,
performance or achievements of Universal American.

All forward-looking statements included in this release are based upon
information available to Universal American as of the date of the
release, and we assume no obligation to update or revise any such
forward-looking statements.

Contacts

Universal American Corp.
Adam C. Thackery, 914-597-2939
Chief
Financial Officer
or
Investor Relations Counsel:
The
Equity Group Inc.
Fred Buonocore, 212-836-9607
or
Linda
Latman, 212-836-9609
www.theequitygroup.com

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