7-May-2008
Entry into a Material Definitive Agreement, Financial Statements and Exhibits
Item 1.01 Entry into a Material Definitive Agreement.
On May 1, 2008, NationsHealth, Inc. (the "Company") and its indirect wholly-owned subsidiary, United States Pharmaceutical Group, L.L.C. ("USPG"), entered into the Second Amended and Restated Preferred Vendor Agreement with Connecticut General Life Insurance Company ("CIGNA") (the "Second Amendment"). The Second Amendment amends and restates the amended and restated preferred vendor agreement entered into on May 26, 2006. The Second Amendment extended the term of the agreement through September 30, 2012 (the "Term") and automatically renews for additional one-year periods (an "Additional Period") unless any party provides to the other parties notice to terminate not later than July 1 of any Additional Period or the final year of the Term. The Second Amendment continues to be contingent upon the award of Part D contracts to CIGNA by the Centers for Medicare and Medicaid Services' (CMS) and contains customary and usual representations and warranties and indemnification provisions.
Pursuant to the Second Amendment, and through an anticipated transition date of the end of the first quarter of 2009 (the "Transition Date"), USPG will continue to provide CIGNA the same member service activities and selected marketing and enrollment services it currently provides (the "Pre-Transition Services") in connection with CIGNA's Medicare Rx Medicare Part D Prescription Drug Plan ("PDP"). Following the Transition Date, USPG will provide more focused member facing services, including telephonic enrollment, member services, grievance management and billing customer service (collectively, the "Post-Transition Services"), but will no longer provide services relating to membership reconciliation, mail room monitoring and document processing, financial reconciliation, premium billing and collection and member correspondence fulfillment. In connection with the Second Amendment, the compensatory terms related to the Pre-Transition Services have been slightly reduced for the period November 2008 through the Transition Date. Furthermore, the compensation related to the Post-Transition Services will be reduced to reflect the reduction in overall services that USPG will provide to CIGNA.
The Second Amendment permits the Company and USPG to provide the Pre-Transition Services and Post-Transition Services to other Medicare Part D insurers and CIGNA may use other vendors to provide the Services for its Medicare Part D program, provided, however, that CIGNA is required to pay the Company certain fees if CIGNA does not meet (i) specified membership enrollment thresholds, and
(ii) CIGNA does not direct to USPG at least a certain minimum percentage of its total enrollees in the CIGNA PDP.
The Second Amendment will be filed as an exhibit to the Company's quarterly report on Form 10-Q for the quarter ending June 30, 2008, with portions omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidential treatment.
The Company issued a press release regarding the foregoing on May 7, 2008, a copy of which is attached hereto as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
