STATE: Aetna Plans to acquire Humana for $37b; says it will retain ‘significant presence’ in Louisville
After weeks of speculation that an acquisition was in the works, Humana Inc. announced on July 3 that it had agreed to a merger with Connecticut-based Aetna to create a new healthcare organization.
Aetna will acquire all outstanding shares of Louisville-based Humana for a combination of cash and stock valued at $37 billion or approximately $230 per Humana share based on the closing price of Aetna common shares on July 2. The transaction is expected to close next year.
In a joint statement, the companies said the combined entity “will help drive better value and higher-quality healthcare by reducing administrative costs, leveraging best-in-breed practices from the two companies – including Humana’s chronic-care capabilities that measurably improve health outcomes for larger populations – and enabling the company to better compete with more cost-effective products.”
The merger brings together Humana’s growing Medicare Advantage business with Aetna’s diversified portfolio and commercial capabilities to create a company serving the most seniors in the Medicare Advantage program and the second-largest managed care company in the United States. Aetna Executive Vice President Shawn M. Guertin said the merger will create savings of $1.25 billion annually in 2018, enabling the company to offer more affordable products.
Though integration plans are still in progress, the companies have announced that Aetna will make Louisville the headquarters for its Medicare, Medicaid and TRICARE businesses and will maintain a significant corporate presence in Louisville.
With nearly 14,000 employee and contractors, Humana is one of the largest employers in the state. Though no details have been released, Humana CEO Bruce Broussard said the combined company will maintain – and possibly increase – its employment levels in Louisville.
The combined company will have projected 2015 operating revenues of approximately $115 billion, approximately 56 percent of which is tied to government-sponsored programs (including Medicare and Medicaid).
STATE: KY’s Small-Business funding draws 5 new high-tech companies
Five high-tech businesses – two of which are based out of state but are relocating to the commonwealth – have been awarded more than $1.5 million as part of a program that is seeing continued success in attracting small, technology-based businesses to Kentucky.
The funds are made available through Kentucky’s competitive Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) matching funds program. Since the program’s inception in 2006, the state has matched all or parts of federal SBIR/STTR awards received by Kentucky-based companies. Out-of-state companies are also eligible for funding, should they decide to relocate to Kentucky. The program has grown substantially since 2006 and has led to an increase in the number of companies pursuing SBIR/STTR grants and out-of-state businesses relocating to the state to capitalize on the funding opportunity.
The companies receiving awards in the second quarter of 2015 include:
• Gismo Therapeutics, Inc. (Fayette County), which recently moved from New York to Lexington, is developing a class of small molecule therapeutics to disrupt the inflammation cycle of rheumatoid arthritis.
• Hera Testing Labs (Fayette County) is developing laboratory and animal tests to make the drug development process more accurate, cost effective and predictive.
• Lakota Technical Solutions Inc. (Howard, Maryland) is developing a software-based tool to more accurately and efficiently simulate electronic warfare scenarios.
• TherapyX Inc. (Jefferson County) is relocating to Louisville from New York and is developing a novel drug delivery system for a gonorrhea vaccine.
• TutorGen Inc. (Campbell County has created LOGIC (Linkage Objects for Generalized Instruction in Coding) to help bridge the gap for new students trying to learn coding.
EASTERN KENTUCKY: program will recruit dentists to eastern Kentucky by forgiving student loans
Kentucky has launched a dentist recruitment program aimed at promoting sustained oral health and well being in Eastern Kentucky.
The new loan forgiveness program is supported by $500,000 in state funds and is available to recent graduates who are establishing or joining a new private practice or purchasing an existing practice in a designated distressed county. Priority will be given to dental students from Eastern Kentucky wishing to return to practice in the designated geographic area.
According to the Kentucky Department for Public Health, Kentucky ranks 41st in annual dental visits; 45th in the percentage of children with untreated dental decay; and 47th in the percentage of adults 65 and older missing six or more teeth.
The dental schools at the University of Kentucky and University of Louisville will administer the program, providing two to five awardees $100,000 each for a two-year commitment. According to the American Dental Association, dentists completing dental school now come out with a debt of around $280,000.
“Many of our UK and UofL dental graduates from the Appalachian counties want to return home to practice – but high levels of student debt complicate their decisions about starting a practice in rural Kentucky,” said M. Raynor Mullins, associate director of the Kentucky Oral Health Research Network. “This new program will help a new cohort of dental graduates return home to serve and realize their dreams.”
BOWLING GREEN: Procom heating will move operations to KY from China
ProCom Heating Inc., a California-based company that specializes in vent-free gas heating appliances, has announced plans to relocate its China-based manufacturing facility to Bowling Green.
ProCom has had a sales/customer service office in Bowling Green since 2012 and currently employs a staff of 14 full-time workers. The company is now planning a $19 million expansion that will add approximately 310,000 s.f. to its existing Bowling Green facility and plans to move all of its manufacturing and assembly from China to the U.S.
The expansion is expected to create 37 new jobs.
The expansion will take place in three stages, starting with the addition of a 140,000-s.f. manufacturing facility in 2016. ProCom will then add approximately 30,000 s.f. of office space in 2017 before completing the project with another addition that will be used for warehouse space. The expansion as a whole will take ProCom’s Bowling Green facility to more than 440,000 s.f.
HEBRON: Allegiant to establish airline base of operations at CVG
Allegiant Travel Co. has announced plans to establish a base of operation at the Cincinnati/Northern Kentucky International Airport, beginning in January 2016.
The Las Vegas-based commercial air carrier will base up to three 156-seat Airbus 319 aircraft at CVG, creating more than 90 local jobs for pilots, flight attendants and airport service personnel.
Allegiant announced that it is also adding five additional weekly flights to its fall and winter schedule, increasing frequencies to some of its most popular destinations from CVG. The expansion includes extended service to Savannah/Hilton Head through Nov. 29 as well as additional flights to Las Vegas, Fort Lauderdale and Tampa Bay/St. Petersburg.
Allegiant started service from CVG in February 2014 with four weekly flights to two destinations and has since grown to more than 35 weekly flights to 11 destinations. In February 2014, Allegiant carried approximately 2,800 new monthly passengers; it now averages more than 25,000 new passengers per month. That growth has made CVG the fastest-growing market in Allegiant’s 16-year history and pushed its employment level at CVG to nearly 100.
“The Greater Cincinnati area has quickly become one of our strongest markets with a demonstrated demand for low-cost vacation travel,” said Jude Bricker, Allegiant’s senior vice president of planning. “The establishment of an aircraft base at CVG will further increase the efficiency of our operations, while continuing our drive to be Cincinnati’s leading low-fare carrier.”
HENDERSON: Big rivers will sell power wholesale to offset smelters loss
The Kentucky Public Service Commission has approved a settlement that permits Henderson-based Big Rivers Electric Corp. to sell wholesale power to several customers in Nebraska to help offset the costs incurred by the loss of two of its major customers.
In the last two years, aluminum smelters in Hawesville and Sebree stopped purchasing power from Big Rivers, having been approved by the PSC to purchase power on the open market. The two smelters at one time accounted for about two-thirds of Big Rivers’ load and revenue. Since October 2013, the PSC has twice approved rate increases that allowed Big Rivers to maintain financial stability following the loss of the smelters.
Big Rivers is owned by the three distribution cooperatives that serve about 112,000 customers in 26 counties in western Kentucky. The customers include about 20 large industrial facilities.
Because the loss of the smelters left Big Rivers with excess electric generating capacity, the utility has shuttered one power plant and has sought opportunities to sell power to outside customers on the open market.
LEXINGTON: UK Moving forward with plan to build more residence halls
The University of Kentucky board of trustees has approved the next phase of the university’s on-campus housing revitalization that will bring the to-date total of beds delivered or under development to 6,504.
Memphis-based EdR, a leading developer of collegiate housing, will provide financing, oversee development and construction and be responsible for maintenance and management while UK provides residence life services.
Scheduled for completion in 2017, University Flats will be composed of a seven-story building that will provide separate living communities for upper-level undergraduate students, and graduate and professional students. The complex will provide 771 beds in 312 apartments in various styles and sizes from studios to four bedrooms, each with furnishings and a full kitchen.
The largest on-campus housing development in American public higher education to date, UK’S revitalization began in spring 2012, when UK and EdR formalized a partnership and broke ground on the first phase – a 601-bed community dedicated to UK’s Honors program and students – that opened in August 2013. Since then, EdR and UK have opened new communities each year: In 2014, five buildings with 2,381 beds opened; three buildings with 1,610 beds are on schedule to open this summer. On schedule to open in 2016 are two buildings with 1,140 beds.
“Our public-private partnership with EdR has helped transform our housing in record time while allowing us to focus UK’s financial and human resources on other capital projects, namely, our new academic science building, medical campus and state-of-the-art student center, ” said Eric Monday, UK’s executive vice president for finance and administration.
LEXINGTON: Major engineering firm adding 100 more jobs downtown
Belcan, an engineering services and technical staffing provider, is adding 100 jobs in Lexington as part a $1.2 million expansion there.
Belcan is planning to lease an additional 15,000 s.f. in Lexington’s Vine Center to accommodate the increased number of engineers needed to support one of its newest customers, Pratt & Whitney, a commercial and military aerospace gas turbine engine supplier. Belcan initially opened its Lexington office in 2005 to service a growing aerospace contract with Sikorsky Aircraft Corp.
Headquartered in Cincinnati, Belcan was founded in 1958 by Ralph G. Anderson, an engineering graduate of the University of Kentucky. The company now has more than 6,000 employees in 49 locations around the world and is a major supplier of engineering, project management and technical staffing solutions to a wide array of industries.
LEXINGTON: New York Private equity firm acquires Fazoli’s restaurants
Fazoli’s, a Lexington-based quick-service Italian restaurant chain, has been sold to Sentinel Capital Partners for an undisclosed price.
Sentinel is a private equity firm headquartered in New York that invests in promising companies at the lower end of the middle market.
“Fazoli’s has consistently outperformed its competitors and will be a very strong addition to our restaurant portfolio,” said John McCormack, a partner at Sentinel. “The business has demonstrated robust financial performance and recently built impressive momentum. Fazoli’s is positioned as ‘affordable fast casual’ and combines the strengths of the fast-casual, quick-service and full-service formats, which is a competitive differentiator and also provides resilience during economic downturns. We are highly impressed with Fazoli’s’ management team and look forward to working closely with them to drive future growth.”
“Our new partnership with Sentinel is an exciting move for us, and we plan to benefit from their deep investment experience in the restaurant sector,” said Fazoli’s CEO Carl Howard. “We have been engaged in a very exciting and successful period of investment, innovation and growth during which we sharpened the focus of our brand strategy, optimized and upgraded our menu, and expanded our geographic profile.”
Founded in 1988, Fazoli’s now has 213 locations across the United States. Last year, the company expanded its concept to include 11 locations at travel centers and opened its first campus location at Texas Tech University. This year, it has been testing an expanded menu, introduced table service and unveiled a contemporary new restaurant design.
LOUISVILLE: LG&E/KU OPens gas fired power plant; cuts coal reliance 13 percent
After more than two years and 2 million construction hours, Louisville Gas and Electric (LG&E) and Kentucky Utilities Co.’s (KU) new 640-megawatt natural gas combined-cycle generating unit – known as Cane Run Unit 7 – is now operational.
The unit, which is the first of its kind in the state, generates electricity through two gas turbines and then uses the exhaust heat from those units to generate steam and produce additional electricity using a steam turbine.
The unit replaces the bulk of 800 megawatts of coal-fired generation as the company retires 13 percent of its energy production from coal-fired units in response to stricter federal carbon emission mandates.
To offset the costs associated with the new unit, the Kentucky Public Service Commission approved an increase in the base rates charged to Kentucky Utilities’ electric customers and LG&E natural gas customers, which went into effect July 1. While the monthly basic service charge remains unchanged, the per-kilowatt charge has been modified to provide additional annual cost-recovery revenues of $125 million for KU. A residential LG&E electric customer, using an average of 984 kWh per month, will see a 10-cent decrease in their overall monthly bill. A residential LG&E natural gas customer, using an average of 57 Ccf per month, will see an increase of $1.23 per month. A KU residential customer, using an average of 1,200 kWh per month, will see an increase of $8.98 per month.
LOUISVILLE: Metro council winS suit; minimum wage in city rises to $7.75
Effective July 1, Louisville’s minimum wage increased to $7.75 per hour after a court ruled that the metro government has the authority to establish a minimum wage for the city.
In December, the Louisville Metro Council passed an ordinance to raise the minimum wage within city limits to $9 an hour, up from $7.25, over the next three years. Later, a number of organizations, including the Kentucky Restaurant Association, filed a suit to have the ordinance voided, claiming the body did not have the legal authority to raise wages above that set by the Kentucky General Assembly.
Jefferson County Circuit Court Judge Judith McDonald-Burkman sided with the metro council.
Louisville Mayor Greg Fischer said the ruling will help Louisville families.
“I’m pleased the court has upheld my right to enact a minimum wage, as well as other local governments,” Fischer said. “The Metro Council and I took this step last summer to provide working families a higher minimum wage because we know that many struggle to pay for housing, food, clothing and medical care. Today’s favorable ruling will have a real impact on many Louisville families.”
The decision could have implications in Lexington, which is considering raising its city’s minimum wage as well.
LOUISVILLE: Kitchen incubator space fosters start-up food businesses
Community Ventures, a Lexington-based nonprofit corporation, has begun renovating a former restaurant in Louisville to create Louisville’s first kitchen incubator.
Also known as culinary incubators, kitchen incubators are dedicated to fostering early-stage catering, retail and wholesale food businesses. Members are given the opportunity to jump-start their food business with a fully licensed and outfitted commercial kitchen, support services, advice and programs to help build their business.
Louisville’s new kitchen incubator, Chef Space, will occupy the former Jay’s Cafeteria and will provide commercial kitchen space and business support services for up to 50 food-related early-stage businesses. The 13,000-s.f. site will also house a retail outlet and meeting spaces that will be open to the community.
Chef Space will be led by Johnetta Roberts, president, and Chris Lavenson, vice president. A late October opening is planned.