Reliance Global Group Announces Definitive Agreement to Acquire Medigap Health Insurance Company

Rhea-AI Summary

Reliance Global Group (Nasdaq: RELI; RELIW) announced its plan to acquire Medigap Health Insurance Company for approximately $19.6 million. This transaction is expected to close in the first quarter of 2022, subject to customary conditions. Medigap, an insurance brokerage based in Florida, specializes in Medicare supplement insurance and generated about $7 million in revenue in the last twelve months. The acquisition aims to enhance Reliance's capabilities in the Medicare market, potentially increasing revenue by over 70%, and is anticipated to be highly accretive.

Positive

• Acquisition expected to boost revenue by more than 70%.
• Strategic expansion into the Medicare supplement insurance market.
• Medigap is a cash flow positive agency with a solid revenue base.

Negative

• None.

Acquisition Would Expand the Company’s Presence into the Medicare Supplement Insurance Market

LAKEWOOD, N.J., Dec. 22, 2021 (GLOBE NEWSWIRE) -- via NewMediaWire – Reliance Global Group, Inc. (Nasdaq: RELI; RELIW), which combines AI and cloud-based technologies with the personalized experience of a traditional insurance agency, today announced that it has entered into a definitive agreement to acquire Medigap Health Insurance Company (“Medigap”) in an asset purchase transaction. The acquisition is expected to close during the first quarter of 2022, and is subject to customary closing conditions. 

Medigap is an insurance brokerage company headquartered in Florida, specializing in Medicare supplement insurance. Medigap generated revenue of approximately $7 million¹ for the trailing twelve months ended September 30, 2021.

Ezra Beyman, CEO of Reliance Global Group, commented, “We are excited to announce the upcoming acquisition of Medigap, one of the nation’s fastest growing providers of Medicare supplemental insurance coverage. This planned acquisition would expand our capabilities within the Medicare supplement market, which we believe would be a perfect complement and highly synergistic with our existing portfolio companies. Importantly, this acquisition is consistent with our strategy of acquiring growing, cash flow positive agencies at attractive multiples. In addition to bolstering our revenue by more than 70%, we believe this transaction has the potential to be highly accretive.”

“I am also delighted to announce that following the acquisition, Kyle Perrin will remain COO of Medigap. Kyle brings an extensive background in the Medicare supplement market.  We look forward to his contributions as we seek to aggressively grow this business by leveraging the deep talent and technological capabilities of Reliance. In addition, we anticipate significant operating synergies across the organization, which we believe will contribute to enhanced profitability. I’d especially like to thank Jonathan Fortman, who was recently promoted to Vice President of Acquisitions for Reliance Global Group, for his tremendous efforts and support, which helped make this acquisition possible.”

Total consideration for Medigap is expected to be approximately $19.6 million, consisting of both cash and restricted common stock of Reliance Global Group.  

Additional details on the acquisition will be available in the Company’s Current Report on Form 8-K, to be filed with the Securities and Exchange Commission.

About Reliance Global Group, Inc.

Reliance Global Group, Inc. (NASDAQ: RELI, RELIW) is combining advanced technologies, with the personalized experience of a traditional insurance agency model. Reliance Global Group’s growth strategy includes both an organic expansion, including 5MinuteInsure.com, as well as acquiring well managed, undervalued and cash flow positive insurance agencies.  Additional information about the Company is available at https://www.relianceglobalgroup.com/. 

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance, condition or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described from time to time in our filings with the Securities and Exchange Commission and elsewhere. The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.

Contact:

Crescendo Communications, LLC
Tel: +1 (212) 671-1020
Email: RELI@crescendo-ir.com

¹This is an unaudited revenue number provided to the Company by the target, and it has not been independently verified by the Company

FAQ

What is the purpose of Reliance's acquisition of Medigap?

The acquisition aims to expand Reliance's presence in the Medicare supplement insurance market and enhance its revenue.

How much is Reliance paying for Medigap?

Reliance is acquiring Medigap for approximately $19.6 million.

When is the Reliance-Medigap acquisition expected to close?

The acquisition is expected to close during the first quarter of 2022.

What were Medigap's revenues prior to the acquisition?

Medigap generated around $7 million in revenue for the trailing twelve months ended September 30, 2021.

What benefits does Reliance expect from the Medigap acquisition?

Reliance expects the acquisition to be highly accretive and anticipates significant operating synergies contributing to enhanced profitability.