TORONTO, Oct. 19, 2015 /CNW/ - The New York State Department of Financial Services, the Centers for Medicare and Medicaid Services, and the New York State Department of Health, publicly announced that they directed Health Republic Insurance of New York ("HRINY") to cease writing new health insurance policies and begin an orderly wind down of business upon the expiration of its existing policies. HRINY is a CO-OP that was formed under the Affordable Care Act legislation in the U.S.
Morneau Shepell Inc. ("Morneau Shepell" or the "Company") has been supplying technology, call centre and back office functions to HRINY since 2013. HRINY represents approximately 3.5 per cent of Morneau Shepell year-to-date revenue, with an insignificant contribution to earnings.
Since being advised of the wind down, Morneau Shepell has been working cooperatively with HRINY and the State and Federal regulators on an agreement to continue to support HRINY and its 200,000 plus members during the orderly wind down. The Company anticipates providing services to HRINY until mid-2016.
Morneau Shepell does not anticipate any significant impact on 2015 revenue as a result of the wind-down directive. The Company, however, is expecting to report a non-cash write down in its third quarter results, scheduled to be released on November 9, 2015, estimated to be between $13 million and $17 million. The write down relates to deferred implementation charges and internally-developed software originally capitalized and anticipated to be amortized over future periods.
"While the news regarding HRINY is disappointing, we remain confident in our overall U.S. growth strategy," said Alan Torrie, President and Chief Executive Officer. "Our core benefits administration business and technology offering remain a strategic focus, as evidenced by our acquisition of Ceridian's health and welfare administration business in this space earlier this year, as does our defined benefit pension administration business where we are already the fourth largest administrator in North America."
About Morneau Shepell Inc.
Morneau Shepell is the only human resources consulting and technology company that takes an integrative approach to employee assistance, health, benefits, and retirement needs. The Company is the leading provider of employee and family assistance programs, the largest administrator of pension and benefits plans and the largest provider of integrated absence management solutions in Canada. Through health and productivity, administrative, and retirement solutions, Morneau Shepell helps clients reduce costs, increase employee productivity, and improve their competitive position.
Established in 1966, Morneau Shepell serves more than 20,000 clients, ranging from small businesses to some of the largest corporations and associations in North America. With almost 4,000 employees in offices across North America, Morneau Shepell provides services to organizations across Canada, in the United States, and around the globe. Morneau Shepell is a publicly-traded company on the Toronto Stock Exchange (TSX: MSI). For more information, visit morneaushepell.com.
This news release contains "forward-looking statements" within the meaning of applicable securities laws, such as statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Use of words such as "may", "will", "expect", "believe", or other words of similar effect may indicate a "forward-looking" statement. These statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those described in the Company's publicly filed documents (available on SEDAR at www.sedar.com) and in the firm's MD&A under the heading "Risks and Uncertainties". Those risks and uncertainties include ability to maintain profitability and manage growth, reliance on information systems and technology, reputational risk, dependence on key clients, reliance on key professionals and economic conditions. Many of these risks and uncertainties can affect the firm's actual results and could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking statement made by the Company or on the firm's behalf. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. All forward-looking statements in this news release are qualified by these cautionary statements. These statements are made as of the date of this news release and, except as required by applicable law, the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Additionally, the Company undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Company, its financial or operating results or its securities.
SOURCE Morneau Shepell - Corporate
For further information: Nathan Gibson, Manager, Corporate Communications, Morneau Shepell, 416-390-2641, firstname.lastname@example.org