Multiple political bets birth $17 bln health deal

Alicia Farmer
March 30, 2019

The deal was valued at $17.3 billion.

Centene Corporation and WellCare, two big players in the USA government-sponsored health insurance programme, have announced that they are merging in a deal worth $17.3 billion. The value of that acquisition is above $15 billion in the cash and stock offer plus the debt, and Centene is effectively targeting a larger effort around its government-backed Medicare and Medicaid businesses and trying to lower its exposure to the Obamacare health exchanges.

The two companies Medicaid businesses now have significant overlap in Illinois, Florida, Georgia and Missouri, according to Jefferies.

WellCare Health Plans, Inc provides government-sponsored managed care services. Harmony members were automatically enrolled with Meridian on January 1, unless they requested otherwise.

Through this purchase, Centene will operate in all 50 states and oversee WellCare's recently acquired Medicare Part D business, which was sold to the company as a result of the still-pending CVS-Aetna megamerger.

The tie-up would make Centene the "undisputed" leader in Medicaid with more than 11 million total lives covered, according to Jefferies analysts who also said the strategic merits of the deal make sense.

Government business opportunities serve as the basis point for this acquisition, as both companies derive much of their financial standing from Medicaid, Medicare, and ACA membership pools. It would include more than 12 million Medicaid beneficiaries and nearly 1 million Medicare members, along with a Medicare prescription drug plan WellCare is acquiring from Aetna.

Centene Chief Executive Officer Michael Neidorff's ambitions don't end there.

Donald Trump Announces Linda McMahon Departure from Small Business Administration
McMahon plans to join the pro-Trump superPAC America First Action, according to a source with direct knowledge of the situation. She stepped down as CEO of WWE in 2009 to run for Senate in CT but lost to Democratic Party nominee Richard Blumenthal.

Man behind fatal Call of Duty swatting incident jailed for 20 years
McAllister told reporters it is "by far the longest prison sentence in the country ever imposed for the practice of swatting". Many readers have commented here that the officer who fired the shot which killed Andrew Finch should also face prosecution.

Cops Break Down Door to Arizona Home to Take Away Unvaccinated Toddler
After the mother phoned the doctor, the doctor phoned the police. "I mean, I don't know what kind of trauma that did to my kids". The boy was taken to the hospital where he was diagnosed with an upper respiratory infection, not meningitis, KNXV reported .

"The more we can grow in this area, the better the recipients are, the better for the investors".

Such grand goals have presented obstacles for other insurers.

Neidorff said Wednesday that the WellCare deal will help Centene with this push. "While there is some overlap in some of the states, we believe it's all very manageable".

Upon completion, Centene shareholders will own approximately 71 percent of the combined entity, with WellCare shareholders owning approximately 29 percent. The companies said they plan to complete the deal in the first half of 2020.

Neidorff will lead the combined company, which will be based in St. Louis. Meanwhile, top gainers in the sector included Mistras Group Inc MG 7.11% up 6 percent, and Navios Maritime Partners L.P. Centene had been gunning for a statewide contract.

After the deal, Centene would have about 22 million members in the United States and would generate about $500 million of annual cost savings by the second year of the closing, the companies said in a statement. On average, equities research analysts anticipate that WellCare Health Plans will post 13.59 EPS for the current fiscal year. The law survived a 2017 repeal effort by Republicans, but 20 conservative-leaning states sued previous year to have it repealed on the grounds that changes in tax law invalidated it. Trump's Justice Department this week backed that effort, to the ire of Democrats. That was a change from a previous DOJ argument to keep the health-care law mostly intact.

An enlarged Centene could be threatened if higher courts uphold the request by the Republican-leaning states and the Trump administration to wipe out the entire Obamacare law, though legal experts have said that outcome is unlikely.

Other reports by

Discuss This Article