Centene to buy WellCare for $17B to create big Medicaid, ACA player
Centene Corp. said it will buy fellow Medicaid insurer WellCare Health Plans in an estimated $17.3 billion deal.
All in all, the two insurers would cover nearly 22 million people in Medicare, Medicaid and the ACA exchanges. Centene CEO Michael Neidorff will serve as chairman and CEO of the merged company.
"With the addition of WellCare, we expect to bolster and diversify our product offerings, increase our scale and have access to new markets, which will in turn, enable us to continue investing in technology and better serve members with innovative programs designed to meet their needs," Neidorff said in a statement.
Combined, the merged company would boast $80.5 billion in revenue and $1.3 billion in net income. It would include more than 12 million Medicaid beneficiaries and almost 1 million Medicare members, along with a Medicare prescription drug plan WellCare is acquiring from Aetna.
Centene saw its ACA exchange membership swell to almost 2 million during the latest open enrollment, giving it about a 20% market share across the country. WellCare's recent growth focused on Medicaid, where it has million members, thanks in large part to its $2.5 billion acquisition of Meridian Health Plan that closed in September.
Centene's shareholders would own 71% of the merged insurer and its board would fill nine of the 11 board seats after its projected close in the first half of 2020.
Centene will pay 3.38 shares of its stock and $120 in cash for each share of WellCare stock, or $305.39 per WellCare share. That's equates to a 32% premium to WellCare's Tuesday closing stock price.
WellCare's stock price bumped up 14% before market open while Centene's stock took a 5% dip. /Source: Modern Healthcare/
March 27, 2019