Centene Agrees to Buy WellCare for $15B

Earlier this week Centene had reached a deal to acquire its smaller rival Well Care Health Plans

Earlier this week Centene had reached a deal to acquire its smaller rival Well Care Health Plans

Centene's planned acquisition of WellCare continues a wave of consolidation in USA healthcare, coming after two large health insurers combined with the two largest US pharmacy benefit managers in deals that closed past year. In a research note, Leerink Parnters analyst Ana Gupte wrote that the move would allow Centene to drive margin expansion and accelerate its slowing growth, while diversifying itself at a time when the ACA is at risk.

The WellCare acquisition would position the Centene more strongly in the more politically stable Medicaid and Medicare markets, where it would rank first and fourth respectively, by membership.

Executives from WellCare are expected to join Centene, though the companies declined to describe the precise roles of they would take in the newly combined management team.

The original $305 (rounded) offer would have been a 32% premium to WellCare's prior close of $231.27, but WellCare shares were last seen up only 9.2% at $252.58 due to the 8.1% drop to $50.35 in Centene's stock price. Based on Tuesday's stock closing price of $54.85, the equity component was valued at $185.39. Meanwhile, top gainers in the sector included Mistras Group Inc MG 7.11% up 6 percent, and Navios Maritime Partners L.P. The company reported $1.63 EPS for the quarter, topping the consensus estimate of $1.55 by $0.08. FMR LLC now owns 2,876,051 shares of the company's stock worth $679,007,000 after buying an additional 1,557,652 shares in the last quarter. HUM, -0.01% giving up 0.4%. The 2010 Affordable Care Act expanded coverage to millions of people by creating individual insurance exchanges and increasing Medicaid enrollment in several states.

A Centene tie up with WellCare Health Plans Inc., based in Tampa, Florida, would create an insurer with 22 million customers and a dominating Medicaid presence.

The merger is targeting around $500 million in cost savings from the deal in the second year after it closes, and the combination was projected to be accretive to earnings in the mid-single digits in year two.

LSU basketball confident as they prepare for Michigan State
Both LSU and Michigan State are led by terrific point guards, and there is plenty of size for each team. Michigan State recently returned center Nick Ward after a broken hand held him out since late February.

Centene saw its ACA exchange membership swell to nearly 2 million during the latest open enrollment, giving it about a 20% market share across the country.

"The combined company would be the leader in government-sponsored health care with increased scale and diversification both geographically and in its managed care service offerings, and enhance access to high-quality services for members", the companies said in a statement.

Shares of WellCare Health Plans stock opened at $259.81 on Thursday.

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.

Oppenheimer's Michael Wiederhorn said among other states where there is significant overlap, Centene may need to "consider its options" with respect to Kentucky. The total deal value is estimated at $17.3 billion, including WellCare's debt load. He also said Centene would benefit from WellCare's Medicare platform, while WellCare could use Centene's technology. SCVL 21.36% shot up 23 percent to $37.34 after the company reported stronger-than-expected results for its fourth quarter.

Silver traded down 0.3 percent Wednesday to $15.38, while copper rose 0.3 percent to $2.862.

Recommended News

  • Biden doesn't recall alleged kissing incident from 2014

    Biden doesn't recall alleged kissing incident from 2014

    She published a detailed account of what happened when she encountered Biden during an event for her election campaign in 2014. When she was 15 years old, she was on juvenile parole; when she was 17, she dropped out of high school.
    Her's have passed away while on U.S.  tour

    Her's have passed away while on U.S. tour

    Stephen and Audun met while studying at the Liverpool Institute for Performing Arts. They were on their second tour of North America and had 19 dates scheduled.
    Valve Confirms Its Own VR Headset, Valve Index To Launch In May

    Valve Confirms Its Own VR Headset, Valve Index To Launch In May

    The headset has been rumored for a while, and became just about a sure thing when convincing-looking images leaked last November . The front of the headset is flanked by at least two sensors.
  • Grand Canyon tourist found dead in wooded area

    Grand Canyon tourist found dead in wooded area

    The person's relatives haven't been notified, and the cause of death is unclear, park spokeswoman Vanessa Ceja-Cervantes said. A tourist trying to get the flawless photo stumbled over the rim of the Grand Canyon and fell to his death, authorities say.
    Piers Morgan labels Meghan Markle a 'fake social climber'

    Piers Morgan labels Meghan Markle a 'fake social climber'

    And it showed me she, I'm afraid, is probably a bit of a social climber. "Good luck to Harry", said Morgan. "I tried to warn you". 'Best wishes, Harry and Meghan , the Duke and Duchess of Sussex '.
    Tennessee Fans Not Happy With Foul Call Late Against Purdue

    Tennessee Fans Not Happy With Foul Call Late Against Purdue

    All you have to do is circle back to last year's Sweet 16 game against the Seminoles when they turned it over 13 times. The Vols also will lose at least a pair of starters from this squad with Schofield and Alexander both seniors.
  • Video released of Alaska father, son illegally shooting bear and shrieking cubs

    Video released of Alaska father, son illegally shooting bear and shrieking cubs

    Both Andrew and Owen Renner were criminally charged over the incident. "Yeah, that would be a good idea", said Owen in the video. The men are then seen pulling the mother bear from the den, high-fiving each other before posing for photos with the dead bear.
    Wendy Williams Hospitalized After Learning Husband's Mistress Gave Birth

    Wendy Williams Hospitalized After Learning Husband's Mistress Gave Birth

    Backing up his claim, he shared with Radar that Williams had had a reporter and a photographer ride with them to their wedding. According to Radar , Williams and Girigorie started dating in 1992, marrying in 1994.
    Iran threatens Israel, US over Golan recognition

    Iran threatens Israel, US over Golan recognition

    Until now, no member of the global community has officially recognized Israeli sovereignty in the area. Iran's ballistic missiles pose a threat to regional and worldwide security, according to al-Assaf.
  • New documents increase pressure on Trudeau in SNC-Lavalin affair

    New documents increase pressure on Trudeau in SNC-Lavalin affair

    Wernick testified on two separate occasions, while Wilson-Raybould was not offered that opportunity. Butts told the committee she called it her dream job when she was told she was being shuffled.
    Anti-stall system was on before Ethiopian jet crash, says report

    Anti-stall system was on before Ethiopian jet crash, says report

    On Wednesday, Boeing unveiled an overhaul to the software system and the pilot training of its 737 MAX plane. The pilot tried repeatedly to regain control and pull the nose up, but the plane crashed into the ocean.

    Marvel's Iron Man VR Announced Exclusively for PlayStation VR

    Camouflaj director Ryan Payton, tells in a post, that his team is developing Iron Man VR in a more deeply, personal and a fun way. The trailer starts out with Tony on a plane talking to Friday, although the trailer notes this cutscene is not actual gameplay .

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.