Centene to Acquire WellCare for $15.27 Billion to Expand Government-Sponsored Healthcare Footprint

VCBeat (WeChat ID: vcbeat) has learned that on March 27, 2019, U.S. health insurance giant Centene announced it would acquire its competitor WellCare for $15.27 billion to expand the scale of its government-sponsored Medicare and Medicaid businesses. Including the assumption of WellCare’s debt by Centene, the total value of the transaction will reach $17.3 billion.

Following the announcement of the acquisition, WellCare’s stock price surged 9.8% to $253.98 per share, while Centene’s stock price fell approximately 7.5% to $50.71 per share.

The acquisition received unanimous approval from the boards of directors of Centene and WellCare and is expected to be completed in the first half of 2020. Upon completion, the two companies will merge, creating a combined entity with 22 million members across all 50 U.S. states, thereby enabling Centene to compete more effectively against formidable rivals UnitedHealth and CVS Health.

It is understood that the merged company will have 11 board members, nine of whom will come from Centene and two from WellCare. The company will be headquartered in St. Louis, where Centene is based, and will conduct large-scale operations in Florida, where WellCare is headquartered. Centene shareholders will hold approximately 71% of the shares in the merged entity, while WellCare shareholders will hold the remaining 29%. Michael F. Neidorff, Chairman and CEO of Centene, will serve as CEO of the merged company. WellCare CEO Ken Burdick and CFO Drew Asher will assume new roles within the company.

Michael F. Neidorff stated in a press release, “The acquisition of WellCare will further diversify our product portfolio, help us expand our scale and commercial markets, and enable us to focus on enhancing our technological capabilities, launching innovative initiatives, and better meeting customer needs.”

It is reported that this acquisition could reduce Centene’s reliance on health insurance exchanges, which are part of the Affordable Care Act (ACA), also known as Obamacare—the signature healthcare initiative of former U.S. President Barack Obama. Recently, U.S. President Donald Trump has intensified his efforts to undermine the ACA. According to Reuters, 40% of Centene’s revenue stems from provisions under the Affordable Care Act. Should the healthcare law be overturned, Centene would be among the companies most severely impacted.

Centene, founded in 1984 and headquartered in Missouri, USA, is a large publicly traded company and a multi-line managed care enterprise. It serves as one of the primary intermediaries in government-sponsored private healthcare programs. Its main product lines include Medicare, health management, the Health Insurance Marketplace system (ACA-certified), military healthcare systems, and traditional commercial insurance.

WellCare, founded in 1985 and headquartered in Florida, USA, is a managed care provider dedicated to delivering government-sponsored managed healthcare services to families, children, the elderly, and other populations with medical needs. WellCare serves approximately 5.5 million members enrolled in Medicaid and Medicare (including Medicare Advantage and Dual-Eligible Special Needs Plans) programs.

(Compiled by Jiao Yanli)