Centene-WellCare Merger Earns Stockholder Approval

Stockholders overwhelmingly approved the Centene-WellCare merger, the managed care company announced today.

“With the addition of WellCare, we are creating a combined company that is better able to serve members and help them achieve better health outcomes. Centene and WellCare will continue to move forward with federal and regulatory approvals with a focus on improving quality for recipients, fair compensation for providers and savings for the states,” said Michael F. Neidorff, chairman and CEO of Centene.

WellCare’s CEO Ken Burdick also said the merger will be a positive step for the insurance company.

“In addition to proving additional opportunities for our employees and better health outcomes for our members, this transaction provides WellCare with an opportunity to become part of a leader in the field, with full access to their systems and capabilities which support enhanced quality for recipients,” he said in the announcement.

Approximately 85 percent of Centene’s stockholders voted at the meeting and approved the acquisition by over 99 percent. WellCare’s meeting of 83 percent of their stockholders had a similarly favorable response rate of 99 percent.

Centene and WellCare released information that Centene would acquire WellCare for around $17.3 billion back in March.

Together, Centene-WellCare would have 22 million members dispersed across all 50 states, of which over 12 million are Medicaid beneficiaries and 5 million are Medicare members, not including Health Insurance Marketplace and TRICARE members. The combined insurance company would also boast 31 National Committee for Quality Assurance (NCQA) accredited health plans.

The companies cited five primary benefits of this merger:

• Increased scale and diversity of services
• Common dedication to community-level, with a particular emphasis on tackling social determinants
• Larger national footprint
• Mid-single digits adjusted diluted earnings per share in the Year 2
• $500 million net cost synergies by the Year 2

They anticipate a pro forma 2019 revenue of $91 billion with $5 billion earnings before interest, taxes, depreciation and amortization (EBITDA).

“By combining with Centene, we will create a more competitive, diversified company that is better able to deliver fully integrated, high-quality, cost-effective services for our members and government partners," Neidorff said in the announcement in March.

Michael Neidorff will be the chairman and CEO of the new company, with Ken Burdick taking senior management team positions.

The merger will make Centene-WellCare the largest player in terms of Medicaid and health insurance marketplace membership and fourth largest in Medicare membership behind United Health, CVS, and Humana, according to their statistics in an investors presentation this May. 

The combined company would also grow membership in “duals” who are dual eligible for Medicare and Medicaid, as well as long-term service and support, taking the first rank in both categories.

At present, the companies are in the midst of the 26 state approval process, today’s announcement stated. The companies have already received conditional approvals in four states, including Alabama, Arkansas, Kentucky, and Missouri.

The Department of Justice has requested additional information and documentation, which the companies plan to provide.

Centene and WellCare anticipate that the merger to close by the first half of 2020.