Centene Corporation, which is a Fortune 100 company, with a diversified, multi-national healthcare enterprise that provides a portfolio of services to government sponsored and commercial healthcare programs, focusing on under-insured and uninsured individuals, will acquire WellCare Health Plans, which focuses primarily on providing government-sponsored managed care services to families, children, seniors and individuals with complex medical needs primarily through Medicaid, Medicare Advantage and Medicare Prescription Drug Plans, as well as individuals in the Health Insurance Marketplace, for shares and cash totalling $17.3 billion.
The combined company will be headquartered in St. Louis and will focus on government-sponsored healthcare programs, with about 22 million members across 50 states plus will continue to support substantial operations in WellCare’s home state of Florida consistent with the size of the business, as part of its commitment to a strong local approach.
Centene’s CEO, Michael Neidorff will be chairman and CEO of the combined company and the new board will consist of 11 members, 9 of whom will be from the board of Centene and 2 of whom will be from the board of WellCare, with WellCare CEO, Ken Burdick and CFO Drew Asher expected to join the Centene senior management team in new positions that will be created for the combined company at a later date.
After all is said and done, Centene shareholders would own about 71% of the combined entity, and WellCare holders will own the remaining 29% of the shares of the combined company.
The transaction is not contingent upon financing. Centene intends to primarily fund the cash portion of the acquisition through debt financing, with Barclays providing an $8.35 billion financing commitment. Upon closing, Centene expects its debt-to-capital ratio to be approximately 40% and intends to use its strong earnings and cash flows to achieve its targeted debt-to-capital ratio in the mid-to-upper 30% range within 12 to 18 months post close.
The transaction is subject to approval by Centene and WellCare shareholders. The transaction is also conditioned on clearance under the Hart-Scott Rodino Act, receipt of required state regulatory approvals and other customary closing conditions. Centene and WellCare expect to complete the transaction in the first half of 2020.
By Jamie Barrie