Health insurer Centene agreed to buy managed-care provider WellCare Health Plans for more than $15 billion, expanding in the market for government insurance plans just as politicians in Washington, D.C., appear to be gearing up for another health-policy clash.
Centene, based in St. Louis, offered $305.39 per share in cash and stock for Tampa, Fla.-based WellCare, the companies said in a statement Wednesday.
The boards of both companies backed the transaction, which has an enterprise value of $17.3 billion.
Both insurers have erected significant businesses around government health programs.
Centene is focused on Medicaid and Affordable Care Act markets. WellCare also offers Medicaid and ACA coverage and has a large Medicare business catering to the elderly.
A combined insurer would have 22 million enrollees in government-sponsored health programs across 50 states, the companies said.
Centene will enter the Iowa market on July 1, as one of the managed-care organizations handling its Medicaid program.
Centene CEO Michael Neidorff’s ambitions don’t end there.
“You don’t achieve a number and say, ‘I don’t need to grow further,’” Neidorff said on a conference call Wednesday. “The more we can add, the more we can grow in this area, the better the recipients are, the better for the investors.”
Such grand goals have presented obstacles for other insurers. In 2017, the courts blocked mergers between Aetna and Cigna, and between Anthem and Humana.
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Aetna eventually merged with pharmacy chain CVS Health, and Cigna bought drug-benefits manager Express Scripts.
Neidorff said that he expected the deal with WellCare to get through an antitrust review, despite previous deals getting blocked.
“There is not all the same issues, all the same issue from a competitive standpoint,” he said. “While there is some overlap in some of the states, we believe it’s all very manageable.”
The combined company will have about $30 billion in drug spending, making it a major player in the pharmacy-benefit management market. That industry is dominated by Cigna, CVS and UnitedHealth Group.