Health insurer Centene will be on the lookout for potential acquisitions after integrating its biggest-ever purchase in WellCare Health Plans.
Centene’s Michael Neidorff says 2020 will be focused on “organic growth” and integrating WellCare after the $15 billion deal’s closing two weeks ago, but the health insurer’s chairman and CEO said the company has an “insatiable appetite” when it comes to mergers and acquisitions.
“We’re not going to look at anything serious and large until we’re really comfortable that . . . the integration has taken place to the level that’s appropriate, but those people that know us know that we have an insatiable appetite,” Neidorff told analysts on the company’s first earnings call of the year, a lengthy 80-minute discussion that included questions about future M&A. “They also know we are balance sheet managers and we look very carefully at that. As our balance sheet continues to strengthen, this gets integrated and we see opportunities, we will be back out there.”
Centene is now a national player focused on providing government-sponsored health insurance coverage that serves “1 in every 15 Americans” that includes more than 2 million people who have purchased Centene’s Ambetter brand individual coverage also known as Obamacare on public exchanges under the Affordable Care Act.
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Centene has found success providing subsidized individual coverage, which was a market that more established health plans like Aetna, Humana and UnitedHealth Group couldn’t make work. They exited the Obamacare business after being unable to successfully manage the healthcare costs of uninsured Americans signing up for coverage.
As health plans have left the Obamacare business, Centene has expanded.
Centene, which sells Obamacare coverage in 20 states on government exchanges, expanded in 10 of these states for 2020 and that has paid off, Neidorff told analysts Tuesday. The company now has 2.2 million enrollees in that business following expansion into new markets.
Neidorff said the company remains focused on organic growth. In Centene’s fourth quarter, the insurer grew its Medicaid business as well as its enrollment in Medicare Advantage, which provides health coverage to seniors via contracts with the federal government.
“We are very driven by organic growth,” Neidorff said. “We had almost $7 billion of organic growth last year.”