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.
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.”
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