Bruce Japsen May 7, 2019, 07:30am
Reports that Humana may be interested in
buying Centene come as the health insurer looks to grow its Medicaid business
in more states.
Centene’s share price jumped Monday on speculation Humana
may be interested in Centene should Centene’s proposed acquisition of WellCare
Health Plans fall through. Centene last month announced plans
to buy WellCare for more than $15 billion in a deal that would
expand the business of administering Medicaid benefits for poor Americans as
well as private Medicare Advantage coverage.
Reuters reported two hedge funds
may oppose Centene's WellCare acquisition. It’s unclear whether
Humana’s interest in Centene is serious. Humana wouldn’t comment when reached
Monday evening.
But Centene remains committed to completing
the WellCare deal.
“We remain as committed to our combination
with WellCare today as we did when we announced it on March 27," Centene
spokeswoman Marcela Hawn said Monday evening. "The addition of WellCare is
an important step in our growth strategy and will drive value for our
collective shareholders over the short and long-term. We look forward to
working through the transaction process so we can bring the benefits of our
combined company to all of our stakeholders.”
But Humana has been looking for ways to grow
its Medicaid business lately, finding success in Florida with plans to bid on
state contracts to administer Medicaid benefits in at least two other states.
Humana is a major player in providing privatized Medicare benefits known as
Medicare Advantage while Centene is one of the biggest providers of Medicaid
benefits in contracts with states.
In Florida, Humana CEO Bruce Broussard told
analysts last week on thecompany’s first quarter
earnings call that the insurer had “wonderful” growth of its
Medicaid business. Humana was a big winner of a Florida Medicaid contract last
year, according to news reports at that
time.
“This
year, we grew 37% on a membership basis, as a result of our contract win last
year,” Broussard said of the Florida contract. "That contract is actually
going quite well, and our quality measurements and so on are aligned with what
we — our expectations are and what the state expectations are."
Broussard said Humana is responding to
requests for proposals to expand into Medicaid in other states beyond Florida.
“Louisiana and Texas are the two RFPs that we're
participating in from an organic point of view, and we're very bullish about
those RFPs as we are engaged at both the community level and the state level in
that particular population,” Broussard told analysts last week.
Humana executives were also asked last week by
analysts about the Centene-WellCare deal.
"We continue to be confident in our
organic direction," Broussard said. "We
are always looking at the market and the M&A side like no different than we
have in the past. So we continue to believe what our strategy is, is very, very
exciting and I think we'll be very competitive in the future."
No comments:
Post a Comment