ST. LOUIS, Sept. 12, 2017 /PRNewswire/ -- Centene
Corporation (NYSE:CNC) announced today that it has signed a
definitive agreement under which Fidelis Care will become Centene's
health plan in New York State. Under the terms of the
agreement, Centene will acquire substantially all of the assets of
Fidelis Care for $3.75 billion,
subject to certain adjustments.
The addition of Fidelis Care will expand Centene's national
leadership in government sponsored healthcare with a leadership
position in New York, the
country's second largest managed care state by membership. With the
addition of New York, Centene will
have a leadership position in the country's four largest managed
care states by membership – California, Florida, New
York and Texas. Fidelis
Care is a not-for-profit corporation that is a diversified leader
in government programs, serving over 1.6 million members as of
June 30, 2017, with total revenue of
$4.8 billion for the six months ended
June 30, 2017.
Fidelis Care is a leading health plan driven by a culture of
excellence and discipline, offering quality, affordable health
insurance coverage for children and adults of all ages and at all
stages of life through Medicaid, Qualified Health Plans, Child
Health Plus, Essential Plan, as well as Medicare Advantage,
Dual Advantage and Managed Long Term Care. Fidelis Care has an
efficient operating platform, a history of profitable operations
and a strong balance sheet. It is a successfully diversified
business spanning state-sponsored programs, senior programs and
exchange products with a statewide network of approximately 70,000
providers.
"We believe our over 30 years of experience, our local approach
to the provision of healthcare, and our expertise and capabilities
in caring for underserved populations will support the next
generation of leadership in government programs in New York State," said Michael F. Neidorff, Chairman, President and CEO
of Centene. "Centene's and Fidelis Care's missions are fully
aligned in terms of promoting health through high quality,
accessible care and services for all and advocating for health
policy that accords true dignity and respect for all people,
especially the underserved. Through this transaction we can further
enhance the well-being of Fidelis Care's members and continue to
build linkages and systems for the coordination of care and
services among healthcare, behavioral and social services while
doing so at an appropriate level of cost. We look forward to
partnering with the state of New
York's healthcare professionals as we continue to deliver on
our mission of transforming the health of the community, one person
at a time."
"Our mission and values are the foundation of Fidelis Care and
we are proud to have found a partner in Centene who shares our
commitment to meeting the needs of all our members throughout the
State of New York and continuing
our mission to serve the health and wellbeing of underserved
populations. We look forward to working closely with Centene's
management and to take advantage of their comprehensive, state of
the art technology and medical management, wellness and care
management systems," said Rev. Patrick J.
Frawley, CEO of Fidelis Care. "We are excited for the
opportunities this combination will create for all of our
stakeholders, including our members, in terms of continuing our
mission of providing access to high quality care, our provider
partners, and our employees."
Strategic and Financial Benefits of the Transaction
- Addition of Incremental Scale to Drive Profitable
Growth: With this acquisition, Centene expects to generate 2018
pro-forma total revenues of over $60
billion assuming a January 1,
2018 closing date, solidifying its position as the largest
Medicaid managed care organization in the country. The combined
company anticipates driving profitable growth by leveraging
Centene's local approach that provides members access to high
quality and culturally sensitive healthcare services. The
transaction will provide Centene with a leadership position in
New York's Medicaid and other
State sponsored businesses, Medicare Advantage and dual eligible
programs, as well as the Qualified Health Plan and Essential
Plan. On a combined basis, Centene and Fidelis Care served
approximately 13.8 million members as of June 30, 2017.
- Highly Accretive to Earnings with Revenue Growth
Opportunity: The transaction is expected to generate immediate
accretion to Year 1 GAAP earnings per share, high single-digit and
low- to mid-teens percentage accretion to adjusted earnings per
share in Year 1 and Year 2, respectively. Centene expects to
achieve $25 million of pre-tax net
synergies in Year 1 and $100 million
run-rate synergies beginning in Year 2. Synergies will come
from areas primarily attributable to reduced medical costs through
the use of Centene's systems and medical management programs,
integration of a range of specialty services and efficiencies in
G&A.
- Opportunity to Leverage Centene's Capabilities: Centene
has made investments in a broad portfolio of capabilities including
the suite of specialty services under envolve, the TruCare case
management platform, the Centelligence data and analytics tools,
and multiple award winning clinical programs. We look forward to
the opportunity to bring these assets to New York in order to further build on and
enhance the existing capabilities of Fidelis Care.
Key Fidelis Care Investment Highlights
- New York market leadership in
state sponsored programs, individual marketplace and Essential
plan, as well as a significant presence in Medicare Advantage
- Fastest growing New York Medicaid and Managed Long-Term Care
(MLTC) plan and 2nd fastest growing New York Medicare
plan
- Only plan to operate Medicaid, Child Health Plus and MLTC in
all 62 NY counties
- History of strong financial performance with 2013 to 2016
enrollment CAGR of approximately 20% and revenue CAGR of
approximately 25%, driven by organic growth
Organization and Management
Upon closing of the transaction, Rev. Patrick J. Frawley will continue to lead Fidelis
Care as Chief Executive Officer. Consistent with Centene's local
approach, the Company will continue to be headquartered in
Queens with operations throughout
the state, including, Albany,
Buffalo, Rochester and Syracuse.
Centene is committed to having a strong New York organization and looks forward to
welcoming Fidelis Care's approximately 4,000 dedicated team members
to the Centene family.
Financing and Approvals
Subject to market conditions, Centene intends to fund the
purchase price with $2.3 billion of
new equity, including share consideration, and $1.6 billion of new long-term debt.
The transaction is not contingent upon financing and Centene has
secured the full $3.75 billion in
committed bridge financing. Centene expects that its strong balance
sheet and the additional cash flow resulting from the acquisition
will allow the Company to maintain its credit rating and the
ability to deleverage on an accelerated basis.
The transaction is expected to close in the first quarter of
2018, subject to various closing conditions and receipt of
New York regulatory approvals,
including approvals under the New York Not-for-Profit Corporation
Law.
Advisors
Allen & Company LLC is serving as financial advisor to
Centene, with Skadden, Arps, Slate, Meagher & Flom LLP serving
as legal counsel. Citi is serving as financial advisor to Fidelis
Care with Norton Rose Fulbright
serving as legal counsel.
Conference Call
Centene and Fidelis Care will host a conference call today,
September 12, 2017, at 5:00 p.m. (Eastern Time) and will simultaneously
broadcast it live over the Internet. The conference call can be
accessed by dialing (866) 610-1072 (domestic) or (973) 935-2840
(international). An investor presentation, to be reviewed during
the conference call, can be accessed via Centene's website at
www.centene.com/investors. A telephonic replay of the conference
call will be available immediately after the call and can be
accessed by dialing (800) 585-8367, or for international callers,
(404) 537-3406. The passcode for the live call and the replay is
83338484. The archive of the call replay will be available until
September 27, 2017. The live webcast
and archived replay can be accessed on Centene's website for a
period of time following the call.
About Centene Corporation
Centene Corporation, a
Fortune 100 company, is 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. Many receive benefits
provided under Medicaid, including the State Children's Health
Insurance Program (CHIP), as well as Aged, Blind or Disabled (ABD),
Foster Care and Long Term Care
(LTC), in addition to other state-sponsored programs, Medicare
(including the Medicare prescription drug benefit commonly known as
"Part D"), dual eligible programs and programs with the U.S.
Department of Defense and U.S. Department of Veterans Affairs.
Centene also provides healthcare services to groups and individuals
delivered through commercial health plans. Centene operates local
health plans and offers a range of health insurance solutions. It
also contracts with other healthcare and commercial organizations
to provide specialty services including behavioral health
management, care management software, correctional healthcare
services, dental benefits management, in-home health services, life
and health management, managed vision, pharmacy benefits
management, specialty pharmacy and telehealth services.
Centene uses its investor relations website to publish important
information about the Company, including information that may be
deemed material to investors. Financial and other information about
Centene is routinely posted and is accessible on Centene's investor
relations website, http://www.centene.com/investors.
About Fidelis Care
As a faith-based, mission-driven health plan, Fidelis Care offers
quality, affordable health insurance coverage for children and
adults of all ages and at all stages of life through Qualified
Health Plans, Child Health Plus, Essential Plan, and Medicaid -
available through the NY State of Health Marketplace - as well as
Medicare Advantage, Dual Advantage, and Managed Long Term Care.
With more than 1.6 million members Statewide, Fidelis Care was
founded on the belief that all New Yorkers should have access to
quality, affordable care. For more information, call Fidelis Care
at 1-888- Fidelis Care (1-888-343-3547) or visit
fideliscare.org.
Forward-Looking Statements
The company and its
representatives may from time to time make written and oral
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act ("PSLRA") of 1995, including
statements in this and other press releases, in presentations,
filings with the Securities and Exchange Commission ("SEC"),
reports to stockholders and in meetings with investors and
analysts. In particular, the information provided in this press
release may contain certain forward-looking statements with respect
to the financial condition, results of operations and business of
Centene and certain plans and objectives of Centene with respect
thereto, including but not limited to the expected benefits of the
acquisition of substantially all of the assets of Fidelis Care.
These forward-looking statements can be identified by the fact that
they do not relate only to historical or current facts. Without
limiting the foregoing, forward-looking statements often use words
such as "anticipate", "seek", "target", "expect", "estimate",
"intend", "plan", "goal", "believe", "hope", "aim", "continue",
"will", "may", "can", "would", "could" or "should" or other words
of similar meaning or the negative thereof. We intend such
forward-looking statements to be covered by the safe-harbor
provisions for forward-looking statements contained in PSLRA. A
number of factors, variables or events could cause actual plans and
results to differ materially from those expressed or implied in
forward-looking statements. Such factors include, but are not
limited to, Centene's ability to accurately predict and effectively
manage health benefits and other operating expenses and reserves;
competition; membership and revenue declines or unexpected trends;
changes in healthcare practices, new technologies, and advances in
medicine; increased health care costs; changes in economic,
political or market conditions; changes in federal or state laws or
regulations, including changes with respect to government health
care programs as well as changes with respect to the Patient
Protection and Affordable Care Act and the Health Care and
Education Affordability Reconciliation Act and any regulations
enacted thereunder that may result from changing political
conditions; rate cuts or other payment reductions or delays by
governmental payors and other risks and uncertainties affecting
Centene's government businesses; Centene's ability to adequately
price products on federally facilitated and state based Health
Insurance Marketplaces; tax matters; disasters or major epidemics;
the outcome of legal and regulatory proceedings; changes in
expected contract start dates; provider, state, federal and other
contract changes and timing of regulatory approval of contracts;
the expiration, suspension or termination of Centene's contracts
with federal or state governments (including but not limited to
Medicaid, Medicare, and TRICARE); challenges to Centene's contract
awards; cyber-attacks or other privacy or data security incidents;
the possibility that the expected synergies and value creation from
acquired businesses, including, without limitation, the Fidelis
Care acquisition, will not be realized, or will not be realized
within the expected time period, including, but not limited to, as
a result of any failure to obtain any regulatory, governmental or
third party consents or approvals in connection with the proposed
acquisition (including any such approvals under the New York
Not-For-Profit Corporation Law) or any conditions, terms,
obligations or restrictions imposed in connection with the receipt
of such consents or approvals; the exertion of management's time
and Centene's resources, and other expenses incurred and business
changes required in connection with complying with the undertakings
in connection with the receipt of any regulatory, governmental or
third party consents or approvals; disruption from the acquisition
making it more difficult to maintain business and operational
relationships; the risk that unexpected costs will be incurred in
connection with, among other things, the acquisition and/or the
integration; changes in expected closing dates, estimated purchase
price and accretion for acquisitions; the risk that acquired
businesses will not be integrated successfully; Centene's ability
to maintain or achieve improvement in the Centers for Medicare and
Medicaid Services (CMS) Star ratings and other quality scores that
impact revenue; availability of debt and equity financing, on terms
that are favorable to Centene; inflation; foreign currency
fluctuations; and risks and uncertainties discussed in the reports
that Centene has filed with the SEC. These forward-looking
statements reflect Centene's current views with respect to future
events and are based on numerous assumptions and assessments made
by Centene in light of its experience and perception of historical
trends, current conditions, business strategies, operating
environments, future developments and other factors it believes
appropriate. By their nature, forward-looking statements involve
known and unknown risks and uncertainties and are subject to change
because they relate to events and depend on circumstances that will
occur in the future. The factors described in the context of such
forward-looking statements in this press release could cause
Centene's plans with respect to the Fidelis Care acquisition,
actual results, performance or achievements, industry results and
developments to differ materially from those expressed in or
implied by such forward-looking statements. Although it is
currently believed that the expectations reflected in such
forward-looking statements are reasonable, no assurance can be
given that such expectations will prove to have been correct and
persons reading this press release are therefore cautioned not to
place undue reliance on these forward-looking statements which
speak only as of the date of this press release. Centene does not
assume any obligation to update the information contained in this
press release (whether as a result of new information, future
events or otherwise), except as required by applicable law. This
list of important factors is not intended to be exhaustive. We
discuss certain of these matters more fully, as well as certain
other risk factors that may affect Centene's business operations,
financial condition and results of operations, in Centene's filings
with the SEC, including the annual reports on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K.
View original
content:http://www.prnewswire.com/news-releases/centene-corporation-to-enter-new-york-through-transaction-with-fidelis-care-300518244.html
SOURCE Centene Corporation