Centene expands NY market share with $3.8B Fidelis Care acquisition
- Centene announced it will acquire nonprofit insurer Fidelis Care for $3.75 billion.
- Through the acquisition, Centene is positioning itself with a leading managed-care market share in New York. Fidelis serves over 1.6 million members across the Affordable Care Act (ACA) markets, Medicaid and Medicare Advantage.
- The purchase would result in Centene's national membership rising to about 14 million members, CNBC reported.
Centene said the deal is expected to close in Q1 of next year. The deal puts Centene in a leadership position for managed care market share. New York is the country's second largest managed care state by membership, and the expansion allows Centene to play in the country's four largest managed care states: California, Florida, New York and Texas.
"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 company said in a prepared statement.
Shareholders and investors seemed happy with the announcement. The company's stock jumped immediately from $90.95 per share at the close of business Tuesday to $97 per share at the open of business Wednesday.
Centene's stock is at an all time high.
The purchase comes about two years after the insurer bought Health Net for $6.8 billion, which allowed Centene to grab a large market share in California.
ACA growth helped the insurer post strong earnings in Q2, including total revenues of $12 billion, a 10% increase compared to last year. During the announcement, the company said its managed care membership increased 7% year-over-year to 12.2 million members.
Centene has enjoyed healthy financials thanks to their ACA and Medicaid managed care portfolio. The insurer has stepped up to offer ACA plans in counties that would otherwise be "bare counties" next year. The insurer seems determined, through asset purchasing or opportunistically entering more markets, to scale its business. With the company's stock hitting a new high, the strategy seems to be working so far.
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