TALLAHASSEE, Fla. – Centene Corp. will acquire the Tampa-based WellCare Health Plans, Inc. in a $17.3 billion deal that will combine two of the biggest players in Florida’s Medicaid managed-care system, the companies announced Wednesday.
Centene does business in Florida as Sunshine Health, while WellCare’s Florida Medicaid business is Staywell Health Plan. The companies provide coverage in similar markets in the state. The deal, in part, would give Centene access to WellCare’s business in parts of the country such as Hawaii, Kentucky and New Jersey.
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"With the addition of WellCare, we expect to bolster and diversify our product offerings, increase our scale and have access to new markets, which will in turn, enable us to continue investing in technology and better serve members with innovative programs designed to meet their needs,” Michael F. Neidorff, Centene's chairman and chief executive officer, said in a prepared statement. “Centene has grown significantly by adding capabilities that have increased revenues and enabled margin expansion. The addition of WellCare is the next logical step in our growth strategy and to drive value for our collective shareholders.”
The subsidiaries of Centene and WellCare oversaw care for more than 1.4 million low-income, disabled and elderly Floridians as of Feb. 28, with WellCare the largest Medicaid HMO in the state, according to numbers posted on the state Agency for Health Care Administration website.
After the acquisition, scheduled to be completed in the first half of 2020, the combined company will be headquartered in St. Louis, where Centene is based. Boards of both companies have signed off on the deal, while it remains subject to approval by shareholders.
The companies focus on Medicaid and other government health programs.
"By combining with Centene, we will create a more competitive, diversified company that is better able to deliver fully integrated, high-quality, cost-effective services for our members and government partners,” Ken Burdick, WellCare's chief executive officer, said in a prepared statement. “Both companies share a deep history and focus on the government-sponsored healthcare market and, together, our expertise will allow us to deliver enhanced value for our shareholders, opportunities for our associates and better outcomes for our members."
The announcement came after both companies in 2018 finished negotiating new five-year Medicaid managed care contracts with Florida that are worth tens of billions of dollars.
WellCare, operating as Staywell, has contracts to provide comprehensive managed care in 10 of the 11 regions used by Florida’s Medicaid program. Comprehensive plans offer both acute and long-term care coverage. The state also chose WellCare to provide a Medicaid managed-care specialty plan for people with serious mental illness in all 11 regions.
Centene, operating as Sunshine Health, also was chosen by AHCA to provide comprehensive coverage to Medicaid managed care enrollees. It has contracts in all 11 regions to provide that coverage. Additionally, the plan also was chosen to provide specialty managed-care benefits to children in the state’s child-welfare program. It is the only HMO with a contract with the state to provide those services.
Both companies also participate in the Florida Healthy Kids program, which provides health insurance to children from ages 5 to 18 whose families earn too much to qualify for Medicaid.
WellCare was started in 1985, Its corporate offices were raided in 2007 by the Federal Bureau of Investigations and other agencies. Ultimately, the company agreed to pay $35 million to settle allegations of Medicaid fraud.
After the new deal is complete, the board of the combined company will be made up of nine members from Centene and two from WellCare, according to the announcement. Neidorff will serve as chairman and chief executive officer.