8-KMaterial Agreements

CENTENE CORP 8-K Report, Material Agreement (Oct 1, 2004)

Filed October 1, 2004For Securities:CNC

Summary

Centene Corporation (CNC) announced on September 28, 2004, a significant expansion through a definitive agreement to acquire two health plan entities, FirstGuard Inc. and FirstGuard Health Plan, from Swope Community Enterprises. This acquisition is set to bring approximately 136,000 new members into Centene's fold, specifically targeting Medicaid and CHIP populations in Kansas and Missouri. The transaction, valued at approximately $93 million in cash, is a strategic move to enter two new Medicaid-mandated states, bolstering Centene's market presence in the government-sponsored healthcare sector. Financing for the acquisition will be a combination of existing cash reserves and Centene's $100 million revolving credit facility. The deal is anticipated to close by the first quarter of 2005, contingent upon customary closing conditions including regulatory approvals, the establishment of a long-term provider agreement with Swope Health Services for the Missouri market, and FirstGuard maintaining a minimum statutory net worth of $6 million at closing. This acquisition represents a material step in Centene's growth strategy, increasing its member base and geographic reach within key government healthcare programs.

Key Highlights

  • 1Centene to acquire two health plan entities, FirstGuard Inc. and FirstGuard Health Plan, from Swope Community Enterprises.
  • 2Acquisition adds approximately 136,000 Medicaid and CHIP members in Kansas and Missouri.
  • 3Purchase price of approximately $93 million in cash, financed by cash and revolving credit facility.
  • 4Marks Centene's entry into two new Medicaid-mandated states, expanding its geographic footprint.
  • 5Transaction expected to close by the first quarter of 2005, subject to regulatory approvals and other conditions.
  • 6Key closing conditions include regulatory approval, a long-term provider agreement with Swope Health Services in Missouri, and minimum net worth for FirstGuard.
  • 7Approximately $17 million of the purchase price to be held in escrow for 18 months post-closing.

Frequently Asked Questions

This acquisition is strategically important as it allows Centene to enter two new Medicaid-mandated states, Kansas and Missouri, significantly expanding its presence in the government-sponsored healthcare market and increasing its member base by approximately 136,000.

The acquisition will be financed through a combination of Centene's existing cash reserves and its $100 million revolving credit agreement.

Key conditions include obtaining necessary regulatory approvals, the signing of a long-term provider agreement between FirstGuard and Swope Health Services for the Missouri market, and ensuring FirstGuard maintains a minimum statutory net worth of $6 million at the time of closing.

The acquisition is expected to close by the first quarter of 2005, pending the satisfaction of all closing conditions.