8-KMaterial AgreementsFinancial EventsOther Events+1

CENTENE CORP 8-K Report, Material Agreement (Jul 22, 2005)

Filed July 22, 2005For Securities:CNC

Summary

Centene Corporation (CNC) filed an 8-K on July 22, 2005, reporting significant developments. A key event was the entry into a material definitive agreement by its subsidiary, Peach State Health Plan, Inc., with the Georgia Department of Community Health (DCH). This contract, effective January 1, 2006, will provide healthcare benefits to Medicaid and SCHIP recipients in specific regions of Georgia, marking an expansion into a new state market. The initial term runs through June 30, 2006, with renewal options. Additionally, Centene reported the acquisition of AirLogix, Inc., a respiratory disease management provider, for approximately $35 million in cash with potential performance-based earn-outs. This acquisition, to be managed under CenCorp Health Solutions, aims to expand Centene's specialty services. The company also disclosed a $35 million draw-down on its $100 million revolving credit facility to fund the acquisition, bringing total outstanding borrowings to $75 million.

Key Highlights

  • 1Centene subsidiary Peach State Health Plan secured a significant contract with the Georgia Department of Community Health (DCH) to serve Medicaid and SCHIP recipients starting January 1, 2006.
  • 2The Georgia contract covers the Atlanta and Central Regions and has an initial term through June 30, 2006, with multiple one-year renewal options.
  • 3Centene acquired AirLogix, Inc., a respiratory disease management provider, for approximately $35 million in cash, plus potential future payments.
  • 4The AirLogix acquisition is expected to be managed by Centene's specialty services subsidiary, CenCorp Health Solutions.
  • 5Centene drew $35 million from its $100 million revolving credit facility to finance the AirLogix acquisition.
  • 6Following the draw-down, total outstanding borrowings under the credit agreement increased to $75 million.
  • 7The credit agreement has an expiration date of September 14, 2009.

Frequently Asked Questions

This 8-K filing reports on two key events: Centene's entry into a material definitive agreement with the Georgia Department of Community Health for its subsidiary Peach State Health Plan, and the acquisition of AirLogix, Inc., a respiratory disease management company.

Centene paid approximately $35 million in cash for AirLogix and drew an additional $35 million from its revolving credit facility, bringing the total outstanding borrowings under that facility to $75 million. There is also potential for an additional $5 million in consideration for AirLogix if performance targets are met.

Through its subsidiary Peach State Health Plan, Centene will provide healthcare benefits and services to Medicaid and SCHIP recipients in the Atlanta and Central Regions of Georgia, commencing operations on January 1, 2006. The contract has an initial term through June 30, 2006, with renewal options.

The acquisition of AirLogix, a respiratory disease management provider, is likely intended to expand Centene's capabilities in specialized healthcare services, managed under its CenCorp Health Solutions subsidiary.