8-KMaterial Agreements

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

Filed December 8, 2005For Securities:CNC

Summary

Centene Corporation, through its subsidiary Superior HealthPlan, Inc., has entered into a significant new Medicaid/CHIP HMO Managed Care contract with the Texas Health and Human Services Commission (HHSC). This agreement, effective from September 1, 2006, expands Superior's service areas to include the Lubbock Service Area for the Medicaid STAR HMO program, the Nueces Service Area for both Medicaid STAR HMO and CHIP programs, and the Travis Service Area for the CHIP HMO program. The initial contract term runs through August 31, 2008, with options for renewal up to a total of eight years, presenting a substantial growth opportunity for Centene in the Texas managed care market. The execution of this contract is a positive development for Centene, indicating an expansion of its government-sponsored healthcare business. Investors should note the extended potential duration of the contract and the broadened service areas, which are expected to contribute to future revenue and membership growth. While the contract allows for termination by HHSC under specified terms, the initial long-term outlook appears favorable for Centene's operations in Texas.

Key Highlights

  • 1Centene's subsidiary, Superior HealthPlan, Inc., finalized a new Medicaid/CHIP HMO Managed Care contract with the Texas Health and Human Services Commission (HHSC).
  • 2The contract's operational start date is September 1, 2006, with an initial term extending through August 31, 2008.
  • 3The agreement includes provisions for renewal, potentially extending the total contract term to eight years.
  • 4Superior's service areas are significantly expanded to include new Medicaid STAR HMO and CHIP programs in the Lubbock, Nueces, and Travis Service Areas of Texas.
  • 5This expansion represents a material increase in Centene's potential market share and revenue opportunities within Texas's government healthcare programs.
  • 6The HHSC has the right to terminate the contract at any time under terms specified within the agreement.

Frequently Asked Questions

This filing announces a significant expansion of Centene's managed care operations in Texas through its subsidiary Superior HealthPlan. The new contract with the Texas Health and Human Services Commission (HHSC) for Medicaid/CHIP programs in expanded service areas is expected to drive future revenue and membership growth for the company.

The operational start date for the contract is September 1, 2006. The initial term runs until August 31, 2008, but the contract can be renewed mutually for additional periods, potentially extending the total term up to eight years.

The contract expands Superior HealthPlan's services to include the Medicaid STAR HMO program in the Lubbock Service Area, and both Medicaid STAR HMO and CHIP programs in the Nueces Service Area. Additionally, it covers the CHIP HMO program in the Travis Service Area.

While the contract offers significant growth potential, investors should note that the HHSC has the right to terminate the agreement at any time under the terms specified. This provides the state with flexibility but introduces an element of risk regarding the contract's long-term stability.