8-KFinancial EventsOther Events

CENTENE CORP 8-K Report, Financial Obligation (Jan 5, 2006)

Filed January 5, 2006For Securities:CNC

Summary

Centene Corporation (CNC) has filed an 8-K report detailing two significant events that occurred on January 3rd and 4th, 2006. The company entered into a direct financial obligation by borrowing $30 million under its existing $200 million revolving line of credit, bringing the total outstanding borrowings to $105 million. This borrowing is related to the previously announced acquisition of US Script, Inc. The most impactful news for investors is the acquisition of US Script, a pharmacy benefits manager, for an initial cash payment of $40 million. This acquisition could potentially increase to $50 million if US Script meets certain EBITDA targets over the next five years. US Script will be integrated into Centene's operations under its wholly-owned specialty services subsidiary, CenCorp Health Solutions. This move signals Centene's strategic expansion into the pharmacy benefits management sector.

Key Highlights

  • 1Centene Corporation acquired US Script, Inc., a pharmacy benefits manager, for $40 million in cash.
  • 2An additional payment of up to $10 million is contingent upon US Script achieving certain EBITDA targets over a five-year period.
  • 3The acquisition was funded in part by a $30 million borrowing under Centene's $200 million revolving line of credit.
  • 4Total outstanding borrowings under the revolving credit facility now stand at $105 million.
  • 5US Script will be managed by Centene's wholly-owned subsidiary, CenCorp Health Solutions.
  • 6The acquisition signifies Centene's strategic expansion into the pharmacy benefits management market.

Frequently Asked Questions

The $30 million borrowing on January 3, 2006, was made in connection with Centene Corporation's acquisition of US Script, Inc.

The initial cash payment for US Script was $40 million. There is a potential for an additional $10 million payment if US Script achieves certain EBITDA targets over the next five years, making the total potential acquisition cost $50 million.

The acquisition of US Script, a pharmacy benefits manager, indicates Centene's strategic move to expand its presence and capabilities within the pharmacy benefits management sector. US Script will operate under Centene's specialty services subsidiary, CenCorp Health Solutions.

After borrowing $30 million, Centene now has $105 million in borrowings outstanding under its $200 million revolving line of credit, which has an expiration date of September 9, 2010.