Summary
Centene Corporation (CNC) disclosed in an 8-K filing on April 9, 2012, that its Ohio subsidiary, Buckeye Community Health Plan, was not awarded a contract to continue serving Medicaid members in Ohio, effective January 2013. This decision by the Ohio Department of Job and Family Services represents a significant operational setback for Centene in a key state. The company intends to formally protest this decision within the mandated seven-day period, signaling its commitment to reversing this outcome.
Key Highlights
- 1Centene's Ohio subsidiary, Buckeye Community Health Plan, lost its Medicaid contract.
- 2The contract loss is effective January 2013.
- 3Centene plans to file a formal protest of the decision.
- 4The loss is not expected to impact 2012 revenue from Buckeye Community Health Plan.
- 5Centene anticipates a material non-cash impairment charge related to Buckeye's goodwill and intangible assets.
- 6As of December 31, 2011, Buckeye had approximately $42.9 million in goodwill and net intangible assets.
- 7The impairment charge will be recorded for the year ended December 31, 2012, if the appeal is unsuccessful.
Frequently Asked Questions
The primary impact is the loss of a significant Medicaid contract for its Ohio subsidiary, Buckeye Community Health Plan, which will result in the potential impairment of approximately $42.9 million in goodwill and intangible assets if the company is unsuccessful in its appeal.
The filing states that the loss is not expected to impact 2012 Premium and Service revenues from Buckeye Community Health Plan. However, a material non-cash impairment charge is anticipated for the year ended December 31, 2012, which will affect net income.
Centene intends to file a formal protest with the Ohio Department of Job and Family Services within the required seven-day notice period.
As of December 31, 2011, Buckeye Community Health Plan had approximately $42.9 million in goodwill and net intangible assets, which are subject to an impairment test and potential write-down.