Summary
Centene Corporation (CNC) has filed an 8-K report on October 17, 2012, primarily detailing the impending termination of its subsidiary Kentucky Spirit Health Plan's Medicaid managed care contract with the Commonwealth of Kentucky. The contract is slated for termination effective July 5, 2013, based on a contractual right exercised by Kentucky Spirit. This strategic move is significant for investors as it signals a divestiture from a specific state's Medicaid program. In conjunction with this contract termination, Centene anticipates establishing a substantial pre-tax premium deficiency reserve, estimated to be between $60 million and $70 million, for the quarter ending September 30, 2012. This reserve reflects the expected financial impact of winding down operations in Kentucky and is a key figure for understanding the immediate financial implications of this decision.
Key Highlights
- 1Centene subsidiary Kentucky Spirit Health Plan notified Kentucky of intent to terminate Medicaid managed care contract.
- 2Contract termination is planned to be effective July 5, 2013.
- 3Centene believes it has a contractual right to terminate the agreement.
- 4A pre-tax premium deficiency reserve of $60-$70 million is anticipated for Q3 2012.
- 5The reserve is related to the Kentucky operations and the contract termination.
- 6The announcement was made via a press release filed as an exhibit.