8-KSecurities & ListingRegulation FDExhibits & Filings

CENTENE CORP 8-K Report, Unregistered Securities Sale (Dec 13, 2013)

Filed December 13, 2013For Securities:CNC

Summary

Centene Corporation (CNC) announced a significant acquisition of 68.2% of U.S. Medical Management, LLC (USMM) via an agreement dated December 11, 2013. This strategic move is expected to close in the first quarter of 2014. The acquisition will be financed through a combination of cash (one-third) and Centene's common stock (two-thirds), with the stock portion estimated to be between 2.3 million and 2.5 million shares, dependent on market prices near the closing date. Centene has committed to filing a registration statement to allow for the resale of these shares. Furthermore, the agreement includes provisions for Centene to acquire the remaining interests in USMM between 2015 and 2017, with potential extensions through 2020. A notable aspect is that up to 50% of the consideration for these future acquisitions can be paid in Centene's common stock. This transaction is being conducted under an exemption from registration, relying on Section 4(a)(2) of the Securities Act of 1933 or Rule 506. Additionally, the company provided updated 2013 and issued its 2014 financial guidance on December 13, 2013, via a press release.

Key Highlights

  • 1Centene Corp. to acquire 68.2% of U.S. Medical Management, LLC (USMM) for approximately $200 million.
  • 2Acquisition expected to close in Q1 2014, subject to closing conditions.
  • 3Transaction financed by one-third cash and two-thirds Centene common stock (estimated 2.3-2.5 million shares).
  • 4Centene has agreements to acquire remaining USMM interests between 2015-2017, potentially using stock for up to 50% of future consideration.
  • 5Company will file a registration statement for the resale of shares issued in connection with the USMM acquisition.
  • 6Issuance of shares relies on Section 4(a)(2) or Rule 506 exemption for unregistered securities.
  • 7Centene also released its 2014 financial guidance and updated 2013 guidance on December 13, 2013.

Frequently Asked Questions

The primary purpose of this 8-K filing is to disclose Centene Corporation's agreement to acquire a controlling interest in U.S. Medical Management, LLC (USMM) and to provide updated financial guidance for 2013 and 2014.

The acquisition is expected to be funded with a combination of one-third cash and two-thirds Centene Corporation's common stock. The exact number of shares to be issued will be determined based on Centene's stock price shortly before the closing.

Yes, the agreement includes call and put options allowing Centene to acquire the remaining interests in USMM from 2015 through 2017 (with possible extensions). Up to 50% of the payment for these future acquisitions can be made in Centene's common stock.

The shares are being issued in reliance on an exemption from registration under Section 4(a)(2) of the Securities Act of 1933 or Rule 506, indicating that the transaction is considered a private placement and not a public offering. Centene has committed to filing a registration statement later to allow these shares to be resold in the public market.