8-KOther EventsExhibits & Filings

CENTENE CORP 8-K Report, Corporate Update (Mar 23, 2016)

Filed March 23, 2016For Securities:CNC

Summary

Centene Corporation (CNC) filed this Form 8-K on March 23, 2016, to announce significant progress in its pending acquisition of Health Net, Inc. The key development is the approval of the change in control of Health Net's California-based subsidiaries by both the California Department of Insurance (CDI) and the California Department of Managed Health Care (DMHC). These approvals are crucial for the completion of the merger and were granted subject to various "Undertakings" and "Stipulations" agreed upon by Centene, Health Net, and the respective California regulatory bodies. The undertakings detail Centene's commitments to maintaining and improving Health Net's operations in California post-merger. These include specific promises regarding capital support for Health Net's insurance entities, maintaining quality of care standards (HEDIS scores), provider network adequacy, and limiting premium rate increases. Additionally, Centene has committed to significant investments in California, including $40 million through the California Organized Investment Network (COIN), $75 million in healthcare infrastructure, and the development of a new service center in an economically distressed community with an investment of $200 million over ten years, creating at least 300 jobs. These regulatory approvals and associated commitments are vital for Centene to finalize the Health Net acquisition.

Key Highlights

  • 1Centene Corporation's proposed merger with Health Net, Inc. has received key regulatory approvals from the California Department of Insurance (CDI) and the California Department of Managed Health Care (DMHC).
  • 2These approvals are for the change of control of Health Net's California subsidiaries, which is a critical step towards closing the merger.
  • 3Centene and Health Net have entered into "Stipulation and Undertakings" with CDI and "Undertakings" with DMHC, outlining specific commitments to ensure the continued quality and accessibility of healthcare services in California.
  • 4Key commitments include maintaining specific capital levels for Health Net's insurance entities, improving quality of care metrics (HEDIS scores), ensuring provider network adequacy, and limiting premium increases.
  • 5Centene has committed to significant investments in California, including $40 million via COIN, $75 million for healthcare infrastructure, and $200 million for a new service center creating at least 300 jobs.
  • 6The regulatory agreements are designed to ensure that Health Net's operations in California continue to meet state standards for policyholders and enrollees post-merger.
  • 7The approvals and undertakings are effective upon the closing of the merger and are subject to specific durations and enforcement mechanisms.

Frequently Asked Questions

This Form 8-K announces that Centene Corporation has received crucial regulatory approvals from the California Department of Insurance (CDI) and the California Department of Managed Health Care (DMHC) for the change in control of Health Net's California subsidiaries. This is a significant step towards completing Centene's acquisition of Health Net.

The 'Undertakings' are legally binding commitments made by Centene and Health Net to the CDI and DMHC. These commitments detail how Centene will operate Health Net's California-based health plans post-merger, focusing on maintaining service quality, capital adequacy, provider networks, and managing premium rates.

Centene has committed to several substantial investments in California, including a total of $40 million through the California Organized Investment Network (COIN), $75 million to improve healthcare infrastructure for underserved communities, and $200 million over ten years to build a new service center employing at least 300 people.

Most of the undertakings will remain in effect for five years from the closing date of the merger, unless terminated earlier with the written consent of the respective California regulators or if Centene no longer controls HNLIC. Certain provisions may have separate termination clauses.