8-KEarnings & ResultsMaterial AgreementsRegulation FD+1

CENTENE CORP 8-K Report, Material Agreement (Sep 12, 2017)

Filed September 12, 2017For Securities:CNC

Summary

Centene Corporation (CNC) has announced a significant strategic move by entering into an Asset Purchase Agreement to acquire substantially all of the assets of New York State Catholic Health Plan, Inc., d/b/a Fidelis Care New York (Fidelis), for approximately $3.75 billion. This acquisition, funded by a newly formed wholly owned subsidiary of Centene, represents a major expansion for the company, particularly within the New York market. The transaction is subject to customary closing conditions, including regulatory approvals from various New York state agencies and antitrust clearance under the Hart-Scott-Rodino Act, with a target closing date around mid-2018. Investors should note that Centene has the flexibility to fund up to $500 million of the purchase price with its common stock, which could impact share dilution. The agreement includes termination provisions and potential fees, as well as indemnification clauses. This acquisition is expected to significantly bolster Centene's presence in government-sponsored healthcare programs, particularly Medicaid, in a key state. The filing also incorporates a press release detailing this transaction.

Key Highlights

  • 1Centene to acquire Fidelis Care New York assets for approximately $3.75 billion.
  • 2Transaction to be completed through a newly formed, wholly owned Centene subsidiary.
  • 3Centene may fund up to $500 million of the purchase price with its common stock.
  • 4Acquisition subject to multiple regulatory approvals, including HSR, NY AG, DOH, and DFS.
  • 5Closing is anticipated by July 1, 2018, with potential extension to September 1, 2018.
  • 6Termination fees apply if a 'Burdensome Condition' arises.
  • 7Ancillary agreements, including transition services and reinsurance, will be executed at closing.

Frequently Asked Questions

This acquisition is expected to significantly expand Centene's footprint in New York State, a key market, by acquiring Fidelis Care, a substantial provider of Medicaid and other government-sponsored health plan services. It strengthens Centene's position in government programs, aligning with its core business strategy.

The transaction is contingent upon several conditions, including the expiration or termination of the Hart-Scott-Rodino antitrust waiting period, receipt of approvals from the New York State Attorney General, Department of Health, and Department of Financial Services, and the assignment of Fidelis's payor contracts. Both parties' representations and warranties must be accurate, and their obligations performed materially.

The total purchase price is approximately $3.75 billion, subject to adjustments. Centene has the option to use up to $500 million of its common stock to fund a portion of the purchase price, which could lead to share dilution for existing investors.

The parties aim to close the transaction by July 1, 2018, with a potential extension to September 1, 2018, under certain circumstances. However, the closing is contingent on meeting all specified regulatory and contractual conditions.