With two of its biggest competitors joining forces with pharmacy benefit managers, Centene isn’t getting left out in the cold.
The insurer currently owns 28% of tech-forward PBM RxAdvance after announcing an initial investment in March. In September, Centene made another investment in the form of convertible preferred stock, according to a third-quarter financial filing on Tuesday.
RxAdvance reported that as a $50 million funding round earlier this month.
The two companies have positioned (PDF) the partnership as a “true alternative” to companies like Aetna and Cigna that are merging with PBMs to get a leg up on medical costs, or insurers like UnitedHealthcare that built a PBM in-house.
During an earnings call on Tuesday, CEO Michael Neidorff said the insurer is planning a “first-stage rollout” of RxAdvance before the end of the year, with a national market-by-market rollout slated throughout 2019. He called the partnership “a game changer.”
“We will be moving to a different operating model which is built around transparency and more focused on cost-sharing for total cost of care,” Jesse Hunter, Centene’s executive vice president of mergers and acquisitions and chief strategy officer said in an earnings call Tuesday morning.
Centene reported $16.2 billion in third-quarter revenues, up $11.4 billion during the same quarter last year. But the company’s net earnings dropped from $205 million in the third quarter last year to $19 million this year due to $140 million in reconciliation payments to California’s In-Home Support Services program and $170 million tied to an expiring Department of Veterans Affairs contract.
The insurer continues to make significant gains in the ACA marketplace, adding more than 500,000 members since last year thanks, in part, to its acquisition of Fidelis Care for $3.75 billion. Commercial revenues jumped 56% over the last year, accounting for $3.1 billion in the third quarter.
“Our strategy remains specific focusing on low income subsidized population,” Neidorff said. “We do not see a significant change in the competitive dynamics of the market.”