Centene, which has been busy expanding its presence on the Affordable Care Act exchanges, also plans to grow through a new acquisition.
The insurer announced Tuesday that it will acquire New York-based Fidelis Care for $3.75 billion, a move it says will benefit shareholders and help it continue to improve care for underserved populations.
Fidelis, a nonprofit health plan with more than 1.6 million members, currently offers plans on the ACA marketplaces as well as Medicaid, Medicare Advantage, Dual Advantage, Child Health Plus, Essential Plan and managed long-term care policies.
“Centene’s entrance into the state of New York marks a significant step in our strategy to continue to be the national leader in government-sponsored healthcare,” Centene CEO Michael Neidorff said on a call with investors.
Once the transaction is completed, the company says, it will have a leadership position in the country's four largest managed care states by membership: California, Florida, New York and Texas.
Assuming a Jan. 1 closing date, Centene says it expects the deal to generate pro-forma total revenues of more than $60 billion in 2018. The company also expects to achieve $25 million of pre-tax net synergies in the first year of the acquisition, and $100 million run-rate synergies starting in the second year.
Neidorff noted on the call that the transaction resulted from “direct bilateral discussion between the two parties” rather than an auction. In accordance with Centene’s decentralized management style, it intends to retain all of Fidelis Care’s employees as well as keep its management team intact.
The two organizations also share the mission of promoting health through high quality, accessible care and services, particularly for the underserved, Neidorff said.
For Fidelis Care’s part, the nonprofit looks forward to “working closely with Centene's management and to take advantage of their comprehensive, state of the art technology and medical management, wellness and care management systems," said CEO Rev. Patrick J. Frawley.
In addition to its newly debuted deal, Centene has spent its summer announcing plans for expanding its ACA exchange footprint in 2018. Some of the regions it entered were poised to have no exchange insurer after other carriers exited.
And in March 2016, the insurer finalized its acquisition of Health Net, a deal that made it the largest Medicaid managed care organization in the country.