NYAPRS Note: Leading national MCO Centene has bought the one health plan in NYS that operates in every county and borough, Fidelis Care. Centene provides behavioral health services through its BHO Cenpatico.
Fidelis Care Sold to Medicaid Giant Centene for $3.75B
Crain’s Health Pulse September 13, 2017
Centene Corp., the country's largest Medicaid managed care organization, has agreed to acquire Queens-based Fidelis Care for $3.75 billion in cash and stock.
The acquisition gives publicly-traded Centene access to the country's second-largest Medicaid managed care market without having to build its own network or attract members from scratch. Instead, it can benefit from Fidelis Care's 24-year history selling plans in New York state, and its network of 70,000 providers.
"Centene's entry into the state of New York marks a significant step in our strategy to continue to be a national leader in government-sponsored health care," Michael Neidorff, president and chief executive of St. Louis-based Centene, said during a conference call held after the deal was announced Tuesday.
Fidelis had about 1.6 million members and $4.8 billion in revenue through the first six months of 2017. Centene generated $40.6 billion in revenue last year. If the acquisition were to close by Jan. 1, Centene would expect to earn $60 billion in revenue next year. The two plans had a combined 13.8 million members on June 30.
"We are proud to have found a partner in Centene who shares our commitment to meeting the needs of all our members throughout the State of New York and continuing our mission to serve the health and wellbeing of underserved populations," Rev. Patrick Frawley, chief executive of Fidelis, said in a statement.
Frawley, who will continue to lead Fidelis, said the deal with Centene would give the plan access to systems to coordinate members' care andtechnology that can help lower medical costs.
Centene said it plans to maintain Fidelis' workforce of 4,000 and its Rego Park local headquarters as well as its regional and community offices.
The company offers Qualified Health Plans sold on the state's insurance marketplace, Child Health Plus, the Essential Plan, Medicaid and Medicare Advantage products.
While the transaction is most significant in the Medicaid market, where Fidelis has 1.3 million members, the insurer is also notable for offering New York State of Health plans in all but seven upstate counties.
Centene has also demonstrated a commitment to the markets created by the 2010 health law. While other insurers have retreated, Centene next year will sell Affordable Care Act plans in four additional states, including New York, and will sell in more counties in six others.
Centene used Allen & Company as financial adviser and Skadden, Arps, Slate, Meagher & Flom as legal counsel. For Fidelis, Citi served as financial adviser and Norton Rose Fulbright as legal counsel.
Centene plans to finance the deal with $2.3 billion in cash and stock and $1.6 billion in new long-term debt.
The transaction is expected to close in the first quarter of 2018, pending regulatory approvals including the signoff of Attorney General Eric Schneiderman, who regulates the sale of assets from a nonprofit to a for-profit entity.