The building housing Centene Corporation headquarters is seen Thursday, July 2, 2015, in Clayton, ... [+]
Health insurer Centene’s growth from expanding Medicaid benefits and individual coverage under the Affordable Care Act into new markets continues to rise as the company enters the regulatory review process for its acquisition of WellCare Health Plans.
Centene’s first quarter profits beat analysts expectations as the health insurer benefited from the addition of the New York health plan Fidelis Care, new state Medicaid contracts and an influx of Obamacare enrollees. Adjusted earnings rose more than 50% to $585 million while revenue soared 40% to $18.4 billon for the first quarter of 2018 compared to the year ago period.
Centene, which announced last month it was buying WellCare Health Plans, now has nearly 2 million enrollees in individual plans from the ACA’s public exchanges compared to 1.6 million a year ago. Centene now sells such Obamacare coverage in 20 states after this year entering Kansas, Missouri and Nevada and expanding into six other states where it already sells individual ACA policies, including markets Anthem, Aetna and UnitedHealth Group scaled back or left altogether.
Meanwhile, Centene’s Medicaid business also added members, growing to 7.4 million total members that included more than 250,000 new Medicaid enrollees from states that expanded Medicaid under the ACA.
Centene also sees additional growth coming from Medicaid as it lands new contracts to enter new states. And in other markets, insurers are leaving like in Iowa where the state has reduced the number of carriers from three to two and Centene remains in the Medicaid business there.
Centene said its proposed acquisition of WellCare will give the combined company 22 million members in all 50 states and combined revenue approaching $100 billion, based on projections the companies have made.
With Centene already a strong player in the Obamacare and Medicaid business, executives say WellCare will give them a beachhead to expand into new markets offering private Medicare Advantage plans as well as Medicare part D drug coverage.
The addition of WellCare “will bolster and diverse our product offerings,” Centene CEO Michael Neidorff told analysts Tuesday morning during a 75-minute call with analysts to discuss the company’s first quarter earnings.
An acquisition of WellCare will allow Centene to gain scale in more markets and potentially better compete with bigger players in the Medicare Advantage business like Humana, UnitedHealth Group and CVS Health’s Aetna health insurance business. Medicare Advantage plans contract with the federal government to provide extra benefits and services to seniors, such as disease management and nurse help hotlines, with some even providing vision and dental care and wellness programs.
Centene has just begun talking to state and federal regulators and Neidorff said talks are positive. Neidorff did, however, say there is the potential for divestitures in Nebraska and Missouri but he didn’t elaborate on details.
Neidorff described the early talks with regulators as "constructive" and he felt "good about" discussions with states and the U.S. Justice Department so far. "We are finding that their questions are the kind one would expect," Neidorff told analysts.
