Centene Acquires Fidelis Care

Deanna Stephenson

Politico reported this week that Centene, a major Medicaid national plan purchased Fidelis Care of New York for 3.75 Billion.

By Dan Goldberg

09/12/2017 06:28 PM EDT

Health insurer Centene announced Tuesday evening that it is purchasing Fidelis Care, one of the largest not-for-profit health insurers in New York state.

The $3.75 billion deal gives Centene, a publicly traded company, a foothold in the nation's second-largest Medicaid managed-care market, complementing its position in California, Texas and Florida.

Fidelis, which began in Brooklyn and Queens in 1993, has more than 1.6 million members and nearly $5 billion in revenue. It is the state's leading provider of on-exchange insurance plans sold on the individual market.

Centene intends to fund the purchase price with $2.3 billion of new equity, including share consideration, and $1.6 billion of new long-term debt. The Rev. Patrick Frawley, CEO of Fidelis, said he is confident the insurer will continue Fidelis' charitable mission.

"Good strong business is good mission and that's what I think Centene will help us with," Frawley said during a conference call with investors. "I am confident that this acquisition will only be to the good of our shared mission."

Centene will be the umbrella company for Fidelis, and keep its name and brand throughout the state. The company also promised to keep Fidelis' 4,000 employees.

The proceeds will go back to Fidelis' foundation, run by the Catholic Church. The money, Frawley said, will continue to be used for grants and other programs that serve the poor.

Fidelis' medical loss ratio is 90 percent, according to Centene executives, who insisted this was not a turn-around project. They said it was about bringing scale to a new market as well as a better understanding of risk adjustment, data analytics and value-based contracting.

"We have the platform and manage care expertise to do this right," said Michael Neidorff, president and CEO of Centene. "We are excited about our future as a growth company."

Centene executives said it was "premature" to think about whether they would narrow the size or scope of Fidelis' networks.

Centene is bucking the trend of national insurers and significantly expanding its Obamacare footprint for next year. It's entering the exchange markets in Kansas, Missouri and Nevada in 2018, and expanding its presence in six other states. Centene has stepped in to sell plans in more than 40 counties nationwide that were at risk of not having any coverage options.

The state attorney general must approve the deal, which is expected to close in the first three months of 2018.

Paul Demko contributed to this report.

 

NYSHFA / NYSCAL Contact:

Deanna L. Stephenson
Director, Managed Programs
518-462-4800, Ext. 16