The sale includes Centene's Medicaid and Medicare Advantage plans in Illinois.
Centene Corp. has agreed to sell its subsidiary IlliniCare Health to CVS Health, the company announced Monday morning, as part of its pending $17.3 billion megamerger with WellCare Health Plans.
The sale includes Centene's Medicaid and Medicare Advantage plans in Illinois, though the St. Louis-based insurer will retain ownership of IlliniCare's Medicare-Medicaid Alignment Initiative that will begin in February 2020.
This is the latest development for Centene as it seeks to complete the $17.3 billion megamerger with Tampa-based WellCare that was announced in March. The pending transaction has already received regulatory approval from 25 states.
"We are continuing to make progress towards completing our transaction with WellCare and the divestiture of our IlliniCare Health plan is the next step in that process," Michael Neidorff, CEO of Centene, said in a statement.
Centene's Medicaid membership is one of the company's strong points and grew by more than 60,000 members in Q3, contributing to segment revenue growth of 18% year-over-year.
Related: Centene Posts Nearly $19B in Revenues as N.Y. Approves WellCare Merger
The IlliniCare announcement came nearly one year after WellCare completed its purchase of Aetna's standalone Medicare Part D plans. This was a factor in Aetna's nearly $70 billion megamerger with CVS that was approved by a federal judge in September.
"Expanding our Medicaid and Medicare Advantage presence in Illinois will allow us to serve more members with our proven holistic approach that addresses physical, behavioral and social determinants of care," said Karen Lynch, executive vice president of CVS Health and president of Aetna, said in a statement.
Related: Guidance Raised as CVS Revenues Soar to Almost $65B
The transaction still requires federal and state regulatory approval, as well as completion of the Centene-WellCare megamerger.
After the IlliniCare deal was announced, CVS shares traded higher during the early morning session while shares were down for both Centene and WellCare.
Jack O'Brien is the Content Team Lead and Finance Editor at HealthLeaders, an HCPro brand.
Photo credit: KIEV, UKRAINE - Dec 11, 2018: Centene Corporation Insurance company logo seen displayed on smart phone. - Image / Editorial credit: IgorGolovniov / Shutterstock.com