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Analysis

Centene-WellCare Merger Hits DOJ Speed Bump

By Steven Porter  
   May 28, 2019

A request from federal antitrust regulators effectively delays the Centene-WellCare deal from being finalized for at least a month.

Centene Corp.'s planned $17.3 billion acquisition of WellCare Health Plans hit a bit of a speed bump last week, when the U.S. Department of Justice sent the companies a request for more information on their planned merger.

Centene revealed the DOJ's request for additional information and documentary material in a letter that it sent to shareholders and also filed publicly Thursday with the Securities and Exchange Commission. The request, which effectively delays the finalization of the Centene-WellCare deal by at least 30 calendar days, signals that antitrust regulators want to take a closer look at the companies' plan. Such requests are not uncommon.

The combined entity is expected to be headquartered in St. Louis and serve about 22 million health plan members across all 50 states, plus about 12 million Medicaid beneficiaries and about 5 million Medicare beneficiaries, according to an SEC filing.

Centene Chairman and CEO Michael Niedorff would lead the combined company as chairman and CEO, while WellCare CEO Kenneth Burdick and Chief Financial Officer Drew Asher join the Centene senior leadership team in newly created positions, the filing states.

The DOJ's request comes after the American Hospital Association urged the DOJ earlier this month to scrutinize the Centene-WellCare arrangement, saying it could undermine competition for "tens of millions of consumers across broad swaths of the country."

Shareholders are scheduled vote on the deal June 24. The companies to close the transaction in the first half of 2020.

Related: With $17.3B Plan to Buy WellCare, Centene Doubles Down on Growth Goals in ACA Markets

Related: Undaunted By Trump's ACA Threats, Centene Plans to Forge Ahead

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.

Photo credit: Milan, Italy - August 10, 2017: Centene logo on the website homepage. - Image / Editorial credit: Casimiro PT / Shutterstock.com


KEY TAKEAWAYS

Some industry stakeholders have raised concerns the planned megamerger could undermine competition.

The development means DOJ officials want to take a closer look at what the companies have planned.

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