Centene looks to offload its $2 billion overseas operation


Centene’s small international business could be next company segment on the auction block.

The health insurer is “reviewing its non-core assets as part of its ongoing portfolio optimization processes, including evaluating strategic alternatives for its international business,” the for-profit company announced in a news release Friday.

The majority of the $32.4 billion company’s $2 billion in international revenue comes from its Circle Health subsidiary in the United Kingdom, which claims to be the largest independent hospital operator in the country with 50 facilities, according to a slide presentation provided to investors Friday. Centene also operates healthcare facilities in Spain.

Centene’s international membership grew 27.2% to 763,500 during the third quarter, which represents a minuscule portion of the company’s 26.5 million policyholders.

The insurer has been on a selling spree of late. Last month, the insurer sold a majority stake in home health provider U.S. Medical Management to private equity firms Rubicon Partners, Valtrius, Oak HC/FT and HLM Venture Partners.

Centene also is exiting the pharmacy benefit manager space and paid $229 million during the third quarter to transition from using the RxAdvance automated drug pricing tool. The company restructured its Envolve PBM in 2019 to serve solely as a third-party administrator after reports surfaced it was overcharging state Medicaid departments for drugs. Centene has budgeted $1.25 billion to settle Medicaid fraud allegations and has so far paid out $246.4 million to Arkansas, Illinois, Kansas, Mississippi and Ohio. And a shareholder sued Centene, demanding information about how much senior executives knew about its former PBM’s Medicaid activities.

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In addition, newly engaged activist investor Politan Capital Management is pressuring the company to change up its leadership and refresh its operations to drive greater profitability.

Centene is led by longtime CEO Michael Neidorff, whose $25 million compensation package makes him the highest paid chief executive in the health insurance industry. The company recently announced a number of leadership changes and changed the name of the office of the president to the office of the chairman and CEO.

Centene plans to focus on growing its core Medicaid, Medicare and commercial operations. The company aims to close its $2.2 billion acquisition of behavioral health provider Magellan Health by the end of this year. The insurer also plans to automate its call center and provider engagement operations and evaluate its real estate footprint. By 2024, Centene intends to grow its adjusted net income margins by 3.3%.



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