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A Look at Synergies from the Centene-WellCare Deal

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The leader in government-sponsored programs

During its Centene-WellCare investor presentation, Centene (CNC) estimated fiscal 2019 proforma revenues of $97 billion and fiscal 2019 adjusted EBITDA of $5.0 billion after the completion of the acquisition of WellCare Health Plans (WCG). Based on these pro-forma projections, the company has estimated its revenue CAGR (compound average growth rate) to be 44% and EBITDA CAGR to be 53%, which is higher than all of its peers from 2013 to 2019.

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Centene expects the combined company to be the number one player in the Medicaid business, the number four player in the Medicare business, and the number one player in the health insurance marketplace business. After completion of the deal, Centene expects to enroll 21.8 million members in government-sponsored plans in the US. Of these, 12.3 million are expected to be Medicaid members, 4.8 million are expected to be Medicare members, 3.2 million are expected to be other government plan members, and 1.5 million to be marketplace members. To know more details about the Centene-WellCare Health Plans deal, please refer to Centene’s Acquisition of WellCare Health Plans: The Must-Knows.

Revenue distribution

According to the Centene-WellCare investor presentation, Centene and WellCare Health Plans were expected to earn fiscal 2019 revenues of $71 billion and $26 billion, respectively, on a stand-alone basis. Of Centene’s revenues, Medicaid, Marketplace, Medicare/Medicare PDP, and Other businesses were expected to contribute 66%, 21%, 8%, and 5%, of the total revenues, respectively. Of WellCare Health Plan’s revenues, Medicaid and Medicare/Medicare PDP businesses were expected to contribute 64% and 36% of the total revenues, respectively.

According to the Centene-WellCare investor presentation, Medicaid, Marketplace, Medicare/Medicare PDP, and Other businesses are expected to contribute 65%, 15%, 15%, and 5%, to the fiscal 2019 proforma revenues of the combined company.

Market distribution

According to the Centene-WellCare investor presentation, after completion of the deal, Centene expects to have a presence across all 50 states in the US. The company expects to offer all three Medicaid, Medicare, and Marketplace products in 17 states in the US, which includes key markets such as California, Texas, Florida, and New York.

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