Centene Corporation [CNC] has signed a definitive agreement to acquire the Medicaid assets of SummaCare Inc, a wholly owned subsidiary of Summa Health System, based in Akron, Ohio. Shares in Centene improved by almost five percent on the news.
This transaction will add approximately 39,000 people to the 23,500 people already covered by Centene’s Ohio subsidiary, Buckeye Community Health Plan (BCHP), making BCHP the second largest Medicaid health plan in the State.
Michael Neidorff, chairman and CEO of Centene Corporation, stated, This in-market acquisition will provide Centene with a critical mass of members, increase our market share in Ohio, meets our financial acquisition requirements and has significant strategic value. It will further enhance the business of our subsidiary, BCHP, by strengthening our platform for future organic growth throughout Ohio.
Under the terms of the agreement, Centene will pay approximately $31 million for the Medicaid assets of SummaCare and long-term provider contracts with Summa Health System. The consideration will consist of approximately $22 million in cash and approximately $9 million of Centene’s common stock.
Subject to regulatory approvals and other closing conditions, the acquisition is expected to close by the beginning of the second quarter of 2005. Centene estimates that this acquisition will generate total revenues of approximately $58 million to $60 million and provide up to $0.02 of accretion to earnings per share in 2005.