Activist Investor Acquires $ 900 Million at Centene

The newly formed hedge fund Politan Capital Management has acquired a stake in Centene Corp. for $ 900 million, the St. Louis-based insurer confirmed Wednesday.

Politana is led by active investor Quentin Coffey, who left Senator Investment Group in August to create his own hedge fund. Coffey is now interested in renewing Centene’s board of directors and other actions aimed at increasing the company’s value. This was originally reported by the Wall Street Journal. In a press release, Centene said it plans to increase its adjusted net income margin by 3.3% by 2024 by scaling certain businesses and selling other “non-core” components.

“We welcome constructive ideas to accelerate these efforts,” Centen wrote.

And the company has already made a move. On Wednesday, the insurer announced that it would sell its controlling interest in home healthcare company US Medical Management to private equity firms Rubicon Partners, Valtrius, Oak HC / FT and HLM Venture Partners. Terms of the deal were not disclosed and Centene will continue to hold a minority stake in USMM.

Centene will use the proceeds from the sale to buy back shares, Sarah London, Centene’s vice chairman of the board, said in a press release.

“We are confident this deal will enable USMM to best leverage its reach and impact by helping Centene realize our value creation plan,” London said.

Centene said it also focused on revamping its board.

According to WSJ, Coffey recommended former WellCare Health Plan CEO Kenneth Burdick and former Anthem CFO Wayne DeWadet to join the insurer as board members. The opportunity to renew the company’s board of directors will open later this month. Centene paid $ 17 billion to Medicare Advantage Wellcare in 2020. Coffey did not immediately respond to interview requests.

Over the past two years, Centene said it has added four new directors to its board, three of whom are independent. The latest addition came in September when Sarah London, who is president of the non-insurance healthcare business and executive vice president of advanced technology businesses, was named vice chairman of the board.

One month after the announcement, David Steward resigned from the Centene board after 14 years in service. He said he would like to spend more time with his family and pursue other business interests.

“The company intends to make further changes to its board of directors, and diversity will continue to be an important factor,” the insurer said.

The insurer has made other recent dramatic changes in its staff.

In September, Brent Leighton was also named COO of Centene, and the president’s office changed its name to the office of the chairman and CEO. Centene is headed by longtime CEO Michael Neudorf.

Later that month, Centene and longtime CEO Jeffrey Schwanecke “mutually agreed” that he should retire after 13 years with the insurer. Schwanecke recently served as executive vice president of medical companies, where he had been transferred six months earlier as part of the insurer’s professional development program. The transfer moved him from reporting to the insurer’s headquarters to Sarah London. No further details were disclosed.

In late October, Centen and former executive vice president and chief strategy officer Jesse Hunter also agreed to disband, with Hunter’s last day falling on November 5, rather than late 2021, according to documentation submitted to the US Securities and Exchange. Commission. The insurer did not disclose why Hunter ended his 19-year stint with the company ahead of schedule.

At the end of the company’s last third quarter, September 30, Centene reported revenues of $ 32.4 billion, an 11% increase over the same period last year of $ 29.1 billion. The company’s net income was $ 584 million, up 4% over the same period last year of $ 561 million.

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