Centene CEO Michael Neudorff retires

Centene CEO Michael Neidorff will step down as head of the nation’s largest Medicaid operator next year amid a management shake-up and a formal deal with investor politan Capital Management, the company said on Tuesday.

Neudorf has been the CEO of a $ 32.4 billion company for a quarter century, and his $ 25 million compensation package is the highest among insurance executives. Neudorf will remain executive chairman until the end of next year. The 77-year-old told the board of his plans to leave in the summer, according to the company. Centene plans to appoint a new CEO by the end of 2022.

“I am confident that our company is well positioned to ensure a smooth transition,” Neudorf said in a press release. “With a plan for value creation, management improvements announced today and our strong leadership team, I have never been so confident in the future success of this company.”

Centene is also rebuilding and expanding its board of directors before looking for leaders.

Politan Captial Management, which acquired a stake in the company for $ 900 million this year, flexed its muscles and gained some power over its board of directors. Centene also announced on Tuesday that the insurer and the hedge fund have entered into a formal cooperation agreement.

“The scale of the change that Centene has adopted demonstrates a true commitment to improving corporate governance and constructive engagement,” Quentin Coffey, Managing Partner of Politan Capital Management, said in a press release.

As part of the deal, Centene will appoint five new board members in early January and will require board members to retire at age 75, the company told the US Securities and Exchange Commission on Tuesday. Three board members will retire immediately, and six more will retire over time.

Centene also increases its council from 13 to 14. From January 5, four new members will take over: Ken Burdick, the former head of WellCare, the Medicare and Medicaid insurance company that Centene acquired for $ 17.3 billion in 2019; Christopher Coughlin, former chief financial officer of Tyco; Wayne DeWadet, former Anthem chief executive and chairman of Surgery Partners; and Theodore Samuels., former president of investment firm Capital Guardian Trust Company.

Centene and Politan Capital Management will jointly select a fifth new board member.

The current director, James Dallas, will immediately become the lead independent director and will take over the independent chair by the end of next year.

Along with the new five appointments come six retirements, including Neudorf. Robert Dietmore, John Roberts and Tommy Thompson will leave the board next year Orlando Ayala and Richard Gephardt will not be re-elected at the company’s 2023 AGM. or will retire before then.

Five executives will also serve on the company’s value plan steering committee, which is responsible for the company’s growth timetable. Centene plans to increase its adjusted net income margin by 3.3% by 2024 by automating call center operations and supplier interactions and re-evaluating its real estate presence.

The insurer has also been actively selling lately.

Centene announced last week that it was looking for a buyer for its $ 2 billion international business. A month earlier, the company sold a majority stake in home health care provider US Medical Management to a group of private equity firms. Centene also paid $ 229 million during the third quarter to switch from RxAdvance, an automated drug pricing tool.

The company is leaving the PBM space and has committed $ 1.25 billion to settle allegations that its now defunct Envolve PBM overcharged Medicaid state departments for drugs. To date, he has paid $ 246.4 million to Arkansas, Illinois, Kansas, Mississippi and Ohio. And the shareholder filed a lawsuit against Centene, demanding information about how well top managers knew about the activities of his former PBM under the Medicaid program.

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