Centene (CNC) Acquires Additional Stake In Ribera Salud

Centene Corporation (NYSE:CNC) recently announced that it has bought an additional stake in Ribera Salud from Banco Sabadell. The deal was closed on Jun 28, 2019. Financial terms of the purchase were not disclosed.

The transaction boosted Centene’s share in the Spanish healthcare company from 50% to 90%. Buying this surplus interest positions the company well for enhancing its unique solutions through cutting-edge technology, value creation and better customer outcomes.

In July 2014, the company invested $17 million to purchase a noncontrolling interest in Ribera Slaud, which helped it enter the Spanish market. It further penetrated the space through a few following pacts. In late 2018, Centene also bought a majority stake in a Madrid hospital. It also owns 89% of the University Hospital of Torrejón, which is managed by Ribera Salud.

The deal is in line with the company’s commitment to bolster its international portfolio.

On the domestic front, Centene is well-poised for growth, evident from its $17.3 billion worth pending acquisition of WellCare Health Plans, Inc. (NYSE:WCG) , which was approved by shareholders last month. The merger is estimated to be completed in the first half of 2020. The combined entity will have a wider scale and diversification with more than 12 million Medicaid and around 5 million Medicare members. In total, it will have around 22 million members across 50 US states.

Centene joins its peers UnitedHealth Group Incorporated (NYSE:UNH) as well as Cigna Corporation (NYSE:CI) , which too are establishing their presence outside the United States in evolving markets for driving growth.

Merger and acquisition activity has led to Centene’s inorganic growth. The company targets market expansion and higher Medicaid membership. Certain buyouts like Community Medical Holdings, MHM Services and Fidelis Care have contributed to the company’s revenue base and evidently, aided it to consolidate is capabilities. All these strategic initiatives by the company bode well for growth.

Shares of this Zacks Rank #3 (Hold) company have lost around 19.7% in a year, wider than its industry's dip of 0.9%.

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