February 16, 2025
Centene completes sale of management services subsidiary

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Dive Brief:

  • Centene closed the sale of its management services subsidiary to Astrana Health, a firm that helps providers join value-based care arrangements. 
  • Collaborative Health Systems, which provides care coordination, data and analytics, and risk contracting services to primary care physicians moving to value-based care, works with more than 129,000 beneficiaries across 17 states, according to a Monday press release.
  • The deal was first announced in July. Financial terms weren’t disclosed, but Astrana reported in a securities filing this summer it would pay $37.5 million for CHS and two physician networks. 

Dive Insight:

Centene, the nation’s largest Medicaid insurer, has divested a number of subsidiaries in recent years. During an earnings call in late 2021, executives said it would sell “non-core assets” as part of a long-term plan to improve its profit margin. 

In 2022, the insurer sold two of its pharmacy businesses, Magellan Rx and Pantherx, as well as its Spanish and Central European units. Centene also inked a deal to sell utilization management subsidiary Magellan Specialty Health to Evolent Health in a sale that closed early last year. 

The insurer sold an artificial intelligence business, called Apixio, to private equity firm New Mountain Capital in 2023, and it completed its divestiture of U.K.-based provider Circle Health Group early this year.

During an earnings call in February, Chief Financial Officer Drew Asher said the insurer had completed 10 divestitures and was “close to wrapping up that successful phase of value creation.”

The latest sale by Centene comes after the insurer beat investor expectations on revenue and earnings in the second quarter. The company recorded a topline of $39.8 billion and net income of $1.2 billion, and it raised its full-year guidance for premium and service revenues.

But Centene has faced some financial pressure amid Medicaid redeterminations, the process where states recheck beneficiaries’ eligibility for the safety-net program after a period of continuous enrollment during the pandemic. 

The insurer ended the second quarter with 13.1 million Medicaid members, down from 16.3 million before the unwinding began. People who remained enrolled in Medicaid tend to be sicker, and payers have argued their payment rates aren’t enough to manage their higher costs. 

Centene reports third-quarter earnings on Oct. 25. 

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