CENTEN CEO: ‘THE TIME WAS RIGHT’ TO BUY WELLCARE FOR $15 BILLION

KEY POINTS

  • “What I’ve always found [is] when there’s a certain amount of uncertainty, there’s a challenging environment, that’s the time to act,” Centene CEO Michael Neidorff says about its acquisition of WellCare.
  • “There was a time this stock was a lot higher … The time was right and some things don’t come back around,” he says.
  • We have a lot of time and patience for our long-term investors and we have a lot of them. And I’m willing to bet a year from now we sit down and talk you’re going to say to me: ’You did it at the right time, ” he says.

Centene CEO Michael Neidorff on Wednesday told CNBC his company’s $15 billion acquisition of WellCare Health Plans “made more sense than I’ve seen in a long time.”

“What I’ve always found [is] when there’s a certain amount of uncertainty, there’s a challenging environment, that’s the time to act,” he told “Mad Money’s” Jim Cramer in a one-on-one interview. “That’s when it’s the best opportunity: Nobody’s watching, nobody’s expecting it. You take a play that makes sense.”

The host noted that investors have begun selling off health care stocks, along with a range of other securities. Health insurer shares also tumbled on Tuesday after the Trump administration began making moves that seek to get rid of the remaining parts of the Affordable Care Act.

WellCare is a government-sponsored managed care company, while Centene services government-sponsored health care programs for uninsured people.

Since early February, shares of WellCare had shed more than $40 before the start of the week, though the stock shot up more than 12 percent during Wednesday’s session. Centene’s stock is down about 10 percent this year and lost nearly 5 percent on the day.

Cramer asked Neidorff why not wait to make a deal.

“We did wait,” the chief responded. “There was a time this stock was a lot higher … The time was right and some things don’t come back around.”

Neidorff ran through the number of reasons he likes the deal. Wellcare bolsters Centene’s Medicare product, while Centene’s technology platform bolsters WellCare’s operations, he said. Centene is using preventative technology to reduce costs and “get ahead of the curve,” he said.

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