Centene divesting Spanish, central European businesses

Photo: VioletaStoimenova/Getty Images

In another round of divestitures, Centene will be selling off its Spanish and central European businesses to French hospital operator Vivalto Santé for an undisclosed sum, in a transaction expected to close before the end of the year.

Centene framed the move as part of a review of "strategic alternatives" for its international portfolio. It follows the divestiture in May of two of its pharmacy businesses, Magellan Rx and PANTHERx Rare, for $2.8 billion.

The companies being sold include Spanish healthcare provider and hospital operator Ribera Salud; Torrejón Salud, a public-private partnership in the community of Madrid, which is operated by Ribera Salud; and Pro Diagnostics Group, a subsidiary of Ribera Salud, which owns clinics providing radiology and other services in Slovakia and the Czech Republic.

WHAT'S THE IMPACT

Vivalto Santé is the third-largest private hospital company in France, operating more than 50 private hospitals, and is controlled by Vivalto Partners, a European private equity firm dedicated to the healthcare industry.

More than 1,000 doctors are also shareholders of the group, resulting in a dual ownership and governance model.

Vivalto Santé became the first "Société à Mission" in the sector – the French equivalent of a Certified B Corporation. Its mission is "to care for and accompany patients along their care pathway and their lives" and "to empower caregivers by emphasizing team spirit, favorable working conditions and professional inclusion." Approximately 35% of the employees are shareholders of the company.

Centene intends to use the majority of the net proceeds from the sale to repurchase stock and the balance to reduce debt. The transaction is expected to be neutral to Centene's adjusted diluted earnings per share in the 12-month period post-closing.

THE LARGER TREND

When Centene sold off its pharmacy businesses earlier this year, it framed the moves as the next step in its ongoing portfolio review. They follow the company's plan, announced last year, to exit the pharmacy benefit management (PBM) space.

Meanwhile, in June, the company agreed to pay $13.7 million to New Mexico to settle an investigation into its subsidiaries' inflationary pricing and reporting of pharmacy benefits in the state's Medicaid program, which is overseen by the state's Human Services Department.
 
Centene, among the largest Medicaid managed care organizations in the U.S., was accused of submitting inaccurate billing requests to the state in its capacity as pharmacy benefit manager, according to the New Mexico Attorney General's office.

The investigation focused on concerns that Centene was layering fees and not passing on retail discounts to New Mexico's Medicaid program, also called Centennial Care.

It was only in January that Centene closed on its acquisition of Magellan Health. The acquisition was intended to allow Centene to provide increased access to behavioral healthcare, in light of the ongoing challenges of Americans struggling with mental or behavioral health issues. There was no talk at the time of divesting Magellan's pharmacy benefits business.

The goal of the transaction was twofold: providing comprehensive and integrated healthcare and generating value for partners and shareholders. Centene originally signaled its intent to snag Magellan in January 2021 in a deal valued at an estimated $2.2 billion.

ON THE RECORD

"This transaction represents another significant milestone in our value creation plan and ongoing portfolio review," said Centene CEO Sarah London. "We are pleased to have found a leading European healthcare partner in Vivalto Santé, who we believe is best positioned to drive growth and make additional investments in Ribera Salud, Torrejón, and PDG, so they can continue providing high-quality care for patients across Europe."
 

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com