Centene Corporation (CNC)—USA’s largest Medicaid managed care organisation—has reportedly divested Apixio to New Mount Capital—a pioneer growth-oriented investment firm.
Apixio is a high-end AI platform that surfaces actionable insights to improve financial, clinical, and administrative outcomes for healthcare organisations in the US. With a patented data science infrastructure, Apixio explores structured and unstructured data to offer high-fidelity patient health profiles and provide value-based services.
Priced at roughly $37 billion in assets, the sell-off agreement was inked back in May 2023. The transaction of Apixio is expected to be neutral to CNC’s adjusted earnings per share (EPS) of 2023, as reported by Healthcare Finance.
Divesting the platform is part of Centene’s effort to augment the operations of its Managed Care (Medicaid) business, which has led the company to see substantial growth over the year. The company has been marked as the largest Medicaid-managed care organisation in the USA. It had over 14.8 million members in the final quarter of 2022, increasing by more than one million compared to 2021. In addition, Centene’s Medicaid membership saw an improvement of 8% year-over-year as of 31st May.
Secondly, the sell-off is tied to Centene’s long-standing strategy of identifying options for shedding its non-core business units and optimising its portfolio. Divesting Apixio to New Mount Capital is expected to help the AI platform increase its footprint, fostering value-based care programs nationwide.
As part of its value creation strategy, the government insurance giant has recently been reviewing its portfolio and executing several strategic divestment transactions.
“Apixio has been a trusted business partner since our relationship began in 2015,” said Sarah London, CEO of Centene. “As part of our ongoing portfolio review, it was important for us to find a strategic partner for Apixio with whom the business can continue to grow, innovate and thrive. We are confident that New Mountain Capital is well positioned to ensure that Apixio continues to support the success of its clients given their sector expertise and long-term focus.”
Portfolio divestment is a complex process that requires a coordinated effort to ensure the involved companies can generate the best-possible shareholder value. For businesses looking to divest a business unit with minimal operational disruption, leveraging a high-end M&A service advisory service like Fission Consulting is a sensible investment.
That said, Centene logged a $1.2 billion profit in 2022, down from the $1.3 billion it reported in the comparable period of 2021. The company’s revenue, however, vaulted year-over-year, hitting $144.5 billion in 2022 compared to $126 billion in 2021 – a jump of 14.74%.
According to Centene, its revenue gains were driven by the organic growth the company’s Managed Care witnessed over the year. It has reportedly had 21% managed care membership growth.
In addition, Centene’s acquisition of Magellan and the divestment of PANTHERx Rx Rare were marked as the key drivers of the company’s revenue increase.
“The (revenue) increase was driven by 52% membership growth in the Marketplace business due to strong product positioning and open enrollment results as well as overall market growth and organic Medicaid growth, primarily due to the ongoing suspension of eligibility redeterminations,” according to Centene’s earnings report.
CNC acquired Apixio in December 2020 as part of its effort to digitise the administration of its data analytics solutions while also accelerating innovation across the enterprise.
Sohela is an electrical engineer and a self-professed writer with a keen interest in all things tech. When she’s not writing killer content pieces, you’ll find her enjoying tempting foods in her favourite restaurants.