Centene Corporation CNC successfully completed the sale of the Circle Health Group, the largest private hospital network in the United Kingdom. The agreement, sealed in August 2023 and expected to conclude in the first quarter of 2024, adhered to the anticipated timeline.
The divestiture of Circle Health underscores Centene’s commitment to bolstering its core Managed Care business. This crucial unit aims to provide health plan coverage to individuals through government-subsidized and commercial programs, making it the leading contributor to CNC’s external revenues. The move to offload Circle Health marks an auspicious time for the health insurer.
The Managed Care division boasts a robust customer base of approximately 28 million as of Sep 30, 2023. Strategic acquisitions and contract wins fuel the unit’s membership growth, enhancing the health insurer’s performance.
While divestitures may seem self-serving, Centene endeavors to place its enterprises in capable hands that will propel their market performance post-sale. Consequently, Circle Health found a new owner in Pure Health, the largest integrated healthcare network in the Middle East. Moreover, CNC’s divestitures of Apixio, Magellan Specialty Health, and Magellan Rx reflect the company’s tireless efforts to fortify its promising Managed Care division.
Coinciding with the conclusion of the Circle Health divestiture, Kroger Health, the healthcare arm of The Kroger Co. KR, shared news that augurs well for Centene’s Managed Care customers. The Kroger Family of Pharmacies will remain part of Centene’s pharmacy network in 2024, ensuring uninterrupted access for approximately 700,000 members to a wide array of benefits.
This will benefit individuals enrolled in Medicaid, Medicare, or Centene’s health insurance marketplace plans. Continuity in accessing Kroger’s expansive pharmacy network, spanning 35 states and comprising over 2,200 pharmacies, is poised to retain existing customers and attract new ones. Moreover, these developments are likely to offer patients enhanced opportunities for cost savings on vital prescriptions.
Centene’s stock has surged 21.2% in the past six months, outpacing the industry’s 8.5% growth. CNC currently carries a Zacks Rank #2 (Buy).
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Other Stocks to Consider
Some other top-ranked stocks in the Medical space are Amphastar Pharmaceuticals, Inc. AMPH and Novo Nordisk A/S NVO, each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Amphastar Pharmaceuticals has surpassed earnings estimates in each of the last four quarters, with an average surprise of 52.06%. Projections for 2024 indicate 17.7% growth in earnings and a 25.4% rise in revenues from the 2023 estimate. The consensus estimate for 2024 earnings has risen by 3.3% in the past 60 days.
Novo Nordisk has beaten earnings estimates in two of the last four quarters, matched once, and missed once, with an average surprise of 0.58%. Projections for 2024 suggest an 18.4% growth in earnings and a 16.7% uptick in revenues from the 2023 estimate. The consensus estimate for 2024 earnings has increased by 0.6% in the past 30 days.
While Novo Nordisk’s stock has surged 33.2% in the past six months, Amphastar Pharmaceuticals has dipped 4.4% over the same period.
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