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Centene still waiting for final Health Net approval in California

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Centene Corp. continues to fight for regulatory approval over its Health Net acquisition, and the insurer is banking on a March 1 closing date.

Centene announced its $6.8 billion deal for Health Net last July and anticipated the transaction would close this month, creating the nation's largest Medicaid managed-care company. Bill Scheffel, Centene's chief financial officer, built his retirement around that assumption.

But California's insurance department, the last remaining hurdle, has not yet given the green light. Groups such as Consumers Union have called health insurance consolidation “worrisome both for marketplace stability, and pricing and access for consumers.” Several California residents have also weighed in during public forums, many who oppose Centene's deal. One consumer decried the rush of industry deals, saying “gangster insurance companies” have too much control.

The delay has chipped away at Centene's 2016 financial guidance and could pressure profit projections more if the timeline continues to be pushed back.

Still, Centene managed a profitable 2015. Full-year net income soared 31% to $355 million. Centene's revenue climbed 37%, totaling almost $22.8 billion. The company ended last year with more than 5.1 million members, most of whom are low-income Medicaid enrollees.

Centene has invested in the Affordable Care Act's exchanges as well. Similar to Molina Healthcare, Centene is trying to capture exchange members who teeter on the border of Medicaid eligibility, but still receive generous subsidies if they buy coverage on the exchanges. Centene had 146,100 exchange members as of Dec. 31, a number that shrunk throughout the year but still was much higher than the 74,500 members at the end of 2014.

The company is turning a 3% profit on exchange plans, which meets expectations, CEO Michael Neidorff told investors this week.

Centene also disclosed Wednesday that it completed the investigation into its missing hard drives. The insurer said in January that it lost six computer hard drives containing medical data of 950,000 people. But an employee admitted that the equipment was “in a locked receptacle for secure destruction.”

Bob Herman writes for Modern Healthcare, a sister publication of Business Insurance.