St. Louis-based Centene has agreed to buy QualChoice Health Insurance, representatives of the two companies confirmed Thursday.
QualChoice chief executive Randall Crow and a Centene spokesman said the companies have entered into a "definitive agreement" on the sale.
They said the two companies will remain independent until the sale is finalized and approved by Insurance Commissioner Allen Kerr.
"There will be no changes to QualChoice operations in the near future as a result of the sale," Crow said in an email. "QualChoice members will still enjoy their current benefits and network of providers and pharmacies."
As of the end of 2017, Centene was Arkansas' third-largest health insurance company behind Arkansas Blue Cross and Blue Shield and Minnetonka, Minn.-based United Health Group. QualChoice ranked fourth.
Neither company responded to questions seeking further details about the sale.
Kerr must verify that Centene has sufficient financial resources to take over QualChoice's business and that the acquisition wouldn't substantially reduce competition in the state.
The companies hadn't applied for approval as of Thursday, Arkansas Insurance Department spokesman Ryan James said.
QualChoice's current owner, Englewood, Colo.-based Catholic Health Initiatives, announced in June 2016 that it planned to sell QualChoice and "exit the health insurance business."
It said at the time that QualChoice had lost $97 million in a nine-month period ending March 31, 2016.
More recently, Catholic Health Initatives said QualChoice had posted profits of $8.6 million in the fiscal year that ended June 30 of last year and $4.3 million in the quarter that ended Sept. 30.
It said in the Nov. 29 quarterly financial report that it had entered into a "non-binding letter of intent for the sale of the QualChoice Health commercial operations" in Arkansas.
"Those negotiations related to the QualChoice Health commercial operations are ongoing with the expectation that a purchase agreement will be executed during fiscal year 2019," the company said in the report.
Catholic Health Initiatives owns hospitals in Little Rock, Hot Springs, Sherwood and Morrilton and is in the process of merging with San Francisco-based Dignity Health.
Both Centene and QualChoice offer plans covering Arkansas Works enrollees and participate in the state's health insurance exchange, which makes subsidized coverage available through healthcare.gov to people with low incomes.
Arkansas Works provides Medicaid-funded coverage to people with incomes of up to 138 percent of the poverty level: $16,753 for an individual or $34,638 for a family of four.
QualChoice was formed in 1994 by the University of Arkansas for Medical Sciences. Catholic Health Initiatives bought the company in 2014.
At the time of that purchase, Bishop Anthony Taylor was quoted in the Arkansas Catholic, the official newspaper of the Little Rock Diocese, as having "reservations" about the deal.
He said he wasn't sure the acquisition would "pose no moral or ethical conflicts."
Taylor didn't have a comment Thursday because "CHI has not yet shared any information with him about the proposed sale," Dennis Lee, the diocese's chancellor for administrative affairs, said in an email.
Business on 01/04/2019