(Centene tricked shareholders into buying Health Net)
In an attempt to take command of Health Net, Centene Corporation issued a cash boon to shareholders for them to accept the union. Michael Neidorff, the chief operating officer, and other top executives have sold off Centene common stock worth $28 million before the company’s stock prices plunged terribly by 8.5%. The shareholders were astounded at this fraud imposed by a Fortune 500 company.
Michael Neirdoff: An Impudent Fraudster
Neirdoff convinced the shareholders of financial benefits from the upcoming merger and acquisition of Health Net. He stated that Centene maintains a disciplined approach to merger and acquisition and has to meet Centene’s financial criteria and announced that the transaction is convincing because of the shareholder returns. He added that the company expected the marketing to increase – adjusting earnings per share by more than 20% of the first full year following.
Health Net’s liabilities worth $390 million were detected as soon as the merger started, which ruptured Centene’s financial portfolio and share values. Centene’s executives silently sold off the company’s shares worth $28 million, according to Insider. Neirdoff also auctioned his stock worth $20 million to save himself from an immense financial catastrophe.
Neirdoff admitted many times that Centene was aware of the liabilities and inadequacy in Health Nets’ policy configuration, claiming he was personally involved in – organizing the changes to be made to the policy configuration and that Centene had been working with the highest level store arrangements in the policies.
In an interview with Jim Cramer’s Mad Money show which was aired in July 2016, Neirdoff confessed that they had full knowledge of the unprofitable policies of Health Net during the merger process.
A remarkable merger turned into an apparition of unpaid claims.
Centene withheld all information that could have impacted the $6.8 billion merger’s worth and failed to inform the federal regulatory bodies and shareholders about it. The U.S. Securities and Exchange Commission (SEC) released a Form S-4 Proxy Statement in September 2015 that did not recognize Health Net’s existing financial burden and requested every shareholder to vote for the merger and acquisition.
The New York Stock Exchange-listed and traded Centene’s stock (NYSE). Centene also interacted with public shareholders using market communication tools such as press releases, newswire, and other reporting services and filed periodic reports with the SEC and the NYSE regularly. Its shareholders trusted the company as evidenced by the fact that the M&A was approved without any cross-examination. Centene reviewed Health Net’s financial portfolio and declared similarly to the shareholders as soon as the merger closed.
From July 2016, Centene’s stock value submerged intensely by 8.5%, accounting for almost $6.39 per share, deleting over $1 billion in shareholder value. Neirdoff and his top executives were saved from the consequences that the drop in share values would have caused. The shareholders were deluded by the falsification of financial statements and had voted for the merger that suffered monetary damages and eventually sold off the shares at a much lower value.
Neirdoff gained riches
Michael Neirdoff continued to be rewarded and has obtained vast financial and compensation benefits due to the so-called successful merger. The shareholders and investors of Centene suffered for the same reason. Neirdoff stood out to be one of the highest-paid executives for over three straight years whose earnings shot from $19 million in 2014 to $25 million in 2017.
He also received a Golden Parachute worth $46.4 million in 2017, which incorporated over $31 million in unvested stock and $15 million in bonus payments and breaches.
Mergers of hypocrisy overflows
Centene has obtained 13 organizations since 2006 in a spree of M&A and has acquired three organizations more, namely: Fidelis Care (2007), MHM, and Community Medical Group (2018) – all of which happened after Health Net. The company also has proposed another merger with Well Care (2019), which is completed in January 2020 regardless of the American Hospital Association (AHA) commenting that it would lessen Medicaid and Medicare insurance competition across 50 states. Moreover, persuading the Antitrust Division of the Department of Justice (DOJ) to investigate the proposed merger with Well Care.
