Centene CEO to Retire Amid Activist Pressure

Michael Neidorff, Centene’s CEO since 1996, will step down next year, and Centene plans to add five new directors to its board as it searches for its next leader, the St. Louis-based company said Tuesday. The new board members have been chosen as part of an agreement between Centene and Politan, whose stake in Centene is now valued at more than $1 billion, according to a person familiar with the matter.

The stock closed 4.7% higher on Tuesday at $81.85. Shares have climbed more than 10% since Nov. 3, when The Wall Street Journal first reported Politan’s stake in Centene.

So far this year, Centene stock has gained 36% after trading mostly sideways in 2020.

Over more than two decades, Centene had grown on Mr. Neidorff’s watch into a leader in government managed care. The company is among the largest players in health-insurance plans sold through the Affordable Care Act’s marketplaces, in Medicaid managed care, and in the Medicare Advantage sector.

In recent years, however, Centene’s margins have lagged behind those of some peers. In a presentation to investors last week that followed news of Politan’s stake in the company, Centene laid out a plan to improve its profitability by concentrating on its core businesses.

Mr. Koffey’s previous campaigns as an activist investor successfully pushed for board changes at Lowe’s Cos. and CoreLogic Inc. He previously worked at D.E. Shaw & Co. and Senator Investment Group LP before forming Politan this summer.

Centene said it will name Ken Burdick, Christopher Coughlin, Wayne DeVeydt and Theodore Samuels to its board early next month. A fifth new director, yet to be identified, will be chosen by agreement with Politan, Centene said. James Dallas, a current board member, will become the lead independent director and will be named independent chairman in 2022.

Meanwhile, six current directors will retire from Centene’s board over time, the company said.

Mr. Burdick, whom Politan recommended as a director, was formerly CEO of WellCare Health Plans Inc., a company Centene bought in early 2020 to expand in the Medicare Advantage sector. Mr. DeVeydt, another Politan choice for the role, is the former chief financial officer at health insurer Anthem Inc.

Messrs. Coughlin and Samuels both have experience on other corporate boards in the healthcare industry, including at Allergan PLC and Bristol-Myers Squibb Co.

The newly restructured board will oversee the search for Mr. Neidorff’s successor, Centene said. After he retires, Mr. Neidorff, 78 years old, will serve as executive chairman until the end of 2022.

When asked about succession planning at a conference last month, Mr. Neidorff said that promotions Centene made over the summer showed the company had strong leadership candidates.

Write to Matt Grossman at [email protected]