Centene Corporation (CNC) announced the retirement of its CEO and Board changes following its succession planning initiative disclosed in July 2021. Following the news, shares reached a new all-time high of $82.22 and closed the day up 4.7% at $81.85 on December 14.
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Centene is a government-sponsored healthcare provider with services under Medicare, Medicaid, and commercially managed care. Centene has projected revenue of $125 billion for the fiscal year 2021, providing healthcare to nearly 1 in 15 individuals nationwide. Its shares have gained 35.6% over the past year.
CEO Retirement
Michael Neidorff, the current Chairman and CEO of Centene, has put forward his intent to retire in 2022. He will continue as the Executive Chairman untill the end of 2022, after a suitable successor is found.
Neidorff joined Centene as CEO in 1996 and revolutionized the healthcare company, from a $40 million local provider to a $125 billion market leader, which also boasts of being a national Fortune 24 and a global Fortune 57 company.
Under his leadership, the company has grown with nearly 76,000 employees serving 26.5 million members across all 50 states in the U.S. and 3 other countries.
Changes in the Board
Centene also announced changes to its Board of Directors, with 5 new directors to be appointed on January 5, 2022. Moreover, current Director James Dallas will immediately become the Lead Independent Director and will later become the Independent Chairman by the end of 2022.
The new Board will be responsible for the appointment of the new CEO for Centene. The Board is expected to follow an in-depth selection process and evaluate both internal and external candidates with the help of an external search firm.
Management Comments
Neidorff said, “Nothing has been more important to me than providing the highest quality of care to the most vulnerable populations we serve… I have been in discussions with the Board about my retirement plans since the summer, and today I have informed the Board of my decision to retire as CEO in 2022.”
Robert Ditmore, Director of Centene, said, “While it is difficult to put into words the immeasurable impact he has had on this company and the members whose health has been transformed, and the communities that have been served, on behalf of all the Board at Centene we are immensely grateful and proud of the work Michael has inspired and delivered as our CEO.”
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Consensus View
Yesterday, analyst Nathan Rich of Goldman Sachs initiated coverage of the stock with a Hold rating and a $83 price target, which implies 1.4% upside potential to current levels.
Overall, the stock has a Moderate Buy consensus rating based on 10 Buys and 4 Holds. The average Centene price target of $88.14 implies 7.68% upside potential to current levels.
Hedge Funds
TipRanks’ Hedge Fund Trading Activity tool shows that confidence in CNC is currently Positive, as 12 hedge funds increased their cumulative holdings of the stock by 134,800 shares in the last quarter.
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