ST. LOUIS, Feb. 10, 2021 /PRNewswire/ – Centene Corporation (CNC) ("Centene" or the "Company") announced today that it has commenced an underwritten public offering to sell $2,200,000,000 of senior notes due 2031 (the "Notes"), subject to market and other conditions.
https://seekingalpha.com/pr/18187238-centene-corporation-announces-offering-of-senior-notes
It’s finance 101. Get a better rate. They’ve done this several times.
These are hardly 'kick the can' notes. They're refinancing the debt due to favorable interest rates and market conditions. This isn't even a way to drive funding, considering that the release from earlier explicitly said the new notes would be used to pay down the previous notes, not drive funding. It's a way to save money and take advantage of favorable rates for borrowing as a cost-saving measure that doesn't have a lot of downsides. They've done this three or four times as interest rates have cratered to record lows, meaning borrowers looking for a return are also more willing to accept lower interest rate notes.
In total, to shareholders and investors, plus the Feds and the states, floating kick the can notes plus 6% layoffs don't build confidence in the company. Centene had a profitable year in 2020 despite the pandemic that affected every payer. They went on a binge of big acquisitions in the past three months. They have a 75-year-old CEO who's been there for 25 years. Yet they can make all these cuts without affecting operations?
So if you're an institution, do you buy Humana or UHG, or Centene which now looks like trouble?
It means they kicked a debt 'can' down the road. It's designed to pay off a 2025 float of senior notes.
It means they need money and are selling shares to the public for a discount