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This managed care company up 30% this year is ‘not an expensive stock’

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Shares of Centene Corp (NYSE: CNC) are up 4.0% on Tuesday after the managed care company said it reached a deal with activist investor Politan Capital Management.

Centene to appoint five new directors to the board

As part of the agreement, Centene appointed four new directors to its board, two of whom were nominated by Politan Capital Management. It is yet to name one more director who might also be picked by the activist investor, who owns a little under 2.0% of Centene.

Michael Neidorff is also set to retire as chief executive of the company in 2022. According to the U.S. firm, both internal and external candidates will be eligible for the role of its new CEO. Neidorff, however, will serve as the executive chairman for one more year.

Last week, Centene said it was exploring options to divest its international operations. The Missouri-based company is looking at $135 billion in revenue for 2022 and double-digit growth in annual earnings over the next three years.

Cramer picks Centene over UnitedHealth Group

On CNBC’s “Squawk on the Street”, Jim Cramer acknowledged that CNC was up 30% for the year but said it was still “not an expensive stock”.

Michael Neidorff has built a company out of nothing that is now the biggest provider of healthcare to people who otherwise wouldn’t be able to afford it. He bought company after company, and Centene will just harvest cash flow now. The cash flow here is extraordinary.

He picked Centene over its bigger rival UnitedHealth Group that’s also up more than 35% in 2021. In October, UNH raised its full-year guidance for earnings per share after reporting strong results for the fiscal third quarter.

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