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WellCare, Centene Seen as Potential Takeover Targets of Ascension

NEW YORK ( TheStreet) -- Shares of insurers WellCare (WCG) and Centene (CNC) are rising after an analyst at Leerink speculated that one of the two may be an acquisition target for Ascension Health.

WHAT'S NOTABLE: In a report, dated May 22, Modern Healthcare stated that Ascension Health President and CEO Robert Henkel said during an investor conference organized by Citigroup that his not-for-profit healthcare provider is in talks to acquire an unnamed insurance company that operates in 18 states. Other executives also presenting at the annual conference said they planned to enter or expand in health insurance markets, according to the report.

WHAT'S NEW: In a note to investors today, Leerink analyst Ana Gupte noted that Modern Healthcare's report on Ascension Health referred to its talks being held with "an unnamed 18-state health insurer." Leerink believes the unnamed insurer is most likely WellCare, which is in 18 states with Managed Medicaid and Medicare Advantage. The firm thinks Centene is also a possibility, noting that both CNC and Ascension Health are headquartered in St. Louis, but Gupte added that CNC operates in 20 states. Leerink says it is more positive on shares of WellCare and Centene, as it believes any deal could catalyze more Hospital-Health plan transactions.

PRICE ACTION: In mid-morning trading, shares of WellCare are up more than 3% to $77.06, while Centene is up over 4% to $73.88.

Reporting by Jason Keil.

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