Centene Corp. (CNC) has operated against the trend in the last couple of years.

The health insurer announced plans in July 2015 to buy Health Net Inc. for $6.8 billion, just as two bigger rivals tried for megadeals of their own. Centene's deal was quickly blessed by the Department of Justice while Anthem Inc.'s (ANTM) plan to acquire Cigna Corp. (CI) and Aetna Inc.'s (AET) bid for Humana Inc. (HUM) , unveiled within weeks of Centene's offer, were challenged by the DOJ and ultimately blocked in federal court.

Now, as major insurers are exiting Obamacare exchanges, Centene is expanding its commitment to offering policies under the Affordable Care Act.

Centene said Wednesday that it will expand its offerings in the 2018 Health Insurance Marketplace, the formal name for the Obamacare exchanges by entering Kansas, Missouri and Nevada in 2018. Centene said it will also expand its footprint in six existing markets: Florida, Georgia, Indiana, Ohio, Texas, and Washington.

Centene's added commitment to the ACA exchanges runs counter to the actions of most other insurers, which have imposed double-digit premium increases or left exchanges altogether due to costs of maintaining a program where no one with pre-existing conditions can be denied coverage.

Anthem pulled out of Ohio's individual insurance exchange in early June, citing low enrollment and uncertainty over the fate of federal subsidies necessary to make the policies more affordable for lower income individuals. Anthem's departure would leave 20 Ohio counties with no insurers on Obamacare's exchange, which cover people who don't get plans through their employer or federal programs.

Blue Cross and Blue Shield of North Carolina said in May it would seek a 22.9% increase in premiums for 2018 plans, well above the 8.8% it would be willing to limit its increase to if Congress and the Trump administration would guarantee the current ACA subsidies. The company also warned it might withdraw entirely because of the ACA's uncertain future.

Centene, by contrast, said the past 12 months "marked another year of Centene's successful operations on the exchanges." From December 31, 2016 to March 31, 2017, Centene more than doubled its exchange members, growing to 1.2 million members from 537,200 members. Much of that added exchange business comes from the company's aggressive expansion into Arizona.

Oppenheimer & Co. analyst Michael Wiederhorn said the exchange expansion makes sense for Centene because the company can leverage its "tight Medicaid networks and low-income expertise."

"We view this announcement as a positive indicator on the current performance of the exchange business and also believe it will only strengthen its relationships with its [Medicaid] state partners," he wrote in a report to clients Wednesday. Wiederhorn noted that New York threatened to to end Medicaid contracts for plans that exit the exchange business.

Wiederhorn estimated that the exchanges account for roughly 40 cents a share, or roughly 8% to 9% of Centene's earnings.

Since the beginning of the year, Centene shares have risen more than 37%, to roughly $78 from $56.83. The shares closed up 30 cents Wednesday to $78.36.

Centene chairman and CEO Michael F. Neidorff explained the company's ability to find success in a segment where others have flailed during a discussion at Barclays High Yield Conference on June 8.

"It's been a significant growth driver for us," Neidorff said. "It's meeting our targeted margins. We have a target pre-tax margin between 3% to 5%. So, for us, it's really business as usual."

Roughly 90% of Centene's exchange customers are eligible for subsidies.

"The demographics of the populations that are buying these plans . . . has not changed substantially for us in the last three years," he said. "We're focused on the low end."

The majority of Centene's revenue already comes from Medicaid, the federal insurance program for the poor. "Medicaid dollars and expenditures have grown no matter what the economic cycle," Neidorff said. "So we believe it's a very good industry to be in."

He noted that 60% of the U.S. population has income at 400% of the federal poverty level and below.

Jeffrey Schwaneke, Centene's CFO, said the company is taking a calculated risk in expanding its presence in the exchanges as uncertainty lingers in Congress over the fate of Obamacare. "Our view has always been—we don't believe anybody wants to see 20 million vulnerable citizens in the country without healthcare. . . We don't see the elimination of the cost-sharing subsidies happening."

Schwaneke acknowledged that the exchange program depends on the cost-sharing subsidies remaining viable but the company doesn't expect them to go away.

With elimination of the subsidies, "You would have a lot of individuals that would no longer have healthcare and we just don't see that being the case."

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