August 20 – CLAYTON – For decades, managed healthcare company Centene Corp. focused on scale. Now one of the largest in its industry, HUNDREDS it is recalibrating for efficiency.
The change in strategy brought an abrupt end this week to her plans for one East Coast headquarters in North Carolinaamazing local leaders there but nice Wall Street. With 90% of its workforce now fully or partially remote, the company has quietly given up much of its once-spacious office space in Saint Louis and throughout the country.
The company may not have had a choice: Investors wanted the company to cut costs and improve profit margins. With a new CEO at the helm, the company has been aggressively downsizing its real estate portfolio across the country — moves that are likely to improve its bottom line, but move away from cities like Saint Louis region, facing dozens of vacant office buildings.
“Making sure that HUNDREDS delivering on its margin expansion promises is something investors take very seriously,” he said Julie Utterback, senior equity analyst at Morningstar Research Services. “It seems like this management team is also taking it very seriously, which is appreciated.”
of East Coast the campus was not of Centene only victims. The company already said it would no longer complete it 770 million dollars Expansion of headquarters in Clayton that would have added nearly 1 million square feet of office space, hundreds of apartments or condos, retail stores, a 1,000-seat civic auditorium and a nearby hotel South Hanley Road AND Forsyth Boulevard.
AND HUNDREDS has vacated nearly its entire real estate footprint here — roughly 1 million square feet of office space — according to marketing materials that buy those leased or subleased properties:
– About 300,000 square feet in Chesterfield.
– 180,000 square meters From Peres.
– 100,000 square meters Richmond Heights.
– 100,000 square meters Heartache.
– More than 60,000 square meters Saint Louis city.
The company confirmed in a statement that it will vacate “several leased locations,” though it did not say which ones. of HUNDREDS The spokesperson also said that it will keep its headquarters in Claytonoperational center in Ferguson and is State House of Health headquarters in Saint Louis — despite a marketing brochure advertising the entire building for sublease.
It’s a take on how the company used to operate, gobbling up every block of office space in the region that was 75,000 square meters or more. And it comes at the end of a pandemic that has chilled the office market as companies rethink their needs, commercial real estate experts said.
“To HUNDREDS the effect, combined with the COVID effect, is catastrophic for Saint Louis market”, he said Kevin McLaughlin e KMA Commercial Real Estate.
AND HUNDREDS offices are coming on the market at a time when Saint Louis there is already a surplus of office space.
“There’s a lot of competition that you didn’t have three to five years ago,” McLaughlin said.
of Centene the extensive real estate portfolio was the product of its former director, Michael Neidorffwho led the initial plans for East Coast headquarters that would bring 3,900 jobs North Carolina.
For years under Neidorff, HUNDREDS succeeded through growth. Neidorff expanded the company from one 40 million dollars health plan for a giant in the managed care industry, bringing 126 billion dollars in last year’s income. Neidorff took a sick leave in February, and Sarah London was named as his replacement in March. Neidorff died in April at the age of 79.
After years of buying, investors have been looking for change. Analysts said the company’s share price underperformed compared to its peers. Last year the company announced a plan to improve margins and shed non-core assets. After an activist investor stepped in last year, the company agreed to overhaul its board of directors.
During an earnings report in July, HUNDREDS said it planned to reduce its leased space by 70%, which it expected to save 200 million dollars rent every year.
“From my perspective, having two corporate headquarters is not a way to gain efficiency,” said Utterback, the Morningstar analyst.
The company also announced plans to sell a Spanish hospital business and a company that runs radiology clinics Slovakia AND Czech Republic.
Investors seem pleased with the moves. After the news was published HUNDREDS was erasing it East Coast headquarters plans, Wall Street reacted with enthusiasm: HUNDREDS Shares rose 1.6% on Friday, closing at $96.90.
IN Claytonwhere officials are still dismantling its development agreement with the company, the Mayor Michelle Harris said that the presence of the company is a real positive for the region.
And her decision not to implement it East Coast campus brought “some closure to the community” that HUNDREDS will not leave from Saint Louis area.
“I hope their employees come for lunch ClaytonHarris said.
(c) 2022 St. Louis Post-Dispatch
Visit St. Louis Post-Dispatch at www.stltoday.com
Distributed by Tribune Content Agency, LLC.