While SpaceX has debuted to well over a $2.3 trillion (that’s with a T) market cap, it seems that even giant companies are still facing expensive headwinds.
The Microsoft-Oracle cloud deal has gone sideways, if not entirely off. Microsoft’s goal was to lease space on Oracle Cloud Infrastructure (OCI) to expand its capacity and to move some of its workloads there. Microsoft Azure would be prioritized for customers. The problem was that Oracle’s public cloud infrastructure does not have the Federal Risk and Authorization Management Program (FedRAMP) security framework that Microsoft needed for some of these workloads, and Oracle was not willing to add it. OCI does have a FedRAMP framework for its Federal Government work. A source for the Business Insider article said that it was potentially worth up to $3 billion. BI’s source within Oracle said that adding FedRAMP to the public OCI would be a “massive engineering lift”.
To Reuters and to Business Insider, an Oracle spokesperson swiftly responded that the report was “inaccurate” but did not specify the inaccuracies, and that the two companies continue to have “a tremendously collaborative and fruitful partnership.”–a statement which can be read as a non-denial.
It highlights a shortage of computing capacity in cloud services, where Microsoft and other companies are scratching for more data center bandwidth, and turning to competitors to lease. Microsoft already leases capacity from Amazon for its GitHub code development business and is searching for more. Amazon and Google’s public clouds have FedRAMP and seem like logical alternatives if they have spare capacity. Google alone signed a $920 million per month deal with SpaceX for AI compute capacity that extends from October 2026 to June 2029. SpaceX also has a similar deal with Anthropic.
Oracle could certainly have used the cash flow.
The Defense Health Agency (DHA) will be transitioning away from Leidos as the lead systems integrator for the Military Health System (MHS) EHR and related systems by July 2027. MHS GENESIS originated from the 2015 EHR contract award to the Leidos Partnership for Defense Health, with Cerner (now Oracle Health) for the EHR and Accenture as members. Leidos served as the lead systems integrator to onboard all the parts of the entire MHS GENESIS system, which grew to include Henry Schein for dental records, Philips North America for tele-critical care, Amwell for telehealth, and Solventum Health Information Systems (formerly 3M) for clinical documentation and coding.
Now that it is fully implemented, DHA will take over the integration role, transitioning Philips and Amwell away from Leidos by the end of this July, Oracle Health by November, and both Schein and Solventum by July 2027. Reasons cited on DHA’s SAM.gov notice were “reduced cost transparency, duplicative layers of management and administration, limited government visibility into pricing structures, and constraints on the government’s ability to directly manage performance and enforce service level agreements.”
While Leidos issued an emollient statement that they hoped to remain working with the DHA, this definitive and apparently drastic move indicates DHA unhappiness with the structure and a desire to directly establish relationships with the vendors as sole-source contractors. Unhappily for Leidos, it has affected its market value and how analysts view its future position in the Federal health IT market. Washington Technology (PDF of article), Yahoo Finance Hat tip to a Reader who wishes to remain anonymous
Major health insurer Centene is offering voluntary buyouts to most employees through a Voluntary Separation Plan (VSP). The insurer currently employs 61,000 people across multiple plans. It is both the largest state Medicaid (12.4 million members) and Affordable Care Act (ACA, 3.5 million members) marketplace provider. But its memberships in both are shrinking. As of March, Medicaid membership was down 4% and ACA membership was down a stunning 54% (2 million members). The latter drop is puzzling, since insurers have exited or cut back on their ACA Marketplace plans, notably Aetna for this year and Cigna after this year.
ACA plans are offered on a state, then county-availability level. 2026 is the first time since 2018 that the average number of insurers participating in the ACA marketplaces has dropped, according to KFF cited in MedCity News. The ACA premium tax credit subsidies expired at the end of 2025, effectively causing premiums to double for nearly everyone. Many members dropped out of exchanges; those who remained were sicker (higher risk) and in lower-level plans that cost less in premiums. Centene also expects that its ACA membership will fall by another 40% by the end of 2026, per their company statement at a Barclays conference in March. CNBC
While Centene has grown membership in other plans, such as employer-sponsored plans and Medicare prescription drug plans (PDP), its total membership has decreased. Centene currently has almost 26.3 million at-risk members, down from 27.9 million in the prior year, a 6% decline. Yet revenue is projected to remain relatively flat, with a forecast of about $189.5 billion at the midpoint of 2026, a decline of roughly 3% from 2025. Share price has recovered from last year’s nadir by over 50%
According to (paywalled) Bloomberg News (quoted in Insurance Business), “a [Centene] spokesperson did not specify how far Centene intends to shrink its headcount, but said layoffs could follow if the company fails to reach its target through voluntary departures.” In her message to staff last Monday, CEO Sarah London wrote, “When our membership shifts, we need to shift our organization accordingly.” To Healthcare Dive, a spokesperson said that “Centene is positioning the company to lead the future of healthcare — working to deliver a simpler and better experience for our members and partners while meeting the realities of today’s healthcare environment.”
Now what could that mean? That “shift” in London’s terms requires a repositioning and further reorganizations. Those have not been disclosed or even hinted at–yet. Certainly, that will be a subject at Centene’s Q2 earnings call in July for investors and shareholders.
In this Editor’s view, rarely does shrinking to profitability work except as an interim strategy to stem losses. Because health plans operate on an annual basis, and enrollment periods start up in the fall, it’s likely that changes won’t be disclosed until then, though internal reorganizations will start to happen. It is hard to operate plans on a ‘bare bones’ basis for long, the nature of the health plan ‘beast’. Lack of service and low customer satisfaction affect vital quality ratings such as STAR (CMS) and HEDIS (NCQA), which influence both CMS payments and plan buyers.
This leads to other alternatives that may be open to Centene. The company could be acquired, broken up, or the larger plans spun off.
- A full sale presents regulatory and Federal antitrust problems to any plan, and would take a long time for approval both at the state and Federal level. Perhaps longer than Centene can afford.
- Payers aren’t attractive to private equity except on a hit-and-run basis. Politan Capital, since its major moves to reorganize Centene in 2022-23 after accumulating $900 million in shares, is now down to $70 million.
- What might be faster: selling off individual or groups of plans to a smaller company such as Molina, or to larger Cigna (once rumored as an acquirer, now divesting whole lines of business), Elevance, or Humana. Centene has always been a ‘family of brands’ such as Wellcare and HealthNet, and the Centene ‘brand’ is nonexistent.
It cannot be emphasized enough that Federal antitrust and the states present significant regulatory barriers on all these alternatives. The plans are what is left to sell. Centene has already sold off most, if not all, of its non-plan management services, such as Magellan and the Collaborative Health Systems ACO/MSO, to generate cash after the Politan Capital-led reorganization.
Another factor: at the state and Federal levels, since ACA, Medicaid. and Medicare Advantage plans are funded and approved by them, eventually the layoffs will attract attention and questions by CMS and state departments of banking and insurance (DOBIs). The VSP may be a way to get around them.
Details for the VSP, eligibility as a % of the workforce, and acceptance goal numbers have not been publicly disclosed. Employee posting sites such as The Layoff and on Reddit indicate that the ‘bonus’ for signing the agreement is an additional four weeks on a package based on your tenure by service years and grade level, plus paid-for COBRA and outplacement. The consensus in the comments is that the information provided to eligible employees is somewhat vague. The word “estimated” is used in terms of the buyout. In addition, ‘eligibility’ apparently does not guarantee that the applicant will be accepted for the VSP (an exit date mentioned is 1 September) nor that an involuntary layoff for a lesser package will take place before then. Recent hires with tenure under two years apparently are not eligible. Opt-out date is 2 July. Unsurprisingly, a third-party administrator has by reports been brought in for this. For employees, another consideration is that accepting a voluntary separation means that in many states, it is treated as ‘quitting’ and you are ineligible for unemployment payment. Most on these boards believe that involuntary layoffs will happen anyway.
It is certainly a difficult decision to make for most people. Best wishes from this Editor to everyone. The impact on healthcare is not going to be subtle, which is why this is discussed at length. (Disclosure: this Editor was briefly a Centene employee after the company she worked for, WellCare Health Plans, was bought by Centene. She is a holder of Centene stock converted from her prior company. The above is strictly her opinion and protected speech, and should not be used as investment advice.)
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