(Reuters) - Centene Corp (CNC.N) on Tuesday cut its full-year forecast due to a delay in closing its $3.75 billion takeover of Fidelis Care, a not-for-profit Medicaid insurer, sending its shares down 3 percent in premarket trading.
Centene, which now expects the acquisition to close by July 1 instead of April 1, said the forecast cut also reflected a contribution of $340 million to the State of New York over five years as part of the regulatory approval for the deal.
The acquisition of Fidelis, announced in September, would help Centene expand its government-sponsored healthcare coverage and make it a top Medicaid insurer in New York.
“While the delayed closing is unfortunate, it does not take away from our enthusiasm toward the Fidelis acquisition and Centene in general,” Cantor Fitzgerald analyst Steven Halper wrote in a note.
The insurer reported a better-than-expected quarterly profit, as it added more members to its health insurance plans, including its Obamacare business, as well as lower costs in its Medicaid unit.
“The company continues to execute nicely in its core Medicaid markets, while adding Medicare Advantage and individual Obamacare members,” Halper said.
Centene, which is one of the few insurers offering Obamacare plans, said membership to the program rose 35 percent to 1.6 million.
The company’s health benefits ratio, or the amount it spends on medical claims compared with its income from premiums, improved to 84.3 percent in the quarter from 87.6 percent a year earlier.
The decrease was primarily a result of membership growth in the Obamacare business and lower medical costs in its Medicaid business, partially offset by new health plans and increased flu-related costs.
Centene now forecast 2018 profit of $6.75 to $7.15 per share, down from $6.95 to $7.35 per share.
Full-year revenue is expected to be in the range of $58.2 billion to $59 billion, down from $60.6 billion and $61.4 billion it previously expected.
The company said net earnings rose to $338 million, or $1.91 per share, in the first quarter ended March 31 from $132 million, or 79 cents per share, a year earlier.
Excluding items, the company earned $2.17 per share, ahead of analysts estimate of $1.93, according to Thomson Reuters I/B/E/S.
Total revenue rose 12.5 percent to $13.19 billion, but was in line with estimates.
Reporting by Ankur Banerjee in Bengaluru; Editing by Anil D'Silva