NEW YORK — Shares of Centene, the Medicaid coverage provider, rose sharply after the opening bell Wednesday after it announced it was acquiring Fidelis Care in New York for $3.75 billion.
Centene (CNC) was trading up nearly 7 percent, or $6.37, to $97.21 a share, shortly after 10 a.m. Wednesday.
Leerink analyst Ana Gupte said the deal, announced late Tuesday, puts Centene in the market with a solid Medicaid presence and a profitable business on the Affordable Care Act’s public insurance exchange. Centene says the privately held, nonprofit Fidelis had $4.8 billion in revenue through the first six months of the year. Fidelis is the largest managed care provider in New York State.
The Archdiocese of New York, Fidelis’ former owner, cited the challenges of providing health insurance “in this uncertain regulatory environment” as the reason for the sale. It said it would use the proceeds to start a health care foundation that would “operate in conformity with Catholic values.”
Centene Corp., based in St. Louis, focuses most of its business on the state and federal Medicaid programs for the poor, but it has also expanded into several states over the past year through the ACA’s exchanges.
© 2017 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.