* Higher costs and claims in Texas and Kentucky, Celtic unit
* Cuts FY 2012 EPS estimate to $1.45-$1.65 from $2.64-$2.84
* May take $28 mln non-cash charge
* Shares crash 21 pct in premarket trade
June 11 Health insurer Centene Corp said
it will post a loss in the second quarter and slashed its
earnings forecast for 2012, citing higher costs and claims in
Texas and Kentucky, and its Celtic individual health business.
The company's shares plunged 21 percent to $28.00 in
premarket trade on Monday.
The health insurer also said it was evaluating the goodwill
and intangible assets of its Celtic business and the review may
result in a non-cash charge of about $28.0 million. The charge
has not been accounted for in the current outlook, it added.
Centene now expects 2012 earnings of $1.45 to $1.65 per
share, down sharply from its previous outlook of $2.64 to $2.84
The company said it expects to return to profitability in
the third quarter, even as rising costs at its Texas, Kentucky
and Celtic businesses impact results for the rest of the year.
The news comes less than a week after rival Molina
Healthcare Inc withdrew its 2012 earnings forecast,
claiming it was facing margin pressure in a Texas Medicaid plan.
Molina's Medicaid plans servicing the El Paso and Hidalgo
counties in Texas saw high medical costs that outstripped the
company's premium revenue from the region.
The El Paso and Hildago service areas experienced
significantly higher-than-expected utilization in a contract
that became active in March, Jefferies & Co analyst David
Windley said in a note on Molina last week.
Centene too said on Monday it saw a significant rise in
certain non-inpatient claims in its Hidalgo service area.
Other health insurers, such as Amerigroup Corp and
Cigna Corp, which have plans for the El Paso and Hidalgo
counties, may also be affected.
Shares of Molina had crashed early last week after it
withdrew its full-year outlook, dragging down Centene shares
with them. However, both stocks recovered much of the lost value
later in the week as Molina and Centene won back a Medicaid
contract in Ohio.
Centene shares, which have lost 5 percent of their value
since Molina announced its margin issues in Texas, closed at
$35.47 on Friday on the New York Stock Exchange.