Centene Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Fidelis Care Acquisition (Tables)

Fidelis Care Acquisition (Tables)

9 Months Ended

Sep. 30, 2018

Schedule of Preliminary Allocation of the Fair Value of Assets Acquired and Liabilities Assumed

The Company's preliminary allocation of the fair value of assets acquired and liabilities assumed as of the acquisition date of July 1, 2018 is as follows ($ in millions):



Assets acquired and liabilities assumed
Cash and cash equivalents	$	2,001
Premium and related receivables	535
Other current assets	32
Restricted deposits	495
Property, software and equipment, net	80
Intangible assets ^(a)	1,000
Other long-term assets	18
Total assets acquired	4,161

Medical claims liability	1,319
Accounts payable and accrued expenses	300
Return of premium payable	124
Unearned revenue	115
Other long-term liabilities	261
Total liabilities assumed	2,119

Total identifiable net assets	2,042
Goodwill ^(b)	1,428
Total assets acquired and liabilities assumed	$	3,470

The Company has made the following preliminary fair value adjustments based on information reviewed through September 30, 2018. Significant fair value adjustments are noted as follows:

(a)

The identifiable intangible assets acquired are to be measured at fair value as of the completion of the acquisition. The fair value of intangible assets is determined primarily using variations of the "income approach," which is based on the present value of the future after tax cash flows attributable to each identified intangible asset. Other valuation methods, including the market approach and cost approach, were also considered in estimating the fair value. As discussed above, due to the timing of the acquisition date, the Company has only performed limited valuation procedures, and the intangible asset valuation is incomplete. The Company has estimated the preliminary fair value of intangible assets to be $1.0 billion with a weighted average life of 13 years. The Company expects the identifiable intangible assets to include customer relationships, provider contracts, trade names and developed technology.


(b)	The acquisition resulted in $1.4 billion of goodwill related primarily to synergies expected from the acquisition and the assembled workforce of Fidelis Care. All of the goodwill has been assigned to the Managed Care segment. The goodwill is deductible for income tax purposes.

Pro Forma Financial Information (unaudtied)

The following table presents supplemental pro forma information for the three and nine months ended September 30, 2017 ($ in millions, except per share data):



	Three Months Ended September 30, 2017		Nine Months Ended September 30, 2017
Total revenues	$	14,387	$	42,954
Net earnings attributable to Centene Corporation	$	248	$	721
Diluted earnings per share	$	1.22	$	3.55