-- Diluted EPS of $2.16; Adjusted Diluted EPS of $2.42 --
-- Reaffirms 2024 Adjusted
Diluted EPS Guidance Floor of Greater Than $6.80 --
- Adjusted diluted EPS of $2.42, up 15% from $2.10 in the second quarter of
2023.
- Premium and service revenues of $36.0
billion in the second quarter of 2024.
- Membership increase of 34% in Marketplace, compared to the
second quarter of 2023.
ST.
LOUIS, July 26, 2024 /PRNewswire/ -- Centene
Corporation (NYSE: CNC) ("the Company") announced today its
financial results for the second quarter ended June 30, 2024.
In summary, the 2024 second quarter results were as follows:
Total revenues (in
millions)
|
$
39,836
|
|
Premium and service
revenues (in millions)
|
$
35,973
|
|
Health benefits
ratio
|
87.6 %
|
|
SG&A expense
ratio
|
8.0 %
|
|
Adjusted SG&A
expense ratio (1)
|
8.0 %
|
|
GAAP diluted
EPS
|
$
2.16
|
|
Adjusted diluted EPS
(1)
|
$
2.42
|
|
Total cash flow
provided by operations (in millions)
|
$
2,175
|
|
(1)
|
Represents a non-GAAP
financial measure. A full reconciliation of the adjusted diluted
earnings per share (EPS) and adjusted selling, general and
administrative (SG&A) expenses is shown in the Non-GAAP
Financial Presentation section of this release.
|
"While we have work to do in Medicaid as redeterminations wind
down, the overall performance of the diversified portfolio enables
us to remain on track for 2024 adjusted diluted EPS guidance," said
Chief Executive Officer of Centene, Sarah M. London. "At the same time, we continue
to make important progress on operations and quality that positions
us well to serve our members and deliver long-term profitable
growth."
Other Events
- In July, Centene entered into a definitive agreement to
sell Collaborative Health Systems, a management services
organization, to Astrana Health, Inc. The transaction is expected
to close by the end of 2024.
- In May, Centene's Kansas
subsidiary, Sunflower Health Plan, was selected to continue
providing managed health care services through KanCare, the
State of Kansas' Medicaid and
Children's Health Insurance Program (CHIP). The new, three-year
contract is expected to take effect on January 1, 2025, with the option to renew for up
to two, 12-month extensions.
Awards & Community Engagement
- Centene received several recognitions in June, including being
ranked No. 22 on the annual Fortune 500 List and No. 224 on Forbes
Global 2000 list, up from No. 259 in 2023. US News and World Report
also named Centene to its Best Companies to Work For (Health
Services Industry). Centene's Chief Health Officer, Dr. Alice Hm
Chen, was named to Modern Healthcare's list of 50 Most Influential
Clinical Executives 2024.
- In May, Centene was named one of the Top 50 Companies for
Diversity by Fair360 (formerly DiversityInc) for the fifth
consecutive year. Centene ranked No. 26 on this year's list, up 11
spots from No. 37. Centene was also recognized as a Top
Disability-Friendly Company 2024 by DIVERSITYCOMM Media; included
as one of the Best Employers for Diversity 2024 by Forbes and for
being one of America's Greatest Workplaces for Mental Wellbeing by
Newsweek.
- The Centene Foundation, the philanthropy arm of Centene
Corporation, announced a partnership with McCormack Baron Salazar – one of the nation's
affordable housing leaders – to increase access to affordable
housing. The multi-year partnership is anticipated to create
thousands of housing units and drive improved outcomes for
Medicaid-eligible populations through increased access to
health-related services.
Membership
The following table sets forth membership by line of
business:
|
June
30,
|
|
2024
|
|
2023
|
Traditional Medicaid
(1)
|
11,640,900
|
|
14,260,400
|
High Acuity Medicaid
(2)
|
1,499,000
|
|
1,799,200
|
Total
Medicaid
|
13,139,900
|
|
16,059,600
|
Commercial
Marketplace
|
4,401,300
|
|
3,295,200
|
Commercial
Group
|
426,400
|
|
435,000
|
Total
Commercial
|
4,827,700
|
|
3,730,200
|
Medicare
(3)
|
1,138,400
|
|
1,329,000
|
Medicare PDP
|
6,603,600
|
|
4,493,700
|
Total at-risk
membership
|
25,709,600
|
|
25,612,500
|
TRICARE
eligibles
|
2,768,000
|
|
2,799,300
|
Total
|
28,477,600
|
|
28,411,800
|
(1)
|
Membership includes
Temporary Assistance for Needy Families (TANF), Medicaid Expansion,
Children's Health Insurance Program (CHIP), Foster Care and
Behavioral Health.
|
(2)
|
Membership includes
Aged, Blind, or Disabled (ABD), Intellectual and Developmental
Disabilities (IDD), Long-Term Services and Supports (LTSS) and
Medicare-Medicaid Plans (MMP) Duals.
|
(3)
|
Membership includes
Medicare Advantage and Medicare Supplement.
|
Premium and Service Revenues
The following table sets forth supplemental revenue information
($ in millions):
|
|
Three Months Ended
June 30,
|
|
|
2024
|
|
2023
|
|
%
Change
|
Medicaid
|
$
20,250
|
|
$
21,895
|
|
(8) %
|
Commercial
|
8,535
|
|
5,734
|
|
49 %
|
Medicare
(1)
|
5,978
|
|
5,665
|
|
6 %
|
Other
|
1,210
|
|
1,544
|
|
(22) %
|
Total premium and
service revenues
|
$
35,973
|
|
$
34,838
|
|
3 %
|
(1)
|
Medicare includes
Medicare Advantage, Medicare Supplement, Dual Eligible Special
Needs Plans (D-SNPs) and Medicare Prescription Drug Plan
(PDP).
|
Statement of Operations: Three Months Ended June 30, 2024
- For the second quarter of 2024, premium and service revenues
increased 3% to $36.0 billion from
$34.8 billion in the comparable
period of 2023. The increase was primarily driven by membership
growth in the Marketplace business due to strong product
positioning as well as overall market growth
and outperformance in Marketplace risk adjustment for the 2023
benefit year, partially offset by recent divestitures in the Other
segment and lower Medicaid membership primarily due to
redeterminations.
- Health benefits ratio (HBR) of 87.6% for the second
quarter of 2024 represents an increase from 87.0% in the comparable
period in 2023. The increase was driven by higher acuity in
Medicaid as we progressed through the redetermination process and
continue to work with states to match rates with acuity. The
increase was also driven by Medicare Star rating impacts. The
increase was partially offset by Marketplace membership growth and
improved margin through strong 2024 product design and execution as
well as outperformance in Marketplace risk adjustment for the 2023
benefit year.
- The SG&A expense ratio was 8.0% for the second quarter
of 2024, compared to 8.7% in the second quarter of 2023. The
adjusted SG&A expense ratio was 8.0% for the second quarter of
2024, compared to 8.6% in the second quarter of 2023. The decreases
were driven by Marketplace risk adjustment revenue, the divestiture
of Circle Health Group (Circle Health), which operated at a higher
SG&A expense ratio, and ongoing SG&A reduction initiatives.
The decreases were partially offset by growth in the Marketplace
business, which operates at a meaningfully higher SG&A expense
ratio as compared to Medicaid.
- The effective tax rate was 24.4% for the second quarter of
2024, compared to 25.4% in the second quarter of 2023. The
effective tax rate for the second quarter of 2024 reflects tax
effects of settlements with taxing authorities. For the second
quarter of 2024, our effective tax rate on adjusted earnings was
24.4%, compared to 24.9% in the second quarter of 2023.
- Cash flow provided by operations for the second quarter of 2024
was $2.2 billion, primarily driven by
net earnings and risk adjustment accruals for the 2024 benefit
year.
Balance Sheet
At June 30, 2024, the Company had cash, investments and
restricted deposits of $38.5 billion
and maintained $217 million of cash
and cash equivalents in its unregulated entities. Medical claims
liabilities totaled $18.2 billion.
The Company's days in claims payable was 54 days, an increase of
one day as compared to the first quarter of 2024, and an increase
of two days as compared to the second quarter of 2023. Total debt
was $17.6 billion, which included no
borrowings on the $2.0 billion
Revolving Credit Facility at quarter end.
During the second quarter of 2024, the Company repurchased
10.7 million shares for $800
million. As of July 26, 2024, $4.4 billion remains available under the
Company's stock repurchase program.
Outlook
The Company reaffirms its 2024 GAAP diluted EPS guidance floor
of greater than $5.94 and its 2024
adjusted diluted EPS guidance floor of greater than $6.80. A full reconciliation of adjusted diluted
EPS is shown in the Non-GAAP Financial Presentation section of this
release.
The Company is increasing its 2024 premium and service revenues
guidance range by $5.0 billion to a
range of $141.0 billion to
$143.0 billion to reflect an
additional $2.0 billion
Commercial premium revenue, $2.0 billion Medicare premium revenue and
$1.0 billion Medicaid premium
revenue. The Company's total revenue guidance has been updated to
$155.0 billion to $157.0 billion. Additionally, the 2024 HBR is
expected to be at the high end of the previous guidance range,
approximately 87.9%.
Conference Call
As previously announced, the Company will host a conference call
Friday, July 26, 2024, at 8:30 a.m.
ET to review the financial results for the second quarter
ended June 30, 2024.
Investors and other interested parties are invited to listen to
the conference call by dialing 1-877-883-0383 in the U.S. and
Canada; +1-412-902-6506 from
abroad, including the following Elite Entry Number: 4980577 to
expedite caller registration; or via a live, audio webcast on the
Company's website at www.centene.com, under the Investors
section.
A webcast replay will be available for on-demand listening
shortly following the completion of the call for the next 12 months
or until 11:59 p.m. ET on Friday,
July 25, 2025, at the aforementioned URL. In addition, a digital
audio playback will be available until 9 a.m. ET on Friday, August 2, 2024, by dialing 1-877-344-7529
in the U.S., 1-855-669-9658 in Canada, or +1-412-317-0088 from abroad, and
entering access code 7407521.
Non-GAAP Financial Presentation
The Company is providing certain non-GAAP financial measures in
this release as the Company believes that these figures are
helpful in allowing investors to more accurately assess the ongoing
nature of the Company's operations and measure the Company's
performance more consistently across periods. The Company uses the
presented non-GAAP financial measures internally in evaluating the
Company's performance and for planning purposes, by allowing
management to focus on period-to-period changes in the Company's
core business operations, and in determining employee incentive
compensation. Therefore, the Company believes that this information
is meaningful in addition to the information contained in the GAAP
presentation of financial information. The Company strongly
encourages investors to review its consolidated financial
statements and publicly filed reports in their entirety and
cautions investors that the non-GAAP financial measures used by the
Company may differ from similar measures used by other companies,
even when similar terms are used to identify such measures. The
presentation of non-GAAP financial measures is not intended to be
considered in isolation or as a substitute for the financial
information prepared and presented in accordance with GAAP.
The Company believes the presentation of non-GAAP financial
measures that excludes amortization of acquired intangible assets,
acquisition and divestiture related expenses, as well as other
items, allows investors to develop a more meaningful understanding
of the Company's core performance over time.
The tables below provide reconciliations of non-GAAP items ($ in
millions, except per share data):
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
GAAP net earnings
attributable to Centene
|
$
1,146
|
|
$
1,058
|
|
$
2,309
|
|
$
2,188
|
Amortization of
acquired intangible assets
|
173
|
|
179
|
|
346
|
|
362
|
Acquisition and
divestiture related expenses
|
6
|
|
13
|
|
67
|
|
36
|
Other adjustments
(1)
|
2
|
|
(74)
|
|
(97)
|
|
(127)
|
Income tax effects of
adjustments (2)
|
(44)
|
|
(21)
|
|
(126)
|
|
(135)
|
Adjusted net
earnings
|
$
1,283
|
|
$
1,155
|
|
$
2,499
|
|
$
2,324
|
(1)
|
Other adjustments
include the following pre-tax items:
|
|
2024:
|
|
|
|
|
(a)
|
for the three months
ended June 30, 2024: gain on the previously reported divestiture of
Circle Health of $10 million, an additional loss on the divestiture
of our Spanish and Central European businesses of $7 million,
severance costs due to a restructuring of $4 million, reduction to
the net gain on the sale of property due to closing costs of $3
million and net gain on the finalization of working capital
adjustments for the previously reported divestiture of Magellan
Specialty Health of $2 million;
|
|
|
|
|
|
|
(b)
|
for the six months
ended June 30, 2024: net gain on the previously reported
divestiture of Magellan Specialty Health due to the achievement of
contingent consideration and finalization of working capital
adjustments of $83 million, net gain on the sale of property of $21
million, gain on the previously reported divestiture of Circle
Health of $20 million, Health Net Federal Services asset impairment
due to the 2024 final ruling on the TRICARE Managed Care
Support Contract of $14 million, severance costs due to a
restructuring of $13 million, an additional loss on the
divestiture of our Spanish and Central European businesses of $7
million and gain on the previously reported divestiture of
HealthSmart due to the finalization of working capital adjustments
of $7 million.
|
|
2023:
|
|
|
|
|
(a)
|
for the three months
ended June 30, 2023: gain on the sale of Apixio of $91 million,
gain on the previously reported divestiture of Centurion of $15
million, an additional loss on the divestiture of our Spanish and
Central European businesses of $13 million and real estate
impairments of $19 million;
|
|
|
|
|
|
|
(b)
|
for the six months
ended June 30, 2023: gain on the sale of Apixio of $91 million,
gain on the sale of Magellan Specialty Health of $79 million, gain
on the previously reported divestiture of Centurion of $15 million,
an additional loss on the divestiture of our Spanish and Central
European businesses of $13 million and real estate impairments of
$45 million.
|
|
|
|
|
(2)
|
The income tax effects
of adjustments are based on the effective income tax rates
applicable to each adjustment. The six months ended June 30, 2023,
includes a one-time income tax benefit of $69 million resulting
from the distribution of long-term stock awards to the estate of
the Company's former CEO.
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
Annual Guidance
December 31, 2024
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
GAAP diluted EPS
attributable to
Centene
|
$
2.16
|
|
$
1.92
|
|
$
4.32
|
|
$
3.96
|
|
greater than
$5.94
|
Amortization of
acquired intangible assets
|
0.33
|
|
0.33
|
|
0.65
|
|
0.66
|
|
~$1.32
|
Acquisition and
divestiture related expenses
|
0.01
|
|
0.02
|
|
0.13
|
|
0.07
|
|
~$0.13
|
Other adjustments
(3)
|
—
|
|
(0.13)
|
|
(0.18)
|
|
(0.23)
|
|
~$(0.19)
|
Income tax effects of
adjustments (4)
|
(0.08)
|
|
(0.04)
|
|
(0.24)
|
|
(0.25)
|
|
~$(0.40)
|
Adjusted diluted
EPS
|
$
2.42
|
|
$
2.10
|
|
$
4.68
|
|
$
4.21
|
|
greater than
$6.80
|
(3)
|
Other adjustments
include the following pre-tax items:
|
|
2024:
|
|
|
|
|
(a)
|
for the three months
ended June 30, 2024: gain on the previously reported divestiture of
Circle Health of $0.02 per share ($0.02 after-tax), an additional
loss on the divestiture of our Spanish and Central European
businesses of $0.01 per share ($0.01 after-tax) and severance costs
due to a restructuring of $0.01 per share ($0.01
after-tax);
|
|
|
|
|
|
|
(b)
|
for the six months
ended June 30, 2024: net gain on the previously reported
divestiture of Magellan Specialty Health due to the achievement of
contingent consideration and finalization of working capital
adjustments of $0.15 per share ($0.11 after-tax), net gain on the
sale of property of $0.04 per share ($0.03 after-tax), gain on the
previously reported divestiture of Circle Health of $0.04 per share
($0.12 after-tax), Health Net Federal Services asset impairment due
to the 2024 final ruling on the TRICARE Managed Care Support
Contract of $0.03 per share ($0.02 after-tax), severance costs due
to a restructuring of $0.02 per share ($0.02 after-tax), an
additional loss on the divestiture of our Spanish and Central
European businesses of $0.01 per share ($0.01 after-tax) and gain
on the previously reported divestiture of HealthSmart due to the
finalization of working capital adjustments of $0.01 per share
($0.01 after-tax);
|
|
|
|
|
|
|
(c)
|
for the year ended
December 31, 2024, an estimated: $0.16 ($0.12 after-tax) net gain
on the previously reported divestiture of Magellan Specialty Health
due to the achievement of contingent consideration and finalization
of working capital adjustments, $0.04 ($0.03 after-tax) net gain on
the sale of property, $0.04 ($0.12 after-tax) gain on the
previously reported divestiture of Circle Health, $0.03 ($0.02
after-tax) Health Net Federal Services asset impairment due to the
2024 final ruling on the TRICARE Managed Care Support
Contract, $0.02 ($0.01 after-tax) severance costs due to a
restructuring, $0.01 ($0.01 after-tax) additional loss on the
previously reported divestiture of our Spanish and Central European
businesses and $0.01 ($0.01 after-tax) gain on the previously
reported divestiture of HealthSmart due to the finalization of
working capital adjustments.
|
|
2023:
|
|
|
|
|
(a)
|
for the three months
ended June 30, 2023: gain on the sale of Apixio of $0.16 per share
($0.11 after-tax), gain on the previously reported divestiture of
Centurion of $0.02 per share ($0.01 after-tax), an additional loss
on the divestiture of our Spanish and Central European businesses
of $0.02 per share ($0.01 after-tax) and real estate impairments of
$0.03 per share ($0.02 after-tax);
|
|
|
|
|
|
|
(b)
|
for the six months
ended June 30, 2023: gain on the sale of Apixio of $0.16 per
share ($0.11 after-tax), gain on the sale of Magellan Specialty
Health of $0.14 per share ($0.12 after-tax), gain on the previously
reported divestiture of Centurion of $0.03 per share ($0.02
after-tax), an additional loss on the divestiture of our Spanish
and Central European businesses of $0.02 per share ($0.01
after-tax) and real estate impairments of $0.08 per share ($0.06
after-tax).
|
|
|
|
|
(4)
|
The income tax effects
of adjustments are based on the effective income tax rates
applicable to each adjustment. The six months ended June 30, 2023,
include a one-time income tax benefit of $0.12 resulting from the
distribution of long-term stock awards to the estate of the
Company's former CEO.
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
GAAP selling, general
and administrative expenses
|
$
2,894
|
|
$
3,016
|
|
$
6,112
|
|
$
6,027
|
Less:
|
|
|
|
|
|
|
|
Acquisition and
divestiture related expenses
|
6
|
|
13
|
|
67
|
|
36
|
Restructuring
costs
|
4
|
|
—
|
|
13
|
|
—
|
Real estate
optimization
|
—
|
|
1
|
|
—
|
|
7
|
Adjusted selling,
general and administrative expenses
|
$
2,884
|
|
$
3,002
|
|
$
6,032
|
|
$
5,984
|
To provide clarity on the way management defines certain key
metrics and ratios, the Company is providing a description of how
the metric or ratio is calculated as follows:
- Health Benefits Ratio (HBR) (GAAP) = Medical costs
divided by premium revenues.
- SG&A Expense Ratio (GAAP) = Selling, general and
administrative expenses divided by premium and service
revenues.
- Adjusted SG&A Expense Ratio (non-GAAP) =
Adjusted selling, general and administrative expenses divided by
premium and service revenues.
- Adjusted Effective Tax Rate (non-GAAP) = GAAP
income tax expense (benefit) excluding the income tax effects of
adjustments to net earnings divided by adjusted earnings (loss)
before income tax expense.
- Adjusted Net Earnings (non-GAAP) = Net earnings less
amortization of acquired intangible assets, less acquisition and
divestiture related expenses, as well as adjustments for other
items, net of the income tax effect of the adjustments.
- Adjusted Diluted EPS (non-GAAP) = Adjusted net
earnings divided by weighted average common shares outstanding on a
fully diluted basis.
- Debt to Capitalization Ratio (GAAP) = Total debt,
divided by total debt plus total stockholder's equity.
- Average Medical Claims Expense (GAAP) = Medical
costs for the period divided by number of days in such period.
Average medical claims expense is most often calculated for the
quarterly reporting period.
- Days in Claims Payable (GAAP) = Medical claims
liabilities divided by average medical claims expense. Days in
claims payable is most often calculated for the quarterly reporting
period.
In addition, the following terms are defined as follows:
- State-directed Payments: Payments directed by a
state that have minimal risk but are administered as a premium
adjustment. These payments are recorded as premium revenue and
medical costs at close to a 100% HBR. In many instances, the
Company has little visibility to the timing of these payments until
they are paid by a state.
- Pass-through Payments: Non-risk supplemental
payments from a state that the Company is required to pass
through to designated contracted providers. These payments are
recorded as premium tax revenue and premium tax expense.
About Centene Corporation
Centene Corporation, a
Fortune 500 company, is a leading healthcare enterprise that is
committed to helping people live healthier lives. The Company takes
a local approach – with local brands and local teams – to provide
fully integrated, high-quality, and cost-effective services to
government-sponsored and commercial healthcare programs, focusing
on under-insured and uninsured
individuals. Centene offers affordable and high-quality
products to more than 1 in 15 individuals across the nation,
including Medicaid and Medicare members (including Medicare
Prescription Drug Plans) as well as individuals and families served
by the Health Insurance Marketplace and the TRICARE program.
The Company also contracts with other healthcare and commercial
organizations to provide a variety of specialty services focused on
treating the whole person. Centene focuses on long-term
growth and value creation as well as the development of its people,
systems and capabilities so that it can better serve its members,
providers, local communities and government partners.
Centene uses its investor relations website to publish important
information about the Company, including information that may be
deemed material to investors. Financial and other information about
Centene is routinely posted and is accessible on Centene's investor
relations website, https://investors.centene.com.
Forward-Looking Statements
All statements, other than statements of current or
historical fact, contained in this press release are
forward-looking statements. Without limiting the foregoing,
forward-looking statements often use words such as "guidance,"
"believe," "anticipate," "plan," "expect," "estimate," "intend,"
"seek," "target," "goal," "may," "will," "would," "could,"
"should," "can," "continue" and other similar words or expressions
(and the negative thereof). Centene Corporation and its
subsidiaries (Centene, the Company, our or we) intends such
forward-looking statements to be covered by the safe-harbor
provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, and we are including this
statement for purposes of complying with these safe-harbor
provisions. In particular, these statements include, without
limitation, statements about our future operating or financial
performance, market opportunity, competition, expected contract
start dates and terms, expected activities in connection with
completed and future acquisitions and dispositions, our
investments, and the adequacy of our available cash resources.
These forward-looking statements reflect our current views with
respect to future events and are based on numerous assumptions and
assessments made by us in light of our experience and perception of
historical trends, current conditions, business strategies,
operating environments, future developments, and other factors we
believe appropriate. By their nature, forward-looking statements
involve known and unknown risks and uncertainties and are subject
to change because they relate to events and depend on circumstances
that will occur in the future, including economic, regulatory,
competitive, and other factors that may cause our or our industry's
actual results, levels of activity, performance, or achievements to
be materially different from any future results, levels of
activity, performance, or achievements expressed or implied by
these forward-looking statements. These statements are not
guarantees of future performance and are subject to risks,
uncertainties, and assumptions. All forward-looking statements
included in this press release are based on information available
to us on the date hereof. Except as may be otherwise required by
law, we undertake no obligation to update or revise the
forward-looking statements included in this press release, whether
as a result of new information, future events, or otherwise,
after the date hereof. You should not place undue reliance on
any forward-looking statements, as actual results may differ
materially from projections, estimates, or other forward-looking
statements due to a variety of important factors, variables, and
events including, but not limited to: our ability to design and
price products that are competitive and/or actuarially sound
including but not limited to any impacts resulting from Medicaid
redeterminations; our ability to maintain or achieve improvement in
the Centers for Medicare and Medicaid Services (CMS) Star ratings
and maintain or achieve improvement in other quality scores in each
case that can impact revenue and future growth; our ability to
accurately predict and effectively manage health benefits and other
operating expenses and reserves, including fluctuations in medical
utilization rates; competition, including for providers, broker
distribution networks, contract reprocurements and organic growth;
our ability to adequately anticipate demand and provide for
operational resources to maintain service level requirements; our
ability to manage our information systems effectively; disruption,
unexpected costs, or similar risks from business transactions,
including acquisitions, divestitures, and changes in our
relationships with third parties; impairments to real estate,
investments, goodwill and intangible assets; changes in senior
management, loss of one or more key personnel or an inability to
attract, hire, integrate and retain skilled personnel; membership
and revenue declines or unexpected trends; rate cuts or other
payment reductions or delays by governmental payors and other risks
and uncertainties affecting our government businesses; changes in
healthcare practices, new technologies, and advances in medicine;
our ability to effectively and ethically use artificial
intelligence and machine learning in compliance with applicable
laws; increased healthcare costs; inflation and interest rates; the
effect of social, economic, and political conditions and
geopolitical events, including as a result of changes in U.S.
presidential administrations or Congress; changes in market
conditions; changes in federal or state laws or regulations,
including changes with respect to income tax reform or government
healthcare programs as well as changes with respect to the Patient
Protection and Affordable Care Act and the Health Care and
Education Affordability Reconciliation Act (collectively referred
to as the ACA) and any regulations enacted thereunder; uncertainty
concerning government shutdowns, debt ceilings or funding; tax
matters; disasters, climate-related incidents, acts of war or
aggression or major epidemics; changes in expected contract start
dates and terms; changes in provider, broker, vendor, state,
federal and other contracts and delays in the timing of regulatory
approval of contracts, including due to protests; the expiration,
suspension, or termination of our contracts with federal or state
governments (including, but not limited to, Medicaid, Medicare or
other customers); the difficulty of predicting the timing or
outcome of legal or regulatory audits, investigations, proceedings
or matters including, but not limited to, our ability to resolve
claims and/or allegations made by states with regard to past
practices on acceptable terms, or at all, or whether additional
claims, reviews or investigations will be brought by states, the
federal government or shareholder litigants, or government
investigations; challenges to our contract awards; cyber-attacks or
other data security incidents or our failure to comply with
applicable privacy, data or security laws and regulations; the
exertion of management's time and our resources, and other expenses
incurred and business changes required in connection with complying
with the terms of our contracts and the undertakings in connection
with any regulatory, governmental, or third party consents or
approvals for acquisitions or dispositions; any changes in expected
closing dates, estimated purchase price, or accretion for
acquisitions or dispositions; losses in our investment portfolio;
restrictions and limitations in connection with our indebtedness; a
downgrade of our corporate family rating, issuer rating or credit
rating of our indebtedness; the availability of debt and equity
financing on terms that are favorable to us and risks and
uncertainties discussed in the reports that Centene has filed with
the Securities and Exchange Commission (SEC). This list of
important factors is not intended to be exhaustive. We discuss
certain of these matters more fully, as well as certain other
factors that may affect our business operations, financial
condition, and results of operations, in our filings with the SEC,
including our annual report on Form 10-K, quarterly reports on Form
10-Q and current reports on Form 8-K. Due to these important
factors and risks, we cannot give assurances with respect to our
future performance, including without limitation our ability to
maintain adequate premium levels or our ability to control our
future medical and selling, general and administrative costs. The
guidance in this press release is only effective as of the date
given, July 26, 2024, and will not be updated or affirmed
unless and until we publicly announce updated or affirmed
guidance.
CENTENE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(In millions, except
shares in thousands and per share data in dollars)
|
|
|
June 30,
2024
|
|
December 31,
2023
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
17,605
|
|
$
17,193
|
Premium and trade
receivables
|
16,587
|
|
15,532
|
Short-term
investments
|
2,609
|
|
2,459
|
Other current
assets
|
1,605
|
|
5,572
|
Total current
assets
|
38,406
|
|
40,756
|
Long-term
investments
|
16,870
|
|
16,286
|
Restricted
deposits
|
1,415
|
|
1,386
|
Property, software and
equipment, net
|
2,041
|
|
2,019
|
Goodwill
|
17,558
|
|
17,558
|
Intangible assets,
net
|
5,755
|
|
6,101
|
Other long-term
assets
|
1,092
|
|
535
|
Total
assets
|
$
83,137
|
|
$
84,641
|
LIABILITIES,
REDEEMABLE NONCONTROLLING INTERESTS AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Medical claims
liability
|
$
18,173
|
|
$
18,000
|
Accounts payable and
accrued expenses
|
12,232
|
|
16,420
|
Return of premium
payable
|
1,615
|
|
1,462
|
Unearned
revenue
|
597
|
|
715
|
Current portion of
long-term debt
|
112
|
|
119
|
Total current
liabilities
|
32,729
|
|
36,716
|
Long-term
debt
|
17,516
|
|
17,710
|
Deferred tax
liability
|
665
|
|
641
|
Other long-term
liabilities
|
4,770
|
|
3,618
|
Total
liabilities
|
55,680
|
|
58,685
|
Commitments and
contingencies
|
|
|
|
Redeemable
noncontrolling interests
|
16
|
|
19
|
Stockholders'
equity:
|
|
|
|
Preferred stock,
$0.001 par value; authorized 10,000 shares; no shares issued or
outstanding at June 30, 2024 and December 31,
2023
|
—
|
|
—
|
Common stock, $0.001
par value; authorized 800,000 shares; 619,495 issued and
526,001 outstanding at June 30, 2024, and 615,291 issued and
534,484
outstanding at December 31, 2023
|
1
|
|
1
|
Additional paid-in
capital
|
20,461
|
|
20,304
|
Accumulated other
comprehensive (loss)
|
(646)
|
|
(652)
|
Retained
earnings
|
14,352
|
|
12,043
|
Treasury stock, at
cost (93,494 and 80,807 shares, respectively)
|
(6,817)
|
|
(5,856)
|
Total Centene
stockholders' equity
|
27,351
|
|
25,840
|
Nonredeemable
noncontrolling interest
|
90
|
|
97
|
Total stockholders'
equity
|
27,441
|
|
25,937
|
Total liabilities,
redeemable noncontrolling interests and stockholders'
equity
|
$
83,137
|
|
$
84,641
|
CENTENE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
(In millions, except
shares in thousands and per share data in dollars)
(Unaudited)
|
|
|
Three Months
Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Revenues:
|
|
|
|
|
|
|
|
Premium
|
$ 35,140
|
|
$ 33,713
|
|
$ 70,669
|
|
$ 67,538
|
Service
|
833
|
|
1,125
|
|
1,641
|
|
2,252
|
Premium and service
revenues
|
35,973
|
|
34,838
|
|
72,310
|
|
69,790
|
Premium tax
|
3,863
|
|
2,770
|
|
7,933
|
|
6,707
|
Total
revenues
|
39,836
|
|
37,608
|
|
80,243
|
|
76,497
|
Expenses:
|
|
|
|
|
|
|
|
Medical
costs
|
30,765
|
|
29,347
|
|
61,697
|
|
58,781
|
Cost of
services
|
680
|
|
877
|
|
1,349
|
|
1,747
|
Selling, general and
administrative expenses
|
2,894
|
|
3,016
|
|
6,112
|
|
6,027
|
Depreciation
expense
|
133
|
|
146
|
|
268
|
|
288
|
Amortization of
acquired intangible assets
|
173
|
|
179
|
|
346
|
|
362
|
Premium tax
expense
|
3,962
|
|
2,854
|
|
8,123
|
|
6,865
|
Impairment
|
—
|
|
18
|
|
13
|
|
38
|
Total operating
expenses
|
38,607
|
|
36,437
|
|
77,908
|
|
74,108
|
Earnings from
operations
|
1,229
|
|
1,171
|
|
2,335
|
|
2,389
|
Other income
(expense):
|
|
|
|
|
|
|
|
Investment and other
income
|
463
|
|
425
|
|
1,008
|
|
778
|
Interest
expense
|
(176)
|
|
(181)
|
|
(354)
|
|
(361)
|
Earnings before
income tax
|
1,516
|
|
1,415
|
|
2,989
|
|
2,806
|
Income tax
expense
|
370
|
|
360
|
|
685
|
|
621
|
Net
earnings
|
1,146
|
|
1,055
|
|
2,304
|
|
2,185
|
Loss attributable to
noncontrolling interests
|
—
|
|
3
|
|
5
|
|
3
|
Net earnings
attributable to Centene Corporation
|
$
1,146
|
|
$
1,058
|
|
$
2,309
|
|
$
2,188
|
|
|
|
|
|
|
|
|
Net earnings per
common share attributable to Centene Corporation:
|
|
|
|
|
Basic earnings per
common share
|
$
2.16
|
|
$
1.93
|
|
$
4.34
|
|
$
3.98
|
Diluted earnings per
common share
|
$
2.16
|
|
$
1.92
|
|
$
4.32
|
|
$
3.96
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares outstanding:
|
|
|
|
|
|
|
Basic
|
529,602
|
|
548,932
|
|
532,385
|
|
549,850
|
Diluted
|
530,755
|
|
550,308
|
|
534,517
|
|
551,996
|
CENTENE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In millions,
unaudited)
|
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
Cash flows from
operating activities:
|
|
|
|
Net earnings
|
$
2,304
|
|
$
2,185
|
Adjustments to
reconcile net earnings to net cash provided by operating
activities
|
|
|
|
Depreciation and
amortization
|
614
|
|
650
|
Stock compensation
expense
|
132
|
|
117
|
Impairment
|
13
|
|
38
|
Deferred income
taxes
|
40
|
|
(160)
|
(Gain) loss on
divestitures, net
|
(103)
|
|
(172)
|
Other adjustments,
net
|
(11)
|
|
68
|
Changes in assets and
liabilities
|
|
|
|
Premium and trade
receivables
|
(1,059)
|
|
(319)
|
Other
assets
|
(404)
|
|
(325)
|
Medical claims
liabilities
|
173
|
|
139
|
Unearned
revenue
|
(118)
|
|
1,895
|
Accounts payable and
accrued expenses
|
(1,704)
|
|
618
|
Other long-term
liabilities
|
1,838
|
|
2,081
|
Other operating
activities, net
|
4
|
|
—
|
Net cash provided by
operating activities
|
1,719
|
|
6,815
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(337)
|
|
(440)
|
Purchases of
investments
|
(3,434)
|
|
(3,199)
|
Sales and maturities of
investments
|
2,497
|
|
2,293
|
Divestiture proceeds,
net of divested cash
|
959
|
|
669
|
Net cash used in
investing activities
|
(315)
|
|
(677)
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from long-term
debt
|
350
|
|
1,281
|
Payments and
repurchases of long-term debt
|
(565)
|
|
(1,322)
|
Common stock
repurchases
|
(954)
|
|
(828)
|
Proceeds from common
stock issuances
|
25
|
|
21
|
Purchase of
noncontrolling interest
|
—
|
|
(85)
|
Other financing
activities, net
|
(4)
|
|
—
|
Net cash used in
financing activities
|
(1,148)
|
|
(933)
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
7
|
|
(7)
|
Net increase in cash,
cash equivalents and restricted cash and cash
equivalents
|
263
|
|
5,198
|
Cash, cash
equivalents and restricted cash and cash equivalents, beginning
of period
|
17,452
|
|
12,330
|
Cash, cash
equivalents and restricted cash and cash equivalents, end of
period
|
$
17,715
|
|
$
17,528
|
Supplemental
disclosures of cash flow information:
|
|
|
|
Interest
paid
|
$
352
|
|
$
348
|
Income taxes
paid
|
$
610
|
|
$
592
|
|
|
|
|
The following table
provides a reconciliation of cash, cash equivalents and restricted
cash and cash equivalents reported within the Consolidated Balance
Sheets to the totals above:
|
|
June
30,
|
|
2024
|
|
2023
|
Cash and cash
equivalents
|
$
17,605
|
|
$
17,170
|
Restricted cash and
cash equivalents, included in restricted deposits
|
110
|
|
358
|
Total cash, cash
equivalents and restricted cash and cash equivalents
|
$
17,715
|
|
$
17,528
|
CENTENE
CORPORATION
SUPPLEMENTAL
FINANCIAL DATA
|
|
|
|
Q2
|
|
Q1
|
|
Q4
|
|
Q3
|
|
Q2
|
|
|
2024
|
|
2024
|
|
2023
|
|
2023
|
|
2023
|
MEMBERSHIP
|
|
|
|
|
|
|
|
|
|
Traditional Medicaid
(1)
|
11,640,900
|
|
11,750,000
|
|
12,754,000
|
|
13,470,900
|
|
14,260,400
|
High Acuity Medicaid
(2)
|
1,499,000
|
|
1,547,600
|
|
1,718,000
|
|
1,769,600
|
|
1,799,200
|
Total
Medicaid
|
13,139,900
|
|
13,297,600
|
|
14,472,000
|
|
15,240,500
|
|
16,059,600
|
Commercial
Marketplace
|
4,401,300
|
|
4,348,800
|
|
3,900,100
|
|
3,681,600
|
|
3,295,200
|
Commercial
Group
|
426,400
|
|
422,700
|
|
427,500
|
|
424,200
|
|
435,000
|
Total
Commercial
|
4,827,700
|
|
4,771,500
|
|
4,327,600
|
|
4,105,800
|
|
3,730,200
|
Medicare
(3)
|
1,138,400
|
|
1,146,800
|
|
1,284,200
|
|
1,310,600
|
|
1,329,000
|
Medicare PDP
|
6,603,600
|
|
6,438,900
|
|
4,617,800
|
|
4,539,800
|
|
4,493,700
|
Total at-risk
membership
|
25,709,600
|
|
25,654,800
|
|
24,701,600
|
|
25,196,700
|
|
25,612,500
|
TRICARE
eligibles
|
2,768,000
|
|
2,768,000
|
|
2,773,200
|
|
2,773,200
|
|
2,799,300
|
Total
|
28,477,600
|
|
28,422,800
|
|
27,474,800
|
|
27,969,900
|
|
28,411,800
|
(1)
|
Membership includes
TANF, Medicaid Expansion, CHIP, Foster Care and Behavioral
Health.
|
(2)
|
Membership includes
ABD, IDD, LTSS and MMP Duals.
|
(3)
|
Membership includes
Medicare Advantage and Medicare Supplement.
|
NUMBER OF EMPLOYEES
|
60,000
|
|
59,900
|
|
67,700
|
|
67,800
|
|
68,300
|
|
|
DAYS IN CLAIMS PAYABLE
|
54
|
|
53
|
|
54
|
|
53
|
|
52
|
|
|
|
|
|
|
|
|
|
|
|
CASH, INVESTMENTS AND RESTRICTED DEPOSITS (in
millions)
|
Regulated
|
$
37,421
|
|
$
36,528
|
|
$
36,314
|
|
$
35,988
|
|
$
35,799
|
Unregulated
|
1,078
|
|
1,018
|
|
1,010
|
|
1,020
|
|
1,046
|
Total
|
$
38,499
|
|
$
37,546
|
|
$
37,324
|
|
$
37,008
|
|
$
36,845
|
|
|
|
|
|
|
|
|
|
|
|
DEBT TO CAPITALIZATION
|
39.1 %
|
|
40.0 %
|
|
40.7 %
|
|
41.5 %
|
|
41.1 %
|
OPERATING
RATIOS
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
HBR
|
87.6 %
|
|
87.0 %
|
|
87.3 %
|
|
87.0 %
|
SG&A expense
ratio
|
8.0 %
|
|
8.7 %
|
|
8.5 %
|
|
8.6 %
|
Adjusted SG&A
expense ratio
|
8.0 %
|
|
8.6 %
|
|
8.3 %
|
|
8.6 %
|
HBR BY
PRODUCT
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Medicaid
|
92.8 %
|
|
88.9 %
|
|
91.8 %
|
|
89.5 %
|
Commercial
|
73.4 %
|
|
81.0 %
|
|
73.4 %
|
|
78.7 %
|
Medicare
(4)
|
89.2 %
|
|
86.2 %
|
|
90.0 %
|
|
85.7 %
|
(4)
|
Medicare includes
Medicare Advantage, Medicare Supplement, D-SNPs and Medicare
PDP.
|
MEDICAL CLAIMS LIABILITY
The changes in medical claims liability are summarized as
follows (in millions):
Balance,
June 30, 2023
|
|
$
16,884
|
Less: Reinsurance
recoverables
|
|
20
|
Balance, June 30,
2023, net
|
|
16,864
|
Incurred related
to:
|
|
|
Current
period
|
|
123,420
|
Prior
periods
|
|
(1,945)
|
Total
incurred
|
|
121,475
|
Paid related
to:
|
|
|
Current
period
|
|
107,316
|
Prior
periods
|
|
13,243
|
Total paid
|
|
120,559
|
Plus: Premium
deficiency reserve
|
|
335
|
Balance, June 30,
2024, net
|
|
18,115
|
Plus: Reinsurance
recoverables
|
|
58
|
Balance,
June 30, 2024
|
|
$
18,173
|
Centene's claims reserving process utilizes a consistent
actuarial methodology to estimate Centene's ultimate liability. Any
reduction in the "Incurred related to: Prior periods" amount may be
offset as Centene actuarially determines the "Incurred related to:
Current period." Centene believes it has consistently applied its
claims reserving methodology. Additionally, approximately
$354 million was recorded as a
reduction to premium revenues resulting from development within
"Incurred related to: Prior periods" due to minimum HBR and other
return of premium programs.
The amount of the "Incurred related to: Prior periods" above
represents favorable development and includes the effects of
reserving under moderately adverse conditions, new markets where we
use a conservative approach in setting reserves during the initial
periods of operations, receipts from other third party payors
related to coordination of benefits and lower medical utilization
and cost trends for dates of service June
30, 2023, and prior.
View original
content:https://www.prnewswire.com/news-releases/centene-corporation-reports-second-quarter-2024-results-302207365.html
SOURCE Centene Corporation