Centene Corporation Reports 2014 Third Quarter Results & Raises Guidance

October 28, 2014 |

3 min read

ST. LOUIS, Oct. 28, 2014 /PRNewswire/ -- Centene Corporation (NYSE: CNC) today announced its financial results for the quarter ended September 30, 2014. The following discussions, with the exception of cash flow information, are in the context of continuing operations. For the third quarter of 2014, we reported net earnings per diluted share of $1.34. Details of the earnings per diluted share are highlighted below:

	Third Quarter
	2014		2013
Net earnings per diluted share	$	1.34	$	0.88
Impact of Health Insurer Fee	0.15
Acquisition transaction costs	0.06
Benefit for tax adjustment related to prior periods	(0.33)
Total, excluding above items	$	1.22	$	0.88

Included in the table above are the following items:

A $0.15 per diluted share impact for the health insurer fee related to two states where we have not yet received signed agreements.
Transaction costs of $0.06 per diluted share associated with acquisitions in the third quarter.
An income tax benefit of $0.33 per diluted share for periods prior to the third quarter 2014. During the third quarter of 2014, the Internal Revenue Service (IRS) issued final regulations related to compensation deduction limitations applicable to certain health insurance issuers. As a result, we no longer believe the deduction limitations apply to Centene for 2013 and 2014. Accordingly, we reversed previously recorded tax expense from prior periods for this item.

Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "The underlying operations performed well during the quarter, delivering over 50% revenue growth over 2013. We continue to successfully execute our growth strategy and expect performance to remain strong over the remainder of 2014."

Key financial metrics for the third quarter of 2014 are summarized as follows:

Quarter-end managed care membership of 3,705,300, including non-risk membership of 303,500, an increase of 1,092,800 members, or 42% year over year.
Premium and service revenues of $4.2 billion, representing 53% growth year over year.
Health Benefits Ratio of 89.7%, compared to 87.8% in 2013.
General and Administrative expense ratio of 8.0%, compared to 9.1% in 2013.
Operating cash flow of $441.8 million for the third quarter of 2014.

Other Events

In October 2014, our subsidiary, Louisiana Healthcare Connections, was recommended for a contract award by the Louisiana Department of Health and Hospitals to serve Bayou Health (Medicaid) beneficiaries. The new Bayou Health contract is expected to commence early in the first quarter of 2015.
In August and September 2014, respectively, our Missouri subsidiary, Home State Health, and our Florida subsidiary, Sunshine Health, received accreditation from the National Committee for Quality Assurance.
In September 2014, Centene was added to the S&P MidCap 400 Index and the Barron's 400 Index.

Membership

The following table sets forth the Company's membership by state for its managed care organizations:

	September 30,
	2014	2013
Arizona	7,000	23,700
Arkansas	36,600
California	144,700
Florida	411,200	217,800
Georgia	382,600	314,100
Illinois	31,300	22,800
Indiana	199,500	198,400
Kansas	144,200	137,700
Louisiana	150,800	152,600
Massachusetts	46,600	23,200
Minnesota	9,500
Mississippi	99,300	76,900
Missouri	64,900	58,200
New Hampshire	56,600
Ohio	261,000	170,900
South Carolina	106,500	89,400
Tennessee	21,200	20,400
Texas	961,100	957,300
Washington	192,500	77,100
Wisconsin	74,700	72,000
Total at-risk membership	3,401,800	2,612,500
Non-risk membership	303,500
Total	3,705,300	2,612,500

At September 30, 2014, the Company served 193,100 Medicaid members in Medicaid expansion programs in California, Illinois, Massachusetts, New Hampshire, Ohio and Washington included in the table above.

To read full press release, please click here.

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