Centene Corporation Reports 2016 First Quarter Results & Updates 2016 Guidance

ST. LOUIS, April 26, 2016 /PRNewswire/ -- Centene Corporation (NYSE: CNC) today announced its financial results for the first quarter ended March 31, 2016. On March 24, 2016, Centene acquired all of the issued and outstanding shares of Health Net, Inc. (Health Net). Our consolidated financial statements as of and for the three months ended March 31, 2016 reflect eight days of Health Net operations. The following discussions, with the exception of cash flow information, are in the context of continuing operations.

For the first quarter of 2016, we reported a diluted net loss per share of $(0.13) and adjusted diluted earnings per share (Adjusted Diluted EPS) of $0.74 when excluding Health Net acquisition related expenses and intangible amortization. A reconciliation of GAAP diluted net loss per share to Adjusted Diluted EPS is highlighted below:

In summary, the 2016 first quarter results were as follows:

Michael F. Neidorff, Centene’s Chairman and Chief Executive Officer, stated, “We are pleased to have closed the Health Net transaction, as expected, in the first quarter. This acquisition is transformational -- building on our critical mass and new products and capabilities that will enhance the sustainability of our long-term growth. The integration process is proceeding as planned and we look forward to continued success in 2016 and beyond.”

First Quarter Highlights

• On March 24, 2016, we acquired all of the issued and outstanding shares of Health Net for approximately $6.0 billion, including the assumption of debt. This strategic acquisition broadens our current service offerings, providing expansion in Medicaid and Medicare programs. This acquisition provides further diversification across our markets and products through the addition of government-sponsored care under federal contracts with the Department of Defense and the U.S. Department of Veteran’s Affairs, as well as Medicare Advantage. Our consolidated financial statements as of and for the three months ended March 31, 2016 reflect eight days of Health Net operations.
• March 31, 2016 managed care membership of 11.5 million, an increase of 7.1 million members, or 162% compared to the first quarter of 2015.
• Total revenues for the first quarter of $7.0 billion, representing 36% growth compared to the first quarter of 2015.
• Health Benefits Ratio of 88.7% for the first quarter of 2016, compared to 89.8% in the first quarter of 2015.
• General and Administrative expense ratio of 11.3%, or 8.3% excluding Health Net acquisition related expenses for the first quarter of 2016, compared to 8.3% in the first quarter of 2015.
• Operating cash flow of $195 million for the first quarter of 2016.
• Diluted loss per share for the first quarter of 2016 of $(0.13), or $0.74 of Adjusted Diluted EPS when excluding Health Net acquisition related expenses and intangible amortization. In comparison, diluted EPS for the first quarter of 2015 was $0.52, or $0.55 Adjusted Diluted EPS when excluding intangible amortization.

Other Events

• In April 2016, our Nebraska subsidiary, Nebraska Total Care, executed a contract with the Nebraska Department of Health and Human Services’ Division of Medicaid and Long-Term Care as one of three managed care organizations to administer its new Heritage Health Program for Medicaid, ABD and CHIP enrollees. The contract is expected to commence in the first quarter of 2017, pending regulatory approval.
• In April 2016, Centurion of Mississippi, LLC was selected to provide correctional healthcare services for the Mississippi Department of Corrections (MDOC). Centurion began providing healthcare services to the MDOC in July 2015 under a one-year emergency contract. The new three-year contract will begin in July 2016.
• In April 2016, Centurion of Florida, LLC began providing correctional healthcare services for the Florida Department of Corrections in Regions 1, 2 and 3.
• In April 2016, Coordinated Care of Washington began operating as the sole contractor with the Washington State Health Care Authority to provide foster care services through the Apple Health Foster Care contract.
• In April 2016, we announced the appointment of Mark Brooks to Senior Vice President and Chief Information Officer.
• In April 2016, the Health Net Federal Services call center operations earned the ranking of first place for large call centers (those with more than 250 full-time representatives) in BenchmarkPortal’s Top 100 Call Center Contest.
• In April 2016, Centene was awarded the Hispanic Health Leadership Award by the National Hispanic Medical Association.
• In March 2016, Centene was added to the S&P 500 Index.

Membership

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