ST. LOUIS, July 26, 2016 /PRNewswire/ -- Centene Corporation (NYSE: CNC) today announced its financial results for the second quarter ended June 30, 2016. The following discussions, with the exception of cash flow information, are in the context of continuing operations.
For the second quarter of 2016, we reported diluted earnings per share of $0.98 and adjusted diluted earnings per share (Adjusted diluted EPS) of $1.29 when excluding Health Net acquisition related expenses and amortization of acquired intangible assets. The second quarter of 2016 includes a $0.19 per diluted share benefit related to the 2015 risk adjustment and reinsurance reconciliations under the Affordable Care Act (ACA) in connection with our health insurance marketplace business. A reconciliation of GAAP diluted earnings per share to Adjusted diluted EPS is highlighted below:
GAAP diluted earnings per share (EPS) | $ | 0.98 | |
Health Net acquisition related expenses | 0.16 | ||
Amortization of acquired intangible assets | 0.15 | ||
Adjusted diluted EPS | $ | 1.29 | |
In summary, the 2016 second quarter results were as follows:
Total revenues (in millions) | $ | 10,897 | ||
Health benefits ratio | 86.6 | % | ||
General & administrative expense ratio | 9.2 | % | ||
General & administrative expense ratio, excluding Health Net acquisition related expenses | 9.0 | % | ||
GAAP diluted earnings per share | $ | 0.98 | ||
Adjusted diluted EPS | $ | 1.29 | ||
Total cash flow used in operations (in millions) | $ | (420) | ||
Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "Centene's solid second quarter results reinforce our positive operating momentum and bode well for continued growth for the balance of 2016 and beyond. The Health Net integration remains on track and the benefits of our greater scale and diversity are being realized accordingly."
Second Quarter Highlights
- June 30, 2016 managed care membership of 11.4 million, an increase of 6.8 million members, or 148% compared to the second quarter of 2015.
- Total revenues for the second quarter of 2016 of $10.9 billion, representing 98% growth compared to the second quarter of 2015.
- Health benefits ratio of 86.6% for the second quarter of 2016, compared to 89.1% in the second quarter of 2015.
- General and administrative expense ratio of 9.2%, or 9.0% excluding Health Net acquisition related expenses for the second quarter of 2016, compared to 8.4% in the second quarter of 2015.
- Operating cash flow of $(420) million for the second quarter of 2016, reflecting an increase in premium and related receivables of approximately $600 million due to the timing of June capitation payments from several of our states (substantially all of which has been collected in July).
- Diluted earnings per share for the second quarter of 2016 of $0.98, or $1.29 of Adjusted diluted EPS. In comparison, diluted EPS for the second quarter of 2015 was $0.72, or $0.76 Adjusted diluted EPS.
Other Events
- In July 2016, it was announced that the Department of Defense awarded our wholly-owned subsidiary, Health Net Federal Services, the TRICARE West Region contract. We will continue to operate in the TRICARE North Region until the middle of 2017, when we expect to start health care delivery for the West Region.
- In June 2016, our Indiana subsidiary, Managed Health Services, was selected by the Indiana Family & Social Services Administration to begin contract negotiations to provide risk-based managed care services for enrollees in the Healthy Indiana Plan and Hoosier Healthwise programs. This new contract is expected to commence on January 1, 2017.
- In June 2016, the Company issued an additional $500 million of 4.75% Senior Notes due 2022 at a premium to yield of 4.41%. The Company used the net proceeds of the offering to repay amounts outstanding under its Revolving Credit Facility and to pay related fees and expenses.
- In June 2016, our correctional health care joint venture, Centurion, began operating under two new contracts with the State of New Mexico Corrections Department to provide correctional medical health care services and pharmacy services.
- In May 2016, our specialty solutions division, Envolve, Inc. was selected by Maryland Care Inc. d/b/a Maryland Physicians Care MCO to provide health plan management services for its Medicaid operations in Maryland effective July 1, 2017.
- In April 2016, our Pennsylvania subsidiary, Pennsylvania Health & Wellness, was selected by the Pennsylvania Department of Human Services to service Medicaid recipients enrolled in the HealthChoices program in three zones. In July 2016, the Commonwealth reissued the request for proposal with an anticipated commencement of April 2017.
- In April 2016, we announced the appointment of Christopher Isaak to Senior Vice President, Corporate Controller and Chief Accounting Officer.
Accreditations & Awards
- In July 2016, FORTUNE magazine announced Centene's position of #470 in its annual ranking of the largest companies globally by revenue.
- In June 2016, FORTUNE magazine announced Centene's position of #124 in its annual ranking of America's largest companies by revenue.
- In May 2016, our Florida subsidiary, Sunshine Health, received Accreditation from the National Committee for Quality Assurance for its Medicaid and Health Insurance Marketplace Exchange plan, Ambetter from Sunshine Health.
- In May 2016, at the Case In Point Platinum Awards, Centene and its specialty solutions divisions, Envolve, Inc. were honored with awards in five categories: Behavioral Health Case Management, Women/Children Case Management, Acute Care, Care Management, and Disease Management/Population Health.
Membership
The following table sets forth the Company's membership by state for its managed care organizations:
June 30, | |||||
2016 | 2015 | ||||
Arizona | 597,700 | 210,900 | |||
Arkansas | 52,800 | 45,400 | |||
California | 3,097,600 | 178,700 | |||
Florida | 726,200 | 470,300 | |||
Georgia | 493,300 | 405,000 | |||
Illinois | 234,700 | 209,100 | |||
Indiana | 291,000 | 250,400 | |||
Kansas | 144,800 | 143,000 | |||
Louisiana | 375,300 | 358,900 | |||
Massachusetts | 47,100 | 61,500 | |||
Michigan | 2,200 | 2,700 | |||
Minnesota | 9,500 | 10,900 | |||
Mississippi | 323,800 | 250,600 | |||
Missouri | 102,900 | 82,600 | |||
New Hampshire | 79,700 | 70,800 | |||
New Mexico | 7,100 | ||||
Ohio | 319,000 | 287,100 | |||
Oregon | 221,500 | ||||
South Carolina | 113,700 | 112,600 | |||
Tennessee | 20,800 | 21,400 | |||
Texas | 1,037,000 | 969,700 | |||
Vermont | 1,600 | 2,800 | |||
Washington | 239,700 | 214,100 | |||
Wisconsin | 76,100 | 78,600 | |||
Total at-risk membership | 8,615,100 | 4,437,100 | |||
TRICARE eligibles | 2,815,700 | ||||
Non-risk membership | 176,600 | ||||
Total | 11,430,800 | 4,613,700 | |||
The following table sets forth our membership by line of business:
June 30, | |||||
2016 | 2015 | ||||
Medicaid: | |||||
TANF, CHIP & Foster Care | 5,541,200 | 3,536,000 | |||
ABD & LTC | 757,500 | 454,000 | |||
Behavioral Health | 455,800 | 203,900 | |||
Commercial | 1,423,400 | 167,400 | |||
Medicare & Duals | 300,700 | 28,200 | |||
Correctional | 136,500 | 47,600 | |||
Total at-risk membership | 8,615,100 | 4,437,100 | |||
TRICARE eligibles | 2,815,700 | ||||
Non-risk membership | 176,600 | ||||
Total | 11,430,800 | 4,613,700 | |||
At June 30, 2016, the Company served 1,004,200 members in Medicaid expansion programs in nine states and 363,600 dual-eligible members, compared to 368,900 members in Medicaid expansion programs in seven states and 187,400 dual-eligible members at June 30, 2015.
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