2018 Second Quarter Diluted EPS of $1.50; Adjusted Diluted EPS of $1.80
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ST. LOUIS, July 24, 2018 /PRNewswire/ -- Centene Corporation (NYSE: CNC) announced today its financial results for the second quarter ended June 30, 2018, reporting diluted earnings per share (EPS) of $1.50 and Adjusted Diluted EPS of $1.80. In summary, the 2018 second quarter results were as follows: Total revenues (in millions) $14,181
Health benefits ratio 85.7%
SG&A expense ratio 9.6%
GAAP diluted EPS $1.50
Adjusted Diluted EPS (1) $1.80
Total cash flow used in
operations (in millions) $(526)
------------------------- -----
(1) A full
reconciliation
of Adjusted
Diluted EPS
is shown on
page six of
this
release.
Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "Centene's strong fundamentals will be enhanced by the strategic and financial benefits of our recently closed Fidelis Care acquisition." Second Quarter Highlights
Other Events
Accreditations & Awards
Membership The following table sets forth our membership by line of business: June 30
2018 2017
---- ----
Medicaid:
TANF, CHIP & Foster Care 5,852,000 5,854,400
ABD & LTSS 874,200 843,500
Behavioral Health 454,600 466,500
------- -------
Total Medicaid 7,180,800 7,164,400
Commercial 2,051,700 1,743,600
Medicare (1) 343,800 327,500
Correctional 157,900 160,400
------- -------
Total at-risk membership 9,734,200 9,395,900
TRICARE eligibles 2,851,500 2,823,200
Non-risk membership 218,100 -
------- ---
Total 12,803,800 12,219,100
========== ==========
(1) Membership
includes
Medicare
Advantage,
Medicare
Supplement,
Special
Needs Plans,
and
Medicare-
Medicaid
Plans (MMP).
The following table sets forth additional membership statistics, which are included in the membership information above: June 30
2018 2017
---- ----
Dual-eligible (2) 489,500 467,500
Health Insurance Marketplace 1,503,100 1,084,600
Medicaid Expansion 1,079,700 1,101,900
(2) Membership
includes
dual-
eligible
ABD & LTSS
and dual-
eligible
Medicare
membership
in the
table
above.
Revenues The following table sets forth supplemental revenue information for the three months ended June 30, ($ in millions): 2018 2017 % Change
2017-2018
---------
Medicaid $8,919 $8,068 11%
Commercial 3,143 2,122 48%
Medicare (1) 1,203 1,134 6%
Other 916 630 45%
Total Revenues $14,181 $11,954 19%
======= ======= ===
(1) Medicare
includes
Medicare
Advantage,
Medicare
Supplement,
Special
Needs Plans,
and MMP.
Statement of Operations: Three Months Ended June 30, 2018
Balance Sheet At June 30, 2018, the Company had cash, investments and restricted deposits of $15.0 billion, including $3.5 billion held by unregulated entities. Medical claims liabilities totaled $5.0 billion, representing 44 days in claims payable, which is an increase of one day over the first quarter of 2018. Total debt was $6.3 billion, and there were no borrowings on our revolving credit facility. The Company had $1.5 billion available on the revolving credit facility at quarter-end. The debt to capitalization ratio was 36.7% at June 30, 2018, excluding the $85 million non-recourse mortgage note and construction loan. Outlook The Company's full updated annual guidance for 2018 is as follows: Full Year 2018
Low High
--- ----
Total revenues (in billions) $59.2 $60.0
GAAP diluted EPS $4.25 $4.57
Adjusted Diluted EPS (1) $6.80 $7.16
HBR 85.9% 86.4%
SG&A expense ratio 10.2% 10.7%
Adjusted SG&A expense ratio (2) 9.4% 9.9%
Effective tax rate 34.0% 36.0%
Diluted shares outstanding (in
millions) 198.7 199.7
(1) Adjusted Diluted EPS excludes
amortization of acquired
intangible assets of $0.81 to
$0.83 per diluted share,
acquisition related expenses
of $1.62 to $1.64 per diluted
share and California minimum
MLR changes of $0.12 per
diluted share.
(2) Adjusted SG&A expense ratio
excludes acquisition related
expenses of $422 million to
$428 million, of which $400
million to $406 million will
be incurred in the second half
of 2018.
Conference Call As previously announced, the Company will host a conference call Tuesday, July 24, 2018, at approximately 8:30 AM (Eastern Time) to review the financial results for the second quarter ended June 30, 2018. Michael Neidorff and Jeffrey Schwaneke will host the conference call. 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: 7229256 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 after the completion of the call for the next twelve months or until 11:59 PM (Eastern Time) on Tuesday, July 23, 2019, at the aforementioned URL. In addition, a digital audio playback will be available until 9:00 AM (Eastern Time) on Tuesday, July 31, 2018, by dialing 1-877-344-7529 in the U.S. and Canada, or +1-412-317-0088 from abroad, and entering access code 10121638. 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 to allow management to focus on period-to-period changes in the Company's core business operations. Therefore, the Company believes that this information is meaningful in addition to the information contained in the GAAP presentation of financial information. The presentation of this additional non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Specifically, the Company believes the presentation of non-GAAP financial information that excludes amortization of acquired intangible assets, acquisition related expenses, as well as other items, allows investors to develop a more meaningful understanding of the Company's performance over time. The tables below provide reconciliations of non-GAAP items ($ in millions, except per share data): Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
---- ---- ---- ----
GAAP net earnings $300 $254 $640 $393
Amortization of
acquired
intangible assets 45 39 84 79
Acquisition
related expenses 1 1 22 6
California minimum
medical loss
ratio changes (1) 30 - 30 -
Penn Treaty
assessment
expense (2) - - - 47
Income tax effects
of adjustments
(3) (16) (14) (30) (48)
Adjusted net
earnings $360 $280 $746 $477
==== ==== ==== ====
(1) The impact of retroactive
minimum MLR changes under
California's Medicaid
expansion program.
(2) Additional expense for the
Company's estimated share of
guaranty association
assessment resulting from the
liquidation of Penn Treaty for
the six months ended June 30,
2017.
(3) The income tax effects of
adjustments are based on the
effective income tax rates
applicable to adjusted (non-
GAAP) results.
Three Months Ended Six Months Ended Annual
June 30, June 30, Guidance
December 31,
2018
----
2018 2017 2018 2017
---- ---- ---- ----
GAAP diluted EPS $1.50 $1.44 $3.39 $2.23 $4.25 - $4.57
Amortization of
acquired
intangible assets
(1) 0.17 0.14 0.35 0.28 $0.81 - $0.83
Acquisition
related expenses
(2) 0.01 0.01 0.10 0.03 $1.62 - $1.64
California minimum
medical loss
ratio changes (3) 0.12 - 0.12 - $0.12
Penn Treaty
assessment
expense (4) - - - 0.17 -
--- --- --- ---- ---
Adjusted Diluted
EPS $1.80 $1.59 $3.96 $2.71 $6.80 - $7.16
===== ===== ===== ===== =============
(1) The amortization of acquired
intangible assets per diluted
share presented above is net of
an income tax benefit of $0.05
and $0.08 for the three months
ended June 30, 2018 and 2017,
respectively, and $0.10 and
$0.17 for the six months ended
June 30, 2018 and 2017,
respectively; and an estimated
$0.24 to $0.25 for the year
ended December 31, 2018.
(2) The acquisition related expenses
per diluted share presented
above are net of an income tax
benefit of $0.00 for both the
three months ended June 30,
2018 and 2017, and $0.02 and
$0.01 for the six months ended
June 30, 2018 and 2017,
respectively; and an estimated
$0.50 to $0.51 for the year
ended December 31, 2018.
(3) The impact of retroactive
changes to the California
minimum MLR is net of an income
tax benefit of $0.03 and $0.04
for the three and six months
ended June 30, 2018,
respectively; and an estimated
$0.03 to $0.04 for the year
ended December 31, 2018.
(4) The Penn Treaty assessment
expense per diluted share
presented above is net of an
income tax benefit of $0.09 for
the six months ended June 30,
2017.
Three Months Ended Six Months Ended Three Months
June 30, June 30,
Ended
March 31,
---------
2018 2017 2018 2017 2018
---- ---- ---- ---- ----
GAAP SG&A
expenses $1,237 $1,065 $2,553 $2,156 $1,316
Acquisition
related
expenses 1 1 22 6 21
Penn Treaty
assessment
expense - - - 47 -
Adjusted SG&A
expenses $1,236 $1,064 $2,531 $2,103 $1,295
====== ====== ====== ====== ======
About Centene Corporation Centene Corporation, a Fortune 100 company, is a diversified, multi-national healthcare enterprise that provides a portfolio of services to government sponsored and commercial healthcare programs, focusing on under-insured and uninsured individuals. Many receive benefits provided under Medicaid, including the State Children's Health Insurance Program (CHIP), as well as Aged, Blind or Disabled (ABD), Foster Care and Long-Term Services and Supports (LTSS), in addition to other state-sponsored programs, Medicare (including the Medicare prescription drug benefit commonly known as "Part D"), dual eligible programs and programs with the U.S. Department of Defense and U.S. Department of Veterans Affairs. Centene also provides healthcare services to groups and individuals delivered through commercial health plans. Centene operates local health plans and offers a range of health insurance solutions. It also contracts with other healthcare and commercial organizations to provide specialty services including behavioral health management, care management software, correctional healthcare services, dental benefits management, commercial programs, home-based primary care services, life and health management, vision benefits management, pharmacy benefits management, specialty pharmacy and telehealth services. 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, http://www.centene.com/investors. Forward-Looking Statements The company and its representatives may from time to time make written and oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act ("PSLRA") of 1995, including statements in this and other press releases, in presentations, filings with the Securities and Exchange Commission ("SEC"), reports to stockholders and in meetings with investors and analysts. In particular, the information provided in this press release may contain certain forward-looking statements with respect to the financial condition, results of operations and business of Centene and certain plans and objectives of Centene with respect thereto, including but not limited to the expected benefits of the acquisition of Health Net, Inc. (Health Net) (Health Net Acquisition) and the acquisition of New York State Catholic Health Plan, Inc., d/b/a Fidelis Care New York (Fidelis Care) (Fidelis Care Acquisition). These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Without limiting the foregoing, forward-looking statements often use words such as "believe", "anticipate", "plan", "expect", "estimate", "intend", "seek", "target", "goal", "may", "will", "would", "could", "should", "can", "continue" and other similar words and expressions (and the negative thereof). We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in PSLRA. A number of factors, variables or events could cause actual plans and results to differ materially from those expressed or implied in forward-looking statements. Such factors include, but are not limited to, Centene's ability to accurately predict and effectively manage health benefits and other operating expenses and reserves; competition; membership and revenue declines or unexpected trends; changes in healthcare practices, new technologies and advances in medicine; increased healthcare costs; changes in economic, political or 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 and any regulations enacted thereunder that may result from changing political conditions; rate cuts or other payment reductions or delays by governmental payors and other risks and uncertainties affecting Centene's government businesses; Centene's ability to adequately price products on federally facilitated and state-based Health Insurance Marketplaces; tax matters; disasters or major epidemics; the outcome of legal and regulatory proceedings; changes in expected contract start dates; provider, state, federal and other contract changes and timing of regulatory approval of contracts; the expiration, suspension or termination of Centene's contracts with federal or state governments (including but not limited to Medicaid, Medicare, TRICARE or other customers); the difficulty of predicting the timing or outcome of pending or future litigation or government investigations; challenges to Centene's contract awards; cyber-attacks or other privacy or data security incidents; the possibility that the expected synergies and value creation from acquired businesses, including, without limitation, the Health Net Acquisition and the Fidelis Care Acquisition, will not be realized, or will not be realized within the expected time period; the exertion of management's time and Centene's resources, and other expenses incurred and business changes required in connection with complying with the undertakings in connection with any regulatory, governmental or third party consents or approvals for the Health Net Acquisition or the Fidelis Care Acquisition; disruption caused by significant completed and pending acquisitions, including the Health Net Acquisition and the Fidelis Care Acquisition, making it more difficult to maintain business and operational relationships; the risk that unexpected costs will be incurred in connection with the completion and/or integration of acquisition transactions, including among others, the Health Net Acquisition and the Fidelis Care Acquisition; changes in expected closing dates, estimated purchase price and accretion for acquisitions; the risk that acquired businesses, including Health Net and Fidelis Care, will not be integrated successfully; the risk that, following the Fidelis Care Acquisition, Centene may not be able to effectively manage its expanded operations; restrictions and limitations in connection with Centene's indebtedness; Centene's ability to 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; availability of debt and equity financing, on terms that are favorable to Centene; inflation; foreign currency fluctuations; and risks and uncertainties discussed in the reports that Centene has filed with the SEC. These forward-looking statements reflect Centene's current views with respect to future events and are based on numerous assumptions and assessments made by Centene in light of its experience and perception of historical trends, current conditions, business strategies, operating environments, future developments and other factors it believes 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. The factors described in the context of such forward-looking statements in this press release could cause Centene's plans with respect to the Health Net Acquisition, the Fidelis Care Acquisition, actual results, performance or achievements, industry results and developments to differ materially from those expressed in or implied by such forward-looking statements. Although it is currently believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and persons reading this press release are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as of the date of this press release. Centene does not assume any obligation to update the information contained in this press release (whether as a result of new information, future events or otherwise), except as required by applicable law. This list of important factors is not intended to be exhaustive. We discuss certain of these matters more fully, as well as certain other risk factors that may affect Centene's business operations, financial condition and results of operations, in Centene's filings with the SEC, including the annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. [Tables Follow] CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except shares in thousands and per share data in dollars)
June 30, 2018 December 31, 2017
------------- -----------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $6,707 $4,072
Premium and trade receivables 4,067 3,413
Short-term investments 602 531
Other current assets 1,001 687
----- ---
Total current assets 12,377 8,703
Long-term investments 5,746 5,312
Restricted deposits 1,943 135
Property, software and equipment, net 1,327 1,104
Goodwill 5,346 4,749
Intangible assets, net 1,501 1,398
Other long-term assets 503 454
--- ---
Total assets $28,743 $21,855
======= =======
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND
STOCKHOLDERS' EQUITY
Current liabilities:
Medical claims liability $5,003 $4,286
Accounts payable and accrued expenses 3,803 4,165
Return of premium payable 529 549
Unearned revenue 523 328
Current portion of long-term debt 4 4
--- ---
Total current liabilities 9,862 9,332
Long-term debt 6,275 4,695
Other long-term liabilities 1,898 952
----- ---
Total liabilities 18,035 14,979
Commitments and contingencies
Redeemable noncontrolling interests 11 12
Stockholders' equity:
Preferred stock, $0.001 par value;
authorized 10,000 shares; no shares
issued or outstanding at June 30, 2018
and December 31, 2017 - -
Common stock, $0.001 par value; authorized
400,000 shares; 207,413 issued and
205,247 outstanding at June 30, 2018, and
180,379 issued and 173,437 outstanding at
December 31, 2017 - -
Additional paid-in capital 7,355 4,349
Accumulated other comprehensive loss (67) (3)
Retained earnings 3,403 2,748
Treasury stock, at cost (2,166 and 6,942
shares, respectively) (81) (244)
--- ----
Total Centene stockholders' equity 10,610 6,850
Noncontrolling interest 87 14
--- ---
Total stockholders' equity 10,697 6,864
------ -----
Total liabilities, redeemable
noncontrolling interests and
stockholders' equity $28,743 $21,855
======= =======
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data in dollars)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
---- ---- ---- ----
Revenues:
Premium $12,113 $10,905 $24,016 $21,543
Service 762 536 1,415 1,063
--- --- ----- -----
Premium and service revenues 12,875 11,441 25,431 22,606
Premium tax and health
insurer fee 1,306 513 1,944 1,072
----- --- ----- -----
Total revenues 14,181 11,954 27,375 23,678
------ ------ ------ ------
Expenses:
Medical costs 10,380 9,413 20,419 18,735
Cost of services 658 456 1,201 897
Selling, general and
administrative expenses 1,237 1,065 2,553 2,156
Amortization of acquired
intangible assets 45 39 84 79
Premium tax expense 1,189 543 1,735 1,133
Health insurer fee expense 183 - 354 -
--- --- --- ---
Total operating expenses 13,692 11,516 26,346 23,000
------ ------ ------ ------
Earnings from operations 489 438 1,029 678
Other income (expense):
Investment and other income 65 45 106 86
Interest expense (80) (62) (148) (124)
--- --- ---- ----
Earnings from operations,
before income tax expense 474 421 987 640
Income tax expense 175 169 350 256
--- --- --- ---
Net earnings 299 252 637 384
Loss attributable to
noncontrolling interests 1 2 3 9
--- --- --- ---
Net earnings attributable to
Centene Corporation $300 $254 $640 $393
==== ==== ==== ====
Net earnings per common share attributable to Centene Corporation:
Basic earnings per common
share $1.53 $1.47 $3.46 $2.28
Diluted earnings per common
share $1.50 $1.44 $3.39 $2.23
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Six Months Ended June 30,
2018 2017
---- ----
Cash flows from operating
activities:
Net earnings $637 $384
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation
and
amortization 215 173
Stock
compensation
expense 67 62
Deferred
income taxes 4 (58)
Changes in assets and
liabilities
Premium and
trade
receivables (553) (696)
Other assets 2 65
Medical claims
liabilities 717 243
Unearned
revenue 202 241
Accounts
payable and
accrued
expenses (865) (257)
Other long-
term
liabilities 865 781
Other
operating
activities,
net 29 4
--- ---
Net cash
provided by
operating
activities 1,320 942
----- ---
Cash flows from investing
activities:
Capital
expenditures (362) (181)
Purchases of
investments (1,375) (1,317)
Sales and
maturities of
investments 721 1,015
Acquisitions,
net of cash
acquired (237) -
Other
investing
activities,
net - (1)
Net cash used
in investing
activities (1,253) (484)
------ ----
Cash flows from financing
activities:
Proceeds from
the issuance
of common
stock 2,780 -
Proceeds from
long-term
debt 5,146 810
Payments of
long-term
debt (3,471) (762)
Common stock
repurchases (13) (15)
Purchase of
noncontrolling
interest (63) -
Other
financing
activities,
net (1) 6
Net cash
provided by
financing
activities 4,378 39
----- ---
Net increase
in cash, cash
equivalents
and
restricted
cash 4,445 497
----- ---
Cash, cash
equivalents,
and
restricted
cash and cash
equivalents,
beginning of
period 4,089 3,936
----- -----
Cash, cash
equivalents,
and
restricted
cash and cash
equivalents,
end of period $8,534 $4,433
====== ======
Supplemental disclosures of
cash flow information:
Interest paid $130 $99
Income taxes
paid $195 $205
Equity issued
in connection
with
acquisitions $507 $ -
CENTENE CORPORATION
SUPPLEMENTAL FINANCIAL DATA
Q2 Q1 Q4 Q3 Q2
2018 2018 2017 2017 2017
---- ---- ---- ---- ----
MANAGED CARE MEMBERSHIP BY LINE OF BUSINESS
Medicaid:
TANF, CHIP & Foster Care 5,852,000 5,776,600 5,807,300 5,809,400 5,854,400
ABD & LTSS 874,200 866,000 846,200 850,300 843,500
Behavioral Health 454,600 454,500 463,700 467,400 466,500
------- ------- ------- ------- -------
Total Medicaid 7,180,800 7,097,100 7,117,200 7,127,100 7,164,400
Commercial 2,051,700 2,161,200 1,558,300 1,657,800 1,743,600
Medicare (1) 343,800 343,400 333,700 331,000 327,500
Correctional 157,900 157,300 157,500 158,000 160,400
------- ------- ------- ------- -------
Total at-risk membership 9,734,200 9,759,000 9,166,700 9,273,900 9,395,900
TRICARE eligibles 2,851,500 2,851,500 2,824,100 2,823,200 2,823,200
Non-risk membership 218,100 218,900 216,300 213,900 -
------- ------- ------- ------- ---
Total 12,803,800 12,829,400 12,207,100 12,311,000 12,219,100
========== ========== ========== ========== ==========
(1) Membership includes Medicare Advantage, Medicare Supplement, Special Needs Plans, and MMP.
NUMBER OF EMPLOYEES 41,200 34,800 33,700 32,400 31,500
DAYS IN CLAIMS PAYABLE (2) 44 43 41 42 40
(2) Days in claims payable is a calculation of medical claims liabilities at the end of the period divided by average claims expense per calendar day for such period.
CASH, INVESTMENTS AND RESTRICTED DEPOSITS (in millions)
Regulated $11,455 $11,398 $9,740 $9,633 $9,673
Unregulated 3,543 452 310 308 291
----- --- --- --- ---
Total $14,998 $11,850 $10,050 $9,941 $9,964
======= ======= ======= ====== ======
DEBT TO CAPITALIZATION 37.0% 40.6% 40.6% 41.5% 42.5%
DEBT TO CAPITALIZATION
EXCLUDING NON-RECOURSE DEBT
(3) 36.7% 40.3% 40.3% 41.2% 42.1%
(3) The non-recourse debt represents the Company's mortgage note payable ($59 million at June 30, 2018) and construction loan payable ($26 million at June 30, 2018).
Debt to capitalization is calculated as follows: total debt divided by (total debt + total equity).
OPERATING RATIOS Three Months Ended Six Months Ended
June 30, June 30,
2018 2017 2018 2017
---- ---- ---- ----
HBR 85.7% 86.3% 85.0% 87.0%
SG&A
expense
ratio 9.6% 9.3% 10.0% 9.5%
Adjusted
SG&A
expense
ratio 9.6% 9.3% 10.0% 9.3%
MEDICAL CLAIMS LIABILITY The changes in medical claims liability are summarized as follows (in millions): Balance, June 30, 2017 $4,170
Reinsurance recoverable 10
---
Balance, June 30, 2017, net 4,160
Incurred related to:
Current period 39,894
Prior period (359)
----
Total incurred 39,535
------
Paid related to:
Current period 35,184
Prior period 3,525
Total paid 38,709
------
Balance, June 30, 2018, net 4,986
Plus: Reinsurance recoverable 17
---
Balance, June 30, 2018 $5,003
======
Centene's claims reserving process utilizes a consistent actuarial methodology to estimate Centene's ultimate liability. Any reduction in the "Incurred related to: Prior period" amount may be offset as Centene actuarially determines "Incurred related to: Current period." As such, only in the absence of a consistent reserving methodology would favorable development of prior period claims liability estimates reduce medical costs. Centene believes it has consistently applied its claims reserving methodology. Additionally, approximately $5 million was recorded as an increase to premium revenues resulting from development within "Incurred related to: Prior period" due to minimum HBR and other return of premium programs. The amount of the "Incurred related to: Prior period" 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, 2017, and prior.
View original content:http://www.prnewswire.com/news-releases/centene-corporation-reports-2018-second-quarter-results-and-updates-2018-guidance-300685237.html SOURCE Centene Corporation |
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Company Codes: NYSE:CNC |
