Press Release

Centene Corporation Reports 2014 Fourth Quarter And Full Year Results
-- 2014 Diluted earnings per share (EPS) from continuing operations for the year of $4.45 --
-- Board of Directors declares two-for-one stock split --

ST. LOUIS, Feb. 3, 2015 /PRNewswire/ -- Centene Corporation (NYSE: CNC) today announced its financial results for the quarter and year ended December 31, 2014.  The following discussions, with the exception of cash flow information, are in the context of continuing operations.

2014 Results



Q4



Full Year





Premium and Service Revenues (in millions)

$

4,415



$

15,667





Consolidated Health Benefits Ratio

89.3

%


89.3

%



General & Administrative expense ratio

8.2

%


8.4

%



Diluted earnings per share (EPS)

$

1.74



$

4.45





Total cash flow from operations (in millions)

$

369



$

1,223





 

On February 2, 2015, the Board of Directors declared a two-for-one split of Centene's common stock in the form of a 100% stock dividend to be distributed on February 19, 2015 to stockholders of record on February 12, 2015.  The impact of the stock split is not reflected in this press release.

Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "By any measure, 2014 was a significant year in the history of Centene.  Membership grew by 1.2 million lives, revenue by almost 50%, and EPS by 55%.  We are more diversified by product and geography - including our entry into the international market.  We look forward to continued progress in 2015 and beyond."

Fourth Quarter and Full Year Highlights

  • December 31, 2014 managed care membership of 4.1 million, an increase of 1.2 million members, or 41% over 2013.
  • Premium and service revenues for the fourth quarter of $4.4 billion, representing 54% growth compared to the fourth quarter of 2013 and $15.7 billion for 2014, representing 49% growth year over year.
  • Health Benefits Ratio of  89.3% for the fourth quarter 2014, compared to 88.1% in the fourth quarter of 2013 and 89.3% for the full year 2014 compared to 88.6% for the full year 2013. 
  • General and Administrative expense ratio of 8.2% for the fourth quarter of 2014, compared to 8.9% in the fourth quarter of 2013 and 8.4% for the full year 2014 compared to 8.8% for 2013.
  • Operating cash flow of $369 million and $1.2 billion for the fourth quarter and full year of 2014, representing 3.5 and 4.6 times net earnings, respectively.
  • Diluted EPS for the fourth quarter of 2014 of $1.74, compared to $0.84 in 2013.

Other Events

  • In February 2015, our Louisiana subsidiary, Louisiana Healthcare Connections, began operating under a new contract with the Louisiana Department of Health and Hospitals to serve Bayou Health (Medicaid) beneficiaries. Members previously served under the shared savings program were transitioned to the at-risk program on February 1, 2015.
  • In February 2015, our South Carolina subsidiary, Absolute Total Care, began operating under a new contract with the South Carolina Department of Health and Human Services and the Centers for Medicare and Medicaid Services to serve dual-eligible members as part of the state's dual demonstration program.
  • In February 2015, our Indiana subsidiary, Managed Health Services, began operating under an expanded contract with the Indiana Family & Social Services Administration to provide Medicaid services under the state's Healthy Indiana Plan 2.0 program. 
  • In February 2015, Centurion began operating under a new contract with the State of Vermont Department of Corrections to provide comprehensive correctional healthcare services.
  • In January 2015, we signed a definitive agreement to acquire Agate Resources, Inc., a diversified holding company that offers an array of healthcare products and services to Oregon residents. The transaction is expected to close in the third quarter of 2015, subject to customary closing conditions, including Oregon regulatory approval.
  • In January 2015, our Mississippi subsidiary, Magnolia Health, began operating under a new contract with the State of Mississippi to provide services under the Children's Health Insurance Program (CHIP). 
  • In January 2015, we expanded our participation in Health Insurance Marketplaces to include members in certain regions of Illinois and Wisconsin.
  • In December 2014, our subsidiary, Cenpatico of Arizona, in partnership with University of Arizona Health Plan, was selected by the Arizona Department of Health Services/Division of Behavioral Health Services to be the Regional Behavioral Health Authority for the new southern geographic service area. The new contract is expected to commence in the fourth quarter of 2015.
  • In December 2014, our Indiana subsidiary, Managed Health Services, was selected by the Indiana Family & Social Services Administration to begin contract negotiations to serve its ABD Medicaid enrollees who will qualify for the new Hoosier Care Connect Program. The contract is expected to commence in the first half of 2015.

Awards

  • In January 2015, NurseWise was awarded the Health Information Product 2 certification from the National Committee for Quality Assurance.
  • In November 2014, Centene's Start Smart For Your Baby Texting Program was awarded the Children's Health Award by the Medicaid Health Plans of America. The Best Practices Awards honor Medicaid health plans for their exemplary programs which have improved the health of Medicaid enrollees by ensuring high-quality care.

Membership

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


December 31,


2014


2013

Arizona

204,000



163,700


Arkansas

38,400




California

163,900



97,200


Florida

425,700



222,000


Georgia

389,100



318,700


Illinois

87,800



22,300


Indiana

197,700



195,500


Kansas

143,300



139,900


Louisiana

152,900



152,300


Massachusetts

48,400



22,600


Minnesota

9,500




Mississippi

108,700



78,300


Missouri

71,000



59,200


New Hampshire

62,700



33,600


Ohio

280,100



173,200


South Carolina

109,700



91,900


Tennessee

21,000



20,700


Texas

971,000



935,100


Washington

194,400



82,100


Wisconsin

83,200



71,500


Total at-risk membership

3,762,500



2,879,800


Non-risk membership

298,400




Total

4,060,900



2,879,800


At December 31, 2014, the Company served 201,300 Medicaid members in Medicaid expansion programs in California, Illinois, Massachusetts, New Hampshire, Ohio and Washington included in the table above.

The following table sets forth our membership by line of business:


December 31,


2014


2013

Medicaid

2,754,900



2,054,700


CHIP & Foster Care

222,700



275,100


ABD, Medicare & Duals

392,700



305,300


Health Insurance Marketplaces

74,500




Hybrid Programs

18,900



19,000


LTC

60,800



37,800


Behavioral Health

197,000



156,600


Correctional Healthcare Services

41,000



31,300


Total at-risk membership

3,762,500



2,879,800


Non-risk membership

298,400




Total

4,060,900



2,879,800


The following table identifies our dual eligible membership by line of business.  The membership tables above include these members.


December 31,


2014


2013

ABD

118,300



71,700

LTC

35,900



28,800

Medicare

10,400



6,500

Total

164,600



107,000

Statement of Operations: Three Months Ended December 31, 2014

  • For the fourth quarter of 2014, Premium and Service Revenues increased 54% to $4.4 billion from $2.9 billion in the fourth quarter of 2013.  The increase was primarily a result of the expansions in Florida, Ohio, Washington, Texas and Illinois, growth in the AcariaHealth specialty pharmacy business, the addition of California and New Hampshire operations and our participation in the Health Insurance Marketplaces.
  • Consolidated HBR of 89.3% for the fourth quarter of 2014 represents an increase from 88.1% in the comparable period in 2013 and a decrease from 89.7% in the third quarter of 2014. The year over year HBR increase is primarily attributable to an increase in complex care membership.  The sequential quarter decrease reflects the impact of retroactive rate increases recorded in the fourth quarter, partially offset by flu costs. 
  • The following table compares the results for new business and existing business for the quarters ended December 31:

2014


2013

Premium and Service Revenue






New business

30

%


17

%

Existing business

70

%


83

%







HBR






New business

89.4

%


95.4

%

Existing business

89.2

%


86.6

%

New business HBR decreased from the third quarter of 2014 primarily as a result of the rate adjustments associated with the long term care program in Florida.

  • Consolidated G&A expense ratio for the fourth quarter of 2014 was 8.2%, compared to 8.9% in the prior year.   The year over year decrease primarily reflects the leveraging of expenses over higher revenues in 2014, offset by the acquisition of U.S. Medical Management and start-up of Health Insurance Marketplaces which operate at higher G&A ratios.  
  • Diluted earnings per share of $1.74 in the fourth quarter of 2014, compared to $0.84 in 2013.

Statement of Operations: Year Ended December 31, 2014

  • Premium and service revenues increased 49% in the year ended December 31, 2014 over the corresponding period in 2013 as a result of expansions in Florida, Ohio, Washington, Texas and Illinois, growth in the AcariaHealth business, the addition of the California and New Hampshire operations and our participation in the Health Insurance Marketplaces.
  • The consolidated HBR for the year ended December 31, 2014, of 89.3% was an increase of 70 basis points over the comparable period in 2013. The increase compared to last year is primarily attributable to an increase in complex care membership over the prior year.
  • The consolidated G&A expense ratio for the year ended December 31, 2014 was 8.4%, compared to 8.8% in 2013. The year over year decrease in the G&A ratio reflects the leveraging of expenses over higher revenues in 2014, offset by the acquisition of U.S. Medical Management and start up of Health Insurance Marketplaces which operate at higher G&A ratios.
  • Diluted earnings per share of $4.45 compared to $2.87 in 2013.

Balance Sheet and Cash Flow

At December 31, 2014, the Company had cash, investments and restricted deposits of $3.1 billion, including $85 million held by its unregulated entities.  Medical claims liabilities totaled $1.7 billion, representing 44.2 days in claims payable.  Total debt was $893 million, which includes $75 million of borrowings on the $500 million revolving credit facility at quarter end.  Debt to capitalization was 32.1% at December 31, 2014, excluding the $70 million non-recourse mortgage note.  Cash flow from operations for the three months ended December 31, 2014, was $369 million, or 3.5 times net earnings.

A reconciliation of the Company's change in days in claims payable from the immediately preceding quarter-end is presented below:


Days in claims payable, September 30, 2014

43.1

Timing of claim payments

1.1

Days in claims payable, December 31, 2014

44.2



 

Outlook

The table below depicts the Company's annual GAAP guidance for 2015.



Full Year 2015




Low


High


Premium and Service Revenues (in millions)


$

20,300



$

20,800



Diluted EPS


$

5.05



$

5.35



Consolidated Health Benefits Ratio


89.2

%


89.6

%


General & Administrative expense ratio


8.0

%


8.4

%


Effective Tax Rate


48.0

%


50.0

%


Diluted Shares Outstanding (in thousands)


61,500



62,000











The guidance in the table above does not include the impact of the recently announced acquisition of Agate Resources, Inc.

Conference Call

As previously announced, the Company will host a conference call Tuesday, February 3, 2015, at 8:30 A.M. (Eastern Time) to review the financial results for the fourth quarter and year ended December 31, 2014, and to discuss its business outlook.  Michael F. Neidorff and William N. Scheffel will host the conference call. 

Investors and other interested parties are invited to listen to the conference call by dialing 1-866-739-7850 in the U.S. and Canada; +1-412-902-6577 from abroad; or via a live, audio webcast on the Company's website at www.centene.com, under the Investors section.  Or, participants can register for the conference call in advance by navigating to: http://dpregister.com/10058403, to receive a dial-in number upon registration.  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, February 2, 2016, at the aforementioned URL. In addition, a digital audio playback will be available until 9:00 AM Eastern Time on Wednesday, February 11, 2015, by dialing 1-877-344-7529 in the U.S. and Canada, or +1-412-317-0088 from abroad, and entering access code 10058403.

Other Information

The discussion in the third bullet under the heading "Statement of Operations: Three Months Ended December 31, 2014" contains financial information for new and existing businesses.  Existing businesses are primarily state markets or significant geographic expansion in an existing state or product that we have managed for four complete quarters.  New businesses are primarily new state markets or significant geographic expansion in an existing state or product that conversely, we have not managed for four complete quarters.

About Centene Corporation

Centene Corporation, a Fortune 500 company, is a diversified leading multi-national healthcare enterprise that provides programs and services to government sponsored 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 Care (LTC), in addition to other state-sponsored/hybrid programs, and Medicare (Special Needs Plans).  The Company 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, in-home health services, life and health management, managed vision, pharmacy benefits management, specialty pharmacy and telehealth services.

The information provided in this press release contains forward-looking statements that relate to future events and future financial performance of Centene.  Subsequent events and developments may cause the Company's estimates to change.  The Company disclaims any obligation to update this forward-looking financial information in the future.  Readers are cautioned that matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, regulatory, competitive and other factors that may cause Centene's or its 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. Actual results may differ from projections or estimates due to a variety of important factors, including Centene's ability to accurately predict and effectively manage health benefits and other operating expenses and reserves; competition; membership and revenue projections; timing of regulatory contract approval; changes in healthcare practices; changes in federal or state laws or regulations, including the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act and any regulations enacted thereunder; changes in expected contract start dates; changes in expected closing dates, estimated purchase price and accretion for acquisitions; inflation; foreign currency fluctuations; provider and state contract changes; new technologies; advances in medicine; reduction in provider payments by governmental payors; major epidemics; disasters and numerous other factors affecting the delivery and cost of healthcare; the expiration, cancellation or suspension of our Medicare or Medicaid managed care contracts by federal or state governments; the outcome of pending legal proceedings; availability of debt and equity financing, on terms that are favorable to us; and general economic and market conditions, as well as those factors disclosed in the Company's publicly filed documents.

 [Tables Follow]

 

 


CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions except share data)
(Unaudited)






December 31,
 2014


December 31,
 2013

ASSETS






Current assets:






Cash and cash equivalents of continuing operations

$

1,546



$

974


Cash and cash equivalents of discontinued operations

64



64


Total cash and cash equivalents

1,610



1,038


Premium and related receivables

912



429


Short term investments

177



102


Other current assets

324



217


Other current assets of discontinued operations

11



14


Total current assets

3,034



1,800


Long term investments

1,280



792


Restricted deposits

100



47


Property, software and equipment, net

445



395


Goodwill

751



348


Intangible assets, net

123



49


Other long term assets

80



60


Long term assets of discontinued operations

25



38


Total assets

$

5,838



$

3,529


LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities:






Medical claims liability

$

1,723



$

1,112


Accounts payable and accrued expenses

751



338


Return of premium payable

236



38


Unearned revenue

168



38


Current portion of long term debt

5



3


Current liabilities of discontinued operations

17



30


Total current liabilities

2,900



1,559


Long term debt

888



666


Other long term liabilities

158



60


Long term liabilities of discontinued operations

1



1


Total liabilities

3,947



2,286


Commitments and contingencies






Redeemable noncontrolling interest

148




Stockholders' equity:






Common stock, $.001 par value; authorized 200,000,000 shares; 62,137,432 issued and 59,216,708 outstanding at December 31, 2014, and 58,673,215 issued and 55,319,239 outstanding at December 31, 2013




Additional paid-in capital

840



594


Accumulated other comprehensive loss

(1)



(3)


Retained earnings

1,003



732


Treasury stock, at cost (2,920,724 and 3,353,976 shares, respectively)

(98)



(89)


Total Centene stockholders' equity

1,744



1,234


Noncontrolling interest

(1)



9


Total stockholders' equity

1,743



1,243


Total liabilities and stockholders' equity

$

5,838



$

3,529


 

 

CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share data)
(Unaudited)






Three Months Ended December 31,


Year Ended

December 31,


2014


2013


2014


2013

Revenues:












Premium

$

4,016



$

2,738



$

14,198



$

10,153


Service

399



121



1,469



373


Premium and service revenues

4,415



2,859



15,667



10,526


Premium tax and health insurer fee

310



73



893



337


Total revenues

4,725



2,932



16,560



10,863


Expenses:












Medical costs

3,585



2,412



12,678



8,995


Cost of services

345



108



1,280



327


General and administrative expenses

364



256



1,314



931


Premium tax expense

206



71



698



333


Health insurer fee expense

31





126




Total operating expenses

4,531



2,847



16,096



10,586


Earnings from operations

194



85



464



277


Other income (expense):












Investment and other income

10



5



28



19


Interest expense

(10)



(6)



(35)



(27)


Earnings from continuing operations, before income tax expense

194



84



457



269


Income tax expense

90



34



196



107


Earnings from continuing operations, net of income tax expense

104



50



261



162


Discontinued operations, net of income tax expense of $0, $3, $1, and $2, respectively

1



5



3



4


Net earnings

105



55



264



166


(Earnings) loss attributable to noncontrolling interests

2



(2)



7



(1)


Net earnings attributable to Centene Corporation

$

107



$

53



$

271



$

165














Amounts attributable to Centene Corporation common shareholders:

Earnings from continuing operations, net of income tax expense

$

106



$

48



$

268



$

161


Discontinued operations, net of income tax expense

1



5



3



4


Net earnings

$

107



$

53



$

271



$

165














Net earnings per common share attributable to Centene Corporation:

Basic:












Continuing operations

$

1.80



$

0.87



$

4.61



$

2.98


Discontinued operations

0.02



0.10



0.05



0.07


Basic earnings per common share

$

1.82



$

0.97



$

4.66



$

3.05














Diluted:












Continuing operations

$

1.74



$

0.84



$

4.45



$

2.87


Discontinued operations

0.02



0.09



0.05



0.07


Diluted earnings per common share

$

1.76



$

0.93



$

4.50



$

2.94














Weighted average number of common shares outstanding:







Basic

58,816,006



54,906,274



58,172,882



54,126,545


Diluted

60,857,893



57,078,257



60,180,106



56,247,173


 

CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)




Year Ended December 31,


2014


2013

Cash flows from operating activities:






Net earnings

$

264



$

166


Adjustments to reconcile net earnings to net cash provided by operating activities








Depreciation and amortization

89



67


Stock compensation expense

48



36


Deferred income taxes

(42)



(2)


Changes in assets and liabilities






Premium and related receivables

(463)



(143)


Other current assets

(5)



(80)


Other assets

(8)



(1)


Medical claims liabilities

609



172


Unearned revenue

129



3


Accounts payable and accrued expenses

506



152


Other operating activities

96



12


Net cash provided by operating activities

1,223



382


Cash flows from investing activities:






Capital expenditures

(103)



(68)


Purchases of investments

(1,015)



(790)


Sales and maturities of investments

406



579


Investments in acquisitions, net of cash acquired

(136)



(63)


Net cash used in investing activities

(848)



(342)


Cash flows from financing activities:






Proceeds from exercise of stock options

8



9


Proceeds from borrowings

1,875



180


Payment of long term debt

(1,674)



(41)


Proceeds from stock offering



15


Excess tax benefits from stock compensation

19



6


Common stock repurchases

(29)



(20)


Contribution from noncontrolling interest

6



8


Debt issue costs

(7)



(3)


Net cash provided by financing activities

198



154


Effect of exchange rate changes on cash and cash equivalents

(1)




Net increase in cash and cash equivalents

572



194


Cash and cash equivalents, beginning of period

1,038



844


Cash and cash equivalents, end of period

$

1,610



$

1,038


Supplemental disclosures of cash flow information:






Interest paid

$

40



$

30


Income taxes paid

$

237



$

85


Equity issued in connection with acquisitions

$

190



$

75


 

CENTENE CORPORATION
SUPPLEMENTAL FINANCIAL DATA FROM CONTINUING OPERATIONS












Q4


Q3


Q2


Q1


Q4


2014


2014


2014


2014


2013

MANAGED CARE MEMBERSHIP















Arizona

204,000



202,500



189,200



169,800



163,700


Arkansas

38,400



36,600



31,100



16,400




California

163,900



144,700



131,100



118,100



97,200


Florida

425,700



411,200



313,800



230,300



222,000


Georgia

389,100



382,600



373,000



331,400



318,700


Illinois

87,800



31,300



29,500



22,400



22,300


Indiana

197,700



199,500



200,500



198,700



195,500


Kansas

143,300



144,200



146,100



145,000



139,900


Louisiana

152,900



150,800



148,600



149,800



152,300


Massachusetts

48,400



46,600



47,200



50,800



22,600


Minnesota

9,500



9,500



9,400



9,400




Mississippi

108,700



99,300



97,400



85,400



78,300


Missouri

71,000



64,900



58,700



58,100



59,200


New Hampshire

62,700



56,600



39,500



37,100



33,600


Ohio

280,100



261,000



225,900



181,800



173,200


South Carolina

109,700



106,500



101,800



96,300



91,900


Tennessee

21,000



21,200



21,300



21,100



20,700


Texas

971,000



961,100



921,500



904,000



935,100


Washington

194,400



192,500



193,800



151,700



82,100


Wisconsin

83,200



74,700



67,300



70,800



71,500


Total at-risk membership

3,762,500



3,597,300



3,346,700



3,048,400



2,879,800


Non-risk membership

298,400



303,500








TOTAL

4,060,900



3,900,800



3,346,700



3,048,400



2,879,800

















Medicaid

2,754,900



2,578,300



2,385,500



2,169,100



2,054,700


CHIP & Foster Care

222,700



247,700



261,800



269,200



275,100


ABD, Medicare & Duals

392,700



383,400



329,700



300,500



305,300


Health Insurance Marketplaces

74,500



76,000



75,700



39,700




Hybrid Programs

18,900



19,900



17,000



14,400



19,000


LTC

60,800



55,200



53,500



51,800



37,800


Behavorial Health

197,000



195,500



182,200



162,700



156,600


Correctional Healthcare Services

41,000



41,300



41,300



41,000



31,300


Total at-risk membership

3,762,500



3,597,300



3,346,700



3,048,400



2,879,800


Non-risk membership

298,400



303,500








TOTAL

4,060,900



3,900,800



3,346,700



3,048,400



2,879,800
































REVENUE PER MEMBER PER MONTH(a)

$

360



$

354



$

344



$

340



$

321

















CLAIMS(a)















Period-end inventory

1,086,600



1,021,200



771,900



832,600



642,100


Average inventory

806,000



660,200



603,700



584,700



533,000


Period-end inventory per member

0.29



0.28



0.23



0.27



0.22


(a) Revenue per member and claims information are presented for the Managed Care at-risk members.
















NUMBER OF EMPLOYEES

13,400



12,900



12,300



11,200



8,800























Q4


Q3


Q2


Q1


Q4


2014


2014


2014


2014


2013
















DAYS IN CLAIMS PAYABLE (b)

44.2



43.1



42.9



42.6



42.4



(b)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

$

3,018



$

2,829



$

2,353



$

2,167



$

1,870


Unregulated

85



70



50



49



45


TOTAL

$

3,103



$

2,899



$

2,403



$

2,216



$

1,915

















DEBT TO CAPITALIZATION

33.9

%


36.8

%


37.5

%


36.5

%


35.0

%

DEBT TO CAPITALIZATION EXCLUDING NON-RECOURSE DEBT(c)

32.1

%


35.0

%


35.5

%


34.4

%


32.4

%

(c) The non-recourse debt represents the Company's mortgage note payable ($70 million at December 31, 2014).

Debt to Capitalization is calculated as follows: total debt divided by (total debt + total equity).

 

Operating Ratios:









Three Months Ended December 31,


Year Ended December 31,


2014


2013


2014


2013

Health Benefits Ratios:












Medicaid, CHIP, Foster Care & Health Insurance Marketplaces

86.9

%


86.5

%


86.3

%


87.5

%

ABD, LTC & Medicare

92.3



90.4



93.5



90.4


Specialty Services

87.2



87.7



85.5



85.4


  Total

89.3



88.1



89.3



88.6














Total General & Administrative Expense Ratio

8.2

%


8.9

%


8.4

%


8.8

%






MEDICAL CLAIMS LIABILITY (In millions)










The changes in medical claims liability are summarized as follows:










Balance, December 31, 2013


$

1,112


Incurred related to:




Current period


12,820


Prior period


(142)


Total incurred


12,678


Paid related to:




Current period


11,122


Prior period


945


Total paid


12,067


Balance, December 31, 2014


$

1,723


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 in each of the periods presented.

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 prior to December 31, 2013. 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/centene-corporation-reports-2014-fourth-quarter-and-full-year-results-300029584.html

SOURCE Centene Corporation

Investor Relations Inquiries, Edmund E. Kroll, Jr., Senior Vice President, Finance & Investor Relations, (212) 759-0382; Media Inquiries, Deanne Lane, Vice President, Media Affairs, (314) 725-4477