Press Release

- Centene Corporation Reports 2014 Third Quarter Results & Raises Guidance -
-- Diluted earnings per share (EPS) from continuing operations of $1.34 --

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. The Company also served 195,500 members at September 30, 2014 under its behavioral health contract in Arizona, compared to 160,700 members at September 30, 2013.

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


September 30,


2014


2013

Medicaid

2,578,300



1,953,300


CHIP & Foster Care

247,700



274,900


ABD, Medicare & Duals

383,400



302,000


Health Insurance Marketplace (HIM)

76,000




Hybrid Programs

19,900



19,600


Long Term Care (LTC)

55,200



31,600


Correctional Services

41,300



31,100


Total at-risk membership

3,401,800



2,612,500


Non-risk membership

303,500




Total

3,705,300



2,612,500


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



September 30,


2014


2013

ABD

119,300



72,000

LTC

35,500



19,600

Medicare

9,800



6,100

Total

164,600



97,700

Statement of Operations: Three Months Ended September 30, 2014

  • For the third quarter of 2014, Premium and Service Revenues increased 53% to $4.2 billion from $2.7 billion in the third quarter of 2013.  The increase was primarily as a result of the expansions in Florida, Ohio, Washington and Illinois, growth in the AcariaHealth business, the addition of California and New Hampshire operations and our participation in the Health Insurance Marketplaces.
  • Consolidated HBR for the third quarter of 2014, was 89.7%, compared to 87.8% in the same period in 2013.  The HBR increase compared to 2013 is attributable to an increase in higher acuity membership.  Consolidated HBR increased from 88.9% in the second quarter of 2014 due to an increase in higher acuity membership.
  • The following table compares the results for new business and existing business for the quarters ended September 30,:

2014


2013

Premium and Service Revenue






New business

27

%


14

%

Existing business

73

%


86

%







HBR






New business

91.4

%


96.5

%

Existing business

89.0

%


86.3

%

  • Consolidated G&A expense ratio for the third quarter of 2014 was 8.0%, compared to 9.1% in the prior year.   The year over year decrease primarily reflects the leveraging of expenses over higher revenue in 2014.
  • Earnings from operations were $108.0 million in the third quarter of 2014 compared to $84.0 million in the third quarter of 2013.  Net earnings attributable to Centene Corporation were $81.1 million in the third quarter of 2014.  This compares to $50.3 million in the third quarter of 2013. 
  • Diluted earnings per share of $1.34, or $1.22 excluding a $(0.15) impact associated with the health insurer fee, a $(0.06) impact from transaction costs and a $0.33 benefit associated with the final regulations on the deduction of compensation, compared to $0.88 in 2013.

Balance Sheet and Cash Flow

At September 30, 2014, the Company had cash, investments and restricted deposits of $2,898.6 million, including $70.3 million held by its unregulated entities.  Medical claims liabilities totaled $1,588.8 million, representing 43.1 days in claims payable.  Total debt was $954.9 million, which includes $140.0 million of borrowings on the $500 million revolving credit facility at quarter end.  Debt to capitalization was 35.0% at September 30, 2014, excluding the $70.7 million non-recourse mortgage note.  Cash flow from operations for the three months ended September 30, 2014, was $441.8 million, or 5.6 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, June 30, 2014

42.9


Timing of claim payments

0.2


Days in claims payable, September 30, 2014

43.1



Outlook

The table below depicts the Company's annual GAAP guidance for 2014.



Full Year 2014




Low


High


Premium and Service Revenues (in millions)


$

15,300



$

15,800



Diluted EPS


$

4.35



$

4.50



Consolidated Health Benefits Ratio


88.9

%


89.4

%


General & Administrative expense ratio


8.2

%


8.6

%


Effective Tax Rate


40.0

%


42.0

%


Diluted Shares Outstanding (in thousands)


60,000



60,400











The table below provides a roll-forward of diluted EPS from the Company's prior guidance to its current 2014 annual GAAP guidance.



Full Year 2014




Low


High


Prior Diluted EPS Guidance


$

3.70



$

3.90



Increase From Improved Performance


0.14



0.09





3.84



3.99



Tax Effect Related to Prior Years


0.24



0.24



Tax Effect Related to 2014


0.27



0.27



Revised 2014 Diluted EPS Guidance


4.35



4.50











The 2014 guidance amounts reflect the following items:

  • We anticipate receiving an additional signed agreement for Texas in the fourth quarter related to the Health Insurer Fee such that the Health Insurer Fee will not have a significant impact on full year 2014 results.
  • Included in the guidance for 2014 is approximately $0.24 per diluted share, or $14.5 million, in tax benefits resulting from the reversal of amounts recorded in prior years.  For 2014, the benefit related to the final regulations on compensation deduction limitations is approximately $0.27 per diluted share.
  • Acquisition transaction costs of $0.12 are included in the full year guidance amounts.

Excluding the impact of the reversal of tax expense associated with periods prior to 2014, the Company expects its 2014 annual effective tax rate, including the fourth quarter, to be between 45% - 46%.

Conference Call

As previously announced, the Company will host a conference call Tuesday, October 28, 2014, at 8:30 A.M. (Eastern Time) to review the financial results for the third quarter ended September 30, 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/10052334, 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, October 27, 2015, at the aforementioned URL. In addition, a digital audio playback will be available until 9:00 AM Eastern Time on Wednesday, November 5, 2014, by dialing 1-877-344-7529 in the U.S. and Canada, or +1-412-317-0088 from abroad, and entering access code 10052334.

Other Information

The discussion in the third bullet under the heading "Statement of Operations: Three Months Ended September 30, 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 leading multi-line 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, care management software, correctional systems healthcare, 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; 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 thousands, except share data)
(Unaudited)






September 30, 2014


December 31, 2013

ASSETS






Current assets:






Cash and cash equivalents of continuing operations

$

1,523,596



$

974,304


Cash and cash equivalents of discontinued operations

59,376



63,769


Total cash and cash equivalents

1,582,972



1,038,073


Premium and related receivables

685,188



428,570


Short term investments

166,993



102,126


Other current assets

319,700



217,661


Other current assets of discontinued operations

12,858



13,743


Total current assets

2,767,711



1,800,173


Long term investments

1,108,261



791,900


Restricted deposits

99,727



46,946


Property, software and equipment, net

424,229



395,407


Goodwill

753,060



348,432


Intangible assets, net

127,297



48,780


Other long term assets

140,429



59,357


Long term assets of discontinued operations

25,631



38,305


Total assets

$

5,446,345



$

3,529,300








LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities:






Medical claims liability

$

1,588,798



$

1,111,709


Accounts payable and accrued expenses

926,780



375,862


Unearned revenue

94,961



38,191


Current portion of long term debt

5,131



3,065


Current liabilities of discontinued operations

18,623



30,294


Total current liabilities

2,634,293



1,559,121


Long term debt

949,720



665,697


Other long term liabilities

80,371



60,015


Long term liabilities of discontinued operations

411



1,028


Total liabilities

3,664,795



2,285,861


Commitments and contingencies






Redeemable noncontrolling interest

140,499




Stockholders' equity:






Common stock, $.001 par value; authorized 200,000,000 shares; 61,357,390 issued and 58,666,797 outstanding at September 30, 2014, and 58,673,215 issued and 55,319,239 outstanding at December 31, 2013

61



59


Additional paid-in capital

811,752



594,326


Accumulated other comprehensive loss

(605)



(2,620)


Retained earnings

896,385



731,919


Treasury stock, at cost (2,690,593 and 3,353,976 shares, respectively)

(74,690)



(89,643)


Total Centene stockholders' equity

1,632,903



1,234,041


Noncontrolling interest

8,148



9,398


Total stockholders' equity

1,641,051



1,243,439


Total liabilities and stockholders' equity

$

5,446,345



$

3,529,300


 

 


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






Three Months Ended September 30,


Nine Months Ended  September 30,


2014


2013


2014


2013

Revenues:












Premium

$

3,780,256



$

2,613,567



$

10,182,201



$

7,415,518


Service

378,833



112,497



1,070,036



251,290


Premium and service revenues

4,159,089



2,726,064



11,252,237



7,666,808


Premium tax and health insurer fee

192,772



69,504



583,212



264,781


Total revenues

4,351,861



2,795,568



11,835,449



7,931,589


Expenses:












Medical costs

3,390,090



2,293,616



9,092,644



6,582,445


Cost of services

327,232



100,479



935,404



218,844


General and administrative expenses

333,878



249,028



950,432



675,783


Premium tax expense

160,744



68,453



491,691



262,188


Health insurer fee expense

31,985





94,640




Total operating expenses

4,243,929



2,711,576



11,564,811



7,739,260


Earnings from operations

107,932



83,992



270,638



192,329


Other income (expense):












Investment and other income

5,676



4,757



17,652



13,099


Interest expense

(9,282)



(6,603)



(24,909)



(20,261)


Earnings from continuing operations, before income tax expense

104,326



82,146



263,381



185,167


Income tax expense

26,696



32,280



106,125



72,937


Earnings from continuing operations, net of income tax expense

77,630



49,866



157,256



112,230


Discontinued operations, net of income tax expense (benefit) of $(142), $(620), $1,311, and $(970), respectively

1,521



(952)



2,368



(1,394)


Net earnings

79,151



48,914



159,624



110,836


Noncontrolling interest

(3,469)



(459)



(4,842)



(1,023)


Net earnings attributable to Centene Corporation

$

82,620



$

49,373



$

164,466



$

111,859














Amounts attributable to Centene Corporation common shareholders:

Earnings from continuing operations, net of income tax expense

$

81,099



$

50,325



$

162,098



$

113,253


Discontinued operations, net of income tax expense (benefit)

1,521



(952)



2,368



(1,394)


Net earnings

$

82,620



$

49,373



$

164,466



$

111,859














Net earnings (loss) per common share attributable to Centene Corporation:

Basic:












Continuing operations

$

1.38



$

0.92



$

2.80



$

2.10


Discontinued operations

0.03



(0.02)



0.04



(0.02)


Basic earnings per common share

$

1.41



$

0.90



$

2.84



$

2.08














Diluted:












Continuing operations

$

1.34



$

0.88



$

2.70



$

2.02


Discontinued operations

0.02



(0.01)



0.04



(0.02)


Diluted earnings per common share

$

1.36



$

0.87



$

2.74



$

2.00














Weighted average number of common shares outstanding:







Basic

58,613,484



54,679,660



57,956,152



53,863,779


Diluted

60,681,875



56,933,056



59,936,699



55,956,421


 

 

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




Nine Months Ended  September 30,


2014


2013

Cash flows from operating activities:






Net earnings

$

159,624



$

110,836


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

Depreciation and amortization

65,008



50,220


Stock compensation expense

34,613



27,252


Deferred income taxes

(64,931)



1,626


Changes in assets and liabilities






Premium and related receivables

(243,032)



(58,587)


Other current assets

(24,678)



(19,133)


Other assets

(51,625)



(65,397)


Medical claims liabilities

476,414



103,895


Unearned revenue

54,000



7,976


Accounts payable and accrued expenses

427,128



48,840


Other operating activities

21,213



4,142


Net cash provided by operating activities

853,734



211,670


Cash flows from investing activities:






Capital expenditures

(68,528)



(46,383)


Purchases of investments

(738,474)



(666,016)


Sales and maturities of investments

319,711



451,034


Investments in acquisitions, net of cash acquired

(94,154)



(62,773)


Net cash used in investing activities

(581,445)



(324,138)


Cash flows from financing activities:






Proceeds from exercise of stock options

5,472



7,674


Proceeds from borrowings

1,385,000



30,000


Payment of long-term debt

(1,117,576)



(40,842)


Proceeds from stock offering



15,225


Excess tax benefits from stock compensation

6,903



1,140


Common stock repurchases

(5,632)



(5,677)


Contribution from noncontrolling interest

5,407



5,864


Debt issue costs

(6,475)



(3,587)


Net cash provided by financing activities

273,099



9,797


Effect of exchange rate changes on cash and cash equivalents

(489)




Net increase (decrease) in cash and cash equivalents

544,899



(102,671)


Cash and cash equivalents, beginning of period

1,038,073



843,952


Cash and cash equivalents, end of period

$

1,582,972



$

741,281


Supplemental disclosures of cash flow information:






Interest paid

$

17,902



$

16,738


Health insurer fee paid

126,187




Income taxes paid

167,283



40,921


Equity issued in connection with acquisition

190,412



75,425


 

 

CENTENE CORPORATION
SUPPLEMENTAL FINANCIAL DATA FROM CONTINUING OPERATIONS












  Q3


  Q2


  Q1


  Q4


  Q3


2014



2014



2014



2013



2013


AT-RISK MEMBERSHIP















Managed Care:















Arizona

7,000



7,000



7,100



7,100



23,700


Arkansas

36,600



31,100



16,400






California

144,700



131,100



118,100



97,200




Florida

411,200



313,800



230,300



222,000



217,800


Georgia

382,600



373,000



331,400



318,700



314,100


Illinois

31,300



29,500



22,400



22,300



22,800


Indiana

199,500



200,500



198,700



195,500



198,400


Kansas

144,200



146,100



145,000



139,900



137,700


Louisiana

150,800



148,600



149,800



152,300



152,600


Massachusetts

46,600



47,200



50,800



22,600



23,200


Minnesota

9,500



9,400



9,400






Mississippi

99,300



97,400



85,400



78,300



76,900


Missouri

64,900



58,700



58,100



59,200



58,200


New Hampshire

56,600



39,500



37,100



33,600




Ohio

261,000



225,900



181,800



173,200



170,900


South Carolina

106,500



101,800



96,300



91,900



89,400


Tennessee

21,200



21,300



21,100



20,700



20,400


Texas

961,100



921,500



904,000



935,100



957,300


Washington

192,500



193,800



151,700



82,100



77,100


Wisconsin

74,700



67,300



70,800



71,500



72,000


Total at-risk membership

3,401,800



3,164,500



2,885,700



2,723,200



2,612,500


Non-risk membership

303,500










TOTAL

3,705,300



3,164,500



2,885,700



2,723,200



2,612,500

















Medicaid

2,578,300



2,385,500



2,169,100



2,054,700



1,953,300


CHIP & Foster Care

247,700



261,800



269,200



275,100



274,900


ABD, Medicare & Duals

383,400



329,700



300,500



305,300



302,000


HIM

76,000



75,700



39,700






Hybrid Programs

19,900



17,000



14,400



19,000



19,600


LTC

55,200



53,500



51,800



37,800



31,600


Correctional Services

41,300



41,300



41,000



31,300



31,100


Total at-risk membership

3,401,800



3,164,500



2,885,700



2,723,200



2,612,500


Non-risk membership

303,500










TOTAL

3,705,300



3,164,500



2,885,700



2,723,200



2,612,500

















Specialty Services(a):















Cenpatico Behavioral Health Arizona

195,500



182,200



162,700



156,600



160,700

















(a) Includes external membership only.
























REVENUE PER MEMBER PER MONTH(b)

$

370



$

359



$

355



$

335



$

328

















CLAIMS(b)















Period-end inventory

970,200



745,400



808,500



622,200



698,900


Average inventory

637,100



584,000



555,400



511,700



505,800


Period-end inventory per member

0.29



0.24



0.28



0.23



0.27


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
















NUMBER OF EMPLOYEES

12,900



12,300



11,200



8,800



8,200



 

 



Q3


Q2


Q1


Q4


Q3


2014



2014



2014



2013



2013

















DAYS IN CLAIMS PAYABLE (c)

43.1



42.9



42.6



42.4



40.6


(c) 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

$

2,828.3



$

2,352.3



$

2,166.4



$

1,870.6



$

1,612.9


Unregulated

70.3



$

50.3



49.3



44.7



37.6


TOTAL

$

2,898.6



$

2,402.6



$

2,215.7



$

1,915.3



$

1,650.5

















DEBT TO CAPITALIZATION

36.8

%


37.5

%


36.5

%


35.0

%


30.5

%

DEBT TO CAPITALIZATION EXCLUDING NON-RECOURSE DEBT(d)

35.0

%


35.5

%


34.4

%


32.4

%


27.4

%

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

(d) The non-recourse debt represents the Company's mortgage note payable ($70.7 million at September 30, 2014).

 

 

Operating Ratios:









Three Months Ended September 30,


Nine Months Ended September 30,


2014


2013


2014


2013

Health Benefits Ratios:












Medicaid, CHIP, Foster Care & HIM

86.5

%


84.8

%


86.1

%


87.9

%

ABD, LTC & Medicare

93.9



92.1



94.0



90.5


Specialty Services

86.8



86.8



84.9



84.4


  Total

89.7



87.8



89.3



88.8














Total General & Administrative Expense Ratio

8.0

%


9.1

%


8.4

%


8.8

%

 

MEDICAL CLAIMS LIABILITY (In thousands)

The changes in medical claims liability are summarized as follows:

 

Balance, September 30, 2013


$

1,013,246


Incurred related to:




Current period


11,652,971


Prior period


(148,132)


Total incurred


11,504,839


Paid related to:




Current period


10,087,868


Prior period


841,419


Total paid


10,929,287


Balance, September 30, 2014


$

1,588,798


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 September 30, 2013. 

 

SOURCE Centene Corporation

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