Press Release

Centene Corporation Reports 2015 Second Quarter Results
Revenue increase of 39% and diluted earnings per share (EPS) from continuing operations of $0.72

ST. LOUIS, July 28, 2015 /PRNewswire/ -- Centene Corporation (NYSE: CNC) today announced its financial results for the quarter ended June 30, 2015.  The following discussions, with the exception of cash flow information, are in the context of continuing operations.

Premium and Service Revenues (in millions)

$

5,184



Consolidated Health Benefits Ratio

89.1

%


General & Administrative expense ratio

8.5

%


Diluted earnings per share (EPS)

$

0.72



Total cash flow from operations (in millions)

$

350



Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "Our strong second quarter results offer further evidence of Centene's positive financial and operating momentum.  Our pending Health Net acquisition will enhance our long-term growth opportunities by adding greater product diversity and scale."

Second Quarter Highlights

  • June 30, 2015 managed care membership of 4.6 million, an increase of 1.3 million members, or 38% compared to the second quarter of 2014.
  • Premium and service revenues for the second quarter of $5.2 billion, representing 39% growth compared to the second quarter of 2014.
  • Health Benefits Ratio of 89.1% for the second quarter of 2015, compared to 88.9% in the second quarter of 2014 and 89.8% in the first quarter of 2015.
  • General and Administrative expense ratio of 8.5% for the second quarter of 2015, compared to 8.6% in the second quarter of 2014 and 8.5% in the first quarter of 2015.
  • Operating cash flow of $350 million for the second quarter of 2015.
  • Diluted EPS for the second quarter of 2015 of $0.72, including $0.01 of diluted EPS associated with Health Net, Inc. (Health Net) merger related expenses, compared to $0.39 in 2014.

Other Events

  • In July 2015, Centene announced that the Company and two direct, newly formed subsidiaries of the Company had entered into a definitive merger agreement with Health Net under which Centene will acquire all of the issued and outstanding shares of Health Net. The transaction is valued at approximately $6.8 billion (based on the Centene closing stock price on July 1, 2015), including the assumption of debt. The transaction is expected to close in early 2016 and is subject to approval by Centene and Health Net shareholders and other customary closing conditions.
  • In July 2015, Centurion began operating under a new contract with the Mississippi Department of Corrections to provide comprehensive correctional healthcare services.
  • In July 2015, Centene'sMississippi subsidiary, Magnolia Health, began operating under a two-year CHIP contract with the State of Mississippi.
  • In June 2015, the Company received regulatory approval of its previously announced acquisition of Agate Resources, Inc. The transaction is expected to close in the third quarter of 2015.
  • In May 2015, the Company completed the acquisition of Fidelis SecureCare of Michigan, Inc. (Fidelis). Fidelis began operating under a new contract with the Michigan Department of Community Health and the Centers for Medicare and Medicaid Services to provide integrated healthcare services to members who are dually eligible for Medicare and Medicaid in Macomb and Wayne counties in May 2015. Passive enrollment began in July 2015.
  • In May 2015, Centene'sFlorida subsidiary, Sunshine Health, was tentatively recommended for a statewide contract award by the Florida Healthy Kids Corporation to manage healthcare services for children ages five through 18 in all 11 regions of Florida. The two-year contract award is expected to commence in the fourth quarter of 2015.
  • In the fourth quarter of 2015, Centene'sLouisiana subsidiary, Louisiana Healthcare Connections, expects to begin operating under an expanded contract to include behavioral health benefits, and Magnolia Health anticipates operating under an expanded contract to include the inpatient benefit for Medicaid and ABD members.

Awards

  • In June 2015, the Company was awarded the Corporate Anti-Bullying Hero Award at Auburn University's Anti-Bullying Summit.
  • In June 2015, FORTUNE magazine announced Centene's position of #186 in its annual ranking of America's largest companies by revenue.
  • In May 2015, at the Case In Point Platinum Awards, Centene and its subsidiaries were honored with awards in five categories: Women/Children Case Management, Disease Management/Population Health, Integrated Case Management and Embedded Case Management, Managed Care Case Management, and Nurse Call Center. Centene was also recognized for four titles in its member educational book series at the Hermes Creative Awards.

Membership

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


June 30,


2015


2014

Arizona

210,900


189,200

Arkansas

45,400


31,100

California

178,700


131,100

Florida

470,300


313,800

Georgia

405,000


373,000

Illinois

209,100


29,500

Indiana

250,400


200,500

Kansas

143,000


146,100

Louisiana

358,900


148,600

Massachusetts

61,500


47,200

Michigan

2,700


Minnesota

10,900


9,400

Mississippi

250,600


97,400

Missouri

82,600


58,700

New Hampshire

70,800


39,500

Ohio

287,100


225,900

South Carolina

112,600


101,800

Tennessee

21,400


21,300

Texas

969,700


921,500

Vermont

2,800


Washington

214,100


193,800

Wisconsin

78,600


67,300

Total at-risk membership

4,437,100


3,346,700

Non-risk membership

176,600


Total

4,613,700


3,346,700

At June 30, 2015, the Company served 368,900 Medicaid members in Medicaid expansion programs in California, Illinois, Massachusetts, New Hampshire, Ohio and Washington and Indiana HIP 2.0, included in the table above.

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


June 30,


2015


2014

Medicaid

3,300,600


2,385,500

CHIP & Foster Care

230,500


261,800

ABD, Medicare & Duals

414,300


329,700

Long Term Care (LTC)

72,800


53,500

Health Insurance Marketplaces

167,400


75,700

Hybrid Programs 1


17,000

Behavioral Health

203,900


182,200

Correctional Healthcare Services

47,600


41,300

Total at-risk membership

4,437,100


3,346,700

Non-risk membership

176,600


Total

4,613,700


3,346,700




1 In February 2015, hybrid programs were converted to Medicaid expansion contracts.

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



June 30,


2015


2014

ABD

106,100


89,300

LTC

53,100


41,800

Medicare

8,500


6,800

Medicaid / Medicare Duals

19,700


1,400

Total

187,400


139,300

 

Statement of Operations: Three Months Ended June 30, 2015



Three Months Ended


June 30, 2015


June 30, 2014


March 31, 2015

(in millions)






Total Revenues

$

5,506


$

4,024


$

5,131

Premium Tax and Health Insurer Fee Revenues


(322)



(283)



(370)

Premium and Service Revenues

$

5,184


$

3,741


$

4,761

 

  • For the second quarter of 2015, Premium and Service Revenues increased 39% to $5.2 billion from $3.7 billion in the second quarter of 2014. The increase was primarily a result of the impact from expansions or new programs in many of our states, particularly Florida, Illinois, Louisiana, Mississippi, Ohio and Texas.
  • Premium Tax and Health Insurer Fee Revenues were $322 million in the second quarter of 2015, compared to $283 million in the comparable period in 2014 and $370 million in the first quarter of 2015. The decrease of $48 million from the first quarter of 2015 was due to a lower amount of hospital assessments received in the second quarter of 2015.
  • Consolidated HBR of 89.1% for the second quarter of 2015 represents an increase from 88.9% in the comparable period in 2014 and a decrease from 89.8% in the first quarter of 2015. The year over year HBR increase is primarily attributable to a higher HBR associated with new programs in two of our states. The sequential decrease is due to normal seasonality.
  • The following table compares the results for new business and existing business for the quarters ended June 30:

2015


2014

Premium and Service Revenue




New business

22

%


26

%

Existing business

78

%


74

%





HBR




New business

91.3

%


91.8

%

Existing business

88.5

%


87.9

%

    • The new business HBR decreased compared to last year as a result of a higher portion of new business associated with Medicaid, which operates at a lower HBR.
    • The existing business HBR increased compared to last year as a result of higher acuity business, including Florida LTC, being classified as existing business in the current year.
  • Consolidated G&A expense ratio for the second quarter of 2015 was 8.5%, compared to 8.6% in the prior year. The year over year decrease in the G&A ratio reflects the leveraging of expenses over higher revenues in 2015.
  • Diluted earnings per share of $0.72 in the second quarter of 2015, compared to $0.39 in 2014. Diluted earnings per share in 2014 was impacted by $0.08 of net cost associated with the health insurer fee.

Balance Sheet and Cash Flow

At June 30, 2015, the Company had cash, investments and restricted deposits of $3.7 billion, including $82 million held by its unregulated entities.  Medical claims liabilities totaled $2.1 billion.  The Company's days in claims payable was 45.5, consistent with the first quarter of 2015.  Total debt was $1.1 billion, which includes $150 million of borrowings on the $500 million revolving credit facility at quarter end.  Debt to capitalization was 35.7% at June 30, 2015, excluding the $69 million non-recourse mortgage note. 

Cash flow from operations for the three months ended June 30, 2015, was $350 million, or 4.0 times net earnings.

Outlook

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




Full Year 2015




Low


High


Premium and Service Revenues (in millions)


$

20,800



$

21,200



Diluted EPS


$

2.74



$

2.82



Consolidated Health Benefits Ratio


89.1

%


89.5

%


General & Administrative expense ratio


8.0

%


8.4

%


Effective Tax Rate


48.0

%


50.0

%


Diluted Shares Outstanding (in millions)


123.0



124.0









The Company's guidance excludes merger related costs expected to be incurred in 2015 related to the Health Net transaction. These costs are estimated to be between $0.10 and $0.15 per diluted share for 2015.  The transaction is expected to close in early 2016.

Consistent with our policy, the above table does not include acquisitions that have not yet closed.

Conference Call

As previously announced, the Company will host a conference call Tuesday, July 28, 2015, at 8:30 AM (Eastern Time) to review the financial results for the second quarter ended June 30, 2015, 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/10067851, 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, July 26, 2016, at the aforementioned URL. In addition, a digital audio playback will be available until 9:00 AM Eastern Time on Wednesday, August 5, 2015, by dialing 1-877-344-7529 in the U.S. and Canada, or +1-412-317-0088 from abroad, and entering access code 10067851.

Other Information

The discussion in the third bullet under the heading "Statement of Operations: Three Months Ended June 30, 2015" 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, multi-national healthcare enterprise that provides a portfolio of 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, Health Net'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 or Health Net'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. including our proposed merger with Health Net (Proposed Merger); 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 or Health Net's managed care contracts by federal or state governments (including but not limited to Medicare and Medicaid); the outcome of our or Health Net's pending legal proceedings; availability of debt and equity financing, on terms that are favorable to us; and changes in economic, political and market conditions; the expected closing date of the Proposed Merger; the possibility that the expected synergies and value creation from the Proposed Merger will not be realized, or will not be realized with the expected time period; the risk that acquired businesses will not be integrated successfully; disruption from the Proposed Merger making it more difficult to maintain business and operational relationships; the risk that unexpected costs related to the Proposed Merger will be incurred; the possibility that the Proposed Merger does not close, including, but not limited to, due to the failure to satisfy the closing conditions, including the receipt of approval of both Centene's stockholders and Health Net's stockholders; and the risk that financing for the Proposed Merger may not be available on favorable terms as well as those factors disclosed in the Company's publicly filed documents.

This list of important factors is not intended to be exhaustive. We discuss certain of these matters more fully, as well as certain risk factors that may affect our business operations, financial condition and results of operations, in our filings with the Securities and Exchange Commission, including our annual reports 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 share data)

(Unaudited)



June 30, 2015


December 31, 2014

ASSETS




Current assets:




Cash and cash equivalents

$

1,967


$

1,610

Premium and related receivables

1,248


912

Short term investments

140


177

Other current assets

483


335

Total current assets

3,838


3,034

Long term investments

1,541


1,280

Restricted deposits

101


100

Property, software and equipment, net

462


445

Goodwill

811


754

Intangible assets, net

148


120

Other long term assets

121


91

Total assets

$

7,022


$

5,824





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Medical claims liability

$

2,092


$

1,723

Accounts payable and accrued expenses

1,004


768

Return of premium payable

289


236

Unearned revenue

68


168

Current portion of long term debt

5


5

Total current liabilities

3,458


2,900

Long term debt

1,139


874

Other long term liabilities

330


159

Total liabilities

4,927


3,933

Commitments and contingencies




Redeemable noncontrolling interests

155


148

Stockholders' equity:




Preferred stock, $0.001 par value; authorized 10,000,000 shares; no shares issued or outstanding at June 30, 2015 and December 31, 2014


Common stock, $.001 par value; authorized 200,000,000 shares; 124,812,343 issued and 119,087,944 outstanding at June 30, 2015, and 124,274,864 issued and 118,433,416 outstanding at December 31, 2014


Additional paid-in capital

891


840

Accumulated other comprehensive loss

(4)


(1)

Retained earnings

1,154


1,003

Treasury stock, at cost (5,724,399 and 5,841,448 shares, respectively)

(101)


(98)

Total Centene stockholders' equity

1,940


1,744

Noncontrolling interest


(1)

Total stockholders' equity

1,940


1,743

Total liabilities and stockholders' equity

$

7,022


$

5,824

 

 


CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share data)

(Unaudited)



Three Months Ended June 30,


Six Months Ended June 30,


2015


2014


2015


2014

Revenues:








Premium

$

4,692



$

3,331



$

8,991



$

6,402


Service

492



410



954



691


Premium and service revenues

5,184



3,741



9,945



7,093


Premium tax and health insurer fee

322



283



692



391


Total revenues

5,506



4,024



10,637



7,484


Expenses:








Medical costs

4,181



2,960



8,042



5,703


Cost of services

419



366



821



608


General and administrative expenses

442



321



845



616


Premium tax expense

239



253



520



331


Health insurer fee expense

52



31



107



63


Total operating expenses

5,333



3,931



10,335



7,321


Earnings from operations

173



93



302



163


Other income (expense):








Investment and other income

10



7



19



12


Interest expense

(11)



(9)



(21)



(16)


Earnings from continuing operations, before income tax expense

172



91



300



159


Income tax expense

84



45



147



79


Earnings from continuing operations, net of income tax expense

88



46



153



80


Discontinued operations, net of income tax expense (benefit) of $0, $1, $(1), and $1, respectively



2



(1)



1


Net earnings

88



48



152



81


(Earnings) loss attributable to noncontrolling interests



1



(1)



1


Net earnings attributable to Centene Corporation

$

88



$

49



$

151



$

82










Amounts attributable to Centene Corporation common shareholders:

Earnings from continuing operations, net of income tax expense

$

88



$

47



$

152



$

81


Discontinued operations, net of income tax expense (benefit)



2



(1)



1


Net earnings

$

88



$

49



$

151



$

82










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

Basic:








 Continuing operations

$

0.74



$

0.41



$

1.28



$

0.70


 Discontinued operations



0.01



(0.01)



0.01


Basic earnings per common share

$

0.74



$

0.42



$

1.27



$

0.71










Diluted:








 Continuing operations

$

0.72



$

0.39



$

1.24



$

0.68


 Discontinued operations



0.02



(0.01)



0.01


Diluted earnings per common share

$

0.72



$

0.41



$

1.23



$

0.69










Weighted average number of common shares outstanding:





Basic

119,003,569


115,517,366


118,894,269


115,244,078

Diluted

122,965,011


119,434,516


122,785,459


119,094,840

 

 

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)



Six Months Ended June 30,


2015


2014

Cash flows from operating activities:




Net earnings

$

152



$

81


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

Depreciation and amortization

53



42


Stock compensation expense

33



23


Deferred income taxes

(13)



(11)


Gain on settlement of contingent consideration

(10)




Changes in assets and liabilities




Premium and related receivables

(341)



(161)


Other current assets

(28)



29


Other assets

(30)



(29)


Medical claims liabilities

366



284


Unearned revenue

(102)



(18)


Accounts payable and accrued expenses

166



160


Other long term liabilities

144



10


Other operating activities

5



2


Net cash provided by operating activities

395



412


Cash flows from investing activities:




Capital expenditures

(58)



(42)


Purchases of investments

(513)



(475)


Sales and maturities of investments

276



221


Proceeds from asset sale

7




Investments in acquisitions, net of cash acquired

(11)



(94)


Net cash used in investing activities

(299)



(390)


Cash flows from financing activities:




Proceeds from exercise of stock options

3



4


Proceeds from borrowings

750



1,145


Payment of long term debt

(479)



(945)


Excess tax benefits from stock compensation

6



1


Common stock repurchases

(7)



(5)


Contribution from noncontrolling interest



5


Debt issue costs

(4)



(6)


Payment of contingent consideration obligation

(8)




Net cash provided by financing activities

261



199


Net increase in cash and cash equivalents

357



221


Cash and cash equivalents, beginning of period

1,610



1,038


Cash and cash equivalents, end of period

$

1,967



$

1,259


Supplemental disclosures of cash flow information:




Interest paid

$

27



$

16


Income taxes paid

$

145



$

110


Equity issued in connection with acquisitions

$

13



$

132


 

 

CENTENE CORPORATION

SUPPLEMENTAL FINANCIAL DATA FROM CONTINUING OPERATIONS



Q2


Q1


Q4


Q3


Q2


2015


2015


2014


2014


2014

MANAGED CARE MEMBERSHIP










Arizona

210,900



202,200



204,000



202,500



189,200


Arkansas

45,400



43,200



38,400



36,600



31,100


California

178,700



171,200



163,900



144,700



131,100


Florida

470,300



463,100



425,700



411,200



313,800


Georgia

405,000



405,600



389,100



382,600



373,000


Illinois

209,100



184,800



87,800



31,300



29,500


Indiana

250,400



227,700



197,700



199,500



200,500


Kansas

143,000



143,700



143,300



144,200



146,100


Louisiana

358,900



359,500



152,900



150,800



148,600


Massachusetts

61,500



64,500



48,400



46,600



47,200


Michigan

2,700










Minnesota

10,900



9,500



9,500



9,500



9,400


Mississippi

250,600



141,900



108,700



99,300



97,400


Missouri

82,600



75,600



71,000



64,900



58,700


New Hampshire

70,800



67,500



62,700



56,600



39,500


Ohio

287,100



296,000



280,100



261,000



225,900


South Carolina

112,600



106,000



109,700



106,500



101,800


Tennessee

21,400



20,800



21,000



21,200



21,300


Texas

969,700



974,900



971,000



961,100



921,500


Vermont

2,800



1,600








Washington

214,100



207,100



194,400



192,500



193,800


Wisconsin

78,600



82,100



83,200



74,700



67,300


Total at-risk membership

4,437,100



4,248,500



3,762,500



3,597,300



3,346,700


Non-risk membership

176,600



153,200



298,400



303,500




TOTAL

4,613,700



4,401,700



4,060,900



3,900,800



3,346,700












Medicaid

3,300,600



3,133,900



2,754,900



2,578,300



2,385,500


CHIP & Foster Care

230,500



233,600



222,700



247,700



261,800


ABD, Medicare & Duals

414,300



410,400



392,700



383,400



329,700


LTC

72,800



71,200



60,800



55,200



53,500


Health Insurance Marketplaces

167,400



161,700



74,500



76,000



75,700


Hybrid Programs





18,900



19,900



17,000


Behavorial Health

203,900



195,100



197,000



195,500



182,200


Correctional Healthcare Services

47,600



42,600



41,000



41,300



41,300


Total at-risk membership

4,437,100



4,248,500



3,762,500



3,597,300



3,346,700


Non-risk membership

176,600



153,200



298,400



303,500




TOTAL

4,613,700



4,401,700



4,060,900



3,900,800



3,346,700






















REVENUE PER MEMBER PER MONTH(a)

$

356



$

349



$

360



$

354



$

344












CLAIMS(a)










Period-end inventory

1,501,600



1,217,000



1,086,600



1,021,200



771,900


Average inventory

946,500



841,000



806,000



660,200



603,700


Period-end inventory per member

0.34



0.29



0.29



0.28



0.23


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











NUMBER OF EMPLOYEES

15,800



14,800



13,400



12,900



12,300






















 

 


Q2


Q1


Q4


Q3


Q2


2015


2015


2014


2014


2014











DAYS IN CLAIMS PAYABLE (b)

45.5



45.5



44.2



43.1



42.9


(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

$

3,667



$

3,345



$

3,082



$

2,829



$

2,353


Unregulated

82



97



85



70



50


TOTAL

$

3,749



$

3,442



$

3,167



$

2,899



$

2,403












DEBT TO CAPITALIZATION

37.1

%


38.0

%


33.5

%


36.4

%


35.3

%

DEBT TO CAPITALIZATION EXCLUDING NON-RECOURSE DEBT(c)

35.7

%


36.6

%


31.7

%


34.6

%


33.4

%

(c) The non-recourse debt represents the Company's mortgage note payable ($69 million at June 30, 2015).

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

 

Operating Ratios:



Three Months Ended June 30,


Six Months Ended June 30,


2015


2014


2015


2014

Health Benefits Ratios:








Medicaid, CHIP, Foster Care & Health Insurance Marketplaces

85.6

%


84.7

%


86.5

%


85.8

%

ABD, LTC & Medicare

93.7



94.9



93.4



94.0


Specialty Services

86.9



80.4



86.0



84.0


  Total

89.1



88.9



89.4



89.1










Total General & Administrative Expense Ratio

8.5

%


8.6

%


8.5

%


8.7

%

 

MEDICAL CLAIMS LIABILITY (In millions)








The changes in medical claims liability are summarized as follows:









Balance, June 30, 2014


$

1,394


Incurred related to:



  Current period


15,216


  Prior period


(199)


  Total incurred


15,017


Paid related to:



  Current period


13,193


  Prior period


1,126


  Total paid


14,319


Balance, June 30, 2015


$

2,092


 

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.  Additionally, as a result of minimum HBR and other state return of premium programs, approximately $65 million of the "Incurred related to: Prior period" was reclassified to Return of Premium Payable.

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 June 30, 2014.  

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/centene-corporation-reports-2015-second-quarter-results-300119561.html

SOURCE Centene Corporation

Investor Relations Inquiries, Edmund E. Kroll, Jr., Senior Vice President, Finance & Investor Relations, (212) 759-0382, Media Inquiries, Marcela Manjarrez Williams, Senior Vice President and Chief Communications Officer, (314) 445-0790