Press Release

- Centene Corporation Reports 2015 Third Quarter Results -
-- Diluted earnings per share of $0.75; $0.84 excluding $0.09 of Health Net merger related expenses --
-- Revenue increase of 31% year over year --

ST. LOUIS, Oct. 27, 2015 /PRNewswire/ -- Centene Corporation (NYSE: CNC) today announced its financial results for the quarter ended September 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)

$

5,463



Consolidated Health Benefits Ratio

89.0

%


General & Administrative expense ratio excluding Health Net merger related expenses

8.2

%


Diluted earnings per share (EPS)

$

0.75



Diluted EPS excluding Health Net merger related expenses

$

0.84



Total cash flow from operations (in millions)

$

62



Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "The quarter reaffirms our strong fundamentals and momentum that positions us well for the balance of this year and 2016, including the combination with Health Net."

Third Quarter Highlights

  • September 30, 2015 managed care membership of 4.8 million, an increase of 933,600 members, or 24% compared to the third quarter of 2014.

  • Premium and service revenues for the third quarter of $5.5 billion, representing 31% growth compared to the third quarter of 2014.

  • Health Benefits Ratio of 89.0% for the third quarter of 2015, compared to 89.7% in the third quarter of 2014 and 89.1% in the second quarter of 2015.

  • General and Administrative expense ratio excluding Health Net merger related expenses of 8.2%, compared to 8.0% in the third quarter of 2014 and 8.5% in the second quarter of 2015.

  • Operating cash flow of $62 million for the third quarter of 2015.  Operating cash flow for the nine months ended September 30, 2015, was $457 million, or 1.9 times net earnings.

  • Diluted EPS for the third quarter of 2015 of $0.75, or $0.84 excluding $0.09 of diluted EPS associated with Health Net merger related expenses, compared to $0.67 in 2014, or $0.61 excluding the impact associated with the health insurer fee, transaction costs, and a tax benefit associated with final regulations on the deduction of compensation.

Other Events

  • In October 2015, Centene's subsidiary, Superior HealthPlan, Inc., was awarded a contract by the Texas Health and Human Services Commission to serve seven delivery areas for STAR Kids Medicaid recipients, more than any other successful bidder.  The new contract is expected to commence in the second half of 2016. 

  • In October 2015, Centene's subsidiary, Cenpatico Integrated Care, in partnership with University of Arizona Health Plan, began operating under a contract with 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.

  • In October 2015, Centene's subsidiary, Sunshine Health began operating under a two-year, statewide contract with the Florida Healthy Kids Corporation to manage healthcare services for children ages five through 18 in all 11 regions of Florida.

  • In September 2015, Centene's subsidiary, Peach State Health Plan, was one of the Care Management Organizations selected to serve Medicaid recipients enrolled in the Georgia Families, PeachCare for Kids and Planning for Healthy Babies programs.  The contract renewal is expected to commence in July 2016, pending regulatory approvals.

  • In September 2015, the Company completed the acquisition of Agate Resources, Inc., a diversified holding company, that offers primarily Medicaid and other healthcare products and services to Oregon residents through Trillium Community Health Plan.

  • In August 2015, Centene's subsidiary, Coordinated Care of Washington, was selected by the Washington State Health Care Authority as the sole provider for the Apple Health Foster Care contract.  The new contract is expected to commence in the first quarter of 2016, pending regulatory approvals.

  • In August 2015, the Company and Health Net announced early termination of the waiting period required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, in connection with the pending merger.  In September 2015, the Company filed a definitive joint proxy statement with the Securities and Exchange Commission in connection with its previously announced merger with Health Net, Inc.  On October 23, 2015, the Company held its special meeting of shareholders in which shareholders approved the merger and the proposal to increase the Company's authorized shares of common stock from 200 million to 400 million.

Membership

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


September 30,


2015


2014

Arizona

223,600



202,500

Arkansas

40,900



36,600


California

183,900



144,700

Florida

486,500



411,200

Georgia

406,700



382,600

Illinois

211,300



31,300


Indiana

276,700



199,500

Kansas

137,500



144,200


Louisiana

358,800



150,800


Massachusetts

63,700



46,600

Michigan

6,600




Minnesota

9,400



9,500


Mississippi

301,000



99,300


Missouri

88,400



64,900


New Hampshire

71,900



56,600


Ohio

308,100



261,000


Oregon

99,800




South Carolina

104,800



106,500


Tennessee

20,200



21,200


Texas

976,500



961,100


Vermont

1,500




Washington

208,600



192,500


Wisconsin

78,100



74,700

Total at-risk membership

4,664,500



3,597,300


Non-risk membership

169,900



303,500


Total

4,834,400



3,900,800


At September 30, 2015, the Company served 442,600 Medicaid members in Medicaid expansion programs in California, Illinois, Massachusetts, New Hampshire, Ohio, Oregon and Washington and Indiana HIP 2.0, included in the table above.

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


September 30,


2015


2014

Medicaid

3,469,800



2,578,300

CHIP & Foster Care

245,200



247,700

ABD, Medicare & Duals

444,100



383,400

Long Term Care (LTC)

73,800



55,200


Health Insurance Marketplaces

155,600



76,000


Hybrid Programs 1



19,900

Behavioral Health

216,700



195,500

Correctional Healthcare Services

59,300



41,300

Total at-risk membership

4,664,500



3,597,300

Non-risk membership

169,900



303,500


Total

4,834,400



3,900,800





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.


September 30,


2015


2014

ABD

107,400



119,300

LTC

54,200



35,500

Medicare

11,400



7,100

Medicaid / Medicare Duals

27,900



2,700


Total

200,900



164,600

Statement of Operations: Three Months Ended September 30, 2015


Three Months Ended


September 30,
2015


September 30,
2014


June 30,
2015

($ in millions)






Total Revenues

$

5,821



$

4,352



$

5,506


Premium Tax and Health Insurer Fee Revenues

(358)



(193)



(322)


Premium and Service Revenues

$

5,463



$

4,159



$

5,184


  • For the third quarter of 2015, Premium and Service Revenues increased 31% to $5.5 billion from $4.2 billion in the third 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.

  • Consolidated HBR of 89.0% for the third quarter of 2015 represents a decrease from 89.7% in the comparable period in 2014 and a decrease from 89.1% in the second quarter of 2015. The year over year HBR decrease is primarily attributable to a lower HBR associated with new Medicaid expansion programs, which had significant growth in membership over the prior year and have a lower HBR.

  • The following table compares the results for new business and existing business for the quarters ended September 30:

2015


2014

Premium and Service Revenue




New business

21

%


27

%

Existing business

79

%


73

%





HBR




New business

88.7

%


91.4

%

Existing business

89.1

%


89.0

%

    • The new business HBR decreased compared to last year primarily due to the movement of the Florida MMA business, which operates at a higher HBR, into existing business during the quarter and the mix of new business being weighted towards Medicaid expansion which operates at a lower HBR.

  • Consolidated G&A expense ratio for the third quarter of 2015 was 8.5%, compared to 8.0% in the prior year. The year over year increase in the G&A ratio primarily reflects the impact of Health Net merger related expenses.  The G&A ratio for the three months ended September 30, 2015 was 8.2% excluding the impact of the Health Net merger related expenses.  Excluding the impact of the Health Net merger related expenses, the increase in the G&A ratio is primarily due to the increase in performance based incentive compensation expense.

  • Diluted earnings per share for the third quarter of 2015 of $0.75, or $0.84 excluding $0.09 of diluted EPS associated with Health Net merger related expenses.  This compares to diluted EPS for the third quarter of 2014 of $0.67, or $0.61 excluding a $(0.08) impact associated with the health insurer fee, a $(0.03) impact from transaction costs and a $0.17 benefit associated with the final regulations on the deduction of compensation. 

Balance Sheet and Cash Flow

At September 30, 2015, the Company had cash, investments and restricted deposits of $3.9 billion, including $91 million held by its unregulated entities.  Medical claims liabilities totaled $2.1 billion.  The Company's days in claims payable was 44.5.  Total debt was $1.3 billion, which includes $275 million of borrowings on the $500 million revolving credit facility at quarter end.  Debt to capitalization was 37.1% at September 30, 2015, excluding the $68 million non-recourse mortgage note. 

Cash flow from operations for the three months ended September 30, 2015, was $62 million, or 0.7 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, 2015

45.5


Addition of Oregon

0.9


Transfer of amounts due to states

(1.9)


Days in claims payable, September 30, 2015

44.5





Outlook

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



Full Year 2015




Low


High


Premium and Service Revenues (in millions)


$

21,000



$

21,300



Diluted EPS (excluding Health Net merger related costs)


$

2.84



$

2.90



Consolidated Health Benefits Ratio


89.2

%


89.4

%


General & Administrative expense ratio (excluding Health Net merger related costs)


8.2

%


8.4

%


Effective Tax Rate


48.0

%


50.0

%


Diluted Shares Outstanding (in millions)


123.0



123.5









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 $0.13 and $0.15 per diluted share for 2015.  The transaction is expected to close in early 2016.

Conference Call

As previously announced, the Company will host a conference call Tuesday, October 27, 2015, at 8:30 AM (Eastern Time) to review the financial results for the third quarter ended September 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/10073458, 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 25, 2016, at the aforementioned URL. In addition, a digital audio playback will be available until 9:00 AM Eastern Time on Wednesday, November 4, 2015, by dialing 1-877-344-7529 in the U.S. and Canada, or +1-412-317-0088 from abroad, and entering access code 10073458.

Other Information

The discussion in the third bullet under the heading "Statement of Operations: Three Months Ended September 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.

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 individuals to more accurately assess the ongoing nature of the Company's operations and measure the Company's performance more consistently. 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.

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 ultimate 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 thereto; 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)



September 30, 2015


December 31, 2014

ASSETS




Current assets:




Cash and cash equivalents

$

1,665



$

1,610


Premium and related receivables

1,281



912


Short term investments

162



177


Other current assets

488



335


Total current assets

3,596



3,034


Long term investments

1,992



1,280


Restricted deposits

106



100


Property, software and equipment, net

488



445


Goodwill

849



754


Intangible assets, net

161



120


Other long term assets

130



91


Total assets

$

7,322



$

5,824






LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Medical claims liability

$

2,144



$

1,723


Accounts payable and accrued expenses

1,035



768


Return of premium payable

313



236


Unearned revenue

66



168


Current portion of long term debt

5



5


Total current liabilities

3,563



2,900


Long term debt

1,276



874


Other long term liabilities

274



159


Total liabilities

5,113



3,933


Commitments and contingencies




Redeemable noncontrolling interests

156



148


Stockholders' equity:




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




Common stock, $.001 par value; authorized 200,000,000 shares; 124,940,103 issued and 119,201,560 outstanding at September 30, 2015, and 124,274,864 issued and 118,433,416 outstanding at December 31, 2014




Additional paid-in capital

909



840


Accumulated other comprehensive loss

(2)



(1)


Retained earnings

1,247



1,003


Treasury stock, at cost (5,738,543 and 5,841,448 shares, respectively)

(103)



(98)


Total Centene stockholders' equity

2,051



1,744


Noncontrolling interest

2



(1)


Total stockholders' equity

2,053



1,743


Total liabilities and stockholders' equity

$

7,322



$

5,824


 


CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share data)

(Unaudited)



Three Months Ended September 30,


Nine Months Ended
September 30,


2015


2014


2015


2014

Revenues:








Premium

$

4,983



$

3,780



$

13,974



$

10,182


Service

480



379



1,434



1,070


Premium and service revenues

5,463



4,159



15,408



11,252


Premium tax and health insurer fee

358



193



1,050



584


Total revenues

5,821



4,352



16,458



11,836


Expenses:








Medical costs

4,433



3,390



12,475



9,093


Cost of services

413



327



1,234



935


General and administrative expenses

464



334



1,309



951


Premium tax expense

274



161



794



492


Health insurer fee expense

54



32



161



94


Total operating expenses

5,638



4,244



15,973



11,565


Earnings from operations

183



108



485



271


Other income (expense):








Investment and other income

8



6



27



18


Interest expense

(11)



(9)



(32)



(25)


Earnings from continuing operations, before income tax expense

180



105



480



264


Income tax expense

87



27



234



107


Earnings from continuing operations, net of income tax expense

93



78



246



157


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

1



1





2


Net earnings

94



79



246



159


(Earnings) loss attributable to noncontrolling interests

(1)



3



(2)



5


Net earnings attributable to Centene Corporation

$

93



$

82



$

244



$

164










Amounts attributable to Centene Corporation common shareholders:

Earnings from continuing operations, net of income tax expense

$

92



$

81



$

244



$

162


Discontinued operations, net of income tax expense

1



1





2


Net earnings

$

93



$

82



$

244



$

164










Net earnings per common share attributable to Centene Corporation:

Basic:








Continuing operations

$

0.77



$

0.69



$

2.05



$

1.40


Discontinued operations

0.01



0.01





0.01


Basic earnings per common share

$

0.78



$

0.70



$

2.05



$

1.41










Diluted:








Continuing operations

$

0.75



$

0.67



$

1.99



$

1.35


Discontinued operations

0.01



0.01





0.02


Diluted earnings per common share

$

0.76



$

0.68



$

1.99



$

1.37










Weighted average number of common shares outstanding:





Basic

119,121,524


117,226,968


118,970,853


115,912,304

Diluted

123,131,810


121,363,750


122,904,476


119,873,398

 

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)



Nine Months Ended September 30,


2015


2014

Cash flows from operating activities:




Net earnings

$

246



$

159


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

Depreciation and amortization

82



65


Stock compensation expense

48



35


Deferred income taxes

(14)



(65)


Gain on settlement of contingent consideration

(37)




Goodwill and intangible adjustment

28




Changes in assets and liabilities




Premium and related receivables

(360)



(243)


Other current assets

(103)



(25)


Other assets

(40)



(51)


Medical claims liabilities

394



476


Unearned revenue

(104)



54


Accounts payable and accrued expenses

209



427


Other long term liabilities

101



17


Other operating activities

7



4


Net cash provided by operating activities

457



853


Cash flows from investing activities:




Capital expenditures

(101)



(69)


Purchases of investments

(1,077)



(738)


Sales and maturities of investments

418



320


Proceeds from asset sale

7




Investments in acquisitions, net of cash acquired

(16)



(94)


Net cash used in investing activities

(769)



(581)


Cash flows from financing activities:




Proceeds from exercise of stock options

5



6


Proceeds from borrowings

1,305



1,385


Payment of long term debt

(910)



(1,118)


Excess tax benefits from stock compensation

7



7


Common stock repurchases

(9)



(6)


Contribution from noncontrolling interest

2



5


Debt issue costs

(4)



(6)


Payment of contingent consideration obligation

(29)




Net cash provided by financing activities

367



273


Net increase in cash and cash equivalents

55



545


Cash and cash equivalents, beginning of period

1,610



1,038


Cash and cash equivalents, end of period

$

1,665



$

1,583


Supplemental disclosures of cash flow information:




Interest paid

$

28



$

18


Health insurer fee paid

$

213



$

126


Income taxes paid

$

229



$

167


Equity issued in connection with acquisitions

$

12



$

190


 

CENTENE CORPORATION

SUPPLEMENTAL FINANCIAL DATA FROM CONTINUING OPERATIONS



Q3


Q2


Q1


Q4


Q3


2015


2015


2015


2014


2014

MANAGED CARE MEMBERSHIP










Arizona

223,600



210,900



202,200



204,000



202,500


Arkansas

40,900



45,400



43,200



38,400



36,600


California

183,900



178,700



171,200



163,900



144,700


Florida

486,500



470,300



463,100



425,700



411,200


Georgia

406,700



405,000



405,600



389,100



382,600


Illinois

211,300



209,100



184,800



87,800



31,300


Indiana

276,700



250,400



227,700



197,700



199,500


Kansas

137,500



143,000



143,700



143,300



144,200


Louisiana

358,800



358,900



359,500



152,900



150,800


Massachusetts

63,700



61,500



64,500



48,400



46,600


Michigan

6,600



2,700








Minnesota

9,400



10,900



9,500



9,500



9,500


Mississippi

301,000



250,600



141,900



108,700



99,300


Missouri

88,400



82,600



75,600



71,000



64,900


New Hampshire

71,900



70,800



67,500



62,700



56,600


Ohio

308,100



287,100



296,000



280,100



261,000


Oregon

99,800










South Carolina

104,800



112,600



106,000



109,700



106,500


Tennessee

20,200



21,400



20,800



21,000



21,200


Texas

976,500



969,700



974,900



971,000



961,100


Vermont

1,500



2,800



1,600






Washington

208,600



214,100



207,100



194,400



192,500


Wisconsin

78,100



78,600



82,100



83,200



74,700


Total at-risk membership

4,664,500



4,437,100



4,248,500



3,762,500



3,597,300


Non-risk membership

169,900



176,600



153,200



298,400



303,500


TOTAL

4,834,400



4,613,700



4,401,700



4,060,900



3,900,800












Medicaid

3,469,800



3,300,600



3,133,900



2,754,900



2,578,300


CHIP & Foster Care

245,200



230,500



233,600



222,700



247,700


ABD, Medicare & Duals

444,100



414,300



410,400



392,700



383,400


LTC

73,800



72,800



71,200



60,800



55,200


Health Insurance Marketplaces

155,600



167,400



161,700



74,500



76,000


Hybrid Programs







18,900



19,900


Behavioral Health

216,700



203,900



195,100



197,000



195,500


Correctional Healthcare Services

59,300



47,600



42,600



41,000



41,300


Total at-risk membership

4,664,500



4,437,100



4,248,500



3,762,500



3,597,300


Non-risk membership

169,900



176,600



153,200



298,400



303,500


TOTAL

4,834,400



4,613,700



4,401,700



4,060,900



3,900,800






















REVENUE PER MEMBER PER MONTH(a)

$

361



$

356



$

349



$

360



$

354












CLAIMS(a)










Period-end inventory

1,564,000



1,501,600



1,217,000



1,086,600



1,021,200


Average inventory

989,300



946,500



841,000



806,000



660,200


Period-end inventory per member

0.34



0.34



0.29



0.29



0.28


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











NUMBER OF EMPLOYEES

17,100



15,800



14,800



13,400



12,900























Q3


Q2


Q1


Q4


Q3


2015


2015


2015


2014


2014











DAYS IN CLAIMS PAYABLE (b)

44.5



45.5



45.5



44.2



43.1


(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

$

3,834



$

3,667



$

3,345



$

3,082



$

2,829


Unregulated

91



82



97



85



70


  TOTAL

$

3,925



$

3,749



$

3,442



$

3,167



$

2,899












DEBT TO CAPITALIZATION

38.4

%


37.1

%


38.0

%


33.5

%


36.4

%

DEBT TO CAPITALIZATION EXCLUDING NON-RECOURSE DEBT(c)

37.1

%


35.7

%


36.6

%


31.7

%


34.6

%

(c) The non-recourse debt represents the Company's mortgage note payable ($68 million at September 30, 2015).

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

Operating Ratios:


Three Months Ended September 30,


Nine Months Ended September 30,


2015


2014


2015


2014

Health Benefits Ratios:








Medicaid, CHIP, Foster Care & Health Insurance Marketplaces

85.7

%


86.5

%


86.2

%


86.1

%

ABD, LTC & Medicare

93.3



93.9



93.3



94.0


Specialty Services

84.8



86.8



85.6



84.9


  Total

89.0



89.7



89.3



89.3










Total General & Administrative Expense Ratio

8.5

%


8.0

%


8.5

%


8.5

%

MEDICAL CLAIMS LIABILITY (In millions)

The changes in medical claims liability are summarized as follows:

Balance, September 30, 2014


$

1,589


Acquisitions


69


Incurred related to:



  Current period


16,237


  Prior period


(177)


  Total incurred


16,060


Paid related to:



  Current period


14,188


  Prior period


1,386


  Total paid


15,574


Balance, September 30, 2015


$

2,144


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 return of premium programs, approximately $48 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 September 30, 2014 and prior.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/--centene-corporation-reports-2015-third-quarter-results---300166416.html

SOURCE Centene Corporation

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