Press Release

Centene Corporation Reports 2016 Second Quarter Results
-- Diluted EPS of $0.98; Adjusted diluted EPS of $1.29, both including a $0.19 benefit from ACA reconciliations --

ST. LOUIS, July 26, 2016 /PRNewswire/ -- Centene Corporation (NYSE: CNC) today announced its financial results for the second quarter ended June 30, 2016.  The following discussions, with the exception of cash flow information, are in the context of continuing operations.

For the second quarter of 2016, we reported diluted earnings per share of $0.98 and adjusted diluted earnings per share (Adjusted diluted EPS) of $1.29 when excluding Health Net acquisition related expenses and amortization of acquired intangible assets.  The second quarter of 2016 includes a $0.19 per diluted share benefit related to the 2015 risk adjustment and reinsurance reconciliations under the Affordable Care Act (ACA) in connection with our health insurance marketplace business.  A reconciliation of GAAP diluted earnings per share to Adjusted diluted EPS is highlighted below:

GAAP diluted earnings per share (EPS)

$

0.98


Health Net acquisition related expenses

0.16


Amortization of acquired intangible assets

0.15


Adjusted diluted EPS

$

1.29


 

In summary, the 2016 second quarter results were as follows:

Total revenues (in millions)

$

10,897



Health benefits ratio

86.6

%


General & administrative expense ratio

9.2

%


General & administrative expense ratio, excluding Health Net acquisition related expenses

9.0

%


GAAP diluted earnings per share

$

0.98



Adjusted diluted EPS

$

1.29



Total cash flow used in operations (in millions)

$

(420)



 

Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "Centene's solid second quarter results reinforce our positive operating momentum and bode well for continued growth for the balance of 2016 and beyond.  The Health Net integration remains on track and the benefits of our greater scale and diversity are being realized accordingly."

Second Quarter Highlights

  • June 30, 2016 managed care membership of 11.4 million, an increase of 6.8 million members, or 148% compared to the second quarter of 2015.
  • Total revenues for the second quarter of 2016 of $10.9 billion, representing 98% growth compared to the second quarter of 2015.
  • Health benefits ratio of 86.6% for the second quarter of 2016, compared to 89.1% in the second quarter of 2015.
  • General and administrative expense ratio of 9.2%, or 9.0% excluding Health Net acquisition related expenses for the second quarter of 2016, compared to 8.4% in the second quarter of 2015.
  • Operating cash flow of $(420) million for the second quarter of 2016, reflecting an increase in premium and related receivables of approximately $600 million due to the timing of June capitation payments from several of our states (substantially all of which has been collected in July).
  • Diluted earnings per share for the second quarter of 2016 of $0.98, or $1.29 of Adjusted diluted EPS. In comparison, diluted EPS for the second quarter of 2015 was $0.72, or $0.76 Adjusted diluted EPS.

Other Events

  • In July 2016, it was announced that the Department of Defense awarded our wholly-owned subsidiary, Health Net Federal Services, the TRICARE West Region contract. We will continue to operate in the TRICARE North Region until the middle of 2017, when we expect to start health care delivery for the West Region.
  • In June 2016, our Indiana subsidiary, Managed Health Services, was selected by the Indiana Family & Social Services Administration to begin contract negotiations to provide risk-based managed care services for enrollees in the Healthy Indiana Plan and Hoosier Healthwise programs. This new contract is expected to commence on January 1, 2017.
  • In June 2016, the Company issued an additional $500 million of 4.75% Senior Notes due 2022 at a premium to yield of 4.41%. The Company used the net proceeds of the offering to repay amounts outstanding under its Revolving Credit Facility and to pay related fees and expenses.
  • In June 2016, our correctional health care joint venture, Centurion, began operating under two new contracts with the State of New Mexico Corrections Department to provide correctional medical health care services and pharmacy services.
  • In May 2016, our specialty solutions division, Envolve, Inc. was selected by Maryland Care Inc. d/b/a Maryland Physicians Care MCO to provide health plan management services for its Medicaid operations in Maryland effective July 1, 2017.
  • In April 2016, our Pennsylvania subsidiary, Pennsylvania Health & Wellness, was selected by the Pennsylvania Department of Human Services to service Medicaid recipients enrolled in the HealthChoices program in three zones. In July 2016, the Commonwealth reissued the request for proposal with an anticipated commencement of April 2017.
  • In April 2016, we announced the appointment of Christopher Isaak to Senior Vice President, Corporate Controller and Chief Accounting Officer.

Accreditations & Awards

  • In July 2016, FORTUNE magazine announced Centene's position of #470 in its annual ranking of the largest companies globally by revenue.
  • In June 2016, FORTUNE magazine announced Centene's position of #124 in its annual ranking of America's largest companies by revenue.
  • In May 2016, our Florida subsidiary, Sunshine Health, received Accreditation from the National Committee for Quality Assurance for its Medicaid and Health Insurance Marketplace Exchange plan, Ambetter from Sunshine Health.
  • In May 2016, at the Case In Point Platinum Awards, Centene and its specialty solutions divisions, Envolve, Inc. were honored with awards in five categories: Behavioral Health Case Management, Women/Children Case Management, Acute Care, Care Management, and Disease Management/Population Health.

Membership

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


June 30,


2016


2015

Arizona

597,700



210,900


Arkansas

52,800



45,400


California

3,097,600



178,700


Florida

726,200



470,300


Georgia

493,300



405,000


Illinois

234,700



209,100


Indiana

291,000



250,400


Kansas

144,800



143,000


Louisiana

375,300



358,900


Massachusetts

47,100



61,500


Michigan

2,200



2,700


Minnesota

9,500



10,900


Mississippi

323,800



250,600


Missouri

102,900



82,600


New Hampshire

79,700



70,800


New Mexico

7,100




Ohio

319,000



287,100


Oregon

221,500




South Carolina

113,700



112,600


Tennessee

20,800



21,400


Texas

1,037,000



969,700


Vermont

1,600



2,800


Washington

239,700



214,100


Wisconsin

76,100



78,600


Total at-risk membership

8,615,100



4,437,100


TRICARE eligibles

2,815,700




Non-risk membership



176,600


Total

11,430,800



4,613,700


 

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


June 30,


2016


2015

Medicaid:




TANF, CHIP & Foster Care

5,541,200



3,536,000


ABD & LTC

757,500



454,000


Behavioral Health

455,800



203,900


Commercial

1,423,400



167,400


Medicare & Duals

300,700



28,200


Correctional

136,500



47,600


Total at-risk membership

8,615,100



4,437,100


TRICARE eligibles

2,815,700




Non-risk membership



176,600


Total

11,430,800



4,613,700


 

At June 30, 2016, the Company served 1,004,200 members in Medicaid expansion programs in nine states and 363,600 dual-eligible members, compared to 368,900 members in Medicaid expansion programs in seven states and 187,400 dual-eligible members at June 30, 2015.  At June 30, 2016, the Company served 617,700 members in Health Insurance Marketplaces, compared to 167,400 at June 30, 2015. 

Statement of Operations: Three Months Ended June 30, 2016

  • For the second quarter of 2016, total revenues increased 98% to $10.9 billion from $5.5 billion in the second quarter of 2015. The increase was primarily a result of the acquisition of Health Net as well as the impact from expansions, acquisitions or new programs in many of our states in 2015.
  • HBR of 86.6% for the second quarter of 2016 represents a decrease from 89.1% in the comparable period in 2015 and a decrease from 88.7% in the first quarter of 2016. The year over year HBR decrease is primarily attributable to the acquisition of Health Net, which operates at a lower HBR due to a higher mix of commercial and Medicare business. The sequential decrease is due to normal seasonality and the acquisition of Health Net.
  • G&A expense ratio of 9.2%, or 9.0% excluding Health Net acquisition related expenses for the second quarter of 2016, compared to 8.4% in the second quarter of 2015. The increase in the G&A expense ratio is primarily attributable to the addition of the Health Net business.
  • Diluted earnings per share for the second quarter of 2016 of $0.98, or $1.29 of Adjusted diluted EPS when excluding Health Net acquisition related expenses and amortization of acquired intangible assets, including a $0.19 per diluted share benefit related to the 2015 risk adjustment and reinsurance reconciliations under the Affordable Care Act (ACA) in connection with our health insurance marketplace business. In comparison, diluted EPS for the second quarter of 2015 was $0.72, or $0.76 Adjusted diluted EPS when excluding Health Net acquisition related expenses and amortization of acquired intangible assets.

Balance Sheet and Cash Flow

At June 30, 2016, the Company had cash, investments and restricted deposits of $7.5 billion, including $196 million held by its unregulated entities.  Medical claims liabilities totaled $4.0 billion.  The Company's days in claims payable was 43.  Total debt was $4.5 billion, which includes $185 million of borrowings on the $1.0 billion revolving credit facility at quarter-end.  Debt to capitalization was 44.4% at June 30, 2016, excluding the $66 million non-recourse mortgage note. 

In the second quarter, we continued to make progress on the fair valuation of the Health Net balance sheet.  There has been no unfavorable development on the medical claims liability as established at March 24, 2016.  We did increase reserves for medical claims primarily associated with disputed substance abuse treatment center costs.  Additionally, we recorded premium deficiency reserves primarily associated with Arizona and the California individual PPO business.

Cash flow used in operations for the three months ended June 30, 2016, was $(420) million. The cash used in operating activities in 2016 reflects an increase in premium and related receivables of approximately $600 million due to the timing of June capitation payments from several of our states (substantially all of which has been collected in July). 

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, March 31, 20161

42

Impact of Health Net acquisition accounting

1

Days in claims payable, June 30, 2016

43




1 A pro-forma adjustment has been made to medical costs to include a full quarter of Health Net medical costs.

 

Outlook

The table below depicts the Company's updated annual guidance for 2016.




Full Year 2016




Low


High


Total revenues (in billions)


$

39.4



$

40.0



GAAP diluted EPS


$

2.65



$

3.00



Adjusted diluted EPS1


$

4.20



$

4.55



HBR


87.0

%


87.5

%


G&A expense ratio


9.4

%


9.9

%


G&A expense ratio, excluding acquisition related costs


9.0

%


9.5

%


Effective tax rate


54.5

%


56.5

%


Diluted shares outstanding (in millions)


162.5



163.5










1Adjusted diluted EPS excludes Health Net acquisition related expenses of $1.00 to $1.05 per diluted share and amortization of acquired intangible assets of $0.50 to $0.55 per diluted share.

 

Conference Call

As previously announced, the Company will host a conference call Tuesday, July 26, 2016, at 8:30 AM (Eastern Time) to review the financial results for the second quarter ended June 30, 2016, and to discuss its business outlook.  Michael Neidorff and Jeffrey Schwaneke will host the conference call.

Investors and other interested parties are invited to listen to the conference call by dialing 1-877-883-0383 in the U.S. and Canada; +1-412-902-6506 from abroad, including the following Elite Entry Number: 6099987 to expedite caller registration; or via a live, audio webcast on the Company's website at www.centene.com, under the Investors section.

A webcast replay will be available for on-demand listening shortly after the completion of the call for the next twelve months or until 11:59 PM (Eastern Time) on Tuesday, July 25, 2017, at the aforementioned URL. In addition, a digital audio playback will be available until 9:00 AM Eastern Time on Tuesday, August 2, 2016, by dialing 1-877-344-7529 in the U.S. and Canada, or +1-412-317-0088 from abroad, and entering access code 10088567.

Non-GAAP Financial Presentation

The Company is providing certain non-GAAP financial measures in this release as the Company believes that these figures are helpful in allowing investors to more accurately assess the ongoing nature of the Company's operations and measure the Company's performance more consistently across periods. The Company uses the presented non-GAAP financial measures internally to allow management to focus on period-to-period changes in the Company's core business operations. Therefore, the Company believes that this information is meaningful in addition to the information contained in the GAAP presentation of financial information. The presentation of this additional non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

Specifically, the Company believes the presentation of non-GAAP financial information which excludes Health Net acquisition related expenses and amortization of acquired intangible assets allows investors to understand the Company's performance more consistently.  The tables below provide a reconciliation of non-GAAP items ($ in millions, except share data): 


Three Months Ended

June 30,


Six Months Ended

June 30,


2016


2015


2016


2015









GAAP general and administrative expenses

$

949



$

437



$

1,671



$

833


Health Net acquisition related expenses

25



2



214



2


General and administrative expenses, excluding Health Net acquisition related expenses

$

924



$

435



$

1,457



$

831










GAAP net earnings from continuing operations

$

170



$

88



$

154



$

152


Health Net acquisition related expenses

25



2



214



2


Amortization of acquired intangible assets

43



5



52



12


Income tax effects of adjustments (1)

(14)



(2)



(101)



(5)


Adjusted net earnings from continuing operations

$

224



$

93



$

319



$

161










 



Three Months Ended

June 30,


Six Months Ended

June 30,


Annual
Guidance
December 31,
2016


2016


2015


2016


2015


GAAP diluted earnings per share (EPS)

$

0.98



$

0.72



$

1.02



$

1.24



$2.65 - $3.00

Health Net acquisition related expenses (2)

0.16



0.01



0.89



0.01



$1.00 - $1.05

Amortization of acquired intangible assets (3)

0.15



0.03



0.20



0.06



$0.50 - $0.55

  Adjusted diluted EPS

$

1.29



$

0.76



$

2.11



$

1.31



$4.20 - $4.55



(1)

The income tax effects of adjustments are based on the effective income tax rates applicable to adjusted (non-GAAP) results. The amounts are based on the annual estimated effective income tax rate that would increase or decrease based on the exclusion of these expenses.



(2)

The Health Net acquisition related expenses per diluted share presented above are net of the income tax benefit (expense) of $(0.02) and $0.01 for the three months ended June 30, 2016 and 2015, respectively; $0.53 and zero for the six months ended June 30, 2016 and 2015, respectively; and estimated $0.37 to $0.41 for the year ended December 31, 2016.



(3)

The amortization of acquired intangible assets per diluted share presented above are net of the income tax benefit of $0.10 and $0.01 for the three months ended June 30, 2016 and 2015, respectively; $0.14 and $0.04 for the six months ended June 30, 2016 and 2015, respectively; and estimated $0.31 to $0.35 for the year ended December 31, 2016.

 

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 programs, Medicare (including the Medicare prescription drug benefit commonly known as "Part D"), as well as programs with the U.S. Department of Defense and U.S. Department of Veterans Affairs. Centene operates local health plans and offers a range of health insurance solutions. It also contracts with other healthcare and commercial organizations to provide specialty services including behavioral health management, care management software, correctional healthcare services, dental benefits management, in-home health services, life and health management, managed vision, pharmacy benefits management, specialty pharmacy and telehealth services.

Centene uses its investor relations website to publish important information about the Company, including information that may be deemed material to investors. Financial and other information about Centene is routinely posted and is accessible on Centene's investor relations website, http://www.centene.com/investors.

Forward-Looking Statements

The information provided in this press release may contain certain forward-looking statements with respect to the financial condition, results of operations and business of Centene and certain plans and objectives of Centene with respect thereto, including the expected benefits of the acquisition of Health Net. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "hope", "aim", "continue", "will", "may", "would", "could" or "should" or other words of similar meaning or the negative thereof. There are several factors which could cause actual plans and results to differ materially from those expressed or implied in forward-looking statements. Such factors include, but are not limited to, the possibility that the expected synergies and value creation from the acquisition will not be realized, or will not be realized within the expected time period, including, but not limited to, as a result of conditions, terms, obligations or restrictions imposed by regulators in connection with their approval of, or consent to, the acquisition; the exertion of management's time and Centene's resources, and other out-of-pocket expenses incurred in connection with complying with the undertakings in connection with certain regulatory approvals; the risk that the businesses will not be integrated successfully; disruption from the acquisition making it more difficult to maintain business and operational relationships; the risk that unexpected costs will be incurred; changes in economic conditions or political conditions; changes in federal or state laws or regulations, including the Patient Protection and Affordable Care Act and the Health Care Education Affordability Reconciliation Act and any regulations enacted thereunder; provider and state contract changes; the outcome of pending legal or regulatory proceedings; reduction in provider payments by governmental payors; the expiration or termination of Centene'sMedicare or Medicaid managed care contracts with federal or state governments; tax matters; increased health care costs; and risks and uncertainties discussed in the reports that Centene has filed with the Securities and Exchange Commission (the "SEC"). These forward-looking statements reflect Centene's current views with respect to future events and are based on numerous assumptions and assessments made by Centene in light of its experience and perception of historical trends, current conditions, business strategies, operating environments, future developments and other factors it believes appropriate. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that will occur in the future.  The factors described in the context of such forward-looking statements in this announcement could cause Centene's plans with respect to the acquisition, actual results, performance or achievements, industry results and developments to differ materially from those expressed in or implied by such forward-looking statements. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and persons reading this announcement are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as of the date of this announcement. Centene does not assume any obligation to update the information contained in this announcement (whether as a result of new information, future events or otherwise), except as required by applicable law.  This list of important factors is not intended to be exhaustive. We discuss certain of these matters more fully, as well as certain 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)



June 30, 2016


December 31, 2015


(Unaudited)



ASSETS




Current assets:




Cash and cash equivalents

$

2,710



$

1,760


Premium and related receivables

3,488



1,279


Short term investments

443



176


Other current assets

1,212



390


Total current assets

7,853



3,605


Long term investments

4,230



1,927


Restricted deposits

137



115


Property, software and equipment, net

626



518


Goodwill

4,707



842


Intangible assets, net

1,609



155


Other long term assets

334



177


Total assets

$

19,496



$

7,339






LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Medical claims liability

$

3,950



$

2,298


Accounts payable and accrued expenses

3,218



976


Return of premium payable

589



207


Unearned revenue

212



143


Current portion of long term debt

845



5


Total current liabilities

8,814



3,629


Long term debt

3,649



1,216


Other long term liabilities

1,346



170


Total liabilities

13,809



5,015


Commitments and contingencies




Redeemable noncontrolling interests

147



156


Stockholders' equity:




Preferred stock, $0.001 par value; authorized 10,000,000 shares; no shares issued or outstanding at June 30, 2016 and December 31, 2015




Common stock, $0.001 par value; authorized 400,000,000 shares; 176,231,905 issued and 170,653,478 outstanding at June 30, 2016, and 126,855,477 issued and 120,342,981 outstanding at December 31, 2015




Additional paid-in capital

4,119



956


Accumulated other comprehensive earnings (loss)

43



(10)


Retained earnings

1,510



1,358


Treasury stock, at cost (5,578,427 and 6,512,496 shares, respectively)

(143)



(147)


   Total Centene stockholders' equity

5,529



2,157


Noncontrolling interest

11



11


Total stockholders' equity

5,540



2,168


Total liabilities and stockholders' equity

$

19,496



$

7,339


 

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 

(In millions, except share data)

(Unaudited)



Three Months Ended June 30,


Six Months Ended June 30,


2016


2015


2016


2015

Revenues:








Premium

$

9,688



$

4,692



$

15,674



$

8,991


Service

588



492



1,013



954


Premium and service revenues

10,276



5,184



16,687



9,945


Premium tax and health insurer fee

621



322



1,163



692


Total revenues

10,897



5,506



17,850



10,637


Expenses:








Medical costs

8,385



4,181



13,696



8,042


Cost of services

515



419



882



821


General and administrative expenses

949



437



1,671



833


Amortization of acquired intangible assets

43



5



52



12


Premium tax expense

498



239



948



520


Health insurer fee expense

130



52



204



107


Total operating expenses

10,520



5,333



17,453



10,335


Earnings from operations

377



173



397



302


Other income (expense):








Investment and other income

32



10



47



19


Interest expense

(52)



(11)



(85)



(21)


Earnings from continuing operations, before income tax expense

357



172



359



300


Income tax expense

188



84



205



147


Earnings from continuing operations, net of income tax expense

169



88



154



153


Discontinued operations, net of income tax benefit

(1)





(2)



(1)


Net earnings

168



88



152



152


(Earnings) loss attributable to noncontrolling interests

1







(1)


Net earnings attributable to Centene Corporation

$

169



$

88



$

152



$

151










Amounts attributable to Centene Corporation common shareholders:

Earnings from continuing operations, net of income tax expense

$

170



$

88



$

154



$

152


Discontinued operations, net of income tax benefit

(1)





(2)



(1)


  Net earnings

$

169



$

88



$

152



$

151










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

Basic:








  Continuing operations

$

1.00



$

0.74



$

1.04



$

1.28


  Discontinued operations

(0.01)





(0.01)



(0.01)


Basic earnings per common share

$

0.99



$

0.74



$

1.03



$

1.27










Diluted:








  Continuing operations

$

0.98



$

0.72



$

1.02



$

1.24


  Discontinued operations

(0.01)





(0.01)



(0.01)


Diluted earnings per common share

$

0.97



$

0.72



$

1.01



$

1.23










Weighted average number of common shares outstanding:










Basic

170,558,778


119,003,569


148,050,927


118,894,269

Diluted

173,778,537


122,965,011


151,147,640


122,785,459

 

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)



Six Months Ended June 30,


2016


2015

Cash flows from operating activities:




Net earnings

$

152



$

152


Adjustments to reconcile net earnings to net cash (used in) provided by operating activities








Depreciation and amortization

111



53


Stock compensation expense

83



33


Deferred income taxes

(13)



(13)


Gain on contingent consideration

(1)



(10)


Changes in assets and liabilities




Premium and related receivables

(1,121)



(341)


Other current assets

(26)



(28)


Medical claims liabilities

188



366


Unearned revenue

(50)



(102)


Accounts payable and accrued expenses

(8)



166


Other long term liabilities

463



144


Other operating activities, net

(3)



(25)


Net cash (used in) provided by operating activities

(225)



395


Cash flows from investing activities:




Capital expenditures

(94)



(58)


Purchases of investments

(956)



(513)


Sales and maturities of investments

593



276


Investments in acquisitions, net of cash acquired

(862)



(11)


Other investing activities, net



7


Net cash used in investing activities

(1,319)



(299)


Cash flows from financing activities:




Proceeds from borrowings

5,711



750


Payment of long term debt

(3,124)



(479)


Common stock repurchases

(27)



(7)


Purchase of noncontrolling interest

(14)




Debt issue costs

(59)



(4)


Other financing activities, net

7



1


Net cash provided by financing activities

2,494



261


Net increase in cash and cash equivalents

950



357


Cash and cash equivalents, beginning of period

1,760



1,610


Cash and cash equivalents, end of period

$

2,710



$

1,967


Supplemental disclosures of cash flow information:




Interest paid

$

36



$

27


Income taxes paid

$

222



$

145


Equity issued in connection with acquisitions

$

3,105



$

13


 

CENTENE CORPORATION

SUPPLEMENTAL FINANCIAL DATA FROM CONTINUING OPERATIONS




Q2


Q1


Q4


Q3


Q2




2016


2016


2015


2015


2015


MANAGED CARE MEMBERSHIP BY STATE

Arizona


597,700



607,000



440,900



223,600



210,900



Arkansas


52,800



50,700



41,900



40,900



45,400



California


3,097,600



3,125,400



186,000



183,900



178,700



Florida


726,200



660,800



510,400



486,500



470,300



Georgia


493,300



495,500



408,600



406,700



405,000



Illinois


234,700



239,100



207,500



211,300



209,100



Indiana


291,000



290,300



282,100



276,700



250,400



Kansas


144,800



141,100



141,000



137,500



143,000



Louisiana


375,300



381,200



381,900



358,800



358,900



Massachusetts


47,100



52,400



61,500



63,700



61,500



Michigan


2,200



2,600



4,800



6,600



2,700



Minnesota


9,500



9,500



9,600



9,400



10,900



Mississippi


323,800



328,300



302,200



301,000



250,600



Missouri


102,900



100,000



95,100



88,400



82,600



New Hampshire


79,700



81,500



71,400



71,900



70,800



New Mexico


7,100











Ohio


319,000



314,000



302,700



308,100



287,100



Oregon


221,500



209,000



98,700



99,800





South Carolina


113,700



107,700



104,000



104,800



112,600



Tennessee


20,800



20,100



20,000



20,200



21,400



Texas


1,037,000



1,036,700



983,100



976,500



969,700



Vermont


1,600



1,500



1,700



1,500



2,800



Washington


239,700



226,500



209,400



208,600



214,100



Wisconsin


76,100



78,400



77,100



78,100



78,600



Total at-risk membership


8,615,100



8,559,300



4,941,600



4,664,500



4,437,100



TRICARE eligibles


2,815,700



2,819,700









Non-risk membership




161,400



166,300



169,900



176,600



Total


11,430,800



11,540,400



5,107,900



4,834,400



4,613,700















MANAGED CARE MEMBERSHIP BY LINE OF BUSINESS

Medicaid:












  TANF, CHIP & Foster Care


5,541,200



5,464,200



3,763,400



3,719,900



3,536,000



  ABD & LTC


757,500



757,600



478,600



473,700



454,000



  Behavioral Health


455,800



456,500



456,800



216,700



203,900



Commercial


1,423,400



1,518,900



146,100



155,600



167,400



Medicare & Duals


300,700



303,100



37,400



39,300



28,200



Correctional


136,500



59,000



59,300



59,300



47,600



Total at-risk membership


8,615,100



8,559,300



4,941,600



4,664,500



4,437,100



TRICARE eligibles


2,815,700



2,819,700









Non-risk membership




161,400



166,300



169,900



176,600



Total


11,430,800



11,540,400



5,107,900



4,834,400



4,613,700















NUMBER OF EMPLOYEES


28,900



28,000



18,200



17,100



15,800




Q2


Q1


Q4


Q3


Q2



2016


2016


2015


2015


2015













DAYS IN CLAIMS PAYABLE (a)

43



66



44



45



46



(a) 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.  On a pro-forma basis, DCP for Q1 2016 is 42, reflecting adjusted medical costs to include a full quarter of Health Net operations.












CASH, INVESTMENTS AND RESTRICTED DEPOSITS (in millions)

Regulated

$

7,324



$

7,682



$

3,900



$

3,834



$

3,667



Unregulated

196



139



78



91



82



  Total

$

7,520



$

7,821



$

3,978



$

3,925



$

3,749














DEBT TO CAPITALIZATION

44.8

%


44.6

%


36.0

%


38.4

%


37.1

%


DEBT TO CAPITALIZATION EXCLUDING NON-RECOURSE DEBT (b)

44.4

%


44.3

%


34.7

%


37.1

%


35.7

%


(b) The non-recourse debt represents the Company's mortgage note payable ($66 million at June 30, 2016).

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,


2016


2015


2016


2015

Health benefits ratio

86.6

%


89.1

%


87.4

%


89.4

%

General & administrative expense ratio

9.2

%


8.4

%


10.0

%


8.4

%

General & administrative expense ratio, excluding Health Net acquisition related expenses

9.0

%


8.4

%


8.7

%


8.4

%

 

MEDICAL CLAIMS LIABILITY




The changes in medical claims liability are summarized as follows (in millions):




Balance, June 30, 2015


$

2,092


Acquisitions


1,540


Incurred related to:



  Current period


23,148


  Prior period


(252)


Total incurred


22,896


Paid related to:



  Current period


20,780


  Prior period


1,798


Total paid


22,578


Balance, June 30, 2016


$

3,950


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 $22 million of the "Incurred related to: Prior period" was recorded as a reduction to premium revenues.

The amount of the "Incurred related to: Prior period" above represents favorable development and includes the effects of reserving under moderately adverse conditions, new markets where we use a conservative approach in setting reserves during the initial periods of operations, receipts from other third party payors related to coordination of benefits and lower medical utilization and cost trends for dates of service June 30, 2015 and prior.

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/centene-corporation-reports-2016-second-quarter-results-300303676.html

SOURCE Centene Corporation

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