CENTENE CORPORATION REPORTS SECOND QUARTER 2024 RESULTS
Centene (NYSE: CNC) reported strong Q2 2024 financial results, with a diluted EPS of $2.16 and an adjusted diluted EPS of $2.42, a 15% increase from $2.10 in Q2 2023. The company posted total revenues of $39.8 billion and premium and service revenues of $36.0 billion, up 3% year-over-year. Membership in the Marketplace increased by 34% compared to Q2 2023.
The Health Benefits Ratio (HBR) rose slightly to 87.6%, while the SG&A expense ratio improved to 8.0%. Cash flow from operations was $2.2 billion. Centene reaffirmed its 2024 adjusted diluted EPS guidance floor of greater than $6.80 and updated its total revenue guidance to $155-$157 billion.
Centene (NYSE: CNC) ha riportato risultati finanziari solidi per il secondo trimestre del 2024, con un utile per azione diluito di $2,16 e un utile per azione diluito rettificato di $2,42, un incremento del 15% rispetto a $2,10 nel secondo trimestre del 2023. L'azienda ha registrato entrate totali di $39,8 miliardi e entrate da premi e servizi di $36,0 miliardi, in aumento del 3% rispetto all'anno precedente. Gli iscritti al Marketplace sono aumentati del 34% rispetto al secondo trimestre del 2023.
Il Rapporto sui Benefici Sanitari (HBR) è leggermente aumentato all'87,6%, mentre il rapporto delle spese SG&A è migliorato all'8,0%. Il flusso di cassa dalle operazioni è stato di $2,2 miliardi. Centene ha ribadito il proprio obiettivo di utile per azione diluito rettificato per il 2024, fissando un limite superiore di oltre $6,80 e ha aggiornato le previsioni sulle entrate totali a $155-$157 miliardi.
Centene (NYSE: CNC) reportó resultados financieros sólidos para el segundo trimestre de 2024, con una EPS diluida de $2.16 y una EPS diluida ajustada de $2.42, lo que representa un aumento del 15% respecto a $2.10 en el segundo trimestre de 2023. La compañía reportó ingresos totales de $39.8 mil millones y ingresos por primas y servicios de $36.0 mil millones, un 3% más en comparación con el año anterior. La membresía en el Marketplace aumentó un 34% en comparación con el segundo trimestre de 2023.
El Ratio de Beneficios de Salud (HBR) aumentó ligeramente al 87.6%, mientras que el ratio de gastos SG&A mejoró al 8.0%. El flujo de caja de las operaciones fue de $2.2 mil millones. Centene reafirmó su orientación para la EPS diluida ajustada de 2024 con un mínimo de más de $6.80 y actualizó su guía de ingresos totales a $155-$157 mil millones.
Centene (NYSE: CNC)는 2024년 2분기 재무 결과를 발표했으며, 희석 EPS는 $2.16, 조정된 희석 EPS는 $2.42로 나타났습니다. 이는 2023년 2분기 $2.10에 비해 15% 증가한 수치입니다. 회사는 총 수익을 $39.8억 달러, 프리미엄 및 서비스 수익을 $36.0억 달러로 기록하여, 작년과 비교해 3% 증가하였습니다. Marketplace의 회원 수는 2023년 2분기 대비 34% 증가했습니다.
혜택 비율(HBR)은 87.6%로 약간 상승했으며, SG&A 비용 비율은 8.0%로 개선되었습니다. 운영에서 발생한 현금 흐름은 $2.2억 달러였습니다. Centene은 2024년 조정된 희석 EPS 목표치를 $6.80 이상으로 재확인하고, 총 수익 지침을 $155-$157억 달러로 업데이트했습니다.
Centene (NYSE: CNC) a annoncé des résultats financiers solides pour le deuxième trimestre 2024, avec un EPS dilué de 2,16 USD et un EPS dilué ajusté de 2,42 USD, ce qui représente une augmentation de 15 % par rapport à 2,10 USD au deuxième trimestre 2023. L'entreprise a enregistré des revenus totaux de 39,8 milliards USD et des revenus de primes et de services de 36,0 milliards USD, en hausse de 3 % par rapport à l'année précédente. Le nombre d'adhérents au Marketplace a augmenté de 34 % par rapport au deuxième trimestre 2023.
Le Ratio des Bénéfices de Santé (HBR) a légèrement augmenté à 87,6 %, tandis que le ratio des frais SG&A s'est amélioré à 8,0 %. Le flux de trésorerie des opérations s'est élevé à 2,2 milliards USD. Centene a réaffirmé son objectif d'EPS dilué ajusté pour 2024, fixé à plus de 6,80 USD et a mis à jour ses prévisions de revenus totaux entre 155 et 157 milliards USD.
Centene (NYSE: CNC) hat solide Finanzzahlen für das zweite Quartal 2024 bekannt gegeben, mit einem verwässerten EPS von 2,16 USD und einem angepassten verwässerten EPS von 2,42 USD, was einem Anstieg von 15 % gegenüber 2,10 USD im zweiten Quartal 2023 entspricht. Das Unternehmen meldete Gesamterlöse von 39,8 Milliarden USD und Prämien- und Dienstleistungserlöse von 36,0 Milliarden USD, was einem Anstieg von 3 % im Jahresvergleich entspricht. Die Mitgliedschaft im Marktplatz stieg im Vergleich zum zweiten Quartal 2023 um 34 %.
Das Verhältnis der Gesundheitsleistungen (HBR) stieg leicht auf 87,6 %, während sich das SG&A-Aufwandsverhältnis auf 8,0 % verbesserte. Der Cashflow aus dem operativen Geschäft betrug 2,2 Milliarden USD. Centene bestätigte seine Prognose für 2024 mit einem angepassten verwässerten EPS von über 6,80 USD und aktualisierte seine Gesamtumsatzprognose auf 155 bis 157 Milliarden USD.
- Adjusted Diluted EPS increased by 15% year-over-year.
- Total revenues reached $39.8 billion.
- Marketplace membership grew by 34% compared to Q2 2023.
- SG&A expense ratio improved to 8.0%.
- Strong cash flow from operations at $2.2 billion.
- Reaffirmed and strong 2024 EPS guidance of >$6.80.
- Medicaid membership decreased by 18% due to redeterminations.
- HBR increased to 87.6%, indicating higher medical costs.
Insights
Centene's Q2 2024 results demonstrate a mixed performance with some positive indicators and areas of concern. The company reported
- The health benefits ratio (HBR) increased to
87.6% from87.0% year-over-year, indicating higher medical costs relative to premium revenues. This is primarily due to higher acuity in Medicaid as redeterminations progress and Medicare Star rating impacts. - Medicaid membership declined by
18% year-over-year, largely due to redeterminations. This is a significant drop that could impact future revenues if not offset by growth in other segments. - On the positive side, Marketplace membership grew by
34% , showing strong performance in this segment.
The company's ability to maintain its 2024 adjusted diluted EPS guidance floor of greater than
The company's financial position remains solid with
Overall, while Centene faces challenges in its Medicaid business, its diversified portfolio and strong performance in other segments are helping to maintain its financial outlook. Investors should closely monitor the progress of Medicaid redeterminations and the company's ability to manage medical costs in the coming quarters.
-- Diluted EPS of
-- Reaffirms 2024 Adjusted Diluted EPS Guidance Floor of Greater Than
- Adjusted diluted EPS of
$2.42 15% from$2.10 - Premium and service revenues of
$36.0 billion - Membership increase of
34% in Marketplace, compared to the second quarter of 2023.
Total revenues (in millions) | $ 39,836 | ||
Premium and service revenues (in millions) | $ 35,973 | ||
Health benefits ratio | 87.6 % | ||
SG&A expense ratio | 8.0 % | ||
Adjusted SG&A expense ratio (1) | 8.0 % | ||
GAAP diluted EPS | $ 2.16 | ||
Adjusted diluted EPS (1) | $ 2.42 | ||
Total cash flow provided by operations (in millions) | $ 2,175 | ||
(1) | Represents a non-GAAP financial measure. A full reconciliation of the adjusted diluted earnings per share (EPS) and adjusted selling, general and administrative (SG&A) expenses is shown in the Non-GAAP Financial Presentation section of this release. |
"While we have work to do in Medicaid as redeterminations wind down, the overall performance of the diversified portfolio enables us to remain on track for 2024 adjusted diluted EPS guidance," said Chief Executive Officer of Centene, Sarah M.
Other Events
- In July, Centene entered into a definitive agreement to sell Collaborative Health Systems, a management services organization, to Astrana Health, Inc. The transaction is expected to close by the end of 2024.
- In May, Centene's
Kansas subsidiary, Sunflower Health Plan, was selected to continue providing managed health care services through KanCare, theState of Kansas' Medicaid and Children's Health Insurance Program (CHIP). The new, three-year contract is expected to take effect on January 1, 2025, with the option to renew for up to two, 12-month extensions.
Awards & Community Engagement
- Centene received several recognitions in June, including being ranked No. 22 on the annual Fortune 500 List and No. 224 on Forbes Global 2000 list, up from No. 259 in 2023. US News and World Report also named Centene to its Best Companies to Work For (Health Services Industry). Centene's Chief Health Officer, Dr. Alice Hm Chen, was named to Modern Healthcare's list of 50 Most Influential Clinical Executives 2024.
- In May, Centene was named one of the Top 50 Companies for Diversity by Fair360 (formerly DiversityInc) for the fifth consecutive year. Centene ranked No. 26 on this year's list, up 11 spots from No. 37. Centene was also recognized as a Top Disability-Friendly Company 2024 by DIVERSITYCOMM Media; included as one of the Best Employers for Diversity 2024 by Forbes and for being one of America's Greatest Workplaces for Mental Wellbeing by Newsweek.
- The Centene Foundation, the philanthropy arm of Centene Corporation, announced a partnership with McCormack Baron Salazar – one of the nation's affordable housing leaders – to increase access to affordable housing. The multi-year partnership is anticipated to create thousands of housing units and drive improved outcomes for Medicaid-eligible populations through increased access to health-related services.
Membership
The following table sets forth membership by line of business:
June 30, | ||||
2024 | 2023 | |||
Traditional Medicaid (1) | 11,640,900 | 14,260,400 | ||
High Acuity Medicaid (2) | 1,499,000 | 1,799,200 | ||
Total Medicaid | 13,139,900 | 16,059,600 | ||
Commercial Marketplace | 4,401,300 | 3,295,200 | ||
Commercial Group | 426,400 | 435,000 | ||
Total Commercial | 4,827,700 | 3,730,200 | ||
Medicare (3) | 1,138,400 | 1,329,000 | ||
Medicare PDP | 6,603,600 | 4,493,700 | ||
Total at-risk membership | 25,709,600 | 25,612,500 | ||
TRICARE eligibles | 2,768,000 | 2,799,300 | ||
Total | 28,477,600 | 28,411,800 | ||
(1) | Membership includes Temporary Assistance for Needy Families (TANF), Medicaid Expansion, Children's Health Insurance Program (CHIP), Foster Care and Behavioral Health. |
(2) | Membership includes Aged, Blind, or Disabled (ABD), Intellectual and Developmental Disabilities (IDD), Long-Term Services and Supports (LTSS) and Medicare-Medicaid Plans (MMP) Duals. |
(3) | Membership includes Medicare Advantage and Medicare Supplement. |
Premium and Service Revenues
The following table sets forth supplemental revenue information ($ in millions):
Three Months Ended June 30, | ||||||
2024 | 2023 | % Change | ||||
Medicaid | $ 20,250 | $ 21,895 | (8) % | |||
Commercial | 8,535 | 5,734 | 49 % | |||
Medicare (1) | 5,978 | 5,665 | 6 % | |||
Other | 1,210 | 1,544 | (22) % | |||
Total premium and service revenues | $ 35,973 | $ 34,838 | 3 % | |||
(1) | Medicare includes Medicare Advantage, Medicare Supplement, Dual Eligible Special Needs Plans (D-SNPs) and Medicare Prescription Drug Plan (PDP). |
Statement of Operations: Three Months Ended June 30, 2024
- For the second quarter of 2024, premium and service revenues increased
3% to$36.0 billion $34.8 billion
- Health benefits ratio (HBR) of
87.6% for the second quarter of 2024 represents an increase from87.0% in the comparable period in 2023. The increase was driven by higher acuity in Medicaid as we progressed through the redetermination process and continue to work with states to match rates with acuity. The increase was also driven by Medicare Star rating impacts. The increase was partially offset by Marketplace membership growth and improved margin through strong 2024 product design and execution as well as outperformance in Marketplace risk adjustment for the 2023 benefit year.
- The SG&A expense ratio was
8.0% for the second quarter of 2024, compared to8.7% in the second quarter of 2023. The adjusted SG&A expense ratio was8.0% for the second quarter of 2024, compared to8.6% in the second quarter of 2023. The decreases were driven by Marketplace risk adjustment revenue, the divestiture of Circle Health Group (Circle Health), which operated at a higher SG&A expense ratio, and ongoing SG&A reduction initiatives. The decreases were partially offset by growth in the Marketplace business, which operates at a meaningfully higher SG&A expense ratio as compared to Medicaid.
- The effective tax rate was
24.4% for the second quarter of 2024, compared to25.4% in the second quarter of 2023. The effective tax rate for the second quarter of 2024 reflects tax effects of settlements with taxing authorities. For the second quarter of 2024, our effective tax rate on adjusted earnings was24.4% , compared to24.9% in the second quarter of 2023.
- Cash flow provided by operations for the second quarter of 2024 was
$2.2 billion
Balance Sheet
At June 30, 2024, the Company had cash, investments and restricted deposits of
During the second quarter of 2024, the Company repurchased 10.7 million shares for
Outlook
The Company reaffirms its 2024 GAAP diluted EPS guidance floor of greater than
The Company is increasing its 2024 premium and service revenues guidance range by
Conference Call
As previously announced, the Company will host a conference call Friday, July 26, 2024, at 8:30 a.m. ET to review the financial results for the second quarter ended June 30, 2024.
Investors and other interested parties are invited to listen to the conference call by dialing 1-877-883-0383 in the
A webcast replay will be available for on-demand listening shortly following the completion of the call for the next 12 months or until 11:59 p.m. ET on Friday, July 25, 2025, at the aforementioned URL. In addition, a digital audio playback will be available until 9 a.m. ET on Friday, August 2, 2024, by dialing 1-877-344-7529 in the
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 in evaluating the Company's performance and for planning purposes, by allowing management to focus on period-to-period changes in the Company's core business operations, and in determining employee incentive compensation. Therefore, the Company believes that this information is meaningful in addition to the information contained in the GAAP presentation of financial information. The Company strongly encourages investors to review its consolidated financial statements and publicly filed reports in their entirety and cautions investors that the non-GAAP financial measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.
The Company believes the presentation of non-GAAP financial measures that excludes amortization of acquired intangible assets, acquisition and divestiture related expenses, as well as other items, allows investors to develop a more meaningful understanding of the Company's core performance over time.
The tables below provide reconciliations of non-GAAP items ($ in millions, except per share data):
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
GAAP net earnings attributable to Centene | $ 1,146 | $ 1,058 | $ 2,309 | $ 2,188 | |||
Amortization of acquired intangible assets | 173 | 179 | 346 | 362 | |||
Acquisition and divestiture related expenses | 6 | 13 | 67 | 36 | |||
Other adjustments (1) | 2 | (74) | (97) | (127) | |||
Income tax effects of adjustments (2) | (44) | (21) | (126) | (135) | |||
Adjusted net earnings | $ 1,283 | $ 1,155 | $ 2,499 | $ 2,324 | |||
(1) | Other adjustments include the following pre-tax items: | ||
2024: | |||
(a) | for the three months ended June 30, 2024: gain on the previously reported divestiture of Circle Health of | ||
(b) | for the six months ended June 30, 2024: net gain on the previously reported divestiture of Magellan Specialty Health due to the achievement of contingent consideration and finalization of working capital adjustments of | ||
2023: | |||
(a) | for the three months ended June 30, 2023: gain on the sale of Apixio of | ||
(b) | for the six months ended June 30, 2023: gain on the sale of Apixio of | ||
(2) | The income tax effects of adjustments are based on the effective income tax rates applicable to each adjustment. The six months ended June 30, 2023, includes a one-time income tax benefit of | ||
Three Months Ended June 30, | Six Months Ended June 30, | Annual Guidance | |||||||
2024 | 2023 | 2024 | 2023 | ||||||
GAAP diluted EPS attributable to | $ 2.16 | $ 1.92 | $ 4.32 | $ 3.96 | greater than | ||||
Amortization of acquired intangible assets | 0.33 | 0.33 | 0.65 | 0.66 | |||||
Acquisition and divestiture related expenses | 0.01 | 0.02 | 0.13 | 0.07 | |||||
Other adjustments (3) | — | (0.13) | (0.18) | (0.23) | |||||
Income tax effects of adjustments (4) | (0.08) | (0.04) | (0.24) | (0.25) | |||||
Adjusted diluted EPS | $ 2.42 | $ 2.10 | $ 4.68 | $ 4.21 | greater than | ||||
(3) | Other adjustments include the following pre-tax items: | ||
2024: | |||
(a) | for the three months ended June 30, 2024: gain on the previously reported divestiture of Circle Health of | ||
(b) | for the six months ended June 30, 2024: net gain on the previously reported divestiture of Magellan Specialty Health due to the achievement of contingent consideration and finalization of working capital adjustments of | ||
(c) | for the year ended December 31, 2024, an estimated: | ||
2023: | |||
(a) | for the three months ended June 30, 2023: gain on the sale of Apixio of | ||
(b) | for the six months ended June 30, 2023: gain on the sale of Apixio of | ||
(4) | The income tax effects of adjustments are based on the effective income tax rates applicable to each adjustment. The six months ended June 30, 2023, include a one-time income tax benefit of | ||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
GAAP selling, general and administrative expenses | $ 2,894 | $ 3,016 | $ 6,112 | $ 6,027 | |||
Less: | |||||||
Acquisition and divestiture related expenses | 6 | 13 | 67 | 36 | |||
Restructuring costs | 4 | — | 13 | — | |||
Real estate optimization | — | 1 | — | 7 | |||
Adjusted selling, general and administrative expenses | $ 2,884 | $ 3,002 | $ 6,032 | $ 5,984 | |||
To provide clarity on the way management defines certain key metrics and ratios, the Company is providing a description of how the metric or ratio is calculated as follows:
- Health Benefits Ratio (HBR) (GAAP) = Medical costs divided by premium revenues.
- SG&A Expense Ratio (GAAP) = Selling, general and administrative expenses divided by premium and service revenues.
- Adjusted SG&A Expense Ratio (non-GAAP) = Adjusted selling, general and administrative expenses divided by premium and service revenues.
- Adjusted Effective Tax Rate (non-GAAP) = GAAP income tax expense (benefit) excluding the income tax effects of adjustments to net earnings divided by adjusted earnings (loss) before income tax expense.
- Adjusted Net Earnings (non-GAAP) = Net earnings less amortization of acquired intangible assets, less acquisition and divestiture related expenses, as well as adjustments for other items, net of the income tax effect of the adjustments.
- Adjusted Diluted EPS (non-GAAP) = Adjusted net earnings divided by weighted average common shares outstanding on a fully diluted basis.
- Debt to Capitalization Ratio (GAAP) = Total debt, divided by total debt plus total stockholder's equity.
- Average Medical Claims Expense (GAAP) = Medical costs for the period divided by number of days in such period. Average medical claims expense is most often calculated for the quarterly reporting period.
- Days in Claims Payable (GAAP) = Medical claims liabilities divided by average medical claims expense. Days in claims payable is most often calculated for the quarterly reporting period.
In addition, the following terms are defined as follows:
- State-directed Payments: Payments directed by a state that have minimal risk but are administered as a premium adjustment. These payments are recorded as premium revenue and medical costs at close to a
100% HBR. In many instances, the Company has little visibility to the timing of these payments until they are paid by a state.
- Pass-through Payments: Non-risk supplemental payments from a state that the Company is required to pass through to designated contracted providers. These payments are recorded as premium tax revenue and premium tax expense.
About Centene Corporation
Centene Corporation, a Fortune 500 company, is a leading healthcare enterprise that is committed to helping people live healthier lives. The Company takes a local approach – with local brands and local teams – to provide fully integrated, high-quality, and cost-effective services to government-sponsored and commercial healthcare programs, focusing on under-insured and uninsured individuals. Centene offers affordable and high-quality products to more than 1 in 15 individuals across the nation, including Medicaid and Medicare members (including Medicare Prescription Drug Plans) as well as individuals and families served by the Health Insurance Marketplace and the TRICARE program. The Company also contracts with other healthcare and commercial organizations to provide a variety of specialty services focused on treating the whole person. Centene focuses on long-term growth and value creation as well as the development of its people, systems and capabilities so that it can better serve its members, providers, local communities and government partners.
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, https://investors.centene.com.
Forward-Looking Statements
All statements, other than statements of current or historical fact, contained in this press release are forward-looking statements. Without limiting the foregoing, forward-looking statements often use words such as "guidance," "believe," "anticipate," "plan," "expect," "estimate," "intend," "seek," "target," "goal," "may," "will," "would," "could," "should," "can," "continue" and other similar words or expressions (and the negative thereof). Centene Corporation and its subsidiaries (Centene, the Company, our or we) intends such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we are including this statement for purposes of complying with these safe-harbor provisions. In particular, these statements include, without limitation, statements about our future operating or financial performance, market opportunity, competition, expected contract start dates and terms, expected activities in connection with completed and future acquisitions and dispositions, our investments, and the adequacy of our available cash resources. These forward-looking statements reflect our current views with respect to future events and are based on numerous assumptions and assessments made by us in light of our experience and perception of historical trends, current conditions, business strategies, operating environments, future developments, and other factors we believe appropriate. By their nature, forward-looking statements involve known and unknown risks and uncertainties and are subject to change because they relate to events and depend on circumstances that will occur in the future, including economic, regulatory, competitive, and other factors that may cause our or our 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. These statements are not guarantees of future performance and are subject to risks, uncertainties, and assumptions. All forward-looking statements included in this press release are based on information available to us on the date hereof. Except as may be otherwise required by law, we undertake no obligation to update or revise the forward-looking statements included in this press release, whether as a result of new information, future events, or otherwise, after the date hereof. You should not place undue reliance on any forward-looking statements, as actual results may differ materially from projections, estimates, or other forward-looking statements due to a variety of important factors, variables, and events including, but not limited to: our ability to design and price products that are competitive and/or actuarially sound including but not limited to any impacts resulting from Medicaid redeterminations; our ability to maintain or achieve improvement in the Centers for Medicare and Medicaid Services (CMS) Star ratings and maintain or achieve improvement in other quality scores in each case that can impact revenue and future growth; our ability to accurately predict and effectively manage health benefits and other operating expenses and reserves, including fluctuations in medical utilization rates; competition, including for providers, broker distribution networks, contract reprocurements and organic growth; our ability to adequately anticipate demand and provide for operational resources to maintain service level requirements; our ability to manage our information systems effectively; disruption, unexpected costs, or similar risks from business transactions, including acquisitions, divestitures, and changes in our relationships with third parties; impairments to real estate, investments, goodwill and intangible assets; changes in senior management, loss of one or more key personnel or an inability to attract, hire, integrate and retain skilled personnel; membership and revenue declines or unexpected trends; rate cuts or other payment reductions or delays by governmental payors and other risks and uncertainties affecting our government businesses; changes in healthcare practices, new technologies, and advances in medicine; our ability to effectively and ethically use artificial intelligence and machine learning in compliance with applicable laws; increased healthcare costs; inflation and interest rates; the effect of social, economic, and political conditions and geopolitical events, including as a result of changes in
CENTENE CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions, except shares in thousands and per share data in dollars) | |||
June 30, | December 31, | ||
(Unaudited) | |||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 17,605 | $ 17,193 | |
Premium and trade receivables | 16,587 | 15,532 | |
Short-term investments | 2,609 | 2,459 | |
Other current assets | 1,605 | 5,572 | |
Total current assets | 38,406 | 40,756 | |
Long-term investments | 16,870 | 16,286 | |
Restricted deposits | 1,415 | 1,386 | |
Property, software and equipment, net | 2,041 | 2,019 | |
Goodwill | 17,558 | 17,558 | |
Intangible assets, net | 5,755 | 6,101 | |
Other long-term assets | 1,092 | 535 | |
Total assets | $ 83,137 | $ 84,641 | |
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND | |||
Current liabilities: | |||
Medical claims liability | $ 18,173 | $ 18,000 | |
Accounts payable and accrued expenses | 12,232 | 16,420 | |
Return of premium payable | 1,615 | 1,462 | |
Unearned revenue | 597 | 715 | |
Current portion of long-term debt | 112 | 119 | |
Total current liabilities | 32,729 | 36,716 | |
Long-term debt | 17,516 | 17,710 | |
Deferred tax liability | 665 | 641 | |
Other long-term liabilities | 4,770 | 3,618 | |
Total liabilities | 55,680 | 58,685 | |
Commitments and contingencies | |||
Redeemable noncontrolling interests | 16 | 19 | |
Stockholders' equity: | |||
Preferred stock, | — | — | |
Common stock, | 1 | 1 | |
Additional paid-in capital | 20,461 | 20,304 | |
Accumulated other comprehensive (loss) | (646) | (652) | |
Retained earnings | 14,352 | 12,043 | |
Treasury stock, at cost (93,494 and 80,807 shares, respectively) | (6,817) | (5,856) | |
Total Centene stockholders' equity | 27,351 | 25,840 | |
Nonredeemable noncontrolling interest | 90 | 97 | |
Total stockholders' equity | 27,441 | 25,937 | |
Total liabilities, redeemable noncontrolling interests and stockholders' equity | $ 83,137 | $ 84,641 | |
CENTENE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except shares in thousands and per share data in dollars) (Unaudited) | |||||||
Three Months Ended | Six Months Ended | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Revenues: | |||||||
Premium | $ 35,140 | $ 33,713 | $ 70,669 | $ 67,538 | |||
Service | 833 | 1,125 | 1,641 | 2,252 | |||
Premium and service revenues | 35,973 | 34,838 | 72,310 | 69,790 | |||
Premium tax | 3,863 | 2,770 | 7,933 | 6,707 | |||
Total revenues | 39,836 | 37,608 | 80,243 | 76,497 | |||
Expenses: | |||||||
Medical costs | 30,765 | 29,347 | 61,697 | 58,781 | |||
Cost of services | 680 | 877 | 1,349 | 1,747 | |||
Selling, general and administrative expenses | 2,894 | 3,016 | 6,112 | 6,027 | |||
Depreciation expense | 133 | 146 | 268 | 288 | |||
Amortization of acquired intangible assets | 173 | 179 | 346 | 362 | |||
Premium tax expense | 3,962 | 2,854 | 8,123 | 6,865 | |||
Impairment | — | 18 | 13 | 38 | |||
Total operating expenses | 38,607 | 36,437 | 77,908 | 74,108 | |||
Earnings from operations | 1,229 | 1,171 | 2,335 | 2,389 | |||
Other income (expense): | |||||||
Investment and other income | 463 | 425 | 1,008 | 778 | |||
Interest expense | (176) | (181) | (354) | (361) | |||
Earnings before income tax | 1,516 | 1,415 | 2,989 | 2,806 | |||
Income tax expense | 370 | 360 | 685 | 621 | |||
Net earnings | 1,146 | 1,055 | 2,304 | 2,185 | |||
Loss attributable to noncontrolling interests | — | 3 | 5 | 3 | |||
Net earnings attributable to Centene Corporation | $ 1,146 | $ 1,058 | $ 2,309 | $ 2,188 | |||
Net earnings per common share attributable to Centene Corporation: | |||||||
Basic earnings per common share | $ 2.16 | $ 1.93 | $ 4.34 | $ 3.98 | |||
Diluted earnings per common share | $ 2.16 | $ 1.92 | $ 4.32 | $ 3.96 | |||
Weighted average number of common shares outstanding: | |||||||
Basic | 529,602 | 548,932 | 532,385 | 549,850 | |||
Diluted | 530,755 | 550,308 | 534,517 | 551,996 | |||
CENTENE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions, unaudited) | |||
Six Months Ended June 30, | |||
2024 | 2023 | ||
Cash flows from operating activities: | |||
Net earnings | $ 2,304 | $ 2,185 | |
Adjustments to reconcile net earnings to net cash provided by operating activities | |||
Depreciation and amortization | 614 | 650 | |
Stock compensation expense | 132 | 117 | |
Impairment | 13 | 38 | |
Deferred income taxes | 40 | (160) | |
(Gain) loss on divestitures, net | (103) | (172) | |
Other adjustments, net | (11) | 68 | |
Changes in assets and liabilities | |||
Premium and trade receivables | (1,059) | (319) | |
Other assets | (404) | (325) | |
Medical claims liabilities | 173 | 139 | |
Unearned revenue | (118) | 1,895 | |
Accounts payable and accrued expenses | (1,704) | 618 | |
Other long-term liabilities | 1,838 | 2,081 | |
Other operating activities, net | 4 | — | |
Net cash provided by operating activities | 1,719 | 6,815 | |
Cash flows from investing activities: | |||
Capital expenditures | (337) | (440) | |
Purchases of investments | (3,434) | (3,199) | |
Sales and maturities of investments | 2,497 | 2,293 | |
Divestiture proceeds, net of divested cash | 959 | 669 | |
Net cash used in investing activities | (315) | (677) | |
Cash flows from financing activities: | |||
Proceeds from long-term debt | 350 | 1,281 | |
Payments and repurchases of long-term debt | (565) | (1,322) | |
Common stock repurchases | (954) | (828) | |
Proceeds from common stock issuances | 25 | 21 | |
Purchase of noncontrolling interest | — | (85) | |
Other financing activities, net | (4) | — | |
Net cash used in financing activities | (1,148) | (933) | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 7 | (7) | |
Net increase in cash, cash equivalents and restricted cash and cash equivalents | 263 | 5,198 | |
Cash, cash equivalents and restricted cash and cash equivalents, beginning of period | 17,452 | 12,330 | |
Cash, cash equivalents and restricted cash and cash equivalents, end of period | $ 17,715 | $ 17,528 | |
Supplemental disclosures of cash flow information: | |||
Interest paid | $ 352 | $ 348 | |
Income taxes paid | $ 610 | $ 592 | |
The following table provides a reconciliation of cash, cash equivalents and restricted cash and cash equivalents reported within the Consolidated Balance Sheets to the totals above: | |||
June 30, | |||
2024 | 2023 | ||
Cash and cash equivalents | $ 17,605 | $ 17,170 | |
Restricted cash and cash equivalents, included in restricted deposits | 110 | 358 | |
Total cash, cash equivalents and restricted cash and cash equivalents | $ 17,715 | $ 17,528 | |
CENTENE CORPORATION SUPPLEMENTAL FINANCIAL DATA | ||||||||||
Q2 | Q1 | Q4 | Q3 | Q2 | ||||||
2024 | 2024 | 2023 | 2023 | 2023 | ||||||
MEMBERSHIP | ||||||||||
Traditional Medicaid (1) | 11,640,900 | 11,750,000 | 12,754,000 | 13,470,900 | 14,260,400 | |||||
High Acuity Medicaid (2) | 1,499,000 | 1,547,600 | 1,718,000 | 1,769,600 | 1,799,200 | |||||
Total Medicaid | 13,139,900 | 13,297,600 | 14,472,000 | 15,240,500 | 16,059,600 | |||||
Commercial Marketplace | 4,401,300 | 4,348,800 | 3,900,100 | 3,681,600 | 3,295,200 | |||||
Commercial Group | 426,400 | 422,700 | 427,500 | 424,200 | 435,000 | |||||
Total Commercial | 4,827,700 | 4,771,500 | 4,327,600 | 4,105,800 | 3,730,200 | |||||
Medicare (3) | 1,138,400 | 1,146,800 | 1,284,200 | 1,310,600 | 1,329,000 | |||||
Medicare PDP | 6,603,600 | 6,438,900 | 4,617,800 | 4,539,800 | 4,493,700 | |||||
Total at-risk membership | 25,709,600 | 25,654,800 | 24,701,600 | 25,196,700 | 25,612,500 | |||||
TRICARE eligibles | 2,768,000 | 2,768,000 | 2,773,200 | 2,773,200 | 2,799,300 | |||||
Total | 28,477,600 | 28,422,800 | 27,474,800 | 27,969,900 | 28,411,800 | |||||
(1) | Membership includes TANF, Medicaid Expansion, CHIP, Foster Care and Behavioral Health. |
(2) | Membership includes ABD, IDD, LTSS and MMP Duals. |
(3) | Membership includes Medicare Advantage and Medicare Supplement. |
NUMBER OF EMPLOYEES | 60,000 | 59,900 | 67,700 | 67,800 | 68,300 | |||||
DAYS IN CLAIMS PAYABLE | 54 | 53 | 54 | 53 | 52 | |||||
CASH, INVESTMENTS AND RESTRICTED DEPOSITS (in millions) | ||||||||||
Regulated | $ 37,421 | $ 36,528 | $ 36,314 | $ 35,988 | $ 35,799 | |||||
Unregulated | 1,078 | 1,018 | 1,010 | 1,020 | 1,046 | |||||
Total | $ 38,499 | $ 37,546 | $ 37,324 | $ 37,008 | $ 36,845 | |||||
DEBT TO CAPITALIZATION | 39.1 % | 40.0 % | 40.7 % | 41.5 % | 41.1 % | |||||
OPERATING RATIOS | Three Months Ended June 30, | Six Months Ended June 30, | |||||
2024 | 2023 | 2024 | 2023 | ||||
HBR | 87.6 % | 87.0 % | 87.3 % | 87.0 % | |||
SG&A expense ratio | 8.0 % | 8.7 % | 8.5 % | 8.6 % | |||
Adjusted SG&A expense ratio | 8.0 % | 8.6 % | 8.3 % | 8.6 % | |||
HBR BY PRODUCT | Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2024 | 2023 | 2024 | 2023 | |||||
Medicaid | 92.8 % | 88.9 % | 91.8 % | 89.5 % | ||||
Commercial | 73.4 % | 81.0 % | 73.4 % | 78.7 % | ||||
Medicare (4) | 89.2 % | 86.2 % | 90.0 % | 85.7 % | ||||
(4) | Medicare includes Medicare Advantage, Medicare Supplement, D-SNPs and Medicare PDP. |
MEDICAL CLAIMS LIABILITY
The changes in medical claims liability are summarized as follows (in millions):
Balance, June 30, 2023 | $ 16,884 | |
Less: Reinsurance recoverables | 20 | |
Balance, June 30, 2023, net | 16,864 | |
Incurred related to: | ||
Current period | 123,420 | |
Prior periods | (1,945) | |
Total incurred | 121,475 | |
Paid related to: | ||
Current period | 107,316 | |
Prior periods | 13,243 | |
Total paid | 120,559 | |
Plus: Premium deficiency reserve | 335 | |
Balance, June 30, 2024, net | 18,115 | |
Plus: Reinsurance recoverables | 58 | |
Balance, June 30, 2024 | $ 18,173 |
Centene's claims reserving process utilizes a consistent actuarial methodology to estimate Centene's ultimate liability. Any reduction in the "Incurred related to: Prior periods" amount may be offset as Centene actuarially determines the "Incurred related to: Current period." Centene believes it has consistently applied its claims reserving methodology. Additionally, approximately
The amount of the "Incurred related to: Prior periods" 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, 2023, and prior.
View original content:https://www.prnewswire.com/news-releases/centene-corporation-reports-second-quarter-2024-results-302207365.html
SOURCE Centene Corporation
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