CENTENE CORPORATION REPORTS THIRD QUARTER 2024 RESULTS
Centene (NYSE: CNC) reported third quarter 2024 results with adjusted diluted EPS of $1.62 and premium and service revenues of $36.9 billion, up 6% year-over-year. The company saw significant membership growth with 22% increase in Marketplace and 49% in Medicare Prescription Drug Plans. The health benefits ratio increased to 89.2% from 87.0% in Q3 2023. Centene executed $1.2 billion in share repurchases during Q3 and an additional $380 million in October. The company reaffirmed its 2024 adjusted diluted EPS guidance floor of greater than $6.80.
Centene (NYSE: CNC) ha riportato i risultati del terzo trimestre 2024 con un utile netto diluito rettificato di $1,62 e ricavi da premi e servizi pari a $36,9 miliardi, in aumento del 6% rispetto all'anno precedente. L'azienda ha registrato una significativa crescita degli iscritti con un incremento del 22% nel Marketplace e un 49% nei Piani di Medicare per i Farmaci. Il rapporto benefici sanitari è aumentato all'89,2%, rispetto all'87,0% del Q3 2023. Centene ha effettuato riacquisti di azioni per $1,2 miliardi durante il terzo trimestre e ulteriori $380 milioni in ottobre. L'azienda ha confermato il suo obiettivo di EPS diluito rettificato per il 2024, fissando un minimo superiore a $6,80.
Centene (NYSE: CNC) reportó los resultados del tercer trimestre de 2024 con un EPS diluido ajustado de $1.62 y ingresos por primas y servicios de $36.9 mil millones, un aumento del 6% respecto al año anterior. La compañía experimentó un crecimiento significativo en la membresía con un incremento del 22% en el Marketplace y un 49% en los Planes de Medicamentos Recetados de Medicare. La relación de beneficios de salud aumentó al 89.2% desde el 87.0% en el tercer trimestre de 2023. Centene realizó recompras de acciones por $1.2 mil millones durante el tercer trimestre y otros $380 millones en octubre. La compañía reafirmó su guía de EPS diluido ajustado para 2024, estableciendo un piso superior a $6.80.
센틴 (NYSE: CNC)은 2024년 3분기 실적을 $1.62의 조정 후속 주당 순이익(EPS)과 $36.9억 달러의 프리미엄 및 서비스 수익을 보고했습니다. 이는 전년 대비 6% 증가한 수치입니다. 회사는 마켓플레이스에서 22% 증가와 메디케어 처방약 계획에서 49% 증가를 기록하며 상당한 회원 증가를 보았습니다. 건강 혜택 비율은 2023년 3분기의 87.0%에서 89.2%로 증가했습니다. 센틴은 3분기 동안 $12억 달러의 자사주 매입을 실행했으며 10월에는 추가로 $3.8억 달러를 매입했습니다. 회사는 2024년 조정 후속 EPS 목표치를 $6.80 이상으로 재확인했습니다.
Centene (NYSE: CNC) a publié ses résultats du troisième trimestre 2024 avec un EPS dilué ajusté de $1,62 et des revenus de primes et de services de $36,9 milliards, en hausse de 6 % par rapport à l'année précédente. L'entreprise a connu une croissance significative des adhésions avec une augmentation de 22 % dans le Marketplace et une augmentation de 49 % dans les Plans de Médicaments sur Ordonnance de Medicare. Le ratio des prestations de santé est passé de 87,0 % au T3 2023 à 89,2 %. Centene a effectué des rachats d'actions pour un montant de $1,2 milliard au cours du T3 et un montant supplémentaire de $380 millions en octobre. L'entreprise a réaffirmé son objectif d'EPS dilué ajusté pour 2024, fixé à plus de $6,80.
Centene (NYSE: CNC) hat die Ergebnisse des dritten Quartals 2024 mit einem bereinigten verwässerten EPS von $1,62 und Einnahmen aus Prämien und Dienstleistungen von $36,9 Milliarden veröffentlicht, was einem Anstieg von 6% im Vergleich zum Vorjahr entspricht. Das Unternehmen verzeichnete ein signifikantes Wachstum der Mitglieder mit einem Anstieg von 22% im Marketplace und einem 49% bei Medicare-Verschreibungsplänen. Das Verhältnis der Gesundheitsleistungen stieg von 87,0% im Q3 2023 auf 89,2%. Centene führte Aktienrückkäufe im Wert von $1,2 Milliarden im dritten Quartal durch und weitere $380 Millionen im Oktober. Das Unternehmen bestätigte seine Prognose für das bereinigte verwässerte EPS 2024 mit einem Mindestwert von über $6,80.
- Premium and service revenues increased 6% to $36.9 billion
- Marketplace membership grew 22% year-over-year
- Medicare Prescription Drug Plans membership increased 49%
- Executed $2.4 billion in share repurchases through October 2024
- Medicare Advantage membership in 3.5+ star plans doubled to 46% from 23%
- Health benefits ratio increased to 89.2% from 87.0% year-over-year
- Traditional Medicaid membership declined by approximately 2 million members
- Cash flow used in operations was negative $978 million in Q3
- Total Medicaid membership decreased by 14.3% year-over-year
Insights
The Q3 2024 results reveal a mixed performance with notable strengths and challenges. Revenue grew 6% to
Key positives include significant Medicare Stars improvement (now
The
-- Diluted EPS of
-- Reaffirms 2024 Adjusted Diluted EPS Guidance Floor of Greater Than
- Adjusted diluted EPS of
in the third quarter of 2024.$1.62 - Premium and service revenues of
in the third quarter of 2024.$36.9 billion - Membership increases of
22% in Marketplace and49% in Medicare Prescription Drug Plans, compared to the third quarter of 2023. - Continued execution on capital deployment with
of share repurchases during the third quarter of 2024 and an additional$1.2 billion in October, bringing full-year repurchases to$380 million through October 2024.$2.4 billion
Total revenues (in millions) | $ 42,023 | ||
Premium and service revenues (in millions) | $ 36,899 | ||
Health benefits ratio | 89.2 % | ||
SG&A expense ratio | 8.3 % | ||
Adjusted SG&A expense ratio (1) | 8.3 % | ||
GAAP diluted EPS | $ 1.36 | ||
Adjusted diluted EPS (1) | $ 1.62 | ||
Total cash flow used in operations (in millions) | $ (978) | ||
(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. |
"Our diversified portfolio has allowed us to successfully navigate a dynamic landscape in the quarter. At the same time, we delivered on fundamentals that carry positive implications for Centene's multi-year earnings trajectory, including notable RFP wins, Medicare Stars improvements and ongoing operational efficiencies," said Chief Executive Officer of Centene, Sarah M.
Other Events
- In October, the Centers for Medicare and Medicaid Services (CMS) issued 2025 Medicare Advantage Star Ratings. Based on the data, Centene has approximately
46% of its Medicare Advantage membership enrolled in plans rated 3.5 stars or higher – compared to approximately23% in the prior year. This represents meaningful progress and is consistent with internal expectations despite higher than industry-anticipated cut point changes. Additionally, we are appealing CMS' scoring of our TTY (Text-to-Voice teletypewriter services for the hearing impaired) measure which, if successful, could further increase our percentage of Medicare Advantage members enrolled in plans rated 3.5 stars or higher. - In October, Centene's subsidiary, Meridian Health Plan of
Michigan , was selected by the Michigan Department of Health and Human Services to provide highly integrated Medicare and Medicaid services for dually eligible Michiganders through a Highly Integrated Dual Eligible Special Needs Plan. The plan is expected to launch on January 1, 2026 and is a seven-year term, with three optional one-year extensions, for a total of 10 possible contract years. - In October, Centene completed the sale of Collaborative Health Systems, a management services organization.
- In September, Centene's subsidiary, Health Net Community Solutions, was selected by the California Department of Health Care Services to provide managed dental health care services to beneficiaries of Medi-Cal, the State's Medicaid program, in
Los Angeles andSacramento counties. The new 54-month contract is expected to take effect on July 1, 2025. - In September, Centene's subsidiary, Iowa Total Care, was selected by the Iowa Department of Health and Human Services to continue providing Medicaid managed care services under the Iowa Health Link program. The contract is expected to begin July 1, 2025 and is a four-year term, with an optional two-year extension, for a total of six possible contract years.
- In August, Centene's subsidiary, PA Health and Wellness, was selected by the Pennsylvania Department of Human Services to continue to administer
Pennsylvania's Community HealthChoices program, the Medicaid managed care program that covers adults who are dually eligible for Medicare and Medicaid or who qualify to receive Medicaid long-term services and supports due to a need for the level of care provided in a nursing facility. The contract is expected to begin April 1, 2025 and is a five-year term, with three optional one-year extensions, for a total of eight possible contract years. - In July, the
State of Florida announced plans to execute agreements with eight health plans, including Centene's subsidiary, Sunshine Health. The Statewide Medicaid Managed Care program includes integrated Managed Medical Assistance, Long-Term Care services, Serious Mental Illness, Child Welfare and HIV specialty products. The contract is expected to begin on February 1, 2025.
Awards & Community Engagement
- In the aftermath of Hurricanes Helene and Milton, Centene's first priority was to conduct outreach to assess the safety of our employees and members. Centene, the Centene Foundation and our health plans then worked to provide on-the-ground support in affected areas in the forms of medical supplies and over-the-counter medications to community health centers and provider practices, hard-to-find essential supplies and monetary donations to approximately two dozen non-profit organizations across
Florida ,Georgia ,North Carolina ,South Carolina andTennessee . - In September, the Centene Foundation announced grants to both The Jed Foundation and the
Washington State Opportunity Scholarship in order to expand services to protect the emotional health of teens and young adults and increase access to healthcare careers for students. - In September, WellCare of
North Carolina , a Medicaid health plan and a Centene subsidiary, announced a donation available to nine Family Justice Centers acrossNorth Carolina . These funds will support Camp HOPE America, a week-long overnight camp specially designed for youth impacted by domestic violence and trauma. - In September, Centene was recognized by Fortune magazine as one of the Best Workplaces in Health Care 2024™ for the third consecutive year in the Large Company category.
- In August, Newsweek named Centene among America's Greatest Workplaces for Parents & Families 2024, and
U.S. Veterans Magazine included Centene as a Top Veteran-Friendly Employer.
Membership
The following table sets forth membership by line of business:
September 30, | ||||
2024 | 2023 | |||
Traditional Medicaid (1) | 11,478,600 | 13,470,900 | ||
High Acuity Medicaid (2) | 1,590,200 | 1,769,600 | ||
Total Medicaid | 13,068,800 | 15,240,500 | ||
Commercial Marketplace | 4,501,300 | 3,681,600 | ||
Commercial Group | 426,600 | 424,200 | ||
Total Commercial | 4,927,900 | 4,105,800 | ||
Medicare (3) | 1,129,900 | 1,310,600 | ||
Medicare PDP | 6,766,400 | 4,539,800 | ||
Total at-risk membership | 25,893,000 | 25,196,700 | ||
TRICARE eligibles | 2,747,000 | 2,773,200 | ||
Total | 28,640,000 | 27,969,900 | ||
(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 September 30, | ||||||
2024 | 2023 | % Change | ||||
Medicaid | $ 21,316 | $ 21,619 | (1) % | |||
Commercial | 8,693 | 6,453 | 35 % | |||
Medicare (1) | 5,643 | 5,430 | 4 % | |||
Other | 1,247 | 1,465 | (15) % | |||
Total premium and service revenues | $ 36,899 | $ 34,967 | 6 % | |||
(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 September 30, 2024
- For the third quarter of 2024, premium and service revenues increased
6% to from$36.9 billion in the comparable period of 2023. The increase was primarily driven by Medicaid rate increases and membership growth in the Marketplace business due to strong product positioning as well as overall market growth, partially offset by lower Medicaid membership primarily due to redeterminations and recent divestitures in the Other segment.$35.0 billion - Health benefits ratio (HBR) of
89.2% for the third quarter of 2024 represents an increase from87.0% in the comparable period in 2023. The increase was primarily driven by higher acuity in Medicaid resulting from the redetermination process as we continue to work with states to match rates with acuity. The increase was also driven by Medicare Star rating impacts. - The SG&A expense ratio was
8.3% for the third quarter of 2024, compared to8.7% in the third quarter of 2023. The adjusted SG&A expense ratio was8.3% for the third quarter of 2024, compared to8.6% in the third quarter of 2023. The decreases were primarily driven by the divestiture of Circle Health Group (Circle Health), which operated at a higher SG&A expense ratio, and continued leveraging of expenses over higher revenues. 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
22.9% for the third quarter of 2024, compared to38.2% in the third quarter of 2023. The effective tax rate for the third quarter of 2023 reflects the tax effects of impairments as well as the then pending divestiture of Circle Health. For the third quarter of 2024, our effective tax rate on adjusted earnings was23.3% , compared to24.2% in the third quarter of 2023. - For the third quarter of 2024, adjusted diluted EPS of
, including a$1.62 net benefit associated with a Marketplace premium tax benefit originally expected in the fourth quarter of 2024.$0.10 - Cash flow used in operations for the third quarter of 2024 was
, primarily driven by the settlement of Marketplace risk adjustment payables for the 2023 benefit year, Medicaid rate increases not yet collected and an increase in Part D receivables, partially offset by net earnings.$1.0 billion
Balance Sheet
At September 30, 2024, the Company had cash, investments and restricted deposits of
During the third quarter of 2024, the Company repurchased 16.3 million shares for
Outlook
The Company is updating its 2024 GAAP diluted EPS guidance floor to greater than
The Company's updated annual guidance for 2024 is as follows and will be discussed further on our conference call:
Full Year 2024 | ||||||
GAAP diluted EPS | > | |||||
Adjusted diluted EPS (1) | > | |||||
(1) A full reconciliation of adjusted diluted EPS is shown in the Non-GAAP Financial Presentation section of this release. | ||||||
Full Year 2024 | ||||||
Low | High | |||||
Total revenues (in billions) | $ 159.0 | $ 161.0 | ||||
Premium and service revenues (in billions) | $ 143.5 | $ 144.5 | ||||
HBR | 88.3 % | 88.5 % | ||||
SG&A expense ratio | 8.5 % | 8.7 % | ||||
Adjusted SG&A expense ratio (2) | 8.5 % | 8.7 % | ||||
Effective tax rate | 22.9 % | 23.9 % | ||||
Adjusted effective tax rate (3) | 24.0 % | 24.5 % | ||||
Diluted shares outstanding (in millions) | 522.2 | 525.2 | ||||
(2) Represents a non-GAAP financial measure. Adjusted SG&A expense ratio excludes acquisition and divestiture related expenses and severance costs due to a restructuring of approximately | ||||||
(3) Represents a non-GAAP financial measure. Adjusted effective tax rate excludes income tax effects of adjustments of approximately |
Conference Call
As previously announced, the Company will host a conference call Friday, October 25, 2024, at 8:30 a.m. ET to review the financial results for the third quarter ended September 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, October 24, 2025, at the aforementioned URL. In addition, a digital audio playback will be available until 9 a.m. ET on Friday, November 1, 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 September 30, | Nine Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
GAAP net earnings attributable to Centene | $ 713 | $ 469 | $ 3,022 | $ 2,657 | |||
Amortization of acquired intangible assets | 173 | 180 | 519 | 542 | |||
Acquisition and divestiture related expenses | 8 | 16 | 75 | 52 | |||
Other adjustments (1) | — | 472 | (97) | 345 | |||
Income tax effects of adjustments (2) | (45) | (55) | (171) | (190) | |||
Adjusted net earnings | $ 849 | $ 1,082 | $ 3,348 | $ 3,406 |
(1) Other adjustments include the following pre-tax items:
2024:
(a) for the nine months ended September 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 September 30, 2023: Circle Health impairment of
(b) for the nine months ended September 30, 2023: Circle Health impairment of
(2) The income tax effects of adjustments are based on the effective income tax rates applicable to each adjustment. The three and nine months ended September 30, 2024, include a tax benefit of
Three Months Ended September 30, | Nine Months Ended September 30, | Annual Guidance December 31, 2024 | |||||||
2024 | 2023 | 2024 | 2023 | ||||||
GAAP diluted EPS attributable to Centene | $ 1.36 | $ 0.87 | $ 5.69 | $ 4.85 | greater than | ||||
Amortization of acquired intangible assets | 0.33 | 0.33 | 0.98 | 0.99 | |||||
Acquisition and divestiture related expenses | 0.02 | 0.03 | 0.14 | 0.09 | |||||
Other adjustments (3) | — | 0.87 | (0.18) | 0.63 | |||||
Income tax effects of adjustments (4) | (0.09) | (0.10) | (0.32) | (0.35) | |||||
Adjusted diluted EPS | $ 1.62 | $ 2.00 | $ 6.31 | $ 6.21 | greater than |
(3) Other adjustments include the following pre-tax items:
2024:
(a) for the nine months ended September 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
(b) for the year ended December 31, 2024, an estimated:
2023:
(a) for the three months ended September 30, 2023: Circle Health impairment of
(b) for the nine months ended September 30, 2023: Circle Health impairment of
(4) The income tax effects of adjustments are based on the effective income tax rates applicable to each adjustment. The nine months ended September 30, 2023, include a one-time income tax benefit of
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
GAAP selling, general and administrative expenses | $ 3,057 | $ 3,048 | $ 9,169 | $ 9,075 | |||
Less: | |||||||
Acquisition and divestiture related expenses | 8 | 16 | 75 | 52 | |||
Restructuring costs | — | 22 | 13 | 22 | |||
Real estate optimization | — | — | — | 7 | |||
Adjusted selling, general and administrative expenses | $ 3,049 | $ 3,010 | $ 9,081 | $ 8,994 |
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) | |||
September 30, | December 31, 2023 | ||
(Unaudited) | |||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 14,577 | $ 17,193 | |
Premium and trade receivables | 18,281 | 15,532 | |
Short-term investments | 2,992 | 2,459 | |
Other current assets | 1,559 | 5,572 | |
Total current assets | 37,409 | 40,756 | |
Long-term investments | 17,691 | 16,286 | |
Restricted deposits | 1,452 | 1,386 | |
Property, software and equipment, net | 2,042 | 2,019 | |
Goodwill | 17,558 | 17,558 | |
Intangible assets, net | 5,582 | 6,101 | |
Other long-term assets | 617 | 535 | |
Total assets | $ 82,351 | $ 84,641 | |
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Medical claims liability | $ 17,995 | $ 18,000 | |
Accounts payable and accrued expenses | 13,338 | 16,420 | |
Return of premium payable | 1,959 | 1,462 | |
Unearned revenue | 658 | 715 | |
Current portion of long-term debt | 111 | 119 | |
Total current liabilities | 34,061 | 36,716 | |
Long-term debt | 17,494 | 17,710 | |
Deferred tax liability | 769 | 641 | |
Other long-term liabilities | 2,618 | 3,618 | |
Total liabilities | 54,942 | 58,685 | |
Commitments and contingencies | |||
Redeemable noncontrolling interests | 13 | 19 | |
Stockholders' equity: | |||
Preferred stock, | — | — | |
Common stock, | 1 | 1 | |
Additional paid-in capital | 20,522 | 20,304 | |
Accumulated other comprehensive (loss) | (226) | (652) | |
Retained earnings | 15,065 | 12,043 | |
Treasury stock, at cost (109,867 and 80,807 shares, respectively) | (8,055) | (5,856) | |
Total Centene stockholders' equity | 27,307 | 25,840 | |
Nonredeemable noncontrolling interest | 89 | 97 | |
Total stockholders' equity | 27,396 | 25,937 | |
Total liabilities, redeemable noncontrolling interests and stockholders' equity | $ 82,351 | $ 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 September 30, | Nine Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Revenues: | |||||||
Premium | $ 36,115 | $ 33,866 | $ 106,784 | $ 101,404 | |||
Service | 784 | 1,101 | 2,425 | 3,353 | |||
Premium and service revenues | 36,899 | 34,967 | 109,209 | 104,757 | |||
Premium tax | 5,124 | 3,075 | 13,057 | 9,782 | |||
Total revenues | 42,023 | 38,042 | 122,266 | 114,539 | |||
Expenses: | |||||||
Medical costs | 32,201 | 29,479 | 93,898 | 88,260 | |||
Cost of services | 692 | 856 | 2,041 | 2,603 | |||
Selling, general and administrative expenses | 3,057 | 3,048 | 9,169 | 9,075 | |||
Depreciation expense | 140 | 148 | 408 | 436 | |||
Amortization of acquired intangible assets | 173 | 180 | 519 | 542 | |||
Premium tax expense | 5,095 | 3,156 | 13,218 | 10,021 | |||
Impairment | — | 440 | 13 | 478 | |||
Total operating expenses | 41,358 | 37,307 | 119,266 | 111,415 | |||
Earnings from operations | 665 | 735 | 3,000 | 3,124 | |||
Other income (expense): | |||||||
Investment and other income | 432 | 214 | 1,440 | 992 | |||
Interest expense | (176) | (181) | (530) | (542) | |||
Earnings before income tax | 921 | 768 | 3,910 | 3,574 | |||
Income tax expense | 211 | 293 | 896 | 914 | |||
Net earnings | 710 | 475 | 3,014 | 2,660 | |||
(Earnings) loss attributable to noncontrolling interests | 3 | (6) | 8 | (3) | |||
Net earnings attributable to Centene Corporation | $ 713 | $ 469 | $ 3,022 | $ 2,657 | |||
Net earnings per common share attributable to Centene Corporation: | |||||||
Basic earnings per common share | $ 1.37 | $ 0.87 | $ 5.71 | $ 4.86 | |||
Diluted earnings per common share | $ 1.36 | $ 0.87 | $ 5.69 | $ 4.85 | |||
Weighted average number of common shares outstanding: | |||||||
Basic | 521,965 | 539,535 | 528,912 | 546,374 | |||
Diluted | 523,542 | 541,270 | 530,915 | 548,412 |
CENTENE CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions, unaudited) | ||||
Nine Months Ended September 30, | ||||
2024 | 2023 | |||
Cash flows from operating activities: | ||||
Net earnings | $ 3,014 | $ 2,660 | ||
Adjustments to reconcile net earnings to net cash provided by operating activities | ||||
Depreciation and amortization | 927 | 978 | ||
Stock compensation expense | 181 | 167 | ||
Impairment | 13 | 478 | ||
Deferred income taxes | 14 | 14 | ||
(Gain) loss on divestitures, net | (103) | (172) | ||
Other adjustments, net | (2) | 158 | ||
Changes in assets and liabilities | ||||
Premium and trade receivables | (2,737) | (2,329) | ||
Other assets | 78 | (103) | ||
Medical claims liabilities | (5) | 401 | ||
Unearned revenue | (58) | 1,878 | ||
Accounts payable and accrued expenses | (503) | 3,127 | ||
Other long-term liabilities | (84) | 583 | ||
Other operating activities, net | 6 | (4) | ||
Net cash provided by operating activities | 741 | 7,836 | ||
Cash flows from investing activities: | ||||
Capital expenditures | (490) | (576) | ||
Purchases of investments | (5,770) | (4,729) | ||
Sales and maturities of investments | 4,147 | 4,373 | ||
Divestiture proceeds, net of divested cash | 959 | 690 | ||
Net cash used in investing activities | (1,154) | (242) | ||
Cash flows from financing activities: | ||||
Proceeds from long-term debt | 350 | 2,170 | ||
Payments and repurchases of long-term debt | (594) | (1,970) | ||
Common stock repurchases | (2,181) | (1,602) | ||
Proceeds from common stock issuances | 37 | 32 | ||
Purchase of noncontrolling interest | — | (87) | ||
Other financing activities, net | (5) | — | ||
Net cash used in financing activities | (2,393) | (1,457) | ||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 7 | 19 | ||
Net increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents | (2,799) | 6,156 | ||
Cash and cash equivalents reclassified (to) from held for sale | (3) | (36) | ||
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 | $ 14,650 | $ 18,450 | ||
Supplemental disclosures of cash flow information: | ||||
Interest paid | $ 495 | $ 496 | ||
Income taxes paid | $ 821 | $ 759 | ||
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: | ||||
September 30, | ||||
2024 | 2023 | |||
Cash and cash equivalents | $ 14,577 | $ 18,190 | ||
Restricted cash and cash equivalents, included in restricted deposits | 73 | 260 | ||
Total cash, cash equivalents and restricted cash and cash equivalents | $ 14,650 | $ 18,450 |
CENTENE CORPORATION SUPPLEMENTAL FINANCIAL DATA | ||||||||||
Q3 | Q2 | Q1 | Q4 | Q3 | ||||||
2024 | 2024 | 2024 | 2023 | 2023 | ||||||
MEMBERSHIP | ||||||||||
Traditional Medicaid (1) | 11,478,600 | 11,640,900 | 11,750,000 | 12,754,000 | 13,470,900 | |||||
High Acuity Medicaid (2) | 1,590,200 | 1,499,000 | 1,547,600 | 1,718,000 | 1,769,600 | |||||
Total Medicaid | 13,068,800 | 13,139,900 | 13,297,600 | 14,472,000 | 15,240,500 | |||||
Commercial Marketplace | 4,501,300 | 4,401,300 | 4,348,800 | 3,900,100 | 3,681,600 | |||||
Commercial Group | 426,600 | 426,400 | 422,700 | 427,500 | 424,200 | |||||
Total Commercial | 4,927,900 | 4,827,700 | 4,771,500 | 4,327,600 | 4,105,800 | |||||
Medicare (3) | 1,129,900 | 1,138,400 | 1,146,800 | 1,284,200 | 1,310,600 | |||||
Medicare PDP | 6,766,400 | 6,603,600 | 6,438,900 | 4,617,800 | 4,539,800 | |||||
Total at-risk membership | 25,893,000 | 25,709,600 | 25,654,800 | 24,701,600 | 25,196,700 | |||||
TRICARE eligibles | 2,747,000 | 2,768,000 | 2,768,000 | 2,773,200 | 2,773,200 | |||||
Total | 28,640,000 | 28,477,600 | 28,422,800 | 27,474,800 | 27,969,900 | |||||
(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 | 60,700 | 60,000 | 59,900 | 67,700 | 67,800 | |||||
DAYS IN CLAIMS PAYABLE | 51 | 54 | 53 | 54 | 53 | |||||
CASH, INVESTMENTS AND RESTRICTED DEPOSITS (in millions) | ||||||||||
Regulated | $ 35,558 | $ 37,421 | $ 36,528 | $ 36,314 | $ 35,988 | |||||
Unregulated | 1,154 | 1,078 | 1,018 | 1,010 | 1,020 | |||||
Total | $ 36,712 | $ 38,499 | $ 37,546 | $ 37,324 | $ 37,008 | |||||
DEBT TO CAPITALIZATION | 39.1 % | 39.1 % | 40.0 % | 40.7 % | 41.5 % |
OPERATING RATIOS | Three Months Ended September 30, | Nine Months Ended September 30, | |||||
2024 | 2023 | 2024 | 2023 | ||||
HBR | 89.2 % | 87.0 % | 87.9 % | 87.0 % | |||
SG&A expense ratio | 8.3 % | 8.7 % | 8.4 % | 8.7 % | |||
Adjusted SG&A expense ratio | 8.3 % | 8.6 % | 8.3 % | 8.6 % |
HBR BY PRODUCT | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2024 | 2023 | 2024 | 2023 | |||||
Medicaid | 93.1 % | 90.7 % | 92.3 % | 89.9 % | ||||
Commercial | 80.0 % | 78.9 % | 75.7 % | 78.8 % | ||||
Medicare (4) | 88.0 % | 82.2 % | 89.4 % | 84.6 % | ||||
(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, September 30, 2023 | $ 17,141 | |
Less: Reinsurance recoverables | 45 | |
Balance, September 30, 2023, net | 17,096 | |
Incurred related to: | ||
Current period | 126,158 | |
Prior periods | (1,871) | |
Total incurred | 124,287 | |
Paid related to: | ||
Current period | 109,956 | |
Prior periods | 13,739 | |
Total paid | 123,695 | |
Plus: Premium deficiency reserve | 245 | |
Balance, September 30, 2024, net | 17,933 | |
Plus: Reinsurance recoverables | 62 | |
Balance, September 30, 2024 | $ 17,995 |
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 September 30, 2023, and prior.
View original content:https://www.prnewswire.com/news-releases/centene-corporation-reports-third-quarter-2024-results-302286777.html
SOURCE CENTENE CORPORATION
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