ST. LOUIS, Feb 5, 2002 /PRNewswire-FirstCall via COMTEX/ -- Centene Corporation (Nasdaq: CNTE) today announced the company's financial results for the fourth quarter and year-ended December 31, 2001.
Fourth Quarter Highlights
* Centene successfully executed an initial public offering (IPO) of
common stock in December 2001. The company raised net proceeds of
approximately $41.0 million via the issuance of 3,250,000 shares.
* Centene achieved a 51% increase in total revenue to $90.3 million in
the fourth quarter 2001 versus $59.8 million for the prior year period.
* Earnings from operations increased 112% to $5.7 million in the fourth
quarter 2001 versus $2.7 million for the prior year period.
* Pro forma earnings per share of $0.37, assuming that the company's IPO
occurred as of October 1, 2001; earnings were $0.45 as reported.
* Tenth consecutive quarter of increased profitability from continuing
operations.
* Sixth consecutive quarter of declining general and administrative
expenses as a percent of revenue.
* Days in claims payable of 73.4 reflect the payment of physician bonuses
and a change in EDI claims submission patterns.
Year-Ended 2001 Highlights
* Membership increased 21% to 235,100 lives at December 31, 2001 versus
194,200 at the end of 2000.
* Total revenue increased 48% to $326.6 million in 2001 compared to
$221.4 million for 2000.
* Earnings from operations increased 183% to $18.5 million in 2001 from
$6.5 million in 2000.
* Pro forma earnings per share of $1.25, assuming that the company's IPO
occurred as of January 1, 2001; earnings were $1.61 as reported.
* Operating cash flow of $30.2 million in 2001 represented a
124% increase over 2000.
Michael F. Neidorff, Centene's president and chief executive officer said, "Our performance in 2001 sets a strong foundation for continued growth, both in terms of total revenue and operating profit. Following our successful IPO in December 2001, we are better positioned to target the highly fragmented Medicaid market and expand our geographic network of managed care services with a focus on Medicaid managed care mandated states. With only nine percent of the Medicaid members currently being served by the top 10 publicly traded Medicaid HMOs, we have a significant opportunity to leverage our sophisticated infrastructure and continue to lower states' health care costs."
Mr. Neidorff added, "We approach 2002 with the same vision and purpose that enabled us to achieve our results in 2001 -- to provide quality care to Medicaid patients in a cost effective manner. We will continue to execute timely business initiatives while remaining committed to further operational improvements.
"Centene is well positioned to work effectively with state and federal agencies to protect the soundness of the health care delivery system for our Medicaid recipients consisting primarily of women and children. Through the visibility we have in the states in which we operate, we believe that both the federal and state political and regulatory leaders are supportive of our programs."
Fourth Quarter 2001
Revenue for the fourth quarter increased 51% to $90.3 million from $59.8 million in 2000. The medical loss ratio (MLR) of 82.8% was within the company's targeted range of 82.0% to 83.5% versus 83.7% for the same period in 2000. General and administrative expenses as a percent of revenue decreased 270 basis points to 11.0% from 13.7%. Earnings from operations increased 112% to $5.7 million from $2.7 million in 2000. Net earnings increased $0.7 million to $3.9 million, or $0.45 per share. Pro forma earnings of $0.37 per share for the quarter ended December 31, 2001 assumes that the company's IPO occurred as of October 1, 2001, increasing the weighted average diluted share basis to 11,228,177 for the period presented. Additionally, pro forma results reflect interest earned on the IPO proceeds and exclude interest expense resulting from the full payment of the company's subordinated notes with proceeds from the IPO. Fourth quarter net earnings for 2000 of $3.2 million reflected an income tax benefit of $0.6 million. This tax benefit was created primarily by the reversal of a valuation allowance previously established against a net operating loss carry-forward.
Year-Ended 2001
Revenue for the year-ended December 31, 2001 increased 48% to $326.6 million from $221.4 million in the prior year. The MLR was 82.8% compared to 84.3% for the prior year. General and administrative expenses as a percent of revenue decreased 300 basis points to 11.6% from 14.6%. Earnings from operations increased 183% to $18.5 million from $6.5 million in 2000. Net earnings increased $5.2 million to $12.9 million, or $1.61 per share. Pro forma earnings of $1.25 per share for the year-ended December 31, 2001 assumes that the company's IPO occurred as of January 1, 2001, increasing the weighted average diluted share basis to 11,100,319 for the period presented. Additionally, pro forma results reflect interest earned on the IPO proceeds and exclude interest expense resulting from the full payment of the company's subordinated notes with proceeds from the IPO. Net earnings for 2000 of $7.7 million reflected an income tax benefit of $0.5 million. This tax benefit was created primarily by the reversal of a valuation allowance previously established against a net operating loss carry-forward.
Cash flow from operations was $30.2 million for 2001, a 124% increase over 2000. Cash provided by financing activities of $37.0 million reflects the company's net proceeds from the IPO after the $4.0 million payoff of the company's subordinated notes. At December 31, 2001, Centene had no debt on its balance sheet and had cash and short-term investments of $90.0 million.
Outlook
Mr. Neidorff commented, "We anticipate revenue growth in excess of 20% in 2002 through a combination of both organic growth and premium rate increases in our markets served. The company should continue to operate within its targeted 82.0% to 83.5% MLR while reducing general and administrative expenses as a percentage of total revenue by 60 to 100 basis points year over year."
As previously announced, the company will host a conference call tomorrow morning, February 6, 2002, at 9:00 a.m. (Eastern Time) to review the financial results for the fourth quarter and year-ended December 31, 2001 and to discuss its business outlook. Mr. Michael F. Neidorff and Mr. Karey L. Witty, chief financial officer of Centene, will host the conference call. Investors and other interested parties may access the conference call by dialing (800) 230-1951 (domestic) or (612) 332-1020 (international), or via a live Internet broadcast on the company's web site at http://www.centene.com. A replay of the call will be available through February 13, 2002 by dialing (800) 475-6701 (domestic) or (320) 365-3844 (international) and entering access code 624655.
About Centene
Centene Corporation provides managed care programs and related services to individuals receiving benefits under Medicaid, including Supplemental Security Income (SSI), and the State Children's Health Insurance Program (CHIP). The company operates health plans in Wisconsin, Indiana and Texas.
This press release contains forward-looking statements that relate to future events and future financial performance of Centene. These forward-looking statements represent the company's estimates as of February 5, 2002. Subsequent events and developments may cause the company's estimates to change. The company disclaims any obligation to update this forward-looking financial information in the future. Readers are cautioned that matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, regulatory, competitive and other factors that may cause Centene's or its industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Actual results may differ from projections or estimates due to a variety of important factors, including Centene's ability to accurately predict and effectively manage health benefits and other operating expenses, competition, changes in health care practices, changes in federal or state laws or regulations, inflation, provider contract changes, new technologies, reduction in provider payments by governmental payors, major epidemics, disasters and numerous other factors affecting the delivery and cost of health care. The expiration, cancellation or suspension of Centene's Medicaid managed care contracts by state governments would also negatively impact Centene.
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE QUARTERS ENDED DECEMBER 31, 2001 AND 2000
(In thousands, except share data)
(Unaudited)
2001 2000
REVENUES:
Premiums $90,189 $58,420
Administrative services fees 102 1,392
Total revenues 90,291 59,812
EXPENSES:
Medical services costs 74,639 48,919
General and administrative expenses 9,954 8,203
Total operating expenses 84,593 57,122
Earnings from operations 5,698 2,690
OTHER INCOME (EXPENSE):
Investment and other income, net 1,110 173
Interest expense (77) (105)
Equity in income (losses) from joint ventures -- (179)
Earnings before income taxes 6,731 2,579
INCOME TAX EXPENSE (BENEFIT) 2,811 (643)
Net earnings 3,920 3,222
ACCRETION OF REDEEMABLE PREFERRED STOCK (98) (123)
Net earnings attributable to
common stockholders $3,822 $3,099
EARNINGS PER COMMON SHARE:
Basic $ 1.37 $3.44
Diluted $.45 $.47
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 2,799,303 901,526
Diluted 8,649,373 6,894,305
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(In thousands, except share data)
(Unaudited)
2001 2000
REVENUES:
Premiums $326,184 $216,414
Administrative services fees 385 4,936
Total revenues 326,569 221,350
EXPENSES:
Medical services costs 270,151 182,495
General and administrative expenses 37,946 32,335
Total operating expenses 308,097 214,830
Earnings from operations 18,472 6,520
OTHER INCOME (EXPENSE):
Investment and other income, net 3,916 1,784
Interest expense (362) (611)
Equity in income (losses) from joint ventures -- (508)
Earnings before income taxes 22,026 7,185
INCOME TAX EXPENSE (BENEFIT) 9,131 (543)
Net earnings 12,895 7,728
ACCRETION OF REDEEMABLE PREFERRED STOCK (467) (492)
Net earnings attributable to
common stockholders $12,428 $7,236
EARNINGS PER COMMON SHARE:
Basic $8.97 $8.03
Diluted $1.61 $1.13
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 1,385,399 901,526
Diluted 8,019,497 6,819,595
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS - PRO FORMA
FOR THE QUARTER ENDED DECEMBER 31, 2001
(In thousands, except share data)
(Unaudited)
Pro Forma Adjusted
As Reported Adjustments Pro Forma
REVENUES:
Premiums $90,189 $-- $90,189
Administrative services fees 102 -- 102
Total revenues 90,291 -- 90,291
EXPENSES:
Medical services costs 74,639 -- 74,639
General and administrative
expenses 9,954 -- 9,954
Total operating expenses 84,593 -- 84,593
Earnings from operations 5,698 -- 5,698
OTHER INCOME (EXPENSE):
Investment and other
income, net 1,110 281 1,391
Interest expense (77) 77 --
Earnings before income taxes 6,731 358 7,089
INCOME TAX EXPENSE (BENEFIT) 2,811 147 2,958
Net earnings 3,920 211 4,131
ACCRETION OF REDEEMABLE
PREFERRED STOCK (98) 98 --
Net earnings attributable
to common stockholders $3,822 $309 $4,131
EARNINGS PER COMMON SHARE:
Basic $1.37 $.41
Diluted $.45 $.37
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic 2,799,303 7,267,018 10,066,321
Diluted 8,649,373 2,578,804 11,228,177
The pro forma presentation assumes that as of October 1, 2001 (i) the company's IPO occurred, (ii) all classes of preferred and common stock were converted into a single class of common stock, (iii) the company's subordinated notes were repaid and (iv) the net IPO proceeds were invested in short-term interest bearing instruments.
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS - PRO FORMA
FOR THE YEAR ENDED DECEMBER 31, 2001
(In thousands, except share data)
(Unaudited)
Pro Forma Adjusted
As Reported Adjustments Pro Forma
REVENUES:
Premiums $326,184 $-- $326,184
Administrative services fees 385 -- 385
Total revenues 326,569 -- 326,569
EXPENSES:
Medical services costs 270,151 -- 270,151
General and administrative
expenses 37,946 -- 37,946
Total operating expenses 308,097 -- 308,097
Earnings from operations 18,472 -- 18,472
OTHER INCOME (EXPENSE):
Investment and other
income, net 3,916 1,296 5,212
Interest expense (362) 362 --
Earnings before income
taxes 22,026 1,658 23,684
INCOME TAX EXPENSE (BENEFIT) 9,131 680 9,811
Net earnings 12,895 978 13,873
ACCRETION OF REDEEMABLE
PREFERRED STOCK (467) 467 --
Net earnings attributable
to common stockholders $12,428 $1,445 $13,873
EARNINGS PER COMMON SHARE:
Basic $8.97 $1.38
Diluted $1.61 $1.25
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic 1,385,399 8,663,686 10,049,085
Diluted 8,019,497 3,080,822 11,100,319
The pro forma presentation assumes that as of January 1, 2001 (i) the company's IPO occurred, (ii) all classes of preferred and common stock were converted into a single class of common stock, (iii) the company's subordinated notes were repaid and (iv) the net IPO proceeds were invested in short-term interest bearing instruments.
CENTENE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2001 AND 2000
(In thousands, except share data)
(Unaudited)
2001 2000
ASSETS
CURRENT ASSETS:
Cash and short-term investments $90,036 $26,423
Premium and related receivables, net 7,032 15,538
Other current assets 4,979 4,755
Total current assets 102,047 46,716
LONG-TERM INVESTMENTS 22,339 14,459
OTHER LONG-TERM INVESTMENTS 6,980 4,842
Total assets $131,366 $66,017
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Medical claims liabilities $59,565 $45,805
Accounts payable and accrued expenses 7,712 6,168
Total current liabilities 67,277 51,973
SUBORDINATED DEBT -- 4,000
Total liabilities 67,277 55,973
SERIES D REDEEMABLE PREFERRED STOCK -- 18,878
STOCKHOLDERS' EQUITY 64,089 (8,834)
Total liabilities and stockholders' equity $131,366 $66,017
CENTENE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
(In thousands)
(Unaudited)
2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $12,895 $7,728
Adjustments to reconcile net income to
net cash provided by operating activities-
Depreciation and amortization 1,847 1,034
Other (384) 548
Net changes in assets and liabilities 15,829 4,148
Net cash provided by operating activities 30,187 13,458
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (3,635) (642)
Net purchase of investments (444) (12,878)
Contract acquisition (1,250) --
Investments in joint ventures 7,995 (1,097)
Net cash provided by (used in)
investing activities 2,666 (14,617)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of note payable -- (2,350)
Payment of subordinated debt (4,000) --
Net proceeds from issuance of common stock 41,042 --
Other, net (51) --
Net cash provided by (used in)
financing activities 36,991 (2,350)
Net increase (decrease) in cash
and cash equivalents 69,844 (3,509)
CASH AND CASH EQUIVALENTS, beginning of period 19,023 22,532
CASH AND CASH EQUIVALENTS, end of period $88,867 $19,023
SOURCE Centene Corporation
CONTACT: Mr. Karey L. Witty, Chief Financial Officer of Centene
Corporation, +1-314-725-4477
URL: http://www.centene.com
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