Centene Corporation Reports 2007 Third Quarter Results

ST. LOUIS--(BUSINESS WIRE)--Centene Corporation (NYSE: CNC) today announced its financial results for the quarter ended September 30, 2007. The revenues, general and administrative expenses and related financial ratios included in this release present premium taxes on a gross basis, consistent with our past reporting practice.

                            2007 Highlights
 ---------------------------------------------------------------------
                                                       Q3      YTD
                                                     ------  --------
 Total Revenues (in millions)                        $749.9  $2,148.5
 Medicaid/SCHIP HBR                                    79.0%     80.5%
 Diluted EPS (as reported)                           $ 0.36  $   1.61
 Diluted EPS excluding FirstGuard Activity           $ 0.37  $   0.90
    Third Quarter Summary

    --  Quarter-end Medicaid Managed Care membership of 1.1 million

    --  Revenues of $749.9 million, an 18.8% increase over the 2006
        third quarter.

    --  Earnings per diluted share of $0.37 (excluding FirstGuard
        Activity), compared to $0.31 in the 2006 third quarter
        (excluding FirstGuard impairment charges).

    --  Health Benefits Ratio (HBR) for Centene's Medicaid and SCHIP
        populations, which reflects medical costs as a percent of
        premium revenues, of 79.0% on a gross basis.

    --  Medicaid Managed Care G&A expense ratio of 13.6% and Specialty
        Services G&A ratio of 15.1%, including premium taxes.

    --  Operating cash flows of $104.9 million.

    --  Days in claims payable of 49.2.

    Other Events

    --  In July 2007, we acquired a minority interest in Access Health
        Solutions, LLC, the third largest Medicaid managed care entity
        in Florida.

    --  Appointed Mark Eggert to position of Executive Vice President,
        Health Plans.

    --  Stock repurchase program extended through October 31, 2008.

Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "During the third quarter, overall results for revenue, membership growth and earnings were consistent with our expectations, and our Medicaid and SCHIP HBR improved by 160 basis points sequentially.

"In Texas, we experienced growing membership in both SCHIP and in the Texas STAR Plus (SSI) program. Recently, we received notification from the state of Texas that it will launch its Foster Care program on April 1, 2008; we have worked diligently to prepare for this and look forward to serving the needs of these recipients.

"In Georgia, membership was 286,200, within our guided range. Positive momentum in cost and utilization trends in the state continue, and we recently hired Michael Cadger as our plan President and CEO. Michael Cadger brings over 30 years of relevant experience in the health and managed care industry. We are currently waiting to receive our rate increase from the state.

"We are encouraged by the opportunity in South Carolina as the state converts to full-risk later this year, as well as our entry into Florida, where we are preparing for the state's future conversion. We remain optimistic about the prospects for growth in both new and existing markets in Medicaid managed care and in our specialty businesses," concluded Neidorff.

The following table depicts membership in Centene's managed care organizations by state at September 30, 2007 and 2006:

                                                    2007       2006
                                                ----------------------
 Georgia                                            286,200    252,600
 Indiana                                            156,300    198,100
 New Jersey                                          58,300     59,100
 Ohio                                               127,500     88,300
 South Carolina                                      29,300         --
 Texas                                              347,000    259,900
 Wisconsin                                          132,700    167,100
                                                 ---------- ----------
    Subtotal                                      1,137,300  1,025,100

 Kansas and Missouri                                     --    144,600
                                                 ---------- ----------
    Total                                         1,137,300  1,169,700
                                                 ========== ==========

The following table depicts membership in Centene's managed care organizations by member category at September 30, 2007 and 2006:

                                               2007         2006
                                           ---------------------------
 Medicaid                                      841,600      818,000
 SCHIP                                         223,500      189,100
 SSI                                            72,200(a)    18,000(b)
                                            ----------   ----------
    Subtotal                                 1,137,300    1,025,100

 Kansas and Missouri Medicaid/SCHIP members         --      144,600
                                            ----------   ----------
    Total                                    1,137,300    1,169,700
                                            ==========   ==========

  (a) 65,700 at-risk; 6,500 ASO
  (b) 10,000 at-risk; 8,000 ASO
----------------------------------------------------------------------
    Statement of Operations

    --  For the 2007 third quarter, revenues increased 18.8% to $749.9
        million from $631.2 million in the 2006 third quarter.

    --  The HBR for Centene's Medicaid and SCHIP populations, which
        reflects medical costs as a percent of premium revenues, was
        79.0% on a gross basis, a decrease of 3.0% over 2006. The
        decrease in the current year is primarily attributable to
        increased premium yield and the effect of higher premium taxes
        combined with a moderating medical cost trend. Sequentially,
        our Medicaid and SCHIP HBR decreased from 80.6% in the 2007
        second quarter to 79.0% because of higher premium yield
        combined with a continued moderate medical cost trend. The
        2007 third quarter reflects expected claims reserve
        development and is based on consistent reserving methodology.

    --  G&A expense as a percent of revenues for the Medicaid Managed
        Care segment was 13.6% in the third quarter of 2007 compared
        to 13.1% in the third quarter of 2006. The increase in the
        Medicaid Managed Care G&A expense ratio for the three months
        ended September 30, 2007 primarily reflects increased premium
        taxes and start-up costs for our South Carolina and Texas
        Foster Care operations. Premium taxes were $20.7 million in
        the 2007 third quarter and $13.8 million in the 2006 third
        quarter. This increase was offset by a FirstGuard intangible
        asset impairment charge of $6.0 million in the third quarter
        of 2006.

    --  Operating earnings were $23.1 million, including $0.8 million
        of net expense for other FirstGuard Activity. Excluding the
        FirstGuard Activity in 2007 and the FirstGuard non-cash
        impairment charges in 2006, operating earnings were $23.9
        million in 2007 compared to $20.5 million in the 2006 third
        quarter.

    --  Reported GAAP earnings per diluted share were $0.36, or $0.37
        excluding FirstGuard Activity, compared to $0.31 in the 2006
        third quarter (excluding the FirstGuard non-cash impairment
        charges).

    --  For the nine months ended September 30, 2007, revenues
        increased 35.8% to $2.1 billion from $1.6 billion for the same
        period in the prior year. Medicaid Managed Care G&A expenses
        as a percent of revenues increased to 13.5% in the first nine
        months of 2007 compared to 12.5% in the first nine months of
        2006. Earnings from operations, excluding the FirstGuard
        Activity in 2007 and the FirstGuard non-cash impairment
        charges in 2006, increased to $56.7 million in the first nine
        months of 2007 from $39.4 million in the first nine months of
        2006. Net earnings, excluding the FirstGuard Activity, were
        $40.1 million or $0.90 per diluted share in the first nine
        months of 2007.

    Balance Sheet and Cash Flow

At September 30, 2007, the Company had cash and investments of $639.5 million, including $593.6 million held by its regulated entities and $45.9 million held by its unregulated entities. Medical claims liabilities totaled $316.6 million, representing 49.2 days in claims payable. Total debt was $202.1 million and debt to capitalization was 33.1%.

A reconciliation of the Company's change in days in claims payable from the immediately preceding quarter-end is presented below:

Days in claims payable, June 30, 2007                             46.8
Change in provider accruals                                        1.3
Increase in days receipt to paid                                   0.6
Specialty segment                                                  0.5
                                                                  ----
Days in claims payable, September 30, 2007                        49.2
                                                                  ====

Outlook

The table below depicts the Company's guidance for the 2007 fourth quarter and full year.

                                            Q4 2007 (1)   2007 (1)
                                            ----------- --------------
                                             Low  High   Low    High
                                            ----- ----- ------ -------
Revenue (in millions)                       $ 770 $ 780 $2,915 $2,930
Earnings per diluted share                  $0.46 $0.51 $ 1.36 $ 1.41
 (1) Excludes FirstGuard Activity
----------------------------------------------------------------------

Eric R. Slusser, Centene's Chief Financial Officer, stated, "The 2007 fourth quarter and full year guidance reflects our expectation for the Georgia rate increase. The high end of our guidance range was reduced to reflect our current rate expectations. As mentioned in our second quarter 2007 earnings call, the 2008 guidance will be announced in early December."

Stock Repurchase Authorization

On October 22, 2007, the Company's Board of Directors extended the expiration date of the Company's stock repurchase program to October 31, 2008. The program would have expired October 31, 2007. The program authorizes the repurchase of up to 4,000,000 shares of the Company's common stock from time to time on the open market or through privately negotiated transactions.

Conference Call

As previously announced, the Company will host a conference call Tuesday, October 23, 2007, at 8:30 A.M. (Eastern Time) to review the financial results for the third quarter ended September 30, 2007, and to discuss its business outlook. Michael F. Neidorff and Eric R. Slusser will host the conference call. Investors are invited to participate in the conference call by dialing 800-273-1254 in the U.S. and Canada, 706-679-8592 from abroad, or via a live internet broadcast on the Company's website at www.centene.com, under the Investor Relations section. A replay will be available for on-demand listening shortly after the completion of the call until 11:59 P.M. (Eastern Time) on November 6, 2007 at the aforementioned URL, or by dialing 800-642-1687 in the U.S. and Canada, or 706-645-9291 from abroad, and entering access code 16108117.

Non-GAAP Financial Presentation

The Company is providing certain non-GAAP financial measures in this release as the Company believes these figures are helpful in allowing individuals to more accurately assess the ongoing nature of the Company's operations and measure the Company's performance more consistently.

The 2007 non-GAAP information presented above in the "highlights" table, third bullet under "Third Quarter Summary" and fourth through sixth bullets under "Statement of Operations" excludes the activity for the Kansas and Missouri health plans, collectively, FirstGuard Activity. This exclusion has been made in the non-GAAP financial measures as management believes the 2007 results of the Kansas and Missouri health plans are not indicative of future company operations.

The 2006 non-GAAP information presented above in the third bullet under "Third Quarter Summary" and fourth through sixth bullets under "Statement of Operations" excludes the FirstGuard non-cash goodwill and intangible asset impairment charges related to the loss of our Kansas contract. This exclusion has been made in the non-GAAP financial measures as management believes this charge is an unusual event.

The Company uses the presented non-GAAP financial measures internally to focus management on period-to-period changes in the Company's core business operations. Therefore, the Company believes this information is meaningful in addition to the information contained in the GAAP presentation of financial information. The presentation of this additional non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

The following tables reconcile the Company's Statement of Operations for the three and nine months ended September 30, 2007 and 2006 on a GAAP basis to a non-GAAP basis. The 2007 non-GAAP basis excludes the FirstGuard Activity and the 2006 non-GAAP basis excludes the FirstGuard non-cash goodwill and intangible asset impairment charges related to the loss of our Kansas contract (in thousands, except share data).

                                              Three Months Ended
                                               September 30, 2007
                                          ----------------------------
                                                   FirstGuard
                                            GAAP    Activity  Non-GAAP
                                          -------- ---------- --------

Total revenues                            $749,949      $  61 $749,888
Expenses:
  Medical costs                            592,128        745  591,383
  Cost of services                          13,622         --   13,622
  General and administrative expenses      121,139        167  120,972
                                          -------- ---------- --------
    Total operating expenses               726,889        912  725,977
                                          -------- ---------- --------
       Earnings (loss) from operations      23,060       (851)  23,911
  Investment and other income, net           2,181         --    2,181
                                          -------- ---------- --------
       Earnings (loss) before income
        taxes                               25,241       (851)  26,092
Income tax expense (benefit)                 9,305       (323)   9,628
                                          -------- ---------- --------
     Net earnings (loss)                  $ 15,936      $(528)$ 16,464
                                          ======== ========== ========

Diluted earnings per common share         $   0.36            $   0.37
                                             Nine Months Ended
                                             September 30, 2007
                                      --------------------------------
                                                 FirstGuard
                                         GAAP     Activity   Non-GAAP
                                      ---------- ---------- ----------

Total revenues                        $2,148,522   $  6,669 $2,141,853
Expenses:
  Medical costs                        1,702,396      7,347  1,695,049
  Cost of services                        45,922         --     45,922
  General and administrative expenses    350,601      6,465    344,136
  Gain on sale of FirstGuard Missouri     (7,472)    (7,472)        --
                                      ---------- ---------- ----------
    Total operating expenses           2,091,447      6,340  2,085,107
                                      ---------- ---------- ----------
       Earnings (loss) from
        operations                        57,075        329     56,746
  Investment and other income, net         5,285     (2,156)     7,441
                                      ---------- ---------- ----------
       Earnings (loss) before income
        taxes                             62,360     (1,827)    64,187
Income tax expense (benefit)              (9,569)   (33,660)    24,091
                                      ---------- ---------- ----------
     Net earnings (loss)              $   71,929   $ 31,833 $   40,096
                                      ========== ========== ==========

Diluted earnings per common share     $     1.61            $     0.90
                                             Three Months Ended
                                              September 30, 2006
                                        ------------------------------
                                                  FirstGuard
                                                   Impairment
                                          GAAP      Charges   Non-GAAP
                                        --------- ----------- --------

Total revenues                          $631,249     $     -- $631,249
Expenses:
  Medical costs                          501,350           --  501,350
  Cost of services                        15,373           --   15,373
  General and administrative expenses     99,984       (5,993)  93,991
  Impairment loss                         81,098      (81,098)      --
                                        --------- ----------- --------
    Total operating expenses             697,805      (87,091) 610,714
                                        --------- ----------- --------
       Earnings (loss) from operations   (66,556)      87,091   20,535
  Investment and other income, net         1,543           --    1,543
                                        --------- ----------- --------
       Earnings (loss) before income
        taxes                            (65,013)      87,091   22,078
Income tax expense                         6,180        2,098    8,278
                                        --------- ----------- --------
     Net earnings (loss)                $(71,193)    $ 84,993 $ 13,800
                                        ========= =========== ========

Diluted earnings (loss) per common
 share                                  $  (1.65)             $   0.31
                                            Nine Months Ended
                                            September 30, 2006
                                     ---------------------------------
                                                FirstGuard
                                                 Impairment
                                        GAAP      Charges    Non-GAAP
                                     ---------- ----------- ----------

Total revenues                       $1,581,620    $     -- $1,581,620
Expenses:
  Medical costs                       1,263,251          --  1,263,251
  Cost of services                       45,278          --     45,278
  General and administrative
   expenses                             239,647      (5,993)   233,654
  Impairment loss                        81,098     (81,098)        --
                                     ---------- ----------- ----------
    Total operating expenses          1,629,274     (87,091) 1,542,183
                                     ---------- ----------- ----------
       Earnings (loss) from
        operations                      (47,654)     87,091     39,437
  Investment and other income, net        4,520          --      4,520
                                     ---------- ----------- ----------
       Earnings (loss) before income
        taxes                           (43,134)     87,091     43,957
Income tax expense                       14,328       2,098     16,426
                                     ---------- ----------- ----------
     Net earnings (loss)             $  (57,462)   $ 84,993 $   27,531
                                     ========== =========== ==========

Diluted earnings (loss) per common
 share                               $    (1.33)            $     0.62

Premium Tax Presentation

The Company reports premium taxes as a component of revenues and general and administrative expenses, or on a gross basis. Effective with the reporting of our results for the fourth quarter of 2007, the Company intends to report premium taxes on the face of the statement of operations as a component of revenues and a component of operating expenses. The following statement of operations, for the three months ended September 30, 2007 and 2006, displays the intended format.

                                                   Three Months Ended
                                                      September 30,
                                                   ------------------
                                                     2007      2006
                                                   --------- --------
                                                       (Unaudited)
Revenues:
    Premium                                        $709,516  $596,831
    Premium tax                                      20,737    13,830
    Service                                          19,696    20,588
                                                   --------- --------
    Total revenues                                  749,949   631,249
                                                   --------- --------
Expenses:
    Medical costs                                   592,128   501,350
    Cost of services                                 13,622    15,373
    General and administrative expenses             100,402    86,154
    Premium tax expense                              20,737    13,830
    Impairment loss                                      --    81,098
                                                   --------- --------
    Total operating expenses                        726,889   697,805
                                                   --------- --------
Earnings (loss) from operations                      23,060   (66,556)
Other income (expense):
    Investment and other income                       6,352     4,625
    Interest expense                                 (4,171)   (3,082)
                                                   --------- --------
      Earnings (loss) before income taxes            25,241   (65,013)
Income tax expense                                    9,305     6,180
                                                   --------- --------
    Net earnings (loss)                            $ 15,936  $(71,193)
                                                   ========= ========

The Company also intends to alter the definition of its HBR and G&A ratios to a net basis. On a net basis, the HBR is calculated as Medical costs divided by Premium revenues. On a net basis, the G&A ratio is recorded as G&A expense divided by the sum of Premium revenue and Service revenue. The following table shows the Company's Medicaid/SCHIP HBR and the Medicaid Managed Care G&A ratio on a gross basis as reported as well as on a net basis for analytical purposes.

                              Premium    Medicaid/SCHIP   Medicaid
                              Taxes (in        HBR       Managed Care
                              thousands)                   G&A Ratio
                                         -------------- --------------
                                         Current   Net  Current   Net
                                          (Gross)        (Gross)
                             ----------- -------- ----- -------- -----
2007
  Q1                             $18,216    82.3% 84.8%    13.0% 10.5%
  Q2                              19,874    80.6  83.1     14.0  11.5
  Q3                              20,737    79.0  81.5     13.6  11.0
                             -----------
Year to Date                     $58,827    80.5  83.0     13.5  11.0
                             ===========

2006
  Q1                             $ 4,305    82.8% 83.7%    11.9% 11.0%
  Q2                               6,876    84.0  85.3     12.3  11.0
  Q3                              13,830    82.0  84.0     13.1  11.0
  Q4                              17,442    82.1  84.4     12.7  10.4
                             -----------
Total Year                       $42,453    82.6  84.3     12.6  10.8
                             ===========

About Centene Corporation

Centene Corporation is a leading multi-line healthcare enterprise that provides programs and related services to individuals receiving benefits under Medicaid, including the State Children's Health Insurance Program (SCHIP) and Supplemental Security Income (SSI). The Company operates health plans in Florida, Georgia, Indiana, New Jersey, Ohio, South Carolina, Texas and Wisconsin. In addition, the Company contracts with other healthcare and commercial organizations to provide specialty services including behavioral health, health management, long-term care, managed vision, nurse triage, pharmacy benefits management and treatment compliance. Information regarding Centene is available via the Internet at www.centene.com.

The information provided in this press release contains forward-looking statements that relate to future events and future financial performance of Centene. Subsequent events and developments may cause the Company's estimates to change. The Company disclaims any obligation to update this forward-looking financial information in the future. Readers are cautioned that matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, regulatory, competitive and other factors that may cause Centene's 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 healthcare 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 healthcare. The expiration, cancellation or suspension of Centene's Medicaid Managed Care contracts by state governments would also negatively affect Centene.

                 CENTENE CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS
                  (In thousands, except share data)

                                            September 30, December 31,
                                                2007          2006
                                            ------------- ------------
                                                   (Unaudited)
                   ASSETS
Current assets:
      Cash and cash equivalents                $  275,048    $271,047
      Premium and related receivables              84,813      91,664
      Short-term investments, at fair value
       (amortized cost $48,312 and $67,199,
       respectively)                               48,095      66,921
      Other current assets                         42,496      22,189
                                            ------------- ------------
        Total current assets                      450,452     451,821
Long-term investments, at fair value
 (amortized cost $288,732 and $146,980,
 respectively)                                    289,608     145,417
Restricted deposits, at fair value
 (amortized cost $26,667 and $25,422,
 respectively)                                     26,804      25,265
Property, software and equipment, net             139,671     110,688
Goodwill                                          133,151     135,877
Other intangible assets, net                       13,829      16,202
Other assets                                       32,725       9,710
                                            ------------- ------------
           Total assets                        $1,086,240    $894,980
                                            ============= ============

    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
      Medical claims liabilities               $  316,617    $280,441
      Accounts payable and accrued expenses       102,728      72,723
      Unearned revenue                             44,496      33,816
      Current portion of long-term debt               998         971
                                            ------------- ------------
        Total current liabilities                 464,839     387,951
Long-term debt                                    201,140     174,646
Other liabilities                                  11,712       5,960
                                            ------------- ------------
           Total liabilities                      677,691     568,557
Stockholders' equity:
      Common stock, $.001 par value;
       authorized 100,000,000 shares; issued
       and outstanding 43,496,447 and
       43,369,918 shares, respectively                 44          44
      Additional paid-in capital                  217,746     209,340
      Accumulated other comprehensive
       income:
        Unrealized gain (loss) on
         investments, net of tax                      493      (1,251)
      Retained earnings                           190,266     118,290
                                            ------------- ------------
           Total stockholders' equity             408,549     326,423
                                            ------------- ------------
           Total liabilities and
            stockholders' equity               $1,086,240    $894,980
                                            ============= ============
                 CENTENE CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF OPERATIONS
                  (In thousands, except share data)



                     Three Months Ended         Nine Months Ended
                         September 30,             September 30,
                   ------------------------  ------------------------
                      2007         2006         2007         2006
                   -----------  -----------  -----------  -----------
                          (Unaudited)               (Unaudited)

Revenues:
 Premium           $   730,253  $   610,661  $ 2,087,219  $ 1,522,302
 Service                19,696       20,588       61,303       59,318
                   -----------  -----------  -----------  -----------
 Total revenues        749,949      631,249    2,148,522    1,581,620
                   -----------  -----------  -----------  -----------
Expenses:
 Medical costs         592,128      501,350    1,702,396    1,263,251
 Cost of services       13,622       15,373       45,922       45,278
 General and
  administrative
  expenses             121,139       99,984      350,601      239,647
 Impairment loss            --       81,098           --       81,098
 Gain on sale of
  FirstGuard
  Missouri                  --           --       (7,472)          --
                   -----------  -----------  -----------  -----------
 Total operating
  expenses             726,889      697,805    2,091,447    1,629,274
                   -----------  -----------  -----------  -----------
Earnings (loss)
 from operations        23,060      (66,556)      57,075      (47,654)
Other income
 (expense):
 Investment and
  other income           6,352        4,625       16,801       12,056
 Interest expense       (4,171)      (3,082)     (11,516)      (7,536)
                   -----------  -----------  -----------  -----------
   Earnings (loss)
    before income
    taxes               25,241      (65,013)      62,360      (43,134)
Income tax expense
 (benefit)               9,305        6,180       (9,569)      14,328
                   -----------  -----------  -----------  -----------
 Net earnings
  (loss)               $15,936     $(71,193)     $71,929     $(57,462)
                   ===========  ===========  ===========  ===========

Earnings per
 share:
 Basic earnings
  (loss) per
  common share     $      0.37  $     (1.65) $      1.65  $     (1.33)
 Diluted earnings
  (loss) per
  common share     $      0.36  $     (1.65) $      1.61  $     (1.33)

Weighted average
 number of shares
 outstanding:
 Basic              43,532,832   43,219,053   43,528,201   43,126,062
 Diluted            44,628,560   43,219,053   44,787,981   43,126,062
                 CENTENE CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In thousands)

                                      Nine Months Ended September 30,
                                      -------------------------------
                                           2007            2006
                                      --------------  ---------------
                                                (Unaudited)

Cash flows from operating activities:
  Net earnings (loss)                 $       71,929  $       (57,462)
  Adjustments to reconcile net
   earnings (loss) to net cash
   provided by operating activities --
    Depreciation and amortization             20,381           15,286
    Stock compensation expense                11,753           11,168
    Impairment loss                               --           87,091
    Deferred income taxes                       (859)          (4,493)
    Gain on sale of FirstGuard
     Missouri                                 (7,472)              --
  Changes in assets and liabilities --
    Premium and related receivables            6,855          (34,209)
    Other current assets                     (15,540)           2,705
    Other assets                                (934)            (455)
    Medical claims liabilities                36,312           74,367
    Unearned revenue                          10,680            4,816
    Accounts payable and accrued
     expenses                                 27,981           25,929
    Other operating activities                 3,666             (188)
                                      --------------  ---------------
        Net cash provided by operating
         activities                          164,752          124,555
                                      --------------  ---------------
Cash flows from investing activities:
  Purchases of property, software and
   equipment                                 (41,774)         (39,494)
  Purchases of investments                  (464,378)        (235,501)
  Sales and maturities of investments        341,450          200,155
  Proceeds from asset sales                   14,102               --
  Investments in acquisitions and
   equity method investee, net of cash
   acquired                                  (26,425)         (66,921)
                                      --------------  ---------------
        Net cash used in investing
         activities                         (177,025)        (141,761)
                                      --------------  ---------------
Cash flows from financing activities:
  Proceeds from exercise of stock
   options                                     3,737            4,594
  Proceeds from borrowings                   202,000           83,359
  Payment of long-term debt                 (176,729)         (12,505)
  Excess tax benefits from stock
   compensation                                1,028            2,094
  Common stock repurchases                    (8,581)          (7,214)
  Debt issue costs                            (5,181)              --
                                      --------------  ---------------
        Net cash provided by financing
         activities                           16,274           70,328
                                      --------------  ---------------
        Net increase in cash and cash
         equivalents                           4,001           53,122
                                      --------------  ---------------
Cash and cash equivalents, beginning
 of period                                   271,047          147,358
                                      --------------  ---------------
Cash and cash equivalents, end of
 period                               $      275,048  $       200,480
                                      ==============  ===============

  Interest paid                       $        4,480  $         7,582
  Income taxes paid                   $        6,965  $         5,223
                         CENTENE CORPORATION

                     SUPPLEMENTAL FINANCIAL DATA

                                  Q3        Q2        Q1        Q4
                                 2007      2007      2007      2006
                               --------- --------- --------- ---------
MEMBERSHIP
Medicaid Managed Care:
   Georgia                       286,200   281,400   291,300   308,800
   Indiana                       156,300   161,700   176,700   183,100
   New Jersey                     58,300    59,100    59,100    58,900
   Ohio                          127,500   128,200   118,300   109,200
   South Carolina                 29,300    31,100        --        --
   Texas                         347,000   333,900   318,500   298,500
   Wisconsin                     132,700   136,100   139,400   164,800
                               --------- --------- --------- ---------
       Subtotal                1,137,300 1,131,500 1,103,300 1,123,300
   Kansas and Missouri                --        --        --   138,900
                               --------- --------- --------- ---------
          TOTAL                1,137,300 1,131,500 1,103,300 1,262,200
                               ========= ========= ========= =========

   Medicaid                      841,600   846,900   839,600   887,300
   SCHIP                         223,500   216,500   211,200   216,200
   SSI                            72,200    68,100    52,500    19,800
                               --------- --------- --------- ---------
       Subtotal                1,137,300 1,131,500 1,103,300 1,123,300
   Kansas and Missouri Medicaid
    and SCHIP members                 --        --        --   138,900
                               --------- --------- --------- ---------
          TOTAL                1,137,300 1,131,500 1,103,300 1,262,200
                               ========= ========= ========= =========

Specialty Services(a):
   Arizona                        99,000    95,200    93,600    94,500
   Kansas                         35,600    37,500    36,600    36,600
                               --------- --------- --------- ---------
          TOTAL                  134,600   132,700   130,200   131,100
                               ========= ========= ========= =========

(a) Includes behavioral health contracts only.

REVENUE PER MEMBER(b)            $207.25   $198.98   $185.90   $173.75

CLAIMS(b)
   Period-end inventory          266,600   284,800   326,000   296,100
   Average inventory             320,100   244,600   239,400   195,700
   Period-end inventory per
    member                          0.24      0.26      0.30      0.23

(b) Revenue per member and claims information are presented for the
 Medicaid Managed Care segment.
                                             Q3     Q2     Q1     Q4
                                            2007   2007   2007   2006
                                           ------ ------ ------ ------

DAYS IN CLAIMS PAYABLE (c)                   49.2   46.8   46.4   46.4
(c) Days in Claims Payable is a calculation of Medical Claims
 Liabilities at the end of the period divided by average claims
 expense per calendar day for such period.

CASH AND INVESTMENTS (in millions)
   Regulated                               $593.6 $527.9 $491.0 $479.8
   Unregulated                               45.9   65.8   71.8   28.9
                                           ------ ------ ------ ------
          TOTAL                            $639.5 $593.7 $562.8 $508.7
                                           ====== ====== ====== ======

DEBT TO CAPITALIZATION (d)                  33.1%  34.0%  35.3%  35.0%
(d) Debt to Capitalization is calculated as follows: total debt
 divided by (total debt + equity).
HEALTH BENEFITS RATIO BY CATEGORY:
                              Three Months Ended   Nine Months Ended
                                 September 30,       September 30,
                              -------------------  ------------------
                                  2007      2006      2007      2006
                              ------------  -----  -----------  -----
Medicaid and SCHIP                    79.0%  82.0%        80.5%  82.8%
SSI                                   89.6   84.1         88.2   86.2
Specialty Services                    81.7   82.9         78.9   83.5
GENERAL AND ADMINISTRATIVE EXPENSE RATIO BY BUSINESS SEGMENT:
                              Three Months Ended   Nine Months Ended
                                 September 30,       September 30,
                              -------------------  ------------------
                                      2007   2006         2007   2006
                              ------------  -----  -----------  -----
Medicaid Managed Care                 13.6%  13.1%        13.5%  12.5%
Specialty Services                    15.1   17.0         15.5   18.3
MEDICAL CLAIMS LIABILITIES (In thousands)
Four rolling quarters of the changes in medical claims liabilities are
 summarized as follows:
Balance, September 30, 2006                                $  246,669
Incurred related to:
   Current period                                           2,275,172
   Prior period                                               (16,216)
                                                           ----------
      Total incurred                                        2,258,956
                                                           ==========
Paid related to:
   Current period                                           1,961,044
   Prior period                                               227,964
                                                           ----------
      Total paid                                            2,189,008
                                                           ----------
Balance, September 30, 2007                                $  316,617
                                                           ==========
Centene's claims reserving process utilizes a consistent actuarial
 methodology to estimate Centene's ultimate liability.  Any reduction
 in the "Incurred related to:  Prior period" claims may be offset as
 Centene actuarially determines "Incurred related to: Current period."
  As such, only in the absence of a consistent reserving methodology
 would favorable development of prior period claims liability
 estimates reduce medical costs. Centene believes it has consistently
 applied its claims reserving methodology in each of the periods
 presented.

Source: Centene Corporation