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