Centene Corporation Reports 2007 Fourth Quarter Results

ST. LOUIS--(BUSINESS WIRE)--Centene Corporation (NYSE: CNC) today announced its financial results for the quarter and year ended December 31, 2007. The results exclude the benefit of the July 1 through December 31, 2007 period rate increase for Georgia which was in our previous guidance and will now be recognized in the first quarter of 2008. Our updated guidance disclosed later in this press release reflects this change. As previously announced, premium taxes are now separately disclosed as a component of both revenues and operating expenses on our statement of operations. Related financial ratios included in this release exclude premium taxes. Additionally, we have reclassified and reported our Kansas and Missouri health plans, collectively FirstGuard, as discontinued operations. Unless specifically noted, the discussions below are in the context of continuing operations, and therefore, exclude the FirstGuard operations.

----------------------------------------------------------------------
                           2007 Highlights
 --------------------------------------------------------------------
                                                    Q4      Full Year
                                                 ---------  ---------
 Total Revenues (in millions)                    $  777.4   $2,919.3
 Medicaid/SCHIP HBR                                  84.0%      83.2%
 Diluted EPS (as reported)                       $   0.07   $   0.92
 Diluted EPS (excluding restructuring charges)   $   0.20   $   1.09

----------------------------------------------------------------------

    Fourth Quarter Summary

    --  2007 fourth quarter earnings impacted by the inability to
        recognize the July 1, 2007 Georgia rate increase until the
        2008 first quarter.

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

    --  Revenues of $777.4 million, a 25.8% increase over the 2006
        fourth quarter.

    --  Earnings per diluted share of $0.20 (excluding restructuring
        charges), compared to $0.21 in the 2006 fourth quarter.

    --  Health Benefits Ratio (HBR) for Centene's Medicaid and SCHIP
        populations, which reflects medical costs as a percent of
        premium revenues, of 84.0%.

    --  Medicaid Managed Care G&A expense ratio of 11.8% and Specialty
        Services G&A ratio of 15.4%.

    --  Total operating cash flows of $37.5 million.

    --  Days in claims payable of 49.1.

    Other Events

    --  Recognized previously announced restructuring charge totaling
        $9.4 million pre-tax.

    --  Began participating in the state of South Carolina's
        conversion to managed care.

Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "We concluded the fourth quarter of 2007 with solid revenue, membership and earnings results. Additionally, our cash flows were strong, our Medicaid HBR improved to 84.0%, a decrease of 140 basis points from the 2006 fourth quarter, and our G&A was consistent with our expectations.

"In Ohio, our core Medicaid program growth was in line. Medical costs in the ABD population, not unexpectedly, continue to be challenging as we work to manage the integration of these members into our network. Over time, we believe that targeted margins are achievable as we reach critical mass and are able to more effectively manage their care.

"In Texas, we experienced growing membership in both SCHIP and the Texas STAR Plus (SSI) program. We are on track for the launch of the state's Foster Care program on April 1, 2008.

"As we commence 2008, we will focus on growing our revenue stream to external third party vendors through our specialty company products and PBM. We are 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 December 31, 2007 and 2006:

----------------------------------------------------------------------
                                                   2007       2006
                                                 ---------  ---------
 Georgia                                           287,900    308,800
 Indiana                                           154,600    183,100
 New Jersey                                         57,300     58,900
 Ohio                                              128,700    109,200
 South Carolina                                     31,800         --
 Texas                                             354,400    298,500
 Wisconsin                                         131,900    164,800
                                                 ---------  ---------
    Total                                        1,146,600  1,123,300
                                                 =========  =========

----------------------------------------------------------------------

The following table depicts membership in Centene's managed care organizations, by member category, at December 31, 2007 and 2006:

----------------------------------------------------------------------
                                             2007          2006
                                           ---------     ---------
 Medicaid                                    848,100       887,300
 SCHIP                                       224,400       216,200
 SSI                                          74,100        19,800
                                           ---------     ---------
    Total                                  1,146,600(a)  1,123,300(b)
                                           =========     =========

 (a) 1,111,500 at-risk; 35,100 ASO
 (b) 1,112,700 at-risk; 10,600 ASO
----------------------------------------------------------------------

    Statement of Operations

    --  For the 2007 fourth quarter, revenues from continuing
        operations increased 25.8% to $777.4 million from $617.8
        million in the 2006 fourth quarter. The increase was mainly
        driven by membership growth in Texas and Ohio, which are the
        two markets that added SSI products in 2007. The fourth
        quarter included an approximate $4.2 million reduction of
        premium revenue and pre-tax earnings due to a prior period
        true-up with the State of Indiana.

    --  The HBR for Centene's Medicaid and SCHIP populations, which
        reflects medical costs as a percent of premium revenues, was
        84.0%, an increase from 81.3% in the 2007 third quarter. The
        increase resulted from pharmacy and other general seasonality
        and the previously mentioned premium true-up in Indiana.

    --  G&A expense as a percent of premium and service revenues for
        the Medicaid Managed Care segment was 11.8% in the fourth
        quarter of 2007 compared to 10.4% in the fourth quarter of
        2006. The increase in the Medicaid Managed Care G&A expense
        ratio for the three months ended December 31, 2007 primarily
        reflects our previously announced restructuring charge
        recorded in the fourth quarter. The pre-tax restructuring
        charge for asset impairment and severance totaled $9.4 million
        and increased our G&A ratio by 1.3%.

    --  Operating earnings were $0.3 million, including the
        restructuring charge. Excluding the restructuring charge,
        operating earnings were $9.7 million compared to $9.8 million
        in the 2006 fourth quarter.

    --  Reported GAAP earnings per diluted share from continuing
        operations were $0.07, or $0.20 excluding restructuring
        charges, compared to $0.21 in the 2006 fourth quarter.

    --  Net earnings per diluted share (including discontinued
        operations) were $0.03.

    --  For the year ended December 31, 2007, revenues from continuing
        operations increased 48.8% to $2.9 billion from $2.0 billion
        for the same period in the prior year. Medicaid Managed Care
        G&A expenses as a percent of premium and service revenues
        decreased to 11.1% in the year ended December 31, 2007,
        compared to 11.4% in the year ended December 31, 2006.
        Excluding the $12.4 million of restructuring charges, earnings
        from operations increased to $66.5 million in the year ended
        December 31, 2007 from $27.8 million in the year ended
        December 31, 2006. Net earnings from continuing operations,
        excluding the restructuring charges, were $49.0 million or
        $1.09 per diluted share in 2007.

    Balance Sheet and Cash Flow

At December 31, 2007, the Company had cash and investments of $659.2 million, including $626.2 million held by its regulated entities and $33.0 million held by its unregulated entities. Medical claims liabilities totaled $335.9 million, representing 49.1 days in claims payable, unchanged from September 30, 2007. Total debt was $207.4 million and debt to capitalization was 33.3%.

Outlook

The table below depicts the Company's guidance for the 2008 first quarter and full year.

----------------------------------------------------------------------
                                          Q1 2008           2008
                                       --------------  --------------
                                        Low     High    Low     High
                                       ------  ------  ------  ------
 Revenue (in millions) (1)             $  785  $  795  $3,370  $3,470
 Earnings per diluted share            $ 0.59  $ 0.64  $ 2.04  $ 2.14

 ------------------------------------
 (1) Revenue net of premium tax
----------------------------------------------------------------------

Eric R. Slusser, Centene's Chief Financial Officer, stated, "This guidance reflects normal seasonality, previously mentioned start-up costs in Texas, South Carolina and Florida of approximately $0.09, and the state of Wisconsin's decision to carve-out pharmacy benefits from our premium, effective February 1, 2008. This guidance also includes premium rate increases of 1.5% in Ohio, effective January 1, 6.3% in Indiana, effective January 1, 3.5% in Wisconsin, effective February 1, and a 3.8% rate increase in Georgia retroactive to July 1, 2007."

Conference Call

As previously announced, the Company will host a conference call Friday, February 8, 2008, at 7:30 A.M. (Eastern Time) to review the financial results for the fourth quarter ended December 31, 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 February 22, 2008 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 34562229.

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 "Fourth Quarter Summary" and fourth, fifth and seventh bullets under "Statement of Operations" excludes the second quarter contribution to our charitable foundation with a portion of the proceeds from the sale of FirstGuard Missouri as well as the fourth quarter charges for fixed asset impairment and severance for an organizational realignment, collectively, restructuring charges. This exclusion has been made in the non-GAAP financial measures as management believes these 2007 restructuring charges are not indicative of future company operations.

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 months and year ended December 31, 2007 on a GAAP basis to a non-GAAP basis. The 2007 non-GAAP basis excludes the restructuring charges mentioned above (in thousands, except share data).

                                           Three Months Ended
                                            December 31, 2007
                                   -----------------------------------
                                              Restructuring
                                      GAAP       Charges     Non-GAAP
                                   ---------- ------------- ----------

Total revenues                     $ 777,439  $         --  $ 777,439
Expenses:
   Medical costs                     629,437            --    629,437
   Cost of services                   15,532            --     15,532
   General and administrative
    expenses                         110,978         9,392    101,586
   Premium tax expense                21,145            --     21,145
                                   ---------- ------------- ----------
      Total operating expenses       777,092         9,392    767,700
                                   ---------- ------------- ----------
         Earnings (loss) from
          operations                     347        (9,392)     9,739
   Investment and other income,
    net                                2,102            --      2,102
                                   ---------- ------------- ----------
         Earnings (loss) before
          income taxes                 2,449        (9,392)    11,841
Income tax expense (benefit)            (584)       (3,523)     2,939
                                   ---------- ------------- ----------
      Net earnings from continuing
       operations                      3,033        (5,869)     8,902
      Discontinued operations, net
       of income tax                  (1,560)           --     (1,560)
                                   ---------- ------------- ----------
      Net earnings (loss)          $   1,473  $     (5,869) $   7,342
                                   ========== ============= ==========

Diluted earnings per common share
 from continuing operations        $    0.07                $    0.20
                                               Year Ended
                                            December 31, 2007
                                   -----------------------------------
                                              Restructuring
                                      GAAP     Charges (1)   Non-GAAP
                                   ---------- ------------- ----------

Total revenues                     $2,919,292 $         --  $2,919,292
Expenses:
   Medical costs                    2,324,486           --   2,324,486
   Cost of services                    61,454           --      61,454
   General and administrative
    expenses                          399,687       12,392     387,295
   Premium tax expense                 79,572           --      79,572
                                   ---------- ------------- ----------
      Total operating expenses      2,865,199       12,392   2,852,807
                                   ---------- ------------- ----------
         Earnings (loss) from
          operations                   54,093      (12,392)     66,485
   Investment and other income,
    net                                 9,543           --       9,543
                                   ---------- ------------- ----------
         Earnings (loss) before
          income taxes                 63,636      (12,392)     76,028
Income tax expense (benefit)           22,367       (4,663)     27,030
                                   ---------- ------------- ----------
      Net earnings from continuing
       operations                      41,269       (7,729)     48,998
      Discontinued operations, net
       of income tax                   32,133           --      32,133
                                   ---------- ------------- ----------
      Net earnings (loss)          $   73,402 $     (7,729) $   81,131
                                   ========== ============= ==========

Diluted earnings per common share
 from continuing operations        $     0.92               $     1.09

----------------------------------
(1) For the year ended December 31, 2007, restructuring charges
 include a $3,000 pre-tax contribution of a portion of the FirstGuard
 sale proceeds to the Company's charitable foundation.

Premium Tax Presentation

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

                                                    Medicaid Managed
                             Medicaid/SCHIP HBR      Care G&A Ratio
                            --------------------  --------------------
            Premium Taxes    Current               Current
            (in thousands)    (Net)      Gross      (Net)      Gross
            --------------  ---------  ---------  ---------  ---------
2007
   Q1       $       17,816      84.5%      82.0%      10.2%      12.7%
   Q2               19,874      82.8       80.3       11.4       13.9
   Q3               20,737      81.3       78.9       11.0       13.5
   Q4               21,145      84.0       81.2       11.8       14.3
            --------------
Total Year  $       79,572      83.2       80.6       11.1       13.6
            ==============

2006
   Q1       $        3,250      81.8%      80.9%      12.6%      13.4%
   Q2                5,806      84.8       83.5       12.5       13.8
   Q3               12,590      84.4       82.2       11.0       13.2
   Q4               16,315      85.4       82.9       10.4       12.8
            --------------
Total Year  $       37,961      84.3       82.5       11.4       13.2
            ==============

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 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, life and 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.

                            (Tables Follow)
                 CENTENE CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS
                  (In thousands, except share data)

                                                     December 31,
                                                 ---------------------
                                                    2007       2006
                                                 ---------- ----------
                                                      (Unaudited)
ASSETS
Current assets:
   Cash and cash equivalents of continuing
    operations                                   $  268,584 $ 253,370
   Cash and cash equivalents of discontinued
    operations                                           --    17,677
                                                 ---------- ----------
         Total cash and cash equivalents            268,584   271,047
   Premium and related receivables                   90,072    74,379
   Short-term investments, at fair value
    (amortized cost $46,392 and $57,031,
    respectively)                                    46,269    56,790
   Other current assets                              41,414    17,279
   Current assets of discontinued operations,
    other than cash                                      --    32,327
                                                 ---------- ----------
         Total current assets                       446,339   451,822
Long-term investments, at fair value (amortized
 cost $314,681 and $117,620, respectively)          317,041   116,052
Restricted deposits, at fair value (amortized
 cost $27,056 and $24,512, respectively)             27,301    24,355
Property, software and equipment, net               138,139   110,688
Goodwill                                            141,030   129,881
Other intangible assets, net                         13,205    15,555
Other assets                                         36,067     9,209
Long-term assets of discontinued operations              --    37,418
                                                 ---------- ----------
         Total assets                            $1,119,122 $ 894,980
                                                 ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Medical claims liabilities                    $  335,856 $ 249,864
   Accounts payable and accrued expenses            105,096    63,893
   Unearned revenue                                  44,016    33,816
   Current portion of long-term debt and notes
    payable                                             971       971
   Current liabilities of discontinued
    operations                                          861    39,407
                                                 ---------- ----------
         Total current liabilities                  486,800   387,951
Long-term debt                                      206,406   174,646
Other liabilities                                    10,869     5,853
Long-term liabilities of discontinued operations         --       107
                                                 ---------- ----------
         Total liabilities                          704,075   568,557
Stockholders' equity:
   Common stock, $.001 par value; authorized
    100,000,000 shares; issued and outstanding
    43,667,837 and 43,369,918 shares,
    respectively                                         44        44
   Additional paid-in capital                       221,693   209,340
   Accumulated other comprehensive income:
      Unrealized gain (loss) on investments, net
       of tax                                         1,571    (1,251)
   Retained earnings                                191,739   118,290
                                                 ---------- ----------
         Total stockholders' equity                 415,047   326,423
                                                 ---------- ----------
         Total liabilities and stockholders'
          equity                                 $1,119,122 $ 894,980
                                                 ========== ==========
                 CENTENE CORPORATION AND SUBSIDIARIES

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

                      Three Months Ended            Year Ended
                         December 31,              December 31,
                   ------------------------- -------------------------
                       2007         2006         2007         2006
                   ------------ ------------ ------------ ------------
                          (Unaudited)               (Unaudited)
Revenues:
  Premium          $   736,895  $   581,217  $ 2,759,018  $ 1,844,452
  Premium tax           21,145       16,315       79,572       37,961
  Service               19,399       20,263       80,702       79,581
                   ------------ ------------ ------------ ------------
    Total revenues     777,439      617,795    2,919,292    1,961,994
                   ------------ ------------ ------------ ------------
Expenses:
  Medical costs        629,437      495,712    2,324,486    1,555,658
  Cost of services      15,532       15,396       61,454       60,506
  General and
   administrative
   expenses            110,978       80,527      399,687      280,067
  Premium tax
   expense              21,145       16,315       79,572       37,961
                   ------------ ------------ ------------ ------------
    Total
     operating
     expenses          777,092      607,950    2,865,199    1,934,192
                   ------------ ------------ ------------ ------------
    Earnings from
     operations            347        9,845       54,093       27,802
Other income
 (expense):
  Investment and
   other income          6,212        6,251       25,169       16,416
  Interest expense      (4,110)      (3,100)     (15,626)     (10,636)
                   ------------ ------------ ------------ ------------
    Earnings
     before income
     taxes               2,449       12,996       63,636       33,582
Income tax expense        (584)       3,745       22,367       12,642
                   ------------ ------------ ------------ ------------
    Net earnings
     from
     continuing
     operations          3,033        9,251       41,269       20,940
    Discontinued
     operations,
     net of income
     tax (benefit)
     expense of
     $1,621,
     $3,904,
     $(30,899) and
     $9,335
     respectively       (1,560)       4,582       32,133      (64,569)
                   ------------ ------------ ------------ ------------
    Net earnings
     (loss)        $     1,473  $    13,833  $    73,402  $   (43,629)
                   ============ ============ ============ ============

Net earnings
 (loss) per common
 share:
  Basic:
    Continuing
     operations    $      0.07  $      0.21  $      0.95  $      0.49
    Discontinued
     operations          (0.04)        0.11         0.74        (1.50)
                   ------------ ------------ ------------ ------------
    Basic earnings
     (loss) per
     common share  $      0.03  $      0.32  $      1.69  $     (1.01)
                   ============ ============ ============ ============
  Diluted:
    Continuing
     operations    $      0.07  $      0.21  $      0.92  $      0.47
    Discontinued
     operations          (0.04)        0.10         0.72        (1.45)
                   ------------ ------------ ------------ ------------
    Diluted
     earnings
     (loss) per
     common share  $      0.03  $      0.31  $      1.64  $     (0.98)
                   ============ ============ ============ ============

Weighted average
 number of common
 shares
 outstanding:
  Basic             43,574,811   43,263,237   43,539,950   43,160,860
  Diluted           44,951,016   44,631,117   44,823,082   44,613,622
                 CENTENE CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (In thousands)

                                                      Year Ended
                                                     December 31,
                                                 ---------------------
                                                    2007       2006
                                                 ---------- ----------
                                                      (Unaudited)
Cash flows from operating activities:
   Net earnings (loss)                           $  73,402  $ (43,629)
   Adjustments to reconcile net earnings (loss)
    to net cash provided by operating
    activities--
      Depreciation and amortization                 27,807     20,600
      Stock compensation expense                    15,781     14,904
      Gain on sale of FirstGuard Missouri           (7,472)        --
      Impairment loss                                7,207     88,268
      Deferred income taxes                        (10,223)    (6,692)
   Changes in assets and liabilities--
      Premium and related receivables                1,663    (39,765)
      Other current assets                          (6,253)     5,352
      Other assets                                    (348)        91
      Medical claims liabilities                    56,287    108,003
      Unearned revenue                              10,085     20,035
      Accounts payable and accrued expenses         31,234     28,136
      Other operating activities                     3,070       (271)
                                                 ---------- ----------
         Net cash provided by operating
          activities                               202,240    195,032
                                                 ---------- ----------
Cash flows from investing activities:
   Purchase of property, software and equipment    (53,937)   (50,318)
   Purchase of investments                        (606,366)  (319,322)
   Sales and maturities of investments             456,738    286,155
   Proceeds from asset sales                        14,102         --
   Investments in acquisitions and equity method
    investee, net of cash acquired                 (36,001)   (66,772)
                                                 ---------- ----------
         Net cash used in investing activities    (225,464)  (150,257)
                                                 ---------- ----------
Cash flows from financing activities:
   Proceeds from exercise of stock options           5,464      6,953
   Proceeds from borrowings                        212,000     94,359
   Payment of long-term debt and notes payable    (181,981)   (17,355)
   Excess tax benefits from stock compensation          --      3,043
   Common stock repurchases                         (9,541)    (7,833)
   Debt issue costs                                 (5,181)      (253)
                                                 ---------- ----------
         Net cash provided by financing
          activities                                20,761     78,914
                                                 ---------- ----------
         Net (decrease) increase in cash and
          cash equivalents                          (2,463)   123,689
                                                 ---------- ----------
Cash and cash equivalents, beginning of period     271,047    147,358
                                                 ---------- ----------
Cash and cash equivalents, end of period         $ 268,584  $ 271,047
                                                 ========== ==========

   Interest paid                                 $  11,945  $  10,680
   Income taxes paid                             $   7,348  $  16,418

Supplemental schedule of non-cash investing and
 financing activities:
   Property acquired under capital leases        $   1,736  $     366
                         CENTENE CORPORATION

          CONTINUING OPERATIONS SUPPLEMENTAL FINANCIAL DATA

                                  Q4        Q3        Q2        Q1
                                 2007      2007      2007      2007
                               --------- --------- --------- ---------
MEMBERSHIP
Medicaid Managed Care:
   Georgia                       287,900   286,200   281,400   291,300
   Indiana                       154,600   156,300   161,700   176,700
   New Jersey                     57,300    58,300    59,100    59,100
   Ohio                          128,700   127,500   128,200   118,300
   South Carolina                 31,800    29,300    31,100        --
   Texas                         354,400   347,000   333,900   318,500
   Wisconsin                     131,900   132,700   136,100   139,400
                               --------- --------- --------- ---------
      TOTAL                    1,146,600 1,137,300 1,131,500 1,103,300
                               ========= ========= ========= =========

   Medicaid                      848,100   841,600   846,900   839,600
   SCHIP                         224,400   223,500   216,500   211,200
   SSI                            74,100    72,200    68,100    52,500
                               --------- --------- --------- ---------
      TOTAL                    1,146,600 1,137,300 1,131,500 1,103,300
                               ========= ========= ========= =========

Specialty Services(a):
   Arizona                        99,900    99,000    95,200    93,600
   Kansas                         39,000    35,600    37,500    36,600
                               --------- --------- --------- ---------
      TOTAL                      138,900   134,600   132,700   130,200
                               ========= ========= ========= =========

(a) Includes behavioral health contracts only.

REVENUE PER MEMBER(b)          $  210.34 $  201.05 $  193.09 $  178.55

CLAIMS(b)
   Period-end inventory          312,700   265,400   281,000   317,600
   Average inventory             288,700   319,900   248,200   228,600
   Period-end inventory per
    member                          0.28      0.24      0.26      0.29

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

DAYS IN CLAIMS PAYABLE (c)            49.1     49.1     46.2     45.6
(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                        $626.2   $593.6   $527.9   $491.0
   Unregulated                        33.0     45.9     65.8     71.8
                                    -------  -------  -------  -------
      TOTAL                         $659.2   $639.5   $593.7   $562.8
                                    =======  =======  =======  =======

DEBT TO CAPITALIZATION (d)            33.3%    33.1%    34.0%    35.3%
(d) Debt to Capitalization is calculated as follows: total debt
 divided by (total debt + equity).
HEALTH BENEFITS RATIO BY CATEGORY:
                              Three Months Ended       Year Ended
                                 December 31,         December 31,
                              -------------------  -------------------
                                2007      2006       2007      2006
                              --------- ---------  --------- ---------
      Medicaid and SCHIP          84.0%     85.4%      83.2%     84.3%
      SSI                         94.5      92.2       92.0      88.0
      Specialty Services          74.9      80.5       78.2      82.6
GENERAL AND ADMINISTRATIVE EXPENSE RATIO BY BUSINESS SEGMENT:
                              Three Months Ended       Year Ended
                                 December 31,         December 31,
                              -------------------  -------------------
                                2007      2006       2007      2006
                              --------- ---------  --------- ---------
      Medicaid Managed Care       11.8%     10.4%      11.1%     11.4%
      Specialty Services          15.4      14.5       15.4      17.1
MEDICAL CLAIMS LIABILITIES (In thousands)

Four rolling quarters of the changes in medical claims liabilities are
 summarized as follows:

      Balance, December 31, 2006                           $  249,864
      Incurred related to:
         Current period                                     2,340,716
         Prior period                                         (16,230)
                                                           -----------
            Total incurred                                  2,324,486
                                                           ===========
      Paid related to:
         Current period                                     2,009,881
         Prior period                                         228,613
                                                           -----------
            Total paid                                      2,238,494
                                                           -----------
      Balance, December 31, 2007                           $  335,856
                                                           ===========

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