Centene Corporation Reports 2010 First Quarter Earnings

ST. LOUIS, April 27 /PRNewswire-FirstCall/ -- Centene Corporation (NYSE: CNC) today announced its financial results for the quarter ended March 31, 2010.  The results of operations for our New Jersey health plan, University Health Plans, are classified as discontinued operations.  The discussions below, with the exception of cash flow information, are in the context of continuing operations and all financial ratios exclude premium taxes.

First Quarter Highlights

    --  Quarter-end managed care at-risk membership of 1,468,600, an increase of
        221,300 members year over year.
    --  Premium and Service Revenues of $1.022 billion, representing 12.5% year
        over year growth.
    --  Health Benefits Ratio (HBR) of 84.0%.
    --  General and Administrative (G&A) expense ratio of 13.3%.
    --  Days in claims payable of 47.7, including pharmacy claims payable.
    --  Diluted earnings per share from continuing operations of $0.41.

 

Other Events

    --  During the first quarter of 2010, we completed the sale of 5.75 million
        shares of common stock, including the underwriters' overallotment
        option, for a public offering price of $19.25 per share. Net proceeds
        from the sale of the shares were $104.6 million.
    --  In February 2010, we announced a definitive agreement to acquire certain
        Medicaid assets in South Carolina. The transaction is expected to close
        in the second quarter of 2010 and add revenues of approximately $60
        million and diluted earnings per share of $0.02 to $0.03 for 2010.
    --  In March 2010, we completed the previously announced sale of our New
        Jersey health plan, University Health Plans, and recorded a pre-tax gain
        on sale of $8.2 million, or $0.08 per diluted share, in discontinued
        operations during the first quarter of 2010.
    --  In March 2010, we announced that our specialty company, Cenpatico
        Behavioral Health, retained its existing service area contract and was
        also awarded an expanded contract by the Arizona Department of Health
        Services to manage behavioral healthcare services for an additional four
        counties. The expanded contract is expected to take effect July 1, 2010,
        and add revenues of approximately $20 million for 2010.
    --  In March 2010, Moody's Investors Service upgraded our senior unsecured
        debt rating and our corporate family rating to Ba2 from Ba3.
    --  In April 2010, we announced that our Celtic Group subsidiary, CeltiCare
        Health Plan of Massachusetts, renewed its contract to serve Commonwealth
        Care members as the low cost provider in Massachusetts.
    --  In April 2010, we announced that our Wisconsin subsidiary was not
        awarded the Southeast Wisconsin BadgerCare Plus Managed Care contract.
        The loss of the contract award will reduce revenues by approximately $25
        million in 2010.
    --  In April 2010, FortuneMagazine announced that Centene ranked #486 in the
        magazine's annual ranking of the world's largest companies by revenue,
        up from #609 last year. The ranking placed Centene in the Fortune500 for
        the first time.

 

Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "We are pleased to have maintained our positive operating momentum as 2010 begins and we are dedicated to maintaining our discipline and focus in the future."

The following table depicts membership in Centene's managed care organizations, by state, at March 31, 2010 and 2009:

                         March 31,

                         2010       2009

Arizona                  19,000     15,500

Florida                  105,900    29,100

Georgia                  301,000    289,300

Indiana                  211,400    179,100

Massachusetts            26,900     —

Ohio                     156,000    137,000

South Carolina           53,900     48,500

Texas                    459,600    421,100

Wisconsin                134,900    127,700

Total at-risk membership 1,468,600  1,247,300

Non-risk membership      62,200     96,000

Total                    1,530,800  1,343,300




 

The following table depicts membership in Centene's managed care organizations, by member category, at March 31, 2010 and 2009:

                         March 31,

                         2010       2009

Medicaid                 1,088,300  921,100

CHIP & Foster Care       266,300    256,900

ABD & Medicare           87,100     69,300

Other State programs     26,900     —

Total at-risk membership 1,468,600  1,247,300

Non-risk membership      62,200     96,000

Total                    1,530,800  1,343,300




 

Statement of Operations

    --  Premium and service revenues increased 12.5% in the three months ended
        March 31, 2010 over 2009 as a result of membership growth in all of our
        states. This increase was moderated by the removal of pharmacy services
        in two states beginning in 2010. These pharmacy carve outs had the
        effect of reducing 2010 revenue by approximately $35 million.
    --  The consolidated HBR for the three months ended March 31, 2010 of 84.0%
        was an increase of 0.5% over the comparable period in 2009. A
        reconciliation of the change in HBR from the prior year same period is
        presented below:

 

 _____________________________________________
|                                            ||
|____________________________________________||
||First Quarter 2009                  |83.5%|||
||____________________________________|_____|||
||Improvements in existing markets    |(0.5)|||
||____________________________________|_____|||
||New markets reserved at higher rates|1.0  |||
||____________________________________|_____|||
||First Quarter 2010                  |84.0%|||
||____________________________________|_____|||
||                                    |     |||
||____________________________________|_____|||
|                                            ||
|____________________________________________||



 

The increase in the first quarter of 2010 over the comparable period in 2009 was primarily due to higher HBR in our new markets, partially offset by improvements in our existing markets.  

    --  Consolidated G&A expense as a percent of premium and service revenues
        was 13.3% in the first quarter of 2010, a decrease from 13.5% in the
        first quarter of 2009. The decrease reflects the leveraging of our
        expenses over higher revenues, partially offset by a $4.6 million
        increase in contributions to the Company's charitable foundation.
    --  Other income for the quarter includes a $3.0 million gain on
        distributions received from the Reserve Primary Fund in excess of our
        adjusted basis. An offsetting $3.0 million contribution was made to the
        Company's charitable foundation and is included in G&A expense discussed
        above.
    --  Earnings per diluted share from continuing operations were $0.41,
        compared to $0.43 in the first quarter of 2009, and reflect the
        approximate 10% increase in diluted shares outstanding resulting from
        the stock offering.

 

Balance Sheet and Cash Flow

At March 31, 2010, the Company had cash and investments of $969.2 million, including $917.9 million held by its regulated entities and $51.3 million held by its unregulated entities.  Medical claims liabilities totaled $444.8 million, representing 47.7 days in claims payable, a decrease of 2.4 days from December 31, 2009.  Total debt was $232.7 million and debt to capitalization was 23.7%.  Year to date cash flow from operations was $(38.5) million, reflecting a $73.3 million decrease in unearned revenue from December 31, 2009 as a result of the prepayment of monthly premiums.  In 2010, only two monthly premium payments were received during the quarter from Ohio and Florida.

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, December 31, 2009|50.1 |||
|_________________________________________|_____|||
|Additional processing days at quarter end|(1.5)|||
|_________________________________________|_____|||
|Pharmacy carve out                       |(0.9)|||
|_________________________________________|_____|||
|Days in claims payable, March 31, 2010   |47.7 |||
|_________________________________________|_____|||
|                                                ||
|________________________________________________||
|                                                ||
|________________________________________________||
|                                                ||
|________________________________________________||



 

Outlook

The table below depicts the Company's annual guidance from continuing operations for 2010:

 ____________________________________________________________
|                                          ||Full Year 2010|||
|__________________________________________||______________|||
|                                          ||Low   ||High  |||
|__________________________________________||______||______|||
|Premium and Service revenues (in millions)||$4,300||$4,400|||
|__________________________________________||______||______|||
|Earnings per diluted share (EPS)          ||$1.73 ||$1.83 |||
|__________________________________________||______||______|||
|HBR %                                     ||84.0% ||86.0% |||
|__________________________________________||______||______|||
|G&A %                                     ||12.4% ||12.9% |||
|__________________________________________||______||______|||
|                                          ||      ||      |||
|__________________________________________||______||______|||
|Diluted Shares Outstanding (in thousands) ||50,500        |||
|__________________________________________||______________|||
|                                          ||      ||      |||
|__________________________________________||______||______|||
|                                                           ||
|___________________________________________________________||
|                                                           ||
|___________________________________________________________||



 

The Company is increasing its earnings guidance by $0.03 to reflect the first quarter performance and results of the RFP's in Arizona and Wisconsin.  The Company is adjusting its revenue guidance to reflect a shift in the start date of our Mississippi operations to October 1, 2010.  Our current guidance excludes the previously announced South Carolina transaction, which is expected to add approximately $60 million of revenue and $0.02 to $0.03 diluted earnings per share in 2010, as the transaction has not yet closed.

Conference Call

As previously announced, the Company will host a conference call Tuesday, April 27, 2010, at 8:30 A.M. (Eastern Time) to review the financial results for the first quarter ended March 31, 2010, and to discuss its business outlook.  Michael F. Neidorff and William N. Scheffel will host the conference call.  Investors and other interested parties are invited to listen to the conference call by dialing 800-273-1254 in the U.S. and Canada; 973-638-3440 from abroad, or via a live, audio webcast on the Company's website at www.centene.com, under the Investors section.  A replay will be available for on-demand listening shortly after the completion of the call for the next twelve months or until 11:59 PM (Eastern Time) on Tuesday, May 11, 2011, 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 63527302.

About Centene Corporation

Centene Corporation, a Fortune 500 company, is a multi-line healthcare enterprise operating in two segments: Medicaid Managed Care and Specialty Services.  Our Medicaid Managed Care segment provides Medicaid and Medicaid-related health plan coverage to individuals through government subsidized programs, including Medicaid, the State Children's Health Insurance Program, or CHIP, Foster Care, Medicare Special Needs Plans and the Supplemental Security Income Program, also known as the Aged, Blind or Disabled Program, or collectively ABD.  Our Specialty Services segment offers products for behavioral health, health insurance exchanges, individual health insurance, life and health management, long-term care programs, managed vision, telehealth services, and pharmacy benefits management to state programs, healthcare organizations, employer groups and other commercial organizations, as well as to our own subsidiaries.  

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)                                            ||
|                                                                             ||
|(Unaudited)                                                                  ||
|_____________________________________________________________________________||
|                                                  |March 31,  | |December 31,||
|                                                  |2010       | |2009        ||
|__________________________________________________|___________|_|____________||
|ASSETS                                            | |         | |            ||
|__________________________________________________|_|_________|_|____________||
|Current assets:                                   | |         | |            ||
|__________________________________________________|_|_________|_|____________||
|Cash and cash equivalents of continuing           | |         | |            ||
|operations, including $5,918 and $8,667,          | |         | |            ||
|respectively, from consolidated variable interest | |         | |            ||
|entities                                          |$|350,075  |$|400,951     ||
|__________________________________________________|_|_________|_|____________||
|Cash and cash equivalents of discontinued         | |         | |            ||
|operations                                        | |14       | |2,801       ||
|__________________________________________________|_|_________|_|____________||
|Total cash and cash equivalents                   | |350,089  | |403,752     ||
|__________________________________________________|_|_________|_|____________||
|Premium and related receivables, net of allowance | |         | |            ||
|for uncollectible accounts of $1,338 and $1,338,  | |         | |            ||
|respectively, including $6,565 and $11,313,       | |         | |            ||
|respectively, from consolidated variable interest | |         | |            ||
|entities                                          | |110,120  | |103,456     ||
|__________________________________________________|_|_________|_|____________||
|Short-term investments, at fair value (amortized  | |         | |            ||
|cost $39,953 and $39,230, respectively)           | |40,220   | |39,554      ||
|__________________________________________________|_|_________|_|____________||
|Other current assets, including $5,023 and $4,507,| |         | |            ||
|respectively, from consolidated variable interest | |         | |            ||
|entities                                          | |69,136   | |64,866      ||
|__________________________________________________|_|_________|_|____________||
|Current assets of discontinued operations other   | |         | |            ||
|than cash                                         | |2,337    | |4,506       ||
|__________________________________________________|_|_________|_|____________||
|Total current assets                              | |571,902  | |616,134     ||
|__________________________________________________|_|_________|_|____________||
|Long-term investments, at fair value (amortized   | |         | |            ||
|cost $547,148 and $514,256, respectively)         | |558,270  | |525,497     ||
|__________________________________________________|_|_________|_|____________||
|Restricted deposits, at fair value (amortized cost| |         | |            ||
|$20,532 and $20,048, respectively)                | |20,618   | |20,132      ||
|__________________________________________________|_|_________|_|____________||
|Property, software and equipment, net of          | |         | |            ||
|accumulated depreciation of $111,938 and $103,883,| |         | |            ||
|respectively, including $110,764 and $89,219,     | |         | |            ||
|respectively, from consolidated variable interest | |         | |            ||
|entities                                          | |269,492  | |230,421     ||
|__________________________________________________|_|_________|_|____________||
|Goodwill                                          | |229,512  | |224,587     ||
|__________________________________________________|_|_________|_|____________||
|Intangible assets, net                            | |22,008   | |22,479      ||
|__________________________________________________|_|_________|_|____________||
|Other long-term assets                            | |35,416   | |36,829      ||
|__________________________________________________|_|_________|_|____________||
|Long-term assets of discontinued operations       | |23,453   | |26,285      ||
|__________________________________________________|_|_________|_|____________||
|Total assets                                      |$|1,730,671|$|1,702,364   ||
|__________________________________________________|_|_________|_|____________||
|LIABILITIES AND STOCKHOLDERS' EQUITY              | |         | |            ||
|__________________________________________________|_|_________|_|____________||
|Current liabilities:                              | |         | |            ||
|__________________________________________________|_|_________|_|____________||
|Medical claims liability                          |$|444,826  |$|470,932     ||
|__________________________________________________|_|_________|_|____________||
|Accounts payable and accrued expenses, including  | |         | |            ||
|$23,122 and $14,020, respectively, from           | |         | |            ||
|consolidated variable interest entities           | |200,615  | |132,001     ||
|__________________________________________________|_|_________|_|____________||
|Unearned revenue                                  | |18,362   | |91,644      ||
|__________________________________________________|_|_________|_|____________||
|Current portion of long-term debt                 | |660      | |646         ||
|__________________________________________________|_|_________|_|____________||
|Current liabilities of discontinued operations    | |20,650   | |20,685      ||
|__________________________________________________|_|_________|_|____________||
|Total current liabilities                         | |685,113  | |715,908     ||
|__________________________________________________|_|_________|_|____________||
|Long-term debt                                    | |232,064  | |307,085     ||
|__________________________________________________|_|_________|_|____________||
|Other long-term liabilities                       | |63,575   | |59,561      ||
|__________________________________________________|_|_________|_|____________||
|Long-term liabilities of discontinued operations  | |385      | |383         ||
|__________________________________________________|_|_________|_|____________||
|Total liabilities                                 | |981,137  | |1,082,937   ||
|__________________________________________________|_|_________|_|____________||
|                                                  | |         | |            ||
|__________________________________________________|_|_________|_|____________||
|Commitments and contingencies                     | |         | |            ||
|__________________________________________________|_|_________|_|____________||
|                                                  | |         | |            ||
|__________________________________________________|_|_________|_|____________||
|Stockholders' equity:                             | |         | |            ||
|__________________________________________________|_|_________|_|____________||
|Common stock, $.001 par value; authorized         | |         | |            ||
|100,000,000 shares; 51,490,256 issued and         | |         | |            ||
|49,049,990 outstanding at March 31, 2010, and     | |         | |            ||
|45,593,383 shares issued and 43,179,373 shares    | |         | |            ||
|outstanding at December 31, 2009                  | |51       | |46          ||
|__________________________________________________|_|_________|_|____________||
|Additional paid-in capital                        | |390,878  | |281,806     ||
|__________________________________________________|_|_________|_|____________||
|Accumulated other comprehensive income:           | |         | |            ||
|__________________________________________________|_|_________|_|____________||
|Unrealized gain on investments, net of tax        | |7,203    | |7,348       ||
|__________________________________________________|_|_________|_|____________||
|Retained earnings                                 | |382,909  | |358,907     ||
|__________________________________________________|_|_________|_|____________||
|Treasury stock, at cost (2,440,266 and 2,414,010  | |         | |            ||
|shares, respectively)                             | |(47,742) | |(47,262)    ||
|__________________________________________________|_|_________|_|____________||
|Total Centene stockholders' equity                | |733,299  | |600,845     ||
|__________________________________________________|_|_________|_|____________||
|Noncontrolling interest                           | |16,235   | |18,582      ||
|__________________________________________________|_|_________|_|____________||
|Total stockholders' equity                        | |749,534  | |619,427     ||
|__________________________________________________|_|_________|_|____________||
|Total liabilities and stockholders' equity        |$|1,730,671|$|1,702,364   ||
|__________________________________________________|_|_________|_|____________||
|                                                                 |           |
|_________________________________________________________________|___________|
|                                                                             ||
|_____________________________________________________________________________||



 
CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

(Unaudited)

                                                   Three Months Ended
                                                   March 31,

                                                   2010           2009

Revenues:

Premium                                            $ 999,315      $ 885,006

Service                                              22,907         23,849

Premium and service revenues                         1,022,222      908,855

Premium tax                                          46,499         23,580

Total revenues                                       1,068,721      932,435

Expenses:

Medical costs                                        839,708        739,340

Cost of services                                     17,152         15,962

General and administrative expenses                  135,507        122,279

Premium tax                                          46,743         23,942

Total operating expenses                             1,039,110      901,523

Earnings from operations                             29,611         30,912

Other income (expense):

Investment and other income                          7,057          3,613

Interest expense                                     (3,813)        (3,986)

Earnings from continuing operations, before income
tax expense                                          32,855         30,539

Income tax expense                                   12,525         10,845

Earnings from continuing operations, net of income
tax expense                                          20,330         19,694

Discontinued operations, net of income tax expense
(benefit) of $4,440 and $(160), respectively         3,920          (449)

Net earnings                                         24,250         19,245

Noncontrolling interest                              248            787

Net earnings attributable to Centene Corporation   $ 24,002       $ 18,458



Amounts attributable to Centene Corporation common
shareholders:

Earnings from continuing operations, net of income
tax expense                                        $ 20,082       $ 18,907

Discontinued operations, net of income tax expense
(benefit)                                            3,920          (449)

Net earnings                                       $ 24,002       $ 18,458



Net earnings (loss) per share attributable to
Centene Corporation:

Basic:

Continuing operations                              $ 0.43         $ 0.44

Discontinued operations                              0.08           (0.01)

Earnings per common share                          $ 0.51         $ 0.43

Diluted:

Continuing operations                              $ 0.41         $ 0.43

Discontinued operations                              0.08           (0.01)

Earnings per common share                          $ 0.49         $ 0.42



Weighted average number of shares outstanding:

Basic                                                47,260,714     43,067,992

Diluted                                              48,761,528     44,238,863








 
CENTENE CORPORATION AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

                                                  Three Months Ended March 31,

                                                  2010         2009



Cash flows from operating activities:

Net earnings                                      $ 24,250     $ 19,245

Adjustments to reconcile net earnings to net cash
provided by operating activities

Depreciation and amortization                       12,527       10,233

Stock compensation expense                          3,460        3,789

(Gain) loss on sale of investments, net             (3,547)      439

(Gain) on sale of UHP                               (8,201)      -

Deferred income taxes                               950          2,282

Changes in assets and liabilities

Premium and related receivables                     (4,457)      (39,396)

Other current assets                                (1,375)      (1,397)

Other assets                                        1,937        (497)

Medical claims liabilities                          (33,129)     2,165

Unearned revenue                                    (73,282)     44,507

Accounts payable and accrued expenses               40,433       (18,674)

Other operating activities                          1,934        722

Net cash (used in) provided by operating
activities                                          (38,500)     23,418

Cash flows from investing activities:

Capital expenditures                                (23,099)     (11,157)

Purchases of investments                            (146,935)    (292,964)

Proceeds from asset sales                           13,420       -

Sales and maturities of investments                 117,469      224,312

Investments in acquisitions, net of cash acquired   (2,019)      (5,191)

Net cash used in investing activities               (41,164)     (85,000)

Cash flows from financing activities:

Proceeds from exercise of stock options             519          890

Proceeds from borrowings                            22,030       108,000

Proceeds from stock offering                        104,557      -

Payment of long-term debt                           (97,136)     (82,573)

Distributions to noncontrolling interest            (3,585)      (1,181)

Excess tax benefits from stock compensation         96           (17)

Common stock repurchases                            (480)        (407)

Net cash provided by financing activities           26,001)      24,712

Net decrease in cash and cash equivalents           (53,663)     (36,870)

Cash and cash equivalents, beginning of period      403,752      379,099

Cash and cash equivalents, end of period          $ 350,089    $ 342,229



Supplemental disclosures of cash flow
information:

Interest paid                                     $ 345        $ 724

Income taxes paid                                 $ 8,272      $ 18,602



Supplemental disclosure of non-cash investing and
financing activities:

Contribution from noncontrolling interest         $ 306        $ -








 
 ______________________________________________________________________________
|                                                                             ||
|_____________________________________________________________________________||
|CENTENE CORPORATION                                                          ||
|                                                                             ||
|                                                                             ||
|                                                                             ||
|CONTINUING OPERATIONS SUPPLEMENTAL FINANCIAL DATA                            ||
|_____________________________________________________________________________||
|                    |Q1       |   |Q4       ||Q3       ||Q2       ||Q1       ||
|____________________|_________|___|_________||_________||_________||_________||
|                    |2010     |   |2009     ||2009     ||2009     ||2009     ||
|____________________|_________|___|_________||_________||_________||_________||
|MEMBERSHIP          |         |   |         ||         ||         ||         ||
|____________________|_________|___|_________||_________||_________||_________||
|Managed Care:       |         |   |         ||         ||         ||         ||
|____________________|_________|___|_________||_________||_________||_________||
|Arizona             |19,000   |   |18,100   ||17,400   ||16,200   ||15,500   ||
|____________________|_________|___|_________||_________||_________||_________||
|Florida             |105,900  |   |102,600  ||84,400   ||22,300   ||29,100   ||
|____________________|_________|___|_________||_________||_________||_________||
|Georgia             |301,000  |   |309,700  ||303,400  ||292,800  ||289,300  ||
|____________________|_________|___|_________||_________||_________||_________||
|Indiana             |211,400  |   |208,100  ||200,700  ||196,100  ||179,100  ||
|____________________|_________|___|_________||_________||_________||_________||
|Massachusetts       |26,900   |   |27,800   ||500      ||—      ||—      ||
|____________________|_________|___|_________||_________||_________||_________||
|Ohio                |156,000  |   |150,800  ||151,200  ||141,200  ||137,000  ||
|____________________|_________|___|_________||_________||_________||_________||
|South Carolina      |53,900   |   |48,600   ||46,100   ||46,000   ||48,500   ||
|____________________|_________|___|_________||_________||_________||_________||
|Texas               |459,600  |   |455,100  ||450,200  ||443,200  ||421,100  ||
|____________________|_________|___|_________||_________||_________||_________||
|Wisconsin           |134,900  |   |134,800  ||132,500  ||131,200  ||127,700  ||
|____________________|_________|___|_________||_________||_________||_________||
|Total at-risk       |         |   |         ||         ||         ||         ||
|membership          |1,468,600|   |1,455,600||1,386,400||1,289,000||1,247,300||
|____________________|_________|___|_________||_________||_________||_________||
|Non-risk membership |62,200   |   |63,700   ||63,200   ||114,000  ||96,000   ||
|____________________|_________|___|_________||_________||_________||_________||
|TOTAL               |1,530,800|   |1,519,300||1,449,600||1,403,000||1,343,300||
|____________________|_________|___|_________||_________||_________||_________||
|                    |         |   |         ||         ||         ||         ||
|____________________|_________|___|_________||_________||_________||_________||
|Medicaid            |1,088,300|   |1,081,400||1,040,000||958,600  ||921,100  ||
|____________________|_________|___|_________||_________||_________||_________||
|CHIP & Foster Care  |266,300  |   |263,600  ||263,400  ||261,400  ||256,900  ||
|____________________|_________|___|_________||_________||_________||_________||
|ABD & Medicare      |87,100   |   |82,800   ||82,500   ||69,000   ||69,300   ||
|____________________|_________|___|_________||_________||_________||_________||
|Other State programs|26,900   |   |27,800   ||500      ||—      ||—      ||
|____________________|_________|___|_________||_________||_________||_________||
|Total at-risk       |         |   |         ||         ||         ||         ||
|membership          |1,468,600|   |1,455,600||1,386,400||1,289,000||1,247,300||
|____________________|_________|___|_________||_________||_________||_________||
|Non-risk membership |62,200   |   |63,700   ||63,200   ||114,000  ||96,000   ||
|____________________|_________|___|_________||_________||_________||_________||
|TOTAL               |1,530,800|   |1,519,300||1,449,600||1,403,000||1,343,300||
|____________________|_________|___|_________||_________||_________||_________||
|                    |         |   |         ||         ||         ||         ||
|____________________|_________|___|_________||_________||_________||_________||
|Specialty Services  |         |   |         ||         ||         ||         ||
|(a):                |         |   |         ||         ||         ||         ||
|____________________|_________|___|_________||_________||_________||_________||
|Cenpatico Behavioral|         |   |         ||         ||         ||         ||
|Health              |         |   |         ||         ||         ||         ||
|____________________|_________|___|_________||_________||_________||_________||
|Arizona             |119,300  |   |120,100  ||117,300  ||110,500  ||104,700  ||
|____________________|_________|___|_________||_________||_________||_________||
|Kansas              |39,800   |   |41,400   ||41,000   ||41,100   ||40,600   ||
|____________________|_________|___|_________||_________||_________||_________||
|Bridgeway Health    |         |   |         ||         ||         ||         ||
|Solutions           |         |   |         ||         ||         ||         ||
|____________________|_________|___|_________||_________||_________||_________||
|Long-term Care      |2,700    |   |2,600    ||2,500    ||2,400    ||2,300    ||
|____________________|_________|___|_________||_________||_________||_________||
|TOTAL               |161,800  |   |164,100  ||160,800  ||154,000  ||147,600  ||
|____________________|_________|___|_________||_________||_________||_________||
|                    |         |   |         ||         ||         ||         ||
|____________________|_________|___|_________||_________||_________||_________||
|(a) Includes external membership only.                                       ||
|_____________________________________________________________________________||
|                    |         |   |         ||         ||         ||         ||
|____________________|_________|___|_________||_________||_________||_________||
|REVENUE PER MEMBER  | |       |   | |       || |       || |       || |       ||
|PER MONTH(b)        |$|215.95 |(c)|$|226.42 ||$|222.77 ||$|219.75 ||$|220.29 ||
|____________________|_|_______|___|_|_______||_|_______||_|_______||_|_______||
|                    |         |   |         ||         ||         ||         ||
|____________________|_________|___|_________||_________||_________||_________||
|CLAIMS(b)           |         |   |         ||         ||         ||         ||
|____________________|_________|___|_________||_________||_________||_________||
|Period-end inventory|341,400  |   |423,400  ||414,900  ||362,200  ||325,000  ||
|____________________|_________|___|_________||_________||_________||_________||
|Average inventory   |283,900  |   |279,000  ||227,100  ||234,500  ||267,600  ||
|____________________|_________|___|_________||_________||_________||_________||
|Period-end inventory|         |   |         ||         ||         ||         ||
|per member          |0.23     |   |0.29     ||0.30     ||0.28     ||0.26     ||
|____________________|_________|___|_________||_________||_________||_________||
|(b) Revenue per member and claims information are presented for the Managed  ||
|Care at-risk members.                                                        ||
|_____________________________________________________________________________||
|(c) Reduction in revenue per member per month is a result of the pharmacy    ||
|carve-outs in 2010.                                                          ||
|_____________________________________________________________________________||
|                                                                             ||
|_____________________________________________________________________________||
|                                                                             ||
|_____________________________________________________________________________||



 
 _______________________________________________________________
|                                                              ||
|______________________________________________________________||
|                                                              ||
|______________________________________________________________||
|                      |Q1  ||Q4  ||Q3  ||Q2  ||Q1             ||
|______________________|____||____||____||____||_______________||
|                      |2010||2009||2009||2009||2009           ||
|______________________|____||____||____||____||_______________||
|                      |    ||    ||    ||    ||               ||
|______________________|____||____||____||____||_______________||
|DAYS IN CLAIMS PAYABLE|    ||    ||    ||    ||               ||
|______________________|____||____||____||____||_______________||
|Medical               |46.6||48.1||47.1||47.5||45.3           ||
|______________________|____||____||____||____||_______________||
|Pharmacy              |1.1 ||2.0 ||1.8 ||1.5 ||1.8            ||
|______________________|____||____||____||____||_______________||
|TOTAL                 |47.7||50.1||48.9||49.0||47.1           ||
|______________________|____||____||____||____||_______________||
|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             |$917.9||$949.9||$911.4||$825.8||$816.8      ||
|______________________|______||______||______||______||____________||
|Unregulated           |51.3  ||36.2  ||27.6  ||27.0  ||28.9        ||
|______________________|______||______||______||______||____________||
|TOTAL                 |$969.2||$986.1||$939.0||$852.8||$845.7      ||
|______________________|______||______||______||______||____________||
|                      |      ||      ||      ||      ||            ||
|______________________|______||______||______||______||____________||
|DEBT TO CAPITALIZATION|23.7% ||33.2% ||31.9% ||33.0% ||34.6%       ||
|______________________|______||______||______||______||____________||
|Debt to Capitalization is calculated as follows: total debt divided||
|by (total debt + total equity).                                    ||
|___________________________________________________________________||
|                                                                   ||
|___________________________________________________________________||



 
Operating Ratios:

                                        Three Months Ended March 31,

                                        2010    2009

Health Benefits Ratios:

Medicaid and CHIP                       85.6 %  84.8 %

ABD and Medicare                        80.3    81.4

Specialty Services                      80.6    78.3

Total                                   84.0    83.5



General & Administrative Expense Ratios 13.3    13.5








 
MEDICAL CLAIMS LIABILITY (In thousands)

The changes in medical claims liability are summarized as follows:

Balance, March 31, 2009 $ 387,242

Incurred related to:

Current period            3,313,053

Prior period              (49,162)

Total incurred            3,263,891

Paid related to:

Current period            2,874,916

Prior period              331,391

Total paid                3,206,307

Balance, March 31, 2010 $ 444,826








 

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" amount 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.

The amount of the "Incurred related to: Prior period" above includes the effects of reserving under moderately adverse conditions, new markets where we use a conservative approach in setting reserves during the initial periods of operations, increased receipts from other third party payors related to coordination of benefits and lower medical utilization and cost trends for dates of service prior to March 31, 2009.

SOURCE Centene Corporation