Centene Corporation Reports 2018 Results And Increases 2019 Annual Guidance
In summary, the 2018 fourth quarter and full year results were as follows:
2018 Results |
|||||||
Q4 |
Full Year |
||||||
Total revenues (in millions) |
$ |
16,559 |
$ |
60,116 |
|||
Health benefits ratio |
86.8 |
% |
85.9 |
% |
|||
SG&A expense ratio |
9.9 |
% |
10.7 |
% |
|||
GAAP diluted EPS |
$ |
1.15 |
$ |
4.52 |
|||
Adjusted Diluted EPS (1) |
$ |
1.38 |
$ |
7.08 |
|||
Total cash flow (used in) provided by operations (in millions) |
$ |
(634) |
$ |
1,234 |
(1) A full reconciliation of Adjusted Diluted EPS is shown on page seven of this release. |
On
Fourth Quarter and Full Year Highlights
December 31, 2018 managed care membership of 14.0 million, an increase of 1.8 million members, or 15%, over 2017.- Total revenues for the fourth quarter of 2018 of
$16.6 billion , representing 29% growth compared to the fourth quarter of 2017, and$60.1 billion for the full year 2018, representing 24% growth year-over-year. - Health benefits ratio (HBR) of 86.8% for the fourth quarter of 2018, compared to 87.3% in the fourth quarter of 2017, and 85.9% for the full year 2018, compared to 87.3% for the full year 2017.
- Selling, general and administrative (SG&A) expense ratio of 9.9% for the fourth quarter of 2018, compared to 10.9% for the fourth quarter of 2017. SG&A expense ratio of 10.7% for the full year 2018, compared to 9.7% for the full year 2017.
- Adjusted SG&A expense ratio of 9.9% for the fourth quarter of 2018, compared to 10.5% for the fourth quarter of 2017. Adjusted SG&A expense ratio of 10.0% for the full year 2018, compared to 9.5% for the full year 2017.
- Diluted EPS for the fourth quarter of 2018 of
$1.15 , compared to$1.30 for the fourth quarter of 2017. Diluted EPS for the full year 2018 of$4.52 , compared to$4.69 for the full year 2017. - Adjusted Diluted EPS for the fourth quarter of 2018 of
$1.38 , compared to$0.97 for the fourth quarter of 2017. Adjusted Diluted EPS for the full year 2018 of$7.08 , compared to$5.03 for the full year 2017. - Our business expansion costs for the full year 2018 were
$0.38 per diluted share, which was$0.04 per diluted share above our previously communicated guidance range of$0.30 to $0.34 per diluted share. The additional costs incurred in the fourth quarter were for growth initiatives, including Health Insurance Marketplace open enrollment. - Operating cash flow of
$(634) million and$1.2 billion for the fourth quarter and full year 2018, respectively, representing 1.4x net earnings for the full year 2018. As expected, the fourth quarter cash flow was negatively affected by the payment of the 2018 health insurer fee and the repayment of approximately$370 million ofMedicaid expansion minimum medical loss ratio (MLR) rebate payments inCalifornia , which were previously accrued.
Other Events
- In
February 2019 , ourNorth Carolina joint venture, Carolina Complete health, was awarded a contract for the Medicaid Managed Care program. Under the agreement,Carolina Complete Health will provideMedicaid managed care services in Regions 3 and 5. Pending regulatory approval, the new three-year contract is effectiveFebruary 1, 2020 . - In
February 2019 , Centurion began operating under a new contract to provide comprehensive healthcare services to detainees of theMetropolitan Detention Center located inAlbuquerque, New Mexico . - In
January 2019 , Centurion was notified byArizona's Department of Corrections of the state's intent to award a contract to provide comprehensive healthcare services to inmates housed inArizona's state prison system. The contract is expected to commenceJuly 1, 2019 , subject to customary contract negotiation. - In
January 2019 , we announced the appointment of Rev.Patrick Frawley to Senior Vice President, Social Responsibility andDavid Thomas to Regional Senior Vice President for the Company and President and CEO forFidelis Care . Also, inDecember 2018 , we announced the appointment ofMatthew Snyder to Senior Vice President, Internal Audit, Compliance and Risk Management. - In
January 2019 , we expanded our offerings in the 2019 Health Insurance Marketplace. We enteredNorth Carolina ,Pennsylvania ,South Carolina andTennessee , and expanded our footprint in six existing markets:Florida ,Georgia ,Indiana ,Kansas ,Missouri andTexas . - In
January 2019 , ourNew Mexico subsidiary, Western Sky Community Care, began operating under a new statewide contract inNew Mexico for the Centennial Care 2.0 Program. - In
January 2019 , ourPennsylvania subsidiary,Pennsylvania Health & Wellness , began serving enrollees in the Community HealthChoices program in the Southeast region as part of the statewide contract that is expected to be fully implemented byJanuary 2020 . - In
January 2019 , ourKansas subsidiary, Sunflower Health Plan, continued providing managed care services to KanCare beneficiaries statewide under a new contract. - In
December 2018 , our Spanish subsidiary, Primero Salud, acquired 89% of Torrejón Salud, a public-private partnership in the Community ofMadrid . - In
December 2018 , ourMississippi subsidiary,Magnolia Health , completed the implementation of a transformative pharmacy benefit management model using RxAdvance's Collaborative PBM Cloud platform.Magnolia Health is the first of our health plans to implement this new model. - In
December 2018 , ourFlorida subsidiary,Sunshine Health , began providing physical and behavioral health care services throughFlorida's Statewide Medicaid Managed Care Program under its new five year contract which was implemented for all 11 regions byFebruary 2019 . - In
December 2018 , Centurion began operating under a new contract to provide comprehensive healthcare services to detainees ofVolusia County detention facilities located nearDaytona ,Florida .
Accreditations & Awards
- In
January 2019 ,Centene was awarded theCenters for Medicare and Medicaid Services' 2019 Health Equity Award for its commitment to provide equal access to quality healthcare and services for people with disabilities. - In
January 2019 , FORTUNE magazine namedCentene to its 2019 list of the world's most admired companies. - In
January 2019 ,Centene was named toBloomberg's 2019 Gender-Equality Index, which lists companies recognized as global leaders in advancing women in the workplace. - In
December 2018 , our Kansas Health Insurance Marketplace plan, Ambetter from Sunflower Health Plan, earned accreditation from NCQA.
Membership
The following table sets forth our membership by line of business:
December 31 |
|||||
2018 |
2017 |
||||
Medicaid: |
|||||
TANF, CHIP & Foster Care |
7,356,200 |
5,807,300 |
|||
ABD & LTSS |
1,002,100 |
846,200 |
|||
Behavioral Health |
36,500 |
463,700 |
|||
Total Medicaid |
8,394,800 |
7,117,200 |
|||
Commercial |
1,978,000 |
1,558,300 |
|||
Medicare (1) |
416,900 |
333,700 |
|||
Correctional |
151,300 |
157,500 |
|||
Total at-risk membership |
10,941,000 |
9,166,700 |
|||
TRICARE eligibles |
2,858,900 |
2,824,100 |
|||
Non-risk membership |
219,700 |
216,300 |
|||
Total |
14,019,600 |
12,207,100 |
(1) Membership includes Medicare Advantage, Medicare Supplement, Special Needs Plans, and Medicare-Medicaid Plans (MMP). |
The following table sets forth additional membership statistics, which are included in the membership information above:
December 31 |
|||||
2018 |
2017 |
||||
Dual-eligible (2) |
598,200 |
474,500 |
|||
Health Insurance Marketplace |
1,459,100 |
959,600 |
|||
Medicaid Expansion |
1,262,100 |
1,091,500 |
(2) Membership includes dual-eligible ABD & LTSS and dual-eligible Medicare membership in the table above. |
Revenues
The following table sets forth supplemental revenue information for the three and twelve months ended December 31, ($ in millions):
Three Months Ended December 31, |
Twelve Months Ended December 31, |
||||||||||||||||||||
2018 |
2017 |
% Change |
2018 |
2017 |
% Change |
||||||||||||||||
Medicaid |
$ |
11,394 |
$ |
8,922 |
28 |
% |
$ |
39,427 |
$ |
33,048 |
19 |
% |
|||||||||
Commercial |
3,060 |
2,082 |
47 |
% |
12,391 |
8,207 |
51 |
% |
|||||||||||||
Medicare (1) |
1,365 |
1,073 |
27 |
% |
5,093 |
4,477 |
14 |
% |
|||||||||||||
Other |
740 |
729 |
2 |
% |
3,205 |
2,650 |
21 |
% |
|||||||||||||
Total Revenues |
$ |
16,559 |
$ |
12,806 |
29 |
% |
$ |
60,116 |
$ |
48,382 |
24 |
% |
(1) Medicare includes Medicare Advantage, Medicare Supplement, Special Needs Plans, and MMP. |
Statement of Operations: Three Months Ended December 31, 2018
- For the fourth quarter of 2018, total revenues increased 29% to
$16.6 billion from$12.8 billion in the comparable period in 2017. The increase over the prior year was due to the acquisition ofFidelis Care , growth in the Health Insurance Marketplace business, expansions and new programs in many of our states, and the reinstatement of the health insurer fee in 2018. These increases were partially offset by a reduction in pass through payments from theState of California and the impact of the removal of the in-home support services (IHSS) program fromCalifornia's Medicaid contract inJanuary 2018 . - HBR of 86.8% for the fourth quarter of 2018 represents a decrease from 87.3% in the comparable period in 2017. The year-over-year decrease was primarily a result of membership growth in the Health Insurance Marketplace business and the reinstatement of the health insurer fee in 2018. These decreases were partially offset by the acquisition of
Fidelis Care , which operates at a higher HBR. - HBR increased sequentially from 86.3% in the third quarter of 2018. The increase was primarily the impact of the IHSS program reconciliation in the third quarter of 2018, which represents 100 basis points of the increase, partially offset by improved
Medicaid performance over the third quarter of 2018. - The SG&A expense ratio was 9.9% for the fourth quarter of 2018, compared to 10.9% in the fourth quarter of 2017. The year-over-year decrease was primarily due to decreased acquisition related expenses and the
$40 million contribution to our charitable foundation in the fourth quarter of 2017. The Adjusted SG&A expense ratio was 9.9% for the fourth quarter of 2018, compared to 10.5% in the fourth quarter of 2017. The SG&A and Adjusted SG&A expense ratios both decreased due to the acquisition ofFidelis Care , which operates at a lower SG&A expense ratio. These decreases in both ratios were partially offset by growth in the Health Insurance Marketplace business, which operates at a higher SG&A expense ratio, and the impact of the removal of the IHSS program fromCalifornia's Medicaid contract. - The effective tax rate was 32.5% for the fourth quarter of 2018. The tax rate benefited from deductions related to the vesting of employee stock awards during the fourth quarter of 2018, and was consistent with our expectations.
Statement of Operations: Year Ended December 31, 2018
- For the full year 2018, total revenues increased 24% to
$60.1 billion from$48.4 billion in the comparable period of 2017. The increase over prior year was primarily due to the acquisition ofFidelis Care , growth in the Health Insurance Marketplace business, expansions and new programs in many of our states, and the reinstatement of the health insurer fee in 2018. This was partially offset by lower revenues as a result of the removal of the IHSS program fromCalifornia's Medicaid contract inJanuary 2018 . - HBR of 85.9% for the full year 2018 represents a decrease from 87.3% in the comparable period in 2017. The HBR decrease compared to last year was driven by membership growth in the Health Insurance Marketplace business, the reinstatement of the health insurer fee in 2018, and the recognition of the previously mentioned IHSS program reconciliation. This was partially offset by the acquisition of
Fidelis Care , which operates at a higher HBR. - The SG&A expense ratio was 10.7% for the full year 2018, compared to 9.7% for the full year 2017. The year-over-year increase was primarily due to increased acquisition related expenses. The Adjusted SG&A expense ratio was 10.0% for the full year 2018, compared to 9.5% for the full year 2017. The SG&A and Adjusted SG&A expense ratios both increased due to growth in the Health Insurance Marketplace business and the impact of the removal of the IHSS program from
California's Medicaid contract inJanuary 2018 . These increases in both ratios were partially offset by the acquisition ofFidelis Care . - For the full year 2018, the effective tax rate was 34.6%, consistent with our previous guidance.
Balance Sheet
At December 31, 2018, the Company had cash, investments and restricted deposits of
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, September 30, 2018 |
51 |
||
Impact of the Fidelis Care integration |
(2) |
||
Timing of claims payments |
(1) |
||
Days in claims payable, December 31, 2018 |
48 |
||
Outlook
The Company's annual guidance for 2019 on a split-adjusted basis is as follows:
Full Year 2019 |
|||||||||
Low |
High |
||||||||
Total revenues (in billions) |
$ |
70.3 |
$ |
71.1 |
|||||
GAAP diluted EPS |
$ |
3.65 |
$ |
3.83 |
|||||
Adjusted Diluted EPS (1) |
$ |
4.11 |
$ |
4.31 |
|||||
HBR |
86.5 |
% |
87.0 |
% |
|||||
SG&A expense ratio |
9.3 |
% |
9.8 |
% |
|||||
Adjusted SG&A expense ratio (2) |
9.3 |
% |
9.8 |
% |
|||||
Effective tax rate |
25.0 |
% |
27.0 |
% |
|||||
Diluted shares outstanding (in millions) |
421.5 |
422.5 |
|||||||
(1) |
Adjusted Diluted EPS excludes amortization of acquired intangible assets of $0.45 to $0.46 per diluted share and acquisition related expenses of $0.01 to $0.02 per diluted share. |
(2) |
Adjusted SG&A expense ratio excludes acquisition related expenses of $6 million to $12 million. |
Conference Call
As previously announced, the Company will host a conference call Tuesday, February 5, 2019, at approximately
Investors and other interested parties are invited to listen to the conference call by dialing 1-877-883-0383 in the U.S. and
A webcast replay will be available for on-demand listening shortly after the completion of the call for the next twelve months or until
Non-GAAP Financial Presentation
The Company is providing certain non-GAAP financial measures in this release as the Company believes that these figures are helpful in allowing investors to more accurately assess the ongoing nature of the Company's operations and measure the Company's performance more consistently across periods. The Company uses the presented non-GAAP financial measures internally to allow management to focus on period-to-period changes in the Company's core business operations. Therefore, the Company believes that this information is meaningful in addition to the information contained in the GAAP presentation of financial information. The presentation of this additional non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.
Specifically, the Company believes the presentation of non-GAAP financial information that excludes amortization of acquired intangible assets, acquisition related expenses, as well as other items, allows investors to develop a more meaningful understanding of the Company's performance over time. The tables below provide reconciliations of non-GAAP items ($ in millions, except per share data):
Three Months Ended |
Twelve Months Ended |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
GAAP net earnings attributable to Centene |
$ |
241 |
$ |
230 |
$ |
900 |
$ |
828 |
|||||||
Amortization of acquired intangible assets |
62 |
39 |
211 |
156 |
|||||||||||
Acquisition related expenses |
2 |
7 |
425 |
20 |
|||||||||||
Other adjustments (1) |
— |
(63) |
30 |
(7) |
|||||||||||
Income tax effects of adjustments (2) |
(15) |
(40) |
(155) |
(108) |
|||||||||||
Adjusted net earnings |
$ |
290 |
$ |
173 |
$ |
1,411 |
$ |
889 |
(1) |
Other adjustments include the following items: |
|
|
(2) |
The income tax effects of adjustments are based on the effective income tax rates applicable to adjusted (non-GAAP) results. |
Three Months Ended |
Twelve Months Ended |
Annual Guidance December 31, 2019 |
|||||||||||||||||
2018 |
2017 |
2018 |
2017 |
Pre-Split |
Split- |
||||||||||||||
GAAP diluted EPS attributable to Centene |
$ |
1.15 |
$ |
1.30 |
$ |
4.52 |
$ |
4.69 |
$7.30 - $7.66 |
$3.65 - $3.83 |
|||||||||
Amortization of acquired intangible assets (1) |
0.23 |
0.14 |
0.82 |
0.56 |
$0.90 - $0.92 |
$0.45 - $0.46 |
|||||||||||||
Acquisition related expenses (2) |
— |
0.02 |
1.62 |
0.07 |
$0.02 - $0.04 |
$0.01 - $0.02 |
|||||||||||||
Other adjustments (3) |
— |
(0.49) |
0.12 |
(0.29) |
— |
— |
|||||||||||||
Adjusted Diluted EPS |
$ |
1.38 |
$ |
0.97 |
$ |
7.08 |
$ |
5.03 |
$8.22 - $8.62 |
$4.11 - $4.31 |
(1) |
The amortization of acquired intangible assets per diluted share presented above is net of an income tax benefit of $0.06 and $0.08 for the three months ended December 31, 2018 and 2017, respectively, and $0.24 and $0.32 for the year ended December 31, 2018 and 2017, respectively; and an estimated $0.28 pre-split and $0.14 split-adjusted for the year ended December 31, 2019. |
(2) |
The acquisition related expenses per diluted share presented above are net of an income tax benefit of $0.01 and $0.02 for the three months ended December 31, 2018 and 2017, respectively, and $0.51 and $0.04 for the year ended December 31, 2018 and 2017, respectively; and an estimated $0.01 pre-split and $0.00 to $0.01 split-adjusted for the year ended December 31, 2019. |
(3) |
Other adjustments include the following items: |
|
|
(4) |
Gives effect to the proposed two-for-one stock split. |
Three Months Ended |
Twelve Months Ended |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
GAAP SG&A expenses |
$ |
1,556 |
$ |
1,260 |
$ |
6,043 |
$ |
4,446 |
|||||||
Acquisition related expenses |
— |
7 |
421 |
20 |
|||||||||||
Penn Treaty assessment expense |
— |
— |
— |
56 |
|||||||||||
Charitable contribution |
— |
40 |
— |
40 |
|||||||||||
Adjusted SG&A expenses |
$ |
1,556 |
$ |
1,213 |
$ |
5,622 |
$ |
4,330 |
About
Forward-Looking Statements
All statements, other than statements of current or historical fact, contained in this press release are forward-looking statements. Without limiting the foregoing, forward-looking statements often use words such as "believe," "anticipate," "plan," "expect," "estimate," "intend," "seek," "target," "goal," "may," "will," "would," "could," "should," "can," "continue" and other similar words or expressions (and the negative thereof).
[Tables Follow]
CENTENE CORPORATION AND SUBSIDIARIES |
|||||||
CONSOLIDATED BALANCE SHEETS |
|||||||
(In millions, except shares in thousands and per share data in dollars) |
|||||||
December 31, 2018 |
December 31, 2017 |
||||||
(Unaudited) |
|||||||
ASSETS |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
5,342 |
$ |
4,072 |
|||
Premium and trade receivables |
5,150 |
3,413 |
|||||
Short-term investments |
722 |
531 |
|||||
Other current assets |
784 |
687 |
|||||
Total current assets |
11,998 |
8,703 |
|||||
Long-term investments |
6,861 |
5,312 |
|||||
Restricted deposits |
555 |
135 |
|||||
Property, software and equipment, net |
1,706 |
1,104 |
|||||
Goodwill |
7,015 |
4,749 |
|||||
Intangible assets, net |
2,239 |
1,398 |
|||||
Other long-term assets |
527 |
454 |
|||||
Total assets |
$ |
30,901 |
$ |
21,855 |
|||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY |
|||||||
Current liabilities: |
|||||||
Medical claims liability |
$ |
6,831 |
$ |
4,286 |
|||
Accounts payable and accrued expenses |
4,051 |
4,165 |
|||||
Return of premium payable |
666 |
549 |
|||||
Unearned revenue |
385 |
328 |
|||||
Current portion of long-term debt |
38 |
4 |
|||||
Total current liabilities |
11,971 |
9,332 |
|||||
Long-term debt |
6,648 |
4,695 |
|||||
Other long-term liabilities |
1,259 |
952 |
|||||
Total liabilities |
19,878 |
14,979 |
|||||
Commitments and contingencies |
|||||||
Redeemable noncontrolling interests |
10 |
12 |
|||||
Stockholders' equity: |
|||||||
Preferred stock, $.001 par value; authorized 10,000 shares; no shares issued or outstanding at December 31, 2018 and December 31, 2017 |
— |
— |
|||||
Common stock, $.001 par value; authorized 400,000 shares; 208,848 issued and 206,239 outstanding at December 31, 2018, and 180,379 issued and 173,437 outstanding at December 31, 2017 |
— |
— |
|||||
Additional paid-in capital |
7,449 |
4,349 |
|||||
Accumulated other comprehensive loss |
(56) |
(3) |
|||||
Retained earnings |
3,663 |
2,748 |
|||||
Treasury stock, at cost (2,608 and 6,942 shares, respectively) |
(139) |
(244) |
|||||
Total Centene stockholders' equity |
10,917 |
6,850 |
|||||
Noncontrolling interest |
96 |
14 |
|||||
Total stockholders' equity |
11,013 |
6,864 |
|||||
Total liabilities, redeemable noncontrolling interests and stockholders' equity |
$ |
30,901 |
$ |
21,855 |
CENTENE CORPORATION AND SUBSIDIARIES |
|||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||||
(In millions, except shares in thousands and per share data in dollars) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Revenues: |
|||||||||||||||
Premium |
$ |
14,990 |
$ |
10,960 |
$ |
53,629 |
$ |
43,353 |
|||||||
Service |
659 |
633 |
2,806 |
2,267 |
|||||||||||
Premium and service revenues |
15,649 |
11,593 |
56,435 |
45,620 |
|||||||||||
Premium tax and health insurer fee |
910 |
1,213 |
3,681 |
2,762 |
|||||||||||
Total revenues |
16,559 |
12,806 |
60,116 |
48,382 |
|||||||||||
Expenses: |
|||||||||||||||
Medical costs |
13,012 |
9,573 |
46,057 |
37,851 |
|||||||||||
Cost of services |
563 |
513 |
2,386 |
1,847 |
|||||||||||
Selling, general and administrative expenses |
1,556 |
1,260 |
6,043 |
4,446 |
|||||||||||
Amortization of acquired intangible assets |
62 |
39 |
211 |
156 |
|||||||||||
Premium tax expense |
801 |
1,240 |
3,252 |
2,883 |
|||||||||||
Health insurer fee expense |
177 |
— |
709 |
— |
|||||||||||
Total operating expenses |
16,171 |
12,625 |
58,658 |
47,183 |
|||||||||||
Earnings from operations |
388 |
181 |
1,458 |
1,199 |
|||||||||||
Other income (expense): |
|||||||||||||||
Investment and other income |
67 |
53 |
253 |
190 |
|||||||||||
Interest expense |
(98) |
(66) |
(343) |
(255) |
|||||||||||
Earnings from operations, before income tax expense |
357 |
168 |
1,368 |
1,134 |
|||||||||||
Income tax expense |
116 |
(55) |
474 |
326 |
|||||||||||
Net earnings |
241 |
223 |
894 |
808 |
|||||||||||
Loss attributable to noncontrolling interests |
— |
7 |
6 |
20 |
|||||||||||
Net earnings attributable to Centene Corporation |
$ |
241 |
$ |
230 |
$ |
900 |
$ |
828 |
|||||||
Net earnings per common share attributable to Centene Corporation: |
|||||||||||||||
Basic earnings per common share |
$ |
1.17 |
$ |
1.33 |
$ |
4.61 |
$ |
4.80 |
|||||||
Diluted earnings per common share |
$ |
1.15 |
$ |
1.30 |
$ |
4.52 |
$ |
4.69 |
|||||||
Weighted average number of common shares outstanding: |
|||||||||||||||
Basic |
205,534 |
172,763 |
195,124 |
172,427 |
|||||||||||
Diluted |
210,123 |
177,284 |
199,253 |
176,702 |
CENTENE CORPORATION AND SUBSIDIARIES |
|||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
(In millions) |
|||||||
(Unaudited) |
|||||||
Year Ended December 31, |
|||||||
2018 |
2017 |
||||||
Cash flows from operating activities: |
|||||||
Net earnings |
$ |
894 |
$ |
808 |
|||
Adjustments to reconcile net earnings to net cash provided by operating activities |
|||||||
Depreciation and amortization |
495 |
361 |
|||||
Stock compensation expense |
145 |
135 |
|||||
Deferred income taxes |
(129) |
(108) |
|||||
Changes in assets and liabilities |
|||||||
Premium and trade receivables |
(1,173) |
(50) |
|||||
Other assets |
(38) |
(146) |
|||||
Medical claims liabilities |
1,325 |
359 |
|||||
Unearned revenue |
(52) |
19 |
|||||
Accounts payable and accrued expenses |
(533) |
53 |
|||||
Other long-term liabilities |
258 |
68 |
|||||
Other operating activities, net |
42 |
(10) |
|||||
Net cash provided by operating activities |
1,234 |
1,489 |
|||||
Cash flows from investing activities: |
|||||||
Capital expenditures |
(675) |
(422) |
|||||
Purchases of investments |
(3,846) |
(2,656) |
|||||
Sales and maturities of investments |
1,991 |
1,862 |
|||||
Investments in acquisitions, net of cash acquired |
(2,055) |
(50) |
|||||
Other investing activities, net |
— |
12 |
|||||
Net cash used in investing activities |
(4,585) |
(1,254) |
|||||
Cash flows from financing activities: |
|||||||
Proceeds from the issuance of common stock |
2,779 |
— |
|||||
Proceeds from borrowings |
6,077 |
1,400 |
|||||
Payment of long-term debt |
(4,083) |
(1,353) |
|||||
Common stock repurchases |
(71) |
(65) |
|||||
Purchase of noncontrolling interest |
(74) |
(66) |
|||||
Debt issuance costs |
(25) |
(3) |
|||||
Other financing activities, net |
9 |
5 |
|||||
Net cash provided by (used in) financing activities |
4,612 |
(82) |
|||||
Net increase in cash, cash equivalents and restricted cash |
1,261 |
153 |
|||||
Cash, cash equivalents,and restricted cash and cash equivalents, beginning of period |
4,089 |
3,936 |
|||||
Cash, cash equivalents, and restricted cash and cash equivalents, end of period |
$ |
5,350 |
$ |
4,089 |
|||
Supplemental disclosures of cash flow information: |
|||||||
Interest paid |
$ |
323 |
$ |
237 |
|||
Income taxes paid |
$ |
448 |
$ |
496 |
|||
Equity issued in connection with acquisitions |
$ |
507 |
$ |
— |
CENTENE CORPORATION |
|||||||||||||||||||
SUPPLEMENTAL FINANCIAL DATA |
|||||||||||||||||||
Q4 |
Q3 |
Q2 |
Q1 |
Q4 |
|||||||||||||||
2018 |
2018 |
2018 |
2018 |
2017 |
|||||||||||||||
MANAGED CARE MEMBERSHIP BY LINE OF BUSINESS |
|||||||||||||||||||
Medicaid: |
|||||||||||||||||||
TANF, CHIP & Foster Care |
7,356,200 |
7,260,500 |
5,852,000 |
5,776,600 |
5,807,300 |
||||||||||||||
ABD & LTSS |
1,002,100 |
964,200 |
874,200 |
866,000 |
846,200 |
||||||||||||||
Behavioral Health |
36,500 |
455,900 |
454,600 |
454,500 |
463,700 |
||||||||||||||
Total Medicaid |
8,394,800 |
8,680,600 |
7,180,800 |
7,097,100 |
7,117,200 |
||||||||||||||
Commercial |
1,978,000 |
2,062,500 |
2,051,700 |
2,161,200 |
1,558,300 |
||||||||||||||
Medicare (1) |
416,900 |
417,400 |
343,800 |
343,400 |
333,700 |
||||||||||||||
Correctional |
151,300 |
150,900 |
157,900 |
157,300 |
157,500 |
||||||||||||||
Total at-risk membership |
10,941,000 |
11,311,400 |
9,734,200 |
9,759,000 |
9,166,700 |
||||||||||||||
TRICARE eligibles |
2,858,900 |
2,858,900 |
2,851,500 |
2,851,500 |
2,824,100 |
||||||||||||||
Non-risk membership |
219,700 |
219,000 |
218,100 |
218,900 |
216,300 |
||||||||||||||
Total |
14,019,600 |
14,389,300 |
12,803,800 |
12,829,400 |
12,207,100 |
||||||||||||||
(1) Membership includes Medicare Advantage, Medicare Supplement, Special Needs Plans, and MMP. |
|||||||||||||||||||
NUMBER OF EMPLOYEES |
47,300 |
45,400 |
41,200 |
34,800 |
33,700 |
||||||||||||||
DAYS IN CLAIMS PAYABLE (2) |
48 |
51 |
44 |
43 |
41 |
||||||||||||||
(2) 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, INVESTMENTS AND RESTRICTED DEPOSITS (in millions) |
|||||||||||||||||||
Regulated |
$ |
13,002 |
$ |
13,782 |
$ |
11,455 |
$ |
11,398 |
$ |
9,740 |
|||||||||
Unregulated |
478 |
481 |
3,543 |
452 |
310 |
||||||||||||||
Total |
$ |
13,480 |
$ |
14,263 |
$ |
14,998 |
$ |
11,850 |
$ |
10,050 |
|||||||||
DEBT TO CAPITALIZATION |
37.8 |
% |
37.3 |
% |
37.0 |
% |
40.6 |
% |
40.6 |
% |
|||||||||
DEBT TO CAPITALIZATION EXCLUDING NON-RECOURSE DEBT (3) |
37.4 |
% |
36.9 |
% |
36.7 |
% |
40.3 |
% |
40.3 |
% |
|||||||||
(3) The non-recourse debt represents the Company's mortgage note payable ($57 million at December 31, 2018) and construction loan payable ($63 million at December 31, 2018). |
|||||||||||||||||||
Debt to capitalization is calculated as follows: total debt divided by (total debt + total equity). |
OPERATING RATIOS
Three Months Ended December 31, |
Twelve Months Ended December 31, |
||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||
HBR |
86.8 |
% |
87.3 |
% |
85.9 |
% |
87.3 |
% |
|||
SG&A expense ratio |
9.9 |
% |
10.9 |
% |
10.7 |
% |
9.7 |
% |
|||
Adjusted SG&A expense ratio |
9.9 |
% |
10.5 |
% |
10.0 |
% |
9.5 |
% |
MEDICAL CLAIMS LIABILITY
The changes in medical claims liability are summarized as follows (in millions):
Balance, December 31, 2017 |
$ |
4,286 |
||
Less: reinsurance recoverable |
18 |
|||
Balance, December 31, 2017, net |
4,268 |
|||
Acquisitions |
1,204 |
|||
Less: acquired reinsurance recoverable |
8 |
|||
Incurred related to: |
||||
Current period |
46,484 |
|||
Prior period |
(427) |
|||
Total incurred |
46,057 |
|||
Paid related to: |
||||
Current period |
41,161 |
|||
Prior period |
3,556 |
|||
Total paid |
44,717 |
|||
Balance, December 31, 2018, net |
6,804 |
|||
Plus: reinsurance recoverable |
27 |
|||
Balance, December 31, 2018 |
$ |
6,831 |
The amount of the "Incurred related to: Prior period" above represents favorable development and 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, receipts from other third party payors related to coordination of benefits and lower medical utilization and cost trends for dates of service December 31, 2017, and prior.
View original content:http://www.prnewswire.com/news-releases/centene-corporation-reports-2018-results-and-increases-2019-annual-guidance-300789503.html
SOURCE
Investor Relations Inquiries, Edmund E. Kroll, Jr., Senior Vice President, Finance & Investor Relations, (212) 759-0382 OR Media Inquiries, Marcela Manjarrez-Hawn, Senior Vice President and Chief Communications Officer, (314) 445-0790