Centene Corporation Reports 2018 Second Quarter Results And Updates 2018 Guidance
In summary, the 2018 second quarter results were as follows:
Total revenues (in millions) |
$ |
14,181 |
|
Health benefits ratio |
85.7 |
% |
|
SG&A expense ratio |
9.6 |
% |
|
GAAP diluted EPS |
$ |
1.50 |
|
Adjusted Diluted EPS (1) |
$ |
1.80 |
|
Total cash flow used in operations (in millions) |
$ |
(526) |
(1) |
A full reconciliation of Adjusted Diluted EPS is shown on page six of this release. |
Second Quarter Highlights
June 30, 2018 managed care membership of 12.8 million, an increase of 584,700 members, or 5%, overJune 30, 2017 .- Total revenues for the second quarter of 2018 of
$14.2 billion , representing 19% growth, compared to the second quarter of 2017. - Health benefits ratio (HBR) of 85.7% for the second quarter of 2018, compared to 86.3% in the second quarter of 2017.
- Selling, general and administrative (SG&A) expense ratio and Adjusted SG&A expense ratio of 9.6% for the second quarter of 2018, compared to 9.3% for the second quarter of 2017.
- Diluted EPS for the second quarter of 2018 of
$1.50 , compared to$1.44 for the second quarter of 2017. - Adjusted Diluted EPS for the second quarter of 2018 of
$1.80 , compared to$1.59 for the second quarter of 2017. - Operating cash flow of
$(526) million for the second quarter of 2018, and$1.3 billion for the six months endedJune 30, 2018 . As expected and highlighted at our June Investor Day, the second quarter cash flow was negatively affected by the repayment of$630 million ofMedicaid expansion rate overpayments inCalifornia , which was previously accrued.
Other Events
- In
July 2018 , we completed the acquisition of substantially all of the assets ofFidelis Care for$3.75 billion . The acquisition was funded through approximately$2.8 billion of new equity and approximately$1.8 billion of new long-term debt. Both offerings were completed inMay 2018 . - In
July 2018 , our subsidiary, Health Net Federal Services, was awarded the next generation Military & Family Life Counseling Program contract. The awarded contract is up to ten years, including multiple one-year option periods. - In
July 2018 , Centurion began operating under a contract to provide healthcare services for correctional facilities inPima County, Arizona . In addition, Centurion's contracts for correctional facilities were reprocured inFlorida ,New Hampshire andTennessee . - In
June 2018 , ourKansas subsidiary, Sunflower Health Plan, was selected to continue providing managed care services to KanCare beneficiaries statewide. The new contract is expected to commenceJanuary 1, 2019 . - In
June 2018 , we announced our partnership with theNational Council on Independent Living for the "Barrier Removal Fund " program. This program is an initiative to increase the accessibility of provider medical offices and services for people with disabilities. - In
May 2018 , ourWashington State subsidiary, Coordinated Care ofWashington , was selected to provide expanded managed care services toApple Health's Fully Integrated Managed Care (FIMC)Medicaid beneficiaries. This new contract integrates physical and behavioral health. - In
May 2018 , ourIowa subsidiary,Iowa Total Care, Inc. , was selected to negotiate a new statewide contract for the IA Health Link Program. Pending regulatory approval, the contract is expected to commence onJuly 1, 2019 . - In
May 2018 , ourFlorida subsidiary,Sunshine Health , was awarded a contract to provide physical and behavioral health care services in all 11 regions throughFlorida's Statewide Medicaid Managed Care Program, subject to regulatory approval and successful completion of readiness review. The five year contract is expected to beginDecember 1, 2018 and will be implemented by region throughFebruary 2019 .
Accreditations & Awards
- In
July 2018 , FORTUNE magazine announcedCentene's position of #210 in its annual ranking of the largest companies globally by revenue. - In
July 2018 ,Forbes announcedCentene's position of #43 in its ranking of "Global 2000: Growth Champions." - In
June 2018 ,Centene and several of its subsidiaries earned Accreditation from NCQA, including SilverSummit Healthplan and Envolve Pharmacy Solutions. - In
May 2018 , FORTUNE magazine announcedCentene's position of #61 in its annual ranking of America's largest companies by revenue. - In
May 2018 , atDecision Health's Ninth Annual Case in Point Platinum Awards,Centene and six of its subsidiaries were honored for their innovative programs.
Membership
The following table sets forth our membership by line of business:
June 30 |
|||||
2018 |
2017 |
||||
Medicaid: |
|||||
TANF, CHIP & Foster Care |
5,852,000 |
5,854,400 |
|||
ABD & LTSS |
874,200 |
843,500 |
|||
Behavioral Health |
454,600 |
466,500 |
|||
Total Medicaid |
7,180,800 |
7,164,400 |
|||
Commercial |
2,051,700 |
1,743,600 |
|||
Medicare (1) |
343,800 |
327,500 |
|||
Correctional |
157,900 |
160,400 |
|||
Total at-risk membership |
9,734,200 |
9,395,900 |
|||
TRICARE eligibles |
2,851,500 |
2,823,200 |
|||
Non-risk membership |
218,100 |
— |
|||
Total |
12,803,800 |
12,219,100 |
(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:
June 30 |
|||||
2018 |
2017 |
||||
Dual-eligible (2) |
489,500 |
467,500 |
|||
Health Insurance Marketplace |
1,503,100 |
1,084,600 |
|||
Medicaid Expansion |
1,079,700 |
1,101,900 |
(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 months ended June 30, ($ in millions):
2018 |
2017 |
% Change |
||||||||
Medicaid |
$ |
8,919 |
$ |
8,068 |
11 |
% |
||||
Commercial |
3,143 |
2,122 |
48 |
% |
||||||
Medicare (1) |
1,203 |
1,134 |
6 |
% |
||||||
Other |
916 |
630 |
45 |
% |
||||||
Total Revenues |
$ |
14,181 |
$ |
11,954 |
19 |
% |
(1) |
Medicare includes Medicare Advantage, Medicare Supplement, Special Needs Plans, and MMP. |
Statement of Operations: Three Months Ended June 30, 2018
- For the second quarter of 2018, total revenues increased 19% to
$14.2 billion , from$12.0 billion in the comparable period in 2017. The increase over prior year was due to growth in the Health Insurance Marketplace business in 2018, acquisitions, expansions and new programs in many of our states in 2017 and 2018, and the reinstatement of the health insurer fee in 2018. Total revenues also increased by approximately$500 million associated with pass through payments from theState of California received in the second quarter that were recorded in premium tax revenue and premium tax expense. These increases were partially offset by the impact of the removal of the in-home support services (IHSS) program fromCalifornia's Medicaid contract inJanuary 2018 . - Sequentially, total revenues increased 8% over the first quarter of 2018 primarily due to the pass through payments from the
State of California noted above, theIllinois contract expansion and acquisitions. - HBR of 85.7% for the second quarter of 2018 represents a decrease from 86.3% 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 impact of retroactive minimum medical loss ratio (MLR) changes under
California's Medicaid expansion program. - HBR increased sequentially from 84.3% in the first quarter of 2018. The increase was primarily attributable to normal seasonality in the commercial business and the
California minimum MLR changes noted above. These HBR increases were partially offset by the decrease in flu-related costs over the first quarter of 2018. - The SG&A expense ratio and Adjusted SG&A expense ratio were 9.6% for the second quarter of 2018, compared to 9.3% for the second quarter of 2017. The year-over-year increase was primarily a result of growth in the Health Insurance Marketplace business, which operates at a higher SG&A expense ratio.
Balance Sheet
At June 30, 2018, the Company had cash, investments and restricted deposits of
Outlook
The Company's full updated annual guidance for 2018 is as follows:
Full Year 2018 |
|||||||||
Low |
High |
||||||||
Total revenues (in billions) |
$ |
59.2 |
$ |
60.0 |
|||||
GAAP diluted EPS |
$ |
4.25 |
$ |
4.57 |
|||||
Adjusted Diluted EPS (1) |
$ |
6.80 |
$ |
7.16 |
|||||
HBR |
85.9 |
% |
86.4 |
% |
|||||
SG&A expense ratio |
10.2 |
% |
10.7 |
% |
|||||
Adjusted SG&A expense ratio (2) |
9.4 |
% |
9.9 |
% |
|||||
Effective tax rate |
34.0 |
% |
36.0 |
% |
|||||
Diluted shares outstanding (in millions) |
198.7 |
199.7 |
|||||||
(1) |
Adjusted Diluted EPS excludes amortization of acquired intangible assets of $0.81 to $0.83 per diluted share, acquisition related expenses of $1.62 to $1.64 per diluted share and California minimum MLR changes of $0.12 per diluted share. |
(2) |
Adjusted SG&A expense ratio excludes acquisition related expenses of $422 million to $428 million, of which $400 million to $406 million will be incurred in the second half of 2018. |
Conference Call
As previously announced, the Company will host a conference call Tuesday, July 24, 2018, at approximately
Investors and other interested parties are invited to listen to the conference call by dialing 1-877-883-0383 in the U.S. and
A webcast replay will be available for on-demand listening shortly after the completion of the call for the next twelve months or until
Non-GAAP Financial Presentation
The Company is providing certain non-GAAP financial measures in this release as the Company believes that these figures are helpful in allowing investors to more accurately assess the ongoing nature of the Company's operations and measure the Company's performance more consistently across periods. The Company uses the presented non-GAAP financial measures internally to allow management to focus on period-to-period changes in the Company's core business operations. Therefore, the Company believes that this information is meaningful in addition to the information contained in the GAAP presentation of financial information. The presentation of this additional non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.
Specifically, the Company believes the presentation of non-GAAP financial information that excludes amortization of acquired intangible assets, acquisition related expenses, as well as other items, allows investors to develop a more meaningful understanding of the Company's performance over time. The tables below provide reconciliations of non-GAAP items ($ in millions, except per share data):
Three Months Ended |
Six Months Ended |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
GAAP net earnings |
$ |
300 |
$ |
254 |
$ |
640 |
$ |
393 |
|||||||
Amortization of acquired intangible assets |
45 |
39 |
84 |
79 |
|||||||||||
Acquisition related expenses |
1 |
1 |
22 |
6 |
|||||||||||
California minimum medical loss ratio changes (1) |
30 |
— |
30 |
— |
|||||||||||
Penn Treaty assessment expense (2) |
— |
— |
— |
47 |
|||||||||||
Income tax effects of adjustments (3) |
(16) |
(14) |
(30) |
(48) |
|||||||||||
Adjusted net earnings |
$ |
360 |
$ |
280 |
$ |
746 |
$ |
477 |
(1) |
The impact of retroactive minimum MLR changes under California's Medicaid expansion program. |
(2) |
Additional expense for the Company's estimated share of guaranty association assessment resulting from the liquidation of Penn Treaty for the six months ended June 30, 2017. |
(3) |
The income tax effects of adjustments are based on the effective income tax rates applicable to adjusted (non-GAAP) results. |
Three Months Ended |
Six Months Ended |
Annual |
|||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||||
GAAP diluted EPS |
$ |
1.50 |
$ |
1.44 |
$ |
3.39 |
$ |
2.23 |
$4.25 - $4.57 |
||||||||
Amortization of acquired intangible assets (1) |
0.17 |
0.14 |
0.35 |
0.28 |
$0.81 - $0.83 |
||||||||||||
Acquisition related expenses (2) |
0.01 |
0.01 |
0.10 |
0.03 |
$1.62 - $1.64 |
||||||||||||
California minimum medical loss ratio changes (3) |
0.12 |
— |
0.12 |
— |
$0.12 |
||||||||||||
Penn Treaty assessment expense (4) |
— |
— |
— |
0.17 |
— |
||||||||||||
Adjusted Diluted EPS |
$ |
1.80 |
$ |
1.59 |
$ |
3.96 |
$ |
2.71 |
$6.80 - $7.16 |
(1) |
The amortization of acquired intangible assets per diluted share presented above is net of an income tax benefit of $0.05 and $0.08 for the three months ended June 30, 2018 and 2017, respectively, and $0.10 and $0.17 for the six months ended June 30, 2018 and 2017, respectively; and an estimated $0.24 to $0.25 for the year ended December 31, 2018. |
(2) |
The acquisition related expenses per diluted share presented above are net of an income tax benefit of $0.00 for both the three months ended June 30, 2018 and 2017, and $0.02 and $0.01 for the six months ended June 30, 2018 and 2017, respectively; and an estimated $0.50 to $0.51 for the year ended December 31, 2018. |
(3) |
The impact of retroactive changes to the California minimum MLR is net of an income tax benefit of $0.03 and $0.04 for the three and six months ended June 30, 2018, respectively; and an estimated $0.03 to $0.04 for the year ended December 31, 2018. |
(4) |
The Penn Treaty assessment expense per diluted share presented above is net of an income tax benefit of $0.09 for the six months ended June 30, 2017. |
Three Months Ended |
Six Months Ended |
Three Months Ended |
|||||||||||||||||
2018 |
2017 |
2018 |
2017 |
2018 |
|||||||||||||||
GAAP SG&A expenses |
$ |
1,237 |
$ |
1,065 |
$ |
2,553 |
$ |
2,156 |
$ |
1,316 |
|||||||||
Acquisition related expenses |
1 |
1 |
22 |
6 |
21 |
||||||||||||||
Penn Treaty assessment expense |
— |
— |
— |
47 |
— |
||||||||||||||
Adjusted SG&A expenses |
$ |
1,236 |
$ |
1,064 |
$ |
2,531 |
$ |
2,103 |
$ |
1,295 |
About
Forward-Looking Statements
The company and its representatives may from time to time make written and oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act ("PSLRA") of 1995, including statements in this and other press releases, in presentations, filings with the
[Tables Follow]
CENTENE CORPORATION AND SUBSIDIARIES |
|||||||
CONSOLIDATED BALANCE SHEETS |
|||||||
(In millions, except shares in thousands and per share data in dollars) |
|||||||
June 30, 2018 |
December 31, 2017 |
||||||
(Unaudited) |
|||||||
ASSETS |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
6,707 |
$ |
4,072 |
|||
Premium and trade receivables |
4,067 |
3,413 |
|||||
Short-term investments |
602 |
531 |
|||||
Other current assets |
1,001 |
687 |
|||||
Total current assets |
12,377 |
8,703 |
|||||
Long-term investments |
5,746 |
5,312 |
|||||
Restricted deposits |
1,943 |
135 |
|||||
Property, software and equipment, net |
1,327 |
1,104 |
|||||
Goodwill |
5,346 |
4,749 |
|||||
Intangible assets, net |
1,501 |
1,398 |
|||||
Other long-term assets |
503 |
454 |
|||||
Total assets |
$ |
28,743 |
$ |
21,855 |
|||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY |
|||||||
Current liabilities: |
|||||||
Medical claims liability |
$ |
5,003 |
$ |
4,286 |
|||
Accounts payable and accrued expenses |
3,803 |
4,165 |
|||||
Return of premium payable |
529 |
549 |
|||||
Unearned revenue |
523 |
328 |
|||||
Current portion of long-term debt |
4 |
4 |
|||||
Total current liabilities |
9,862 |
9,332 |
|||||
Long-term debt |
6,275 |
4,695 |
|||||
Other long-term liabilities |
1,898 |
952 |
|||||
Total liabilities |
18,035 |
14,979 |
|||||
Commitments and contingencies |
|||||||
Redeemable noncontrolling interests |
11 |
12 |
|||||
Stockholders' equity: |
|||||||
Preferred stock, $0.001 par value; authorized 10,000 shares; no shares issued or outstanding at June 30, 2018 and December 31, 2017 |
— |
— |
|||||
Common stock, $0.001 par value; authorized 400,000 shares; 207,413 issued and 205,247 outstanding at June 30, 2018, and 180,379 issued and 173,437 outstanding at December 31, 2017 |
— |
— |
|||||
Additional paid-in capital |
7,355 |
4,349 |
|||||
Accumulated other comprehensive loss |
(67) |
(3) |
|||||
Retained earnings |
3,403 |
2,748 |
|||||
Treasury stock, at cost (2,166 and 6,942 shares, respectively) |
(81) |
(244) |
|||||
Total Centene stockholders' equity |
10,610 |
6,850 |
|||||
Noncontrolling interest |
87 |
14 |
|||||
Total stockholders' equity |
10,697 |
6,864 |
|||||
Total liabilities, redeemable noncontrolling interests and stockholders' equity |
$ |
28,743 |
$ |
21,855 |
CENTENE CORPORATION AND SUBSIDIARIES |
|||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||||
(In millions, except per share data in dollars) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||||||
Revenues: |
|||||||||||||||
Premium |
$ |
12,113 |
$ |
10,905 |
$ |
24,016 |
$ |
21,543 |
|||||||
Service |
762 |
536 |
1,415 |
1,063 |
|||||||||||
Premium and service revenues |
12,875 |
11,441 |
25,431 |
22,606 |
|||||||||||
Premium tax and health insurer fee |
1,306 |
513 |
1,944 |
1,072 |
|||||||||||
Total revenues |
14,181 |
11,954 |
27,375 |
23,678 |
|||||||||||
Expenses: |
|||||||||||||||
Medical costs |
10,380 |
9,413 |
20,419 |
18,735 |
|||||||||||
Cost of services |
658 |
456 |
1,201 |
897 |
|||||||||||
Selling, general and administrative expenses |
1,237 |
1,065 |
2,553 |
2,156 |
|||||||||||
Amortization of acquired intangible assets |
45 |
39 |
84 |
79 |
|||||||||||
Premium tax expense |
1,189 |
543 |
1,735 |
1,133 |
|||||||||||
Health insurer fee expense |
183 |
— |
354 |
— |
|||||||||||
Total operating expenses |
13,692 |
11,516 |
26,346 |
23,000 |
|||||||||||
Earnings from operations |
489 |
438 |
1,029 |
678 |
|||||||||||
Other income (expense): |
|||||||||||||||
Investment and other income |
65 |
45 |
106 |
86 |
|||||||||||
Interest expense |
(80) |
(62) |
(148) |
(124) |
|||||||||||
Earnings from operations, before income tax expense |
474 |
421 |
987 |
640 |
|||||||||||
Income tax expense |
175 |
169 |
350 |
256 |
|||||||||||
Net earnings |
299 |
252 |
637 |
384 |
|||||||||||
Loss attributable to noncontrolling interests |
1 |
2 |
3 |
9 |
|||||||||||
Net earnings attributable to Centene Corporation |
$ |
300 |
$ |
254 |
$ |
640 |
$ |
393 |
|||||||
Net earnings per common share attributable to Centene Corporation: |
|||||||||||||||
Basic earnings per common share |
$ |
1.53 |
$ |
1.47 |
$ |
3.46 |
$ |
2.28 |
|||||||
Diluted earnings per common share |
$ |
1.50 |
$ |
1.44 |
$ |
3.39 |
$ |
2.23 |
|||||||
CENTENE CORPORATION AND SUBSIDIARIES |
|||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
(In millions) |
|||||||
(Unaudited) |
|||||||
Six Months Ended June 30, |
|||||||
2018 |
2017 |
||||||
Cash flows from operating activities: |
|||||||
Net earnings |
$ |
637 |
$ |
384 |
|||
Adjustments to reconcile net earnings to net cash provided by operating activities |
|||||||
Depreciation and amortization |
215 |
173 |
|||||
Stock compensation expense |
67 |
62 |
|||||
Deferred income taxes |
4 |
(58) |
|||||
Changes in assets and liabilities |
|||||||
Premium and trade receivables |
(553) |
(696) |
|||||
Other assets |
2 |
65 |
|||||
Medical claims liabilities |
717 |
243 |
|||||
Unearned revenue |
202 |
241 |
|||||
Accounts payable and accrued expenses |
(865) |
(257) |
|||||
Other long-term liabilities |
865 |
781 |
|||||
Other operating activities, net |
29 |
4 |
|||||
Net cash provided by operating activities |
1,320 |
942 |
|||||
Cash flows from investing activities: |
|||||||
Capital expenditures |
(362) |
(181) |
|||||
Purchases of investments |
(1,375) |
(1,317) |
|||||
Sales and maturities of investments |
721 |
1,015 |
|||||
Acquisitions, net of cash acquired |
(237) |
— |
|||||
Other investing activities, net |
— |
(1) |
|||||
Net cash used in investing activities |
(1,253) |
(484) |
|||||
Cash flows from financing activities: |
|||||||
Proceeds from the issuance of common stock |
2,780 |
— |
|||||
Proceeds from long-term debt |
5,146 |
810 |
|||||
Payments of long-term debt |
(3,471) |
(762) |
|||||
Common stock repurchases |
(13) |
(15) |
|||||
Purchase of noncontrolling interest |
(63) |
— |
|||||
Other financing activities, net |
(1) |
6 |
|||||
Net cash provided by financing activities |
4,378 |
39 |
|||||
Net increase in cash, cash equivalents and restricted cash |
4,445 |
497 |
|||||
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 |
$ |
8,534 |
$ |
4,433 |
|||
Supplemental disclosures of cash flow information: |
|||||||
Interest paid |
$ |
130 |
$ |
99 |
|||
Income taxes paid |
$ |
195 |
$ |
205 |
|||
Equity issued in connection with acquisitions |
$ |
507 |
$ |
— |
CENTENE CORPORATION |
|||||||||||||||||||
SUPPLEMENTAL FINANCIAL DATA |
|||||||||||||||||||
Q2 |
Q1 |
Q4 |
Q3 |
Q2 |
|||||||||||||||
2018 |
2018 |
2017 |
2017 |
2017 |
|||||||||||||||
MANAGED CARE MEMBERSHIP BY LINE OF BUSINESS |
|||||||||||||||||||
Medicaid: |
|||||||||||||||||||
TANF, CHIP & Foster Care |
5,852,000 |
5,776,600 |
5,807,300 |
5,809,400 |
5,854,400 |
||||||||||||||
ABD & LTSS |
874,200 |
866,000 |
846,200 |
850,300 |
843,500 |
||||||||||||||
Behavioral Health |
454,600 |
454,500 |
463,700 |
467,400 |
466,500 |
||||||||||||||
Total Medicaid |
7,180,800 |
7,097,100 |
7,117,200 |
7,127,100 |
7,164,400 |
||||||||||||||
Commercial |
2,051,700 |
2,161,200 |
1,558,300 |
1,657,800 |
1,743,600 |
||||||||||||||
Medicare (1) |
343,800 |
343,400 |
333,700 |
331,000 |
327,500 |
||||||||||||||
Correctional |
157,900 |
157,300 |
157,500 |
158,000 |
160,400 |
||||||||||||||
Total at-risk membership |
9,734,200 |
9,759,000 |
9,166,700 |
9,273,900 |
9,395,900 |
||||||||||||||
TRICARE eligibles |
2,851,500 |
2,851,500 |
2,824,100 |
2,823,200 |
2,823,200 |
||||||||||||||
Non-risk membership |
218,100 |
218,900 |
216,300 |
213,900 |
— |
||||||||||||||
Total |
12,803,800 |
12,829,400 |
12,207,100 |
12,311,000 |
12,219,100 |
||||||||||||||
(1) Membership includes Medicare Advantage, Medicare Supplement, Special Needs Plans, and MMP. |
|||||||||||||||||||
NUMBER OF EMPLOYEES |
41,200 |
34,800 |
33,700 |
32,400 |
31,500 |
||||||||||||||
DAYS IN CLAIMS PAYABLE (2) |
44 |
43 |
41 |
42 |
40 |
||||||||||||||
(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 |
$ |
11,455 |
$ |
11,398 |
$ |
9,740 |
$ |
9,633 |
$ |
9,673 |
|||||||||
Unregulated |
3,543 |
452 |
310 |
308 |
291 |
||||||||||||||
Total |
$ |
14,998 |
$ |
11,850 |
$ |
10,050 |
$ |
9,941 |
$ |
9,964 |
|||||||||
DEBT TO CAPITALIZATION |
37.0 |
% |
40.6 |
% |
40.6 |
% |
41.5 |
% |
42.5 |
% |
|||||||||
DEBT TO CAPITALIZATION EXCLUDING NON-RECOURSE DEBT (3) |
36.7 |
% |
40.3 |
% |
40.3 |
% |
41.2 |
% |
42.1 |
% |
|||||||||
(3) The non-recourse debt represents the Company's mortgage note payable ($59 million at June 30, 2018) and construction loan payable ($26 million at June 30, 2018). |
|||||||||||||||||||
Debt to capitalization is calculated as follows: total debt divided by (total debt + total equity). |
OPERATING RATIOS
Three Months Ended |
Six Months Ended |
||||||||||
2018 |
2017 |
2018 |
2017 |
||||||||
HBR |
85.7 |
% |
86.3 |
% |
85.0 |
% |
87.0 |
% |
|||
SG&A expense ratio |
9.6 |
% |
9.3 |
% |
10.0 |
% |
9.5 |
% |
|||
Adjusted SG&A expense ratio |
9.6 |
% |
9.3 |
% |
10.0 |
% |
9.3 |
% |
MEDICAL CLAIMS LIABILITY
The changes in medical claims liability are summarized as follows (in millions):
Balance, June 30, 2017 |
$ |
4,170 |
||
Reinsurance recoverable |
10 |
|||
Balance, June 30, 2017, net |
4,160 |
|||
Incurred related to: |
||||
Current period |
39,894 |
|||
Prior period |
(359) |
|||
Total incurred |
39,535 |
|||
Paid related to: |
||||
Current period |
35,184 |
|||
Prior period |
3,525 |
|||
Total paid |
38,709 |
|||
Balance, June 30, 2018, net |
4,986 |
|||
Plus: Reinsurance recoverable |
17 |
|||
Balance, June 30, 2018 |
$ |
5,003 |
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 June 30, 2017, and prior.
View original content:http://www.prnewswire.com/news-releases/centene-corporation-reports-2018-second-quarter-results-and-updates-2018-guidance-300685237.html
SOURCE
Investor Relations Inquiries, Edmund E. Kroll, Jr., Senior Vice President, Finance & Investor Relations, (212) 759-0382; Media Inquiries, Marcela Manjarrez-Hawn, Senior Vice President and Chief Communications Officer, (314) 445-0790