Centene Corporation Reports Third Quarter 2020 Results
In summary, the 2020 third quarter results were as follows:
Total revenues (in millions) |
$ |
29,090 |
|
Health benefits ratio |
86.4 |
% |
|
SG&A expense ratio |
9.1 |
% |
|
Adjusted SG&A expense ratio (1) |
8.9 |
% |
|
GAAP diluted EPS |
$ |
0.97 |
|
Adjusted diluted EPS (1) |
$ |
1.26 |
|
Total cash flow used in operations (in millions) (2) |
$ |
(952) |
|
(1) A full reconciliation of the Adjusted SG&A expense ratio and Adjusted diluted EPS are shown on pages seven and eight of this release. |
|||
(2) The third quarter cash flow was negatively impacted by approximately |
The third quarter results include the following items, which had a net benefit to GAAP and Adjusted diluted EPS of
GAAP |
Adjusted |
||||||
Diluted EPS |
$ |
0.97 |
$ |
1.26 |
|||
Less: ACA risk corridor benefit, net |
(0.52) |
(0.52) |
|||||
Plus: charitable contribution commitment |
0.35 |
0.35 |
|||||
Less: tax settlement benefit |
(0.12) |
(0.12) |
|||||
Total |
$ |
0.68 |
$ |
0.97 |
|||
- a pre-tax net benefit related to the Affordable Care Act (ACA) risk corridor receivable settlement of
$398 million (net of minimum medical loss ratio payback and related expenses), or$0.52 per diluted share; - a pre-tax expense of
$275 million , or$0.35 per diluted share, related to a charitable contribution commitment to the Company's foundation; and - a favorable tax settlement of
$72 million , or$0.12 per diluted share.
The third quarter net benefit of
"We reported strong third quarter results with revenues up 53% as a result of the WellCare acquisition as well as product and geographic expansions, new programs and growth in many of our states," said
"As we benefited from the one-time risk corridor settlement this quarter, we've made the decision to reinvest the proceeds in the growth of our business as well as the communities in which we serve and live. Looking ahead, we expect our underlying businesses to continue to perform well in an uncertain environment and remain focused on executing our growth strategy across our diversified healthcare enterprise."
Third Quarter Highlights
September 30, 2020 managed care membership of 25.2 million, an increase of 9.9 million members, or 65%, overSeptember 30, 2019 .- Total revenues of
$29.1 billion for the third quarter of 2020, representing 53% growth compared to the third quarter of 2019. - Health benefits ratio (HBR) of 86.4% for the third quarter of 2020, compared to 88.2% in the third quarter of 2019.
- Selling, general and administrative (SG&A) expense ratio of 9.1% for the third quarter of 2020, compared to 8.9% for the third quarter of 2019.
- Adjusted SG&A expense ratio of 8.9% for the third quarter of 2020, compared to 8.8% for the third quarter of 2019.
- Diluted EPS for the third quarter of 2020 of
$0.97 , compared to$0.23 for the third quarter of 2019. - Adjusted diluted EPS for the third quarter of 2020 of
$1.26 , compared to$0.96 for the third quarter of 2019. - Operating cash flow of
$(952) million for the third quarter of 2020, reflecting the payment of the health insurer fee and the 2019 risk adjustment liability, as expected. Cash flow provided by operations for the nine months endedSeptember 30, 2020 , was$2.5 billion , or 1.4 times net earnings.
Other Events
- In
October 2020 ,Centene issued$2.2 billion of 3.00% Senior Notes due 2030. The Company used the net proceeds of the notes, together with cash on hand, to redeem all of its outstanding 4.75% Senior Notes due 2022 and all of its outstanding 5.25% Senior Notes due 2025, including all premiums, accrued interest and expenses related to the redemptions. - In
October 2020 ,Centene announced the expansion of its Medicare Advantage offerings for 2021. The Company's Medicare plans expect to operate in 1,249 counties across 33 states in 2021, a 30% increase in counties over 2020. - In
September 2020 ,Centene announced that it is expanding its offering in the 2021Health Insurance Marketplace .Centene is expanding its Marketplace product, branded Ambetter, in nearly 400 new counties across 13 existing states. In addition,Ambetter-branded Marketplace products will be offered in two new states,Michigan andNew Mexico . This brings the total number of states withCentene's Marketplace offerings to 22. - In
September 2020 ,Centene's Illinois subsidiary,Meridian Health Plan of Illinois, Inc. , expanded itsFoster Care services through the YouthCare program. - In
September 2020 ,Centene announced three executive leadership appointments to support the Company's continued growth.Jonathan Dinesman was appointed to Executive Vice President, Government Relations;Shannon Bagley was appointed to Executive Vice President, Human Resources; andH. Robert Sanders was appointed to Executive Vice President, Human Resources. - In
September 2020 ,Centene's Oregon subsidiary, Trillium Community Health Plan, began operating under an expanded contract in three new counties, including the metroPortland area, and now serves as a coordinated care organization for six counties in the state. - In
August 2020 ,Centene announced that itsIndiana subsidiary,Managed Health Services , has been selected by theIndiana Department of Administration to continue serving Hoosier Care Connect members with Medicaid managed care and care coordination services.
Accreditations & Awards
- In
October 2020 ,Centene was named a 2020 Leading Disability Employer by theNational Organization on Disability . This award recognizes companies that demonstrate exemplary employment practices for people with disabilities. - In
September 2020 , FORTUNE recognizedCentene in its sixth-annual "Change the World" list of companies that have made an important social or environmental impact. Companies are recognized for innovative strategies that positively impact the world. - In
August 2020 , FORTUNE announcedCentene's position of #127 in its annual ranking of the world's largest companies based on 2019 revenue, rising from #168 in the previous year's annual ranking.
COVID-19 Pandemic
Beginning in
Membership
The following table sets forth our membership by line of business:
|
|||||
2020 |
2019 |
||||
Medicaid: |
|||||
TANF, CHIP & |
11,498,700 |
7,623,400 |
|||
ABD & LTSS |
1,439,800 |
1,045,700 |
|||
|
184,800 |
73,300 |
|||
Total Medicaid |
13,123,300 |
8,742,400 |
|||
Medicare PDP |
4,436,400 |
— |
|||
Commercial |
2,719,500 |
2,388,500 |
|||
Medicare (1) |
1,014,300 |
404,500 |
|||
International |
599,900 |
462,400 |
|||
Correctional |
167,200 |
187,200 |
|||
Total at-risk membership |
22,060,600 |
12,185,000 |
|||
TRICARE eligibles |
2,877,900 |
2,860,700 |
|||
Non-risk membership |
227,200 |
227,800 |
|||
Total |
25,165,700 |
15,273,500 |
|||
(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:
|
|||||
2020 |
2019 |
||||
Dual-eligible (2) |
974,800 |
629,600 |
|||
|
2,210,800 |
1,860,200 |
|||
Medicaid Expansion |
2,070,500 |
1,359,300 |
|||
(2) Membership includes dual-eligible ABD & LTSS and dual-eligible Medicare. |
Revenues
The following table sets forth supplemental revenue information ($ in millions):
Three Months Ended |
||||||||||
2020 |
2019 |
% Change |
||||||||
Medicaid |
$ |
19,031 |
$ |
12,859 |
48 |
% |
||||
Commercial |
4,638 |
3,670 |
26 |
% |
||||||
Medicare (3) |
3,603 |
1,429 |
152 |
% |
||||||
Medicare PDP |
582 |
— |
n.m. |
|||||||
Other |
1,236 |
1,018 |
21 |
% |
||||||
Total Revenues |
$ |
29,090 |
$ |
18,976 |
53 |
% |
||||
(3) Medicare includes Medicare Advantage, Medicare Supplement, Special Needs Plans, and MMP. |
||||||||||
n.m.: not meaningful |
Statement of Operations: Three Months Ended
- For the third quarter of 2020, total revenues increased 53% to
$29.1 billion from$19.0 billion in the comparable period in 2019. The increase over the prior year was due to the acquisition of WellCare, growth in theHealth Insurance Marketplace business, expansions, new programs and growth in many of our states, the reinstatement of the health insurer fee in 2020, and the ACA risk corridor receivable settlement, partially offset by the divestiture of ourIllinois health plan. - HBR of 86.4% for the third quarter of 2020 represents a decrease from 88.2% in the comparable period in 2019. The decrease was attributable to the ACA risk corridor receivable settlement and the effect of the COVID-19 pandemic, partially offset by retroactive state premium rate adjustments and risk sharing mechanisms. The effect of the COVID-19 pandemic includes lower traditional medical utilization, partially offset by higher testing and treatment costs associated with COVID-19.
- The SG&A expense ratio was 9.1% for the third quarter of 2020, compared to 8.9% in the third quarter of 2019. The Adjusted SG&A expense ratio was 8.9% for the third quarter of 2020, compared to 8.8% in the third quarter of 2019. The year-over-year increases to the ratios were due to the
$275 million charitable contribution commitment to our foundation, partially offset by the addition of the WellCare business, which operates at a lower SG&A ratio, and the leveraging of expenses over higher revenues. - The effective tax rate was 26.8% for the third quarter of 2020, compared to 45.1% in the third quarter of 2019. The effective tax rate for the third quarter of 2020 reflects a favorable tax settlement, offset by the reinstatement of the health insurer fee in 2020. The effective tax rate for the third quarter of 2019 reflects the non-deductibility of a portion of our non-cash goodwill and intangible impairment, offset by the health insurer fee moratorium. For the third quarter of 2020, our effective tax rate on adjusted earnings was 26.1%.
Balance Sheet
At
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, |
51 |
|
Impact of the COVID-19 Pandemic (1) |
(4) |
|
State directed payments |
2 |
|
Membership increases |
1 |
|
Timing of claims payments |
2 |
|
Days in claims payable, |
52 |
|
(1) Days in claims payable at |
Outlook
The Company's annual adjusted diluted EPS guidance has been increased by
Full Year 2020 |
|||||||||
Low |
High |
||||||||
Total revenues (in billions) |
$ |
109.8 |
$ |
111.4 |
|||||
GAAP diluted EPS |
$ |
3.22 |
$ |
3.32 |
|||||
Adjusted diluted EPS (1) |
$ |
4.90 |
$ |
5.06 |
|||||
Diluted shares outstanding (in millions) |
577.9 |
580.9 |
|||||||
(1) Adjusted diluted EPS excludes estimated amortization of acquired intangible assets of |
A rollforward of Adjusted diluted EPS from our previous guidance to our current guidance is shown in the table below:
Adjusted diluted EPS |
|||||
Previous guidance range |
|
||||
Q3 - ACA risk corridor/charitable contribution commitment |
0.17 |
||||
Q4 - Enhanced growth and profitability initiative expenses |
(0.17) |
||||
Q3 - Tax settlement |
0.12 |
||||
Revised guidance range* |
|
||||
*Reflects tightening of guidance range. |
|||||
Conference Call
As previously announced, the Company will host a conference call
Investors and other interested parties are invited to listen to the conference call by dialing 1-877-883-0383 in the
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 and 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 |
Nine Months Ended |
||||||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||||||
GAAP net earnings attributable to |
$ |
568 |
$ |
95 |
$ |
1,820 |
$ |
1,112 |
|||||||
Amortization of acquired intangible assets |
164 |
65 |
527 |
194 |
|||||||||||
Acquisition related expenses |
62 |
25 |
446 |
66 |
|||||||||||
Other adjustments (1) |
— |
271 |
12 |
271 |
|||||||||||
Income tax effects of adjustments (2) |
(53) |
(54) |
(178) |
(95) |
|||||||||||
Adjusted net earnings |
$ |
741 |
$ |
402 |
$ |
2,627 |
$ |
1,548 |
|||||||
(1) Other adjustments include the following adjustments for the nine months ended |
|||||||||||||||
(2) The income tax effects of adjustments are based on the effective income tax rates applicable to each adjustment. |
Three Months Ended |
Nine Months Ended |
Annual Guidance |
|||||||||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||||||||||
GAAP diluted EPS attributable to |
$ |
0.97 |
$ |
0.23 |
$ |
3.16 |
$ |
2.65 |
|
||||||||||
Amortization of acquired intangible assets (3) |
0.21 |
0.12 |
0.70 |
0.35 |
|
||||||||||||||
Acquisition related expenses (4) |
0.08 |
0.04 |
0.65 |
0.12 |
|
||||||||||||||
Other adjustments (5) |
— |
0.57 |
0.05 |
0.57 |
|
||||||||||||||
Adjusted diluted EPS |
$ |
1.26 |
$ |
0.96 |
$ |
4.56 |
$ |
3.69 |
|
||||||||||
(3) The amortization of acquired intangible assets per diluted share presented above is net of an income tax benefit of |
|||||||||||||||||||
(4) The acquisition related expenses per diluted share presented above are net of an income tax benefit of |
|||||||||||||||||||
(5) Other adjustments include the following items: (a) gain related to the divestiture of certain products of the Company's (b) non-cash impairment of our third party-care management software system of (c) debt extinguishment costs of (d) non-cash impairment of |
Three Months Ended |
Nine Months Ended |
||||||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||||||
GAAP SG&A expenses |
$ |
2,507 |
$ |
1,617 |
$ |
7,146 |
$ |
4,800 |
|||||||
Acquisition related expenses |
61 |
23 |
426 |
61 |
|||||||||||
Adjusted SG&A expenses |
$ |
2,446 |
$ |
1,594 |
$ |
6,720 |
$ |
4,739 |
To provide clarity on the way management defines certain key metrics and ratios, the Company is providing a description of how the metric or ratio is calculated as follows:
- Health Benefits Ratio (HBR) (GAAP) = Medical costs divided by premium revenues.
- SG&A Expense Ratio (GAAP) = Selling, general and administrative expenses divided by premium and service revenues.
- Adjusted SG&A Expenses (non-GAAP) = Selling, general and administrative expenses, less acquisition related expenses.
- Adjusted SG&A Expense Ratio (non-GAAP) = Adjusted selling, general and administrative expenses divided by premium and service revenues.
- Adjusted Net Earnings (non-GAAP) = Net earnings less amortization of acquired intangible assets, less acquisition related expenses, as well as adjustments for other items, net of the income tax effect of the adjustments.
- Adjusted Diluted EPS (non-GAAP) = Adjusted net earnings divided by weighted average common shares outstanding on a fully diluted basis.
- Debt to Capitalization Ratio (GAAP) = Total debt, divided by total debt plus total stockholder's equity.
- Debt to Capitalization Ratio Excluding Non-Recourse Debt (non-GAAP) = Total debt less non-recourse debt, divided by total debt less non-recourse debt plus total stockholder's equity.
- Average Medical Claims Expense (GAAP) = Medical costs for the period, divided by number of days in such period. Average Medical Claims Expense is most often calculated for the quarterly reporting period.
- Days in Claims Payable (GAAP) = Medical claims liabilities, divided by average medical claims expense. Days in Claims Payable is most often calculated for the quarterly reporting period.
In addition, the following terms are defined as follows:
- State Directed Payments: Payments directed by a state that have minimal risk, but are administered as a premium adjustment. These payments are recorded as premium revenue and medical costs at close to a 100% HBR. The Company has little visibility to the timing of these payments until they are paid by a state.
- Pass Through Payments: Non-risk supplemental payments from a state that the Company is required to pass through to designated contracted providers. These payments are recorded as premium tax revenue and premium tax expense.
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) |
|||||||
|
|
||||||
ASSETS |
(Unaudited) |
||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
12,198 |
$ |
12,123 |
|||
Premium and trade receivables |
11,670 |
6,247 |
|||||
Short-term investments |
1,497 |
863 |
|||||
Other current assets |
1,910 |
1,090 |
|||||
Total current assets |
27,275 |
20,323 |
|||||
Long-term investments |
9,859 |
7,717 |
|||||
Restricted deposits |
1,055 |
658 |
|||||
Property, software and equipment, net |
2,669 |
2,121 |
|||||
|
17,964 |
6,863 |
|||||
Intangible assets, net |
8,130 |
2,063 |
|||||
Other long-term assets |
1,412 |
1,249 |
|||||
Total assets |
$ |
68,364 |
$ |
40,994 |
|||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY |
|||||||
Current liabilities: |
|||||||
Medical claims liability |
$ |
12,899 |
$ |
7,473 |
|||
Accounts payable and accrued expenses |
7,102 |
4,164 |
|||||
Return of premium payable |
1,123 |
824 |
|||||
Unearned revenue |
582 |
383 |
|||||
Current portion of long-term debt |
89 |
88 |
|||||
Total current liabilities |
21,795 |
12,932 |
|||||
Long-term debt |
16,737 |
13,638 |
|||||
Other long-term liabilities |
3,953 |
1,732 |
|||||
Total liabilities |
42,485 |
28,302 |
|||||
Commitments and contingencies |
|||||||
Redeemable noncontrolling interests |
36 |
33 |
|||||
Stockholders' equity: |
|||||||
Preferred stock, |
— |
— |
|||||
Common stock, |
— |
— |
|||||
Additional paid-in capital |
19,390 |
7,647 |
|||||
Accumulated other comprehensive earnings |
293 |
134 |
|||||
Retained earnings |
6,804 |
4,984 |
|||||
|
(762) |
(214) |
|||||
Total |
25,725 |
12,551 |
|||||
Noncontrolling interest |
118 |
108 |
|||||
Total stockholders' equity |
25,843 |
12,659 |
|||||
Total liabilities, redeemable noncontrolling interests and stockholders' equity |
$ |
68,364 |
$ |
40,994 |
CENTENE CORPORATION AND SUBSIDIARIES |
|||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||||||||||
(In millions, except shares in thousands and per share data in dollars) |
|||||||||||||||
(Unaudited) |
|||||||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||||||
Revenues: |
|||||||||||||||
Premium |
$ |
26,537 |
$ |
17,472 |
$ |
74,496 |
$ |
50,229 |
|||||||
Service |
922 |
743 |
2,859 |
2,123 |
|||||||||||
Premium and service revenues |
27,459 |
18,215 |
77,355 |
52,352 |
|||||||||||
Premium tax and health insurer fee |
1,631 |
761 |
5,472 |
3,424 |
|||||||||||
Total revenues |
29,090 |
18,976 |
82,827 |
55,776 |
|||||||||||
Expenses: |
|||||||||||||||
Medical costs |
22,932 |
15,406 |
63,659 |
43,642 |
|||||||||||
Cost of services |
861 |
619 |
2,519 |
1,778 |
|||||||||||
Selling, general and administrative expenses |
2,507 |
1,617 |
7,146 |
4,800 |
|||||||||||
Amortization of acquired intangible assets |
164 |
65 |
527 |
194 |
|||||||||||
Premium tax expense |
1,389 |
822 |
4,737 |
3,587 |
|||||||||||
Health insurer fee expense |
376 |
— |
1,100 |
— |
|||||||||||
Impairment |
— |
271 |
72 |
271 |
|||||||||||
Total operating expenses |
28,229 |
18,800 |
79,760 |
54,272 |
|||||||||||
Earnings from operations |
861 |
176 |
3,067 |
1,504 |
|||||||||||
Other income (expense): |
|||||||||||||||
Investment and other income |
95 |
98 |
375 |
317 |
|||||||||||
Debt extinguishment costs |
— |
— |
(44) |
— |
|||||||||||
Interest expense |
(184) |
(99) |
(551) |
(299) |
|||||||||||
Earnings from operations, before income tax expense |
772 |
175 |
2,847 |
1,522 |
|||||||||||
Income tax expense |
207 |
79 |
1,034 |
415 |
|||||||||||
Net earnings |
565 |
96 |
1,813 |
1,107 |
|||||||||||
Loss (earnings) attributable to noncontrolling interests |
3 |
(1) |
7 |
5 |
|||||||||||
Net earnings attributable to |
$ |
568 |
$ |
95 |
$ |
1,820 |
$ |
1,112 |
|||||||
Net earnings per common share attributable to |
|||||||||||||||
Basic earnings per common share |
$ |
0.98 |
$ |
0.23 |
$ |
3.21 |
$ |
2.69 |
|||||||
Diluted earnings per common share |
$ |
0.97 |
$ |
0.23 |
$ |
3.16 |
$ |
2.65 |
|||||||
Weighted average number of common shares outstanding: |
|||||||||||||||
Basic |
579,510 |
413,616 |
567,586 |
413,302 |
|||||||||||
Diluted |
587,971 |
419,956 |
575,732 |
419,700 |
CENTENE CORPORATION AND SUBSIDIARIES |
|||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
(In millions, unaudited) |
|||||||
Nine Months Ended |
|||||||
2020 |
2019 |
||||||
Cash flows from operating activities: |
|||||||
Net earnings |
$ |
1,813 |
$ |
1,107 |
|||
Adjustments to reconcile net earnings to net cash provided by operating activities |
|||||||
Depreciation and amortization |
916 |
475 |
|||||
Stock compensation expense |
218 |
106 |
|||||
Impairment |
72 |
271 |
|||||
Loss on debt extinguishment |
44 |
— |
|||||
Deferred income taxes |
(154) |
(75) |
|||||
Gain on divestiture |
(104) |
— |
|||||
Changes in assets and liabilities |
|||||||
Premium and trade receivables |
(1,640) |
(319) |
|||||
Other assets |
185 |
(14) |
|||||
Medical claims liabilities |
1,563 |
1,091 |
|||||
Unearned revenue |
(212) |
(10) |
|||||
Accounts payable and accrued expenses |
(861) |
(552) |
|||||
Other long-term liabilities |
663 |
68 |
|||||
Other operating activities, net |
19 |
(14) |
|||||
Net cash provided by operating activities |
2,522 |
2,134 |
|||||
Cash flows from investing activities: |
|||||||
Capital expenditures |
(663) |
(530) |
|||||
Purchases of investments |
(2,911) |
(2,074) |
|||||
Sales and maturities of investments |
3,408 |
1,247 |
|||||
Acquisitions, net of cash acquired |
(3,000) |
(31) |
|||||
Divestiture proceeds, net of divested cash |
466 |
— |
|||||
Net cash used in investing activities |
(2,700) |
(1,388) |
|||||
Cash flows from financing activities: |
|||||||
Proceeds from long-term debt |
2,687 |
12,456 |
|||||
Payments of long-term debt |
(1,654) |
(12,293) |
|||||
Common stock repurchases |
(570) |
(41) |
|||||
Payments for debt extinguishment |
(21) |
— |
|||||
Debt issuance costs |
(94) |
(6) |
|||||
Other financing activities, net |
35 |
12 |
|||||
Net cash provided by financing activities |
383 |
128 |
|||||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
8 |
4 |
|||||
Net increase in cash, cash equivalents and restricted cash and cash equivalents |
213 |
878 |
|||||
Cash, cash equivalents, and restricted cash and cash equivalents, beginning of period |
12,131 |
5,350 |
|||||
Cash, cash equivalents, and restricted cash and cash equivalents, end of period |
$ |
12,344 |
$ |
6,228 |
|||
Supplemental disclosures of cash flow information: |
|||||||
Interest paid |
$ |
479 |
$ |
213 |
|||
Income taxes paid |
$ |
920 |
$ |
511 |
|||
Equity issued in connection with acquisitions |
$ |
11,526 |
$ |
— |
|||
The following table provides a reconciliation of cash, cash equivalents, and restricted cash and cash equivalents reported within the Consolidated Balance Sheets to the totals above: |
|||||||
|
|||||||
2020 |
2019 |
||||||
Cash and cash equivalents |
$ |
12,198 |
$ |
6,215 |
|||
Restricted cash and cash equivalents, included in restricted deposits |
146 |
13 |
|||||
Total cash, cash equivalents, and restricted cash and cash equivalents |
$ |
12,344 |
$ |
6,228 |
|
|||||||||||||||||||
SUPPLEMENTAL FINANCIAL DATA |
|||||||||||||||||||
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
|||||||||||||||
2020 |
2020 |
2020 |
2019 |
2019 |
|||||||||||||||
Medicaid: |
|||||||||||||||||||
TANF, CHIP & |
11,498,700 |
10,971,700 |
10,259,700 |
7,528,700 |
7,623,400 |
||||||||||||||
ABD & LTSS |
1,439,800 |
1,418,500 |
1,410,100 |
1,043,500 |
1,045,700 |
||||||||||||||
Behavioral Health |
184,800 |
173,900 |
158,000 |
66,500 |
73,300 |
||||||||||||||
Total Medicaid |
13,123,300 |
12,564,100 |
11,827,800 |
8,638,700 |
8,742,400 |
||||||||||||||
Medicare PDP |
4,436,400 |
4,443,100 |
4,416,500 |
— |
— |
||||||||||||||
Commercial |
2,719,500 |
2,763,300 |
2,728,200 |
2,331,100 |
2,388,500 |
||||||||||||||
Medicare (1) |
1,014,300 |
996,100 |
976,700 |
404,500 |
404,500 |
||||||||||||||
International |
599,900 |
600,400 |
599,900 |
599,800 |
462,400 |
||||||||||||||
Correctional |
167,200 |
166,000 |
172,000 |
180,000 |
187,200 |
||||||||||||||
Total at-risk membership |
22,060,600 |
21,533,000 |
20,721,100 |
12,154,100 |
12,185,000 |
||||||||||||||
TRICARE eligibles |
2,877,900 |
2,864,700 |
2,864,800 |
2,860,700 |
2,860,700 |
||||||||||||||
Non-risk membership |
227,200 |
223,300 |
216,200 |
227,000 |
227,800 |
||||||||||||||
Total |
25,165,700 |
24,621,000 |
23,802,100 |
15,241,800 |
15,273,500 |
||||||||||||||
(1) Membership includes Medicare Advantage, Medicare Supplement, Special Needs Plans, and MMP. |
|||||||||||||||||||
NUMBER OF EMPLOYEES |
71,100 |
71,800 |
69,700 |
56,600 |
53,600 |
||||||||||||||
DAYS IN CLAIMS PAYABLE (2) |
52 |
51 |
51 |
45 |
48 |
||||||||||||||
(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. On a pro-forma basis, DCP for Q1 2020 was 47, reflecting adjusted medical costs to include a full quarter of WellCare operations. |
|||||||||||||||||||
CASH, INVESTMENTS AND RESTRICTED DEPOSITS (in millions) |
|||||||||||||||||||
Regulated |
$ |
22,623 |
$ |
23,655 |
$ |
19,358 |
$ |
14,204 |
$ |
14,734 |
|||||||||
Unregulated |
1,986 |
1,982 |
2,871 |
7,157 |
855 |
||||||||||||||
Total |
$ |
24,609 |
$ |
25,637 |
$ |
22,229 |
$ |
21,361 |
$ |
15,589 |
|||||||||
DEBT TO CAPITALIZATION |
39.4 |
% |
40.0 |
% |
42.2 |
% |
52.0 |
% |
36.2 |
% |
|||||||||
DEBT TO CAPITALIZATION EXCLUDING NON-RECOURSE DEBT (3) |
39.1 |
% |
39.7 |
% |
41.9 |
% |
51.7 |
% |
35.6 |
% |
|||||||||
(3) Excluding non-recourse debt of |
OPERATING RATIOS |
|||||||||||
Three Months Ended |
Nine Months Ended |
||||||||||
2020 |
2019 |
2020 |
2019 |
||||||||
HBR |
86.4 |
% |
88.2 |
% |
85.5 |
% |
86.9 |
% |
|||
SG&A expense ratio |
9.1 |
% |
8.9 |
% |
9.2 |
% |
9.2 |
% |
|||
Adjusted SG&A expense ratio |
8.9 |
% |
8.8 |
% |
8.7 |
% |
9.1 |
% |
MEDICAL CLAIMS LIABILITY
The changes in medical claims liability are summarized as follows (in millions):
Balance, |
$ |
7,975 |
||
Less: reinsurance recoverable |
21 |
|||
Balance, |
7,954 |
|||
Acquisitions and divestitures |
3,874 |
|||
Incurred related to: |
||||
Current period |
79,314 |
|||
Prior period |
(435) |
|||
Total incurred |
78,879 |
|||
Paid related to: |
||||
Current period |
70,936 |
|||
Prior period |
6,893 |
|||
Total paid |
77,829 |
|||
Balance, |
12,878 |
|||
Plus: reinsurance recoverable |
21 |
|||
Balance, |
$ |
12,899 |
||
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
Our Response to COVID-19
Demonstrating our commitment to our members and the communities we serve, employees, and providers and government partners.
Members and Communities |
Waiving COVID-19 related prior authorizations and member cost sharing |
Delivering 50,000 gift cards, with |
Donating 1 million meals a month for 12 months to feed our neighbors in communities all over the country. |
Providing grants to Area Agencies on Aging to enable grocery and |
Matching funds in partnership with workforce development boards and other safety net organizations |
Investment in new technology and supplies to improve access to quality healthcare for the incarcerated population, including expanding PPE supplies in prisons and expanding the partnership with the |
Creation of |
Waiving all cost sharing for in-network primary care, behavioral health and telehealth costs for Medicare Advantage members for the remainder of 2020. In addition, offering our Community Connections Help Line, available to anyone in need of help beyond medical care, as well as expanded benefits including extended meal program benefits, over-the-counter (OTC) allowances, and annual wellness visit incentives to help members in need of extra support. |
Formed partnership with the |
Expanded partnership with |
Partnered with |
Employees |
Providing 10 additional working days of paid leave to support employees. |
Waiving prior authorizations and employee cost sharing for COVID-19 related screening, testing and treatment. |
Encouraging employees to work from home, with approximately 90% working remotely. |
Providing essential workers with a one-time payment of |
Scheduling essential workers to preserve social distancing, |
Establishing a Medical Reserve Leave policy to support clinical staff |
Hiring continues across the country to fill nearly 2,000 open positions. |
|
Expediting the rollout of FirstNet that will streamline access to affordable, |
Dedicating funds to the |
Expediting the distribution of approximately 2 million pieces of PPE |
Extending grants to providers to assist with the upfront investment costs of new devices and equipment. |
Developing a new Provider Accessibility Initiative (PAI) COVID-19 Web Series to provide timely recommendations on how providers and organizations can deliver disability-competent care during the pandemic and beyond. |
In partnership with Quest Diagnostics, distributing 25,000 COVID test kits each week to FQHCs in ten states or districts across the country. |
Investments in |
Donated |
View original content:http://www.prnewswire.com/news-releases/centene-corporation-reports-third-quarter-2020-results-301160083.html
SOURCE
Investor Relations, Jennifer Gilligan, Senior Vice President, Finance & Investor Relations, (212) 549-1306 or Media, Marcela Manjarrez-Hawn, Senior Vice President and Chief Communications Officer, (314) 445-0790