10-KPeriod: FY2008

CENTENE CORP Annual Report, Year Ended Dec 31, 2008

Filed February 23, 2009For Securities:CNC

Summary

Centene Corporation (CNC) reported substantial revenue growth in its 2008 10-K filing, driven primarily by its Medicaid Managed Care segment. The company's strategy focuses on increasing market penetration, diversifying its service offerings, and adapting to emerging state needs in government-subsidized healthcare. Key financial highlights include a revenue of $3.4 billion and net earnings of $84.2 million from continuing operations, reflecting strong operational performance and growth. The company's business is heavily reliant on government contracts, particularly Medicaid and SCHIP programs, and it operates in a highly regulated environment. Risks identified include changes in government funding and regulations, competition, and the accuracy of medical cost estimates. Centene also reported a pending sale of its New Jersey health plan assets and is actively managing its financial resources, including a $300 million credit facility.

Financial Highlights

29 data points
Beta

Revenue

$3.36B

Net Income

$83.50M

2.5% Net Margin

EPS (Diluted)

$0.47

Cash & Equivalents

$379.10M

Free Cash Flow

$156.82M

Financial Statements
Beta
Revenue$3.36B
Operating Expenses$3.23B
Operating Income$131.56M
Interest Expense$16.67M
Net Income$83.50M
EPS (Basic)$0.48
EPS (Diluted)$0.47
Shares Outstanding (Basic)173.10M
Shares Outstanding (Diluted)177.60M

Key Highlights

  • 1Total revenues reached $3.4 billion for the year ended December 31, 2008, a 21.5% increase from the prior year.
  • 2Net earnings from continuing operations were $84.2 million, representing a significant 105.1% increase compared to 2007.
  • 3Medicaid Managed Care membership grew to 1.18 million, while Specialty Services segment revenue increased by 39.5% to $344.3 million, driven by acquisitions and organic growth.
  • 4The company's Health Benefits Ratio (HBR) improved to 82.5% in 2008, down from 83.9% in 2007, indicating better management of medical costs relative to revenue.
  • 5General and Administrative (G&A) expenses as a percentage of revenue decreased to 13.6% from 14.3% in 2007, demonstrating improved operational efficiency.
  • 6Centene ended 2008 with $379.1 million in cash and cash equivalents, and a total of $480.4 million in cash, cash equivalents, and short-term investments, indicating a strong liquidity position.
  • 7The company is pursuing strategic growth through acquisitions and new contracts, including plans for Florida operations and the acquisition of AMERIGROUP Community Care of South Carolina.

Frequently Asked Questions

Centene operates in two main segments: Medicaid Managed Care and Specialty Services. The Medicaid Managed Care segment, which provides health coverage through government-subsidized programs like Medicaid and SCHIP, is the primary revenue driver, accounting for the vast majority of the company's membership and revenue. The Specialty Services segment offers a range of services like behavioral health and pharmacy benefits management.

For the year ended December 31, 2008, Centene reported total revenues of $3.4 billion, an increase of 21.5% from the previous year. Net earnings from continuing operations were $84.2 million, more than doubling from $41.0 million in 2007. The company also saw an improvement in its Health Benefits Ratio (HBR) to 82.5% and a decrease in its General and Administrative expense ratio to 13.6%.

Centene faces several risks, including significant reliance on government funding and contracts (Medicaid, SCHIP, etc.), which are subject to regulatory changes, budget constraints, and potential contract terminations. Competition within the managed care industry is also a key challenge. Other risks include the accuracy of medical cost estimates, potential for increased administrative or healthcare costs due to regulatory changes, and the effective integration of acquired businesses.

As of December 31, 2008, Centene maintained a strong liquidity position with $379.1 million in cash and cash equivalents and $480.4 million in cash, cash equivalents, and short-term investments. The company has a $300 million revolving credit facility and $175 million in senior notes. Management expects available cash, operations, and the credit facility to be sufficient to fund planned acquisitions and operations for at least the next 12 months.