10-KPeriod: FY2013

CENTENE CORP Annual Report, Year Ended Dec 31, 2013

Filed February 21, 2014For Securities:CNC

Summary

Centene Corporation, a diversified healthcare enterprise, reported strong growth in its 2013 fiscal year, driven by expansion in existing and new state markets and acquisitions. The company primarily serves government-sponsored healthcare programs, with Medicaid accounting for 75% of its at-risk membership. Premium and service revenues grew by 37% to $10.5 billion, with a net earnings of $165.1 million. The company's membership base expanded by 12.3% to 2.7 million members, reflecting successful market penetration and new contract wins across several states, including California, Kansas, and New Hampshire. Centene's strategy emphasizes expanding its multi-line managed care approach, diversifying its service offerings, and leveraging its centralized infrastructure for efficiency.

Financial Highlights

52 data points
Beta

Revenue

$10.86B

Net Income

$165.00M

1.5% Net Margin

EPS (Diluted)

$0.73

Total Assets

$3.52B

Cash & Equivalents

$974.00M

Free Cash Flow

$314.00M

Financial Statements
Beta
Revenue$10.86B
Operating Expenses$10.59B
Operating Income$277.00M
Interest Expense$27.00M
Net Income$165.00M
EPS (Basic)$0.76
EPS (Diluted)$0.73
Shares Outstanding (Basic)216.51M
Shares Outstanding (Diluted)224.99M

Key Highlights

  • 1Revenue growth of 37% to $10.5 billion in 2013, with total at-risk membership reaching 2.7 million.
  • 2Significant expansion into new states and existing markets, including California, Kansas, and New Hampshire.
  • 3Acquisition of AcariaHealth, a specialty pharmacy company, in April 2013, and a majority interest in U.S. Medical Management in January 2014, diversifying services and revenue streams.
  • 4Focus on government-sponsored programs, with Medicaid comprising 75% of its at-risk membership.
  • 5Health Benefits Ratio improved to 88.6% in 2013 from 89.6% in 2012, indicating better cost management.
  • 6Strong operational cash flow of $382.5 million, demonstrating solid financial health.
  • 7Company is subject to significant government regulation and relies heavily on state contracts, which are subject to renewal and potential changes.

Frequently Asked Questions

Centene's primary sources of revenue are premiums received from government-sponsored healthcare programs, predominantly Medicaid (75% of at-risk membership), CHIP, and other state and federal programs. The company also generates revenue from its Specialty Services segment, which includes behavioral health, correctional healthcare, and pharmacy benefits management.

In 2013, Centene experienced substantial growth, with premium and service revenues increasing by 37% to $10.5 billion and net earnings reaching $165.1 million. The company also saw a 12.3% increase in its at-risk membership to 2.7 million members.

Centene's growth strategy focuses on increasing penetration in existing state markets, diversifying its business lines through acquisitions and new service offerings, addressing emerging state needs, developing and acquiring additional state markets, and leveraging its established infrastructure to enhance operating efficiencies and maintain operational discipline.

Key risks include reductions in government funding or changes to eligibility requirements for its programs, failure to accurately estimate and manage medical costs, the impact of healthcare reform legislation (like the ACA), regulatory changes, competition, and the potential termination or non-renewal of government contracts.