01—Abstract
Summary
Summary of the 10-K filed February 23, 2015. Cited figures are marked; the original filing is the authoritative source.
Centene Corporation's 2015 10-K filing reveals a period of significant growth and expansion, primarily driven by its focus on government-sponsored healthcare programs like Medicaid and CHIP.
The company demonstrated robust top-line growth, with premium and service revenues increasing by 48.8% in 2014 to $15.7 billiona, fueled by a 41% rise in membership to 4.1 million. Net earnings also saw a substantial increase, reaching $271 million in 2014. Key to this growth were strategic expansions into new states, new product offerings like Health Insurance Marketplaces, and acquisitions in complementary service areas.
The company's strategy centers on increasing penetration in existing markets, diversifying its business lines, and adapting to emerging state healthcare needs, leveraging a decentralized local approach supported by a centralized infrastructure. Centene's financial health appears strong, with operating cash flow significantly increasing and a solid equity position. Investors should note the company's continued reliance on government contracts, which exposes it to regulatory and funding risks, as well as its ongoing efforts to manage medical costs effectively.
02—Key points
Key Highlights
- Total membership grew by 41% to 4.1 million by the end of 2014.
- Premium and service revenues increased by 48.8% to $15.7 billion in 2014.
- Net earnings attributable to Centene Corporation reached $271 million in 2014, a significant increase from $165 million in 2013.
- The company expanded its presence into new states and began offering services through Health Insurance Marketplaces.
- Key acquisitions, such as U.S. Medical Management and AcariaHealth, contributed to revenue and service diversification.
- Managed Care segment represented 89% of total external premium and service revenues in 2014.
- Diluted earnings per share grew to $2.23 in 2014 from $1.43 in 2013.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2014filed February 23, 2015Financial Statements
FY2014 against FY2013
| Line item | FY2014FY2013 | Change |
|---|---|---|
| Revenue | $16.56B$10.86B | +52.4% |
| SG&A Expenses | $1.30B— | — |
| Operating Expenses | $16.10B$10.59B | +52.0% |
| Operating Income | $464.00M$277.00M | +67.5% |
| Interest Expense | $35.00M$27.00M | +29.6% |
| Net Income | $271.00M$165.00M | +64.2% |
| EPS (Basic) | $1.17$0.76 | +53.3% |
| EPS (Diluted) | $1.13$0.73 | +53.1% |
| Shares Outstanding (Basic) | 232.69M216.51M | +7.5% |
| Shares Outstanding (Diluted) | 240.72M224.99M | +7.0% |
05—Questions
Frequently Asked Questions
What was Centene's primary business focus as of the 2015 filing?
Centene Corporation's primary focus was on providing programs and services to government-sponsored healthcare programs, particularly for under-insured and uninsured individuals. This included services through Medicaid, CHIP, Long Term Care, Foster Care, and Health Insurance Marketplaces.
How did Centene's membership and revenue change in 2014?
In 2014, Centene experienced significant growth. Total managed care membership increased by 41% to 4.1 million members by the end of the year. Premium and service revenues saw a substantial increase of 48.8%, reaching $15.7 billion for the year ended December 31, 2014.
What were the main drivers of Centene's growth in 2014?
Centene's growth was driven by several factors including geographic and product expansions in various states (e.g., Florida, Ohio, Washington, Texas, Illinois), new contracts for government programs, participation in Health Insurance Marketplaces, and strategic acquisitions like AcariaHealth and U.S. Medical Management, which broadened its service offerings.
What are the key risks highlighted in the filing that could impact Centene's future performance?
Key risks include potential reductions in funding or changes to eligibility requirements for government-sponsored healthcare programs, the company's ability to accurately estimate and manage medical expenses, the ongoing implementation and impact of healthcare reforms like the Affordable Care Act, and the highly regulated nature of its operations, where changes in laws or regulations could negatively affect business. Additionally, competition and the ability to maintain favorable provider relationships are noted risks.
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