01—Abstract
Summary
Summary of the 10-K filed February 22, 2016. Cited figures are marked; the original filing is the authoritative source.
Centene Corporation's 2015 10-K filing highlights a year of significant growth, marked by a 36% increase in premium and service revenues to $21.3 billiona and a 33% rise in net earnings to $356 million, primarily driven by membership expansion across government-sponsored programs like Medicaid and CHIP.
The company reported a substantial 26% increase in total membership, reaching 5.1 million by year-end. A pivotal development during the year was the announcement of Centene's definitive merger agreement with Health Net, Inc., a transaction valued at approximately $5.5 billionb.
This strategic move aims to significantly expand Centene's scale and market reach, particularly into Medicare Advantage and federal government contracts. The company emphasizes its decentralized, local approach supported by a centralized infrastructure as a key competitive strength, enabling it to effectively serve under-insured and uninsured populations.
02—Key points
Key Highlights
- Achieved 36% revenue growth, reaching $21.3 billion in premium and service revenues for 2015.
- Increased net earnings by 33% to $356 million, with diluted EPS growing to $2.89.
- Expanded managed care membership by 26% to 5.1 million members by year-end 2015.
- Announced a $5.5 billion merger agreement with Health Net, Inc., a significant strategic move to enhance scale and market presence.
- Demonstrated strong operational performance with Adjusted EBITDA growing 49% to $948 million.
- Continued to diversify its business lines, with specialty services showing significant revenue growth.
- Maintained a strong focus on a localized approach with centralized support, contributing to operational efficiency and member satisfaction.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2015filed February 22, 2016Financial Statements
FY2015 against FY2014
| Line item | FY2015FY2014 | Change |
|---|---|---|
| Revenue | $22.76B$16.56B | +37.4% |
| SG&A Expenses | $1.80B$1.30B | +38.8% |
| Operating Expenses | $22.05B$16.10B | +37.0% |
| Operating Income | $705.00M$464.00M | +51.9% |
| Interest Expense | $43.00M$35.00M | +22.9% |
| Net Income | $355.00M$271.00M | +31.0% |
| EPS (Basic) | $1.49$1.17 | +27.9% |
| EPS (Diluted) | $1.44$1.13 | +28.0% |
| Shares Outstanding (Basic) | 238.20M232.69M | +2.4% |
| Shares Outstanding (Diluted) | 246.13M240.72M | +2.2% |
05—Questions
Frequently Asked Questions
What was Centene's financial performance in 2015?
In 2015, Centene Corporation experienced substantial growth, with premium and service revenues increasing by 36% to $21.3 billion and net earnings from continuing operations rising by 33% to $356 million. Diluted earnings per share (EPS) grew to $2.89. The company also saw a 26% increase in its managed care membership, reaching 5.1 million.
What is the significance of the Health Net acquisition announced in 2015?
Centene announced a definitive agreement to acquire Health Net, Inc. for approximately $5.5 billion. This strategic acquisition is expected to significantly expand Centene's market presence, particularly in Medicare Advantage and federal government contracts, and will add substantial membership and revenue to the company, reinforcing its position as a leading healthcare enterprise focused on government-sponsored programs.
How does Centene manage its diverse operations and serve its members?
Centene employs a unique 'localized approach with centralized support infrastructure.' This means it has locally-based staff to provide member and provider services, ensuring cultural sensitivity and accessibility, while leveraging a centralized system for functions like finance, IT, and claims processing. This dual approach helps manage costs, integrate growth, and deliver quality care tailored to community needs.
What are Centene's primary business segments and revenue drivers?
Centene operates in two main segments: Managed Care, which accounts for 90% of revenues and includes government-sponsored programs like Medicaid, CHIP, and Health Insurance Marketplaces, and Specialty Services, which comprises diversified healthcare services and products. The primary revenue driver is premium revenue from government contracts.
06—Continue