01—Abstract
Summary
Summary of the 10-K filed February 20, 2018. Cited figures are marked; the original filing is the authoritative source.
Centene Corporation, a diversified healthcare enterprise, reported strong financial performance for the year ended December 31, 2017.
The company experienced significant growth in total revenues, reaching $48.4 billiona, a 19% increase year-over-year, driven largely by the full-year impact of the Health Net acquisition and organic membership growth across its government-sponsored and commercial healthcare programs. Net earnings from continuing operations attributable to Centene were $828 million, a substantial increase of 48% compared to the prior year, reflecting improved operational efficiencies and strategic execution. The company's membership grew by 7% to 12.2 million, underscoring its expanding reach in serving under-insured and uninsured individuals through Medicaid, Medicare, and Health Insurance Marketplace offerings.
Centene also announced a significant strategic move with an agreement to acquire Fidelis Care in New York for $3.75 billionb, signaling a continued commitment to expanding its market presence. The company's robust financial performance and strategic growth initiatives position it for continued success in the healthcare sector.
02—Key points
Key Highlights
- Total revenues increased by 19% to $48.4 billion in 2017.
- Net earnings from continuing operations grew by 48% to $828 million in 2017.
- Total membership reached 12.2 million, a 7% increase year-over-year.
- The company signed an agreement to acquire Fidelis Care for $3.75 billion, expanding its New York presence.
- Health Benefits Ratio (HBR) was 87.3%, with SG&A expense ratio at 9.7%.
- Diluted EPS increased by 38% to $4.69 in 2017.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Centene Corp kept $0.02.
- Revenue$48.38B100.0%
- Cost of revenue−$1.85B3.8%
- Gross profit$46.53B96.2%
- Operating costs−$45.34B93.7%
- Operating income$1.20B2.5%
- Interest, other & tax−$371.0M0.8%
- Net income$828.0M1.7%
Where FY2017 revenue went
$48.38B- Other operating costs: $40.89B, 85% of revenue
- Net income: $828.0M, 1.7% of revenue
- Cost of revenue: $1.85B, 3.8% of revenue
- SG&A: $4.45B, 9.2% of revenue
- Interest, other & tax: $371.0M, 0.8% of revenue
Kept 1.7% as net incomeNet income $828.0M · 1.7%Interest, other & tax $371.0M · 0.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 20, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $48.38B$40.61B | +19.1% |
| Cost of Revenue | $1.85B$1.86B | −0.9% |
| Gross Profit | $46.53B$38.74B | +20.1% |
| SG&A Expenses | $4.45B$3.67B | +21.0% |
| Operating Expenses | $47.18B$39.34B | +19.9% |
| Operating Income | $1.20B$1.26B | −5.1% |
| Interest Expense | $255.00M$217.00M | +17.5% |
| Net Income | $828.00M$562.00M | +47.3% |
| EPS (Basic) | $2.40$1.76 | +36.4% |
| EPS (Diluted) | $2.34$1.71 | +36.8% |
| Shares Outstanding (Basic) | 344.85M319.13M | +8.1% |
| Shares Outstanding (Diluted) | 353.40M327.95M | +7.8% |
05—Questions
Frequently Asked Questions
What was Centene's revenue performance in 2017?
Centene reported a significant increase in total revenues, reaching $48.4 billion in 2017, which represents a 19% growth compared to the prior year. This growth was primarily attributed to the full year impact of the Health Net acquisition and organic membership expansion.
How did Centene's profitability fare in 2017?
Centene demonstrated strong profitability in 2017, with net earnings from continuing operations attributable to Centene increasing by 48% to $828 million. Diluted EPS also saw substantial growth, rising 38% to $4.69.
What are the key strategic initiatives highlighted for growth?
Centene's strategy focuses on increasing penetration in existing state markets, diversifying its business lines, addressing emerging state needs, developing and acquiring additional markets, leveraging its established infrastructure for efficiency, and maintaining operational discipline. A major strategic development in 2017 was the agreement to acquire Fidelis Care for $3.75 billion, which is expected to enhance its market position in New York.
What is Centene's membership base and how did it change in 2017?
Centene's total membership grew by 7% to 12.2 million as of December 31, 2017. This growth reflects the company's success in expanding its reach across its various government-sponsored and commercial healthcare programs.
06—Continue