01—Abstract
Summary
Summary of the 10-K filed February 22, 2022. Cited figures are marked; the original filing is the authoritative source.
Centene Corporation (CNC) reported a significant year of growth and strategic acquisitions in its 2021 10-K filing.
Total revenues reached $126.0 billiona, marking a 13% increase year-over-year, driven primarily by Medicaid membership growth and expansion in Medicare offerings. A key strategic move was the acquisition of Magellan Health for approximately $2.6 billion, aimed at expanding Centene's integrated healthcare solutions for complex populations. The company also reported strong operating cash flows of $4.2 billion, demonstrating its ability to generate cash from its core business activities.
Despite the revenue growth, the company's net earnings attributable to Centene decreased by 25% to $1.3 billionb, or $2.28 per diluted share, from $1.8 billion in the prior year. This decrease was largely due to a $1.25 billion legal settlement reserve related to its pharmacy benefits manager subsidiary, Envolve. Looking ahead, Centene is focused on its Value Creation Plan, designed to drive margin expansion through SG&A savings, gross margin improvements, and strategic capital management, including share repurchases and portfolio optimization.
02—Key points
Key Highlights
- Total revenues increased by 13% to $126.0 billion in 2021.
- Managed care membership grew by 4% to 26.6 million by year-end 2021.
- Acquired Magellan Health in January 2022 for approximately $2.6 billion to enhance integrated healthcare solutions.
- Operating cash flow was strong at $4.2 billion for the year.
- Net earnings attributable to Centene Corporation decreased by 25% to $1.3 billion, or $2.28 per diluted share, primarily due to a significant legal settlement reserve.
- The company is executing a Value Creation Plan focused on SG&A savings, gross margin expansion, and strategic capital management.
- Medicare membership saw a significant increase, contributing to revenue growth.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Centene Corp kept $0.01.
- Revenue$125.98B100.0%
- Cost of revenue−$111.50B88.5%
- Gross profit$14.49B11.5%
- Operating costs−$12.70B10.1%
- Operating income$1.78B1.4%
- Interest, other & tax−$437.0M0.3%
- Net income$1.35B1.1%
Where FY2021 revenue went
$125.98B- Other operating costs: $109.70B, 87% of revenue
- Net income: $1.35B, 1.1% of revenue
- Cost of revenue: $4.89B, 3.9% of revenue
- SG&A: $9.60B, 7.6% of revenue
Kept 1.1% as net incomeNet income $1.35B · 1.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 22, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $125.98B$111.11B | +13.4% |
| Cost of Revenue | $4.89B$3.30B | +48.2% |
| Gross Profit | $14.49B$107.81B | −86.6% |
| SG&A Expenses | $9.60B$9.38B | +2.4% |
| Operating Expenses | $124.20B$108.03B | +15.0% |
| Operating Income | $1.78B$3.08B | −42.1% |
| Interest Expense | $665.00M$728.00M | −8.7% |
| Net Income | $1.35B$1.81B | −25.5% |
| EPS (Basic) | $2.31$3.17 | −27.1% |
| EPS (Diluted) | $2.28$3.12 | −26.9% |
| Shares Outstanding (Basic) | 582.83M570.72M | +2.1% |
| Shares Outstanding (Diluted) | 590.52M579.13M | +2.0% |
05—Questions
Frequently Asked Questions
What was Centene's financial performance in 2021?
In 2021, Centene reported total revenues of $126.0 billion, a 13% increase year-over-year, driven by membership growth and acquisitions. However, net earnings attributable to Centene decreased by 25% to $1.3 billion, or $2.28 per diluted share, mainly due to a large legal settlement reserve.
What were the key strategic initiatives undertaken by Centene in 2021?
Centene's key strategic initiatives included the significant acquisition of Magellan Health for $2.6 billion, which aims to bolster its integrated healthcare offerings. The company also continued to focus on its Value Creation Plan, designed to improve operational efficiencies, expand margins, and manage capital strategically.
How did Centene's membership change in 2021?
Centene experienced a 4% increase in managed care membership, reaching 26.6 million by the end of 2021. This growth was primarily driven by increases in Medicaid membership and expansion in Medicare offerings.
What caused the decrease in net earnings in 2021?
The primary driver for the decrease in net earnings was a significant legal settlement reserve of $1.25 billion related to services provided by Envolve, its pharmacy benefits manager subsidiary. This reserve impacted the company's profitability for the year.
What is Centene's outlook for the future?
Centene is focused on executing its Value Creation Plan to drive sustainable profitable growth. The company anticipates continued growth through its diversified business lines, strategic acquisitions, and efforts to improve operational efficiency and cost management.
06—Continue