01—Abstract
Summary
Summary of the 10-K filed February 21, 2023. Cited figures are marked; the original filing is the authoritative source.
Centene Corporation reported a net earnings of $1.2 billiona on total revenues of $144.5 billion for the year ended December 31, 2022.
This represents a decrease in net earnings compared to the prior year, primarily due to significant impairment charges totaling $2.3 billionb related to real estate optimization, business divestitures, and a loss on a government contract. The company's value creation plan is actively being executed, including significant divestitures of non-core businesses and a strategic review of its real estate footprint, which is expected to yield substantial annualized lease expense savings. Centene's membership grew by 5% year-over-year, reaching 27.1 million members, driven by increases in its Medicaid and Medicare segments.
Despite the reported net loss, the company generated robust operating cash flow of $6.3 billionc. Centene continues to focus on margin expansion and profitable growth, with strategic initiatives in place to streamline operations and modernize its infrastructure.
Key financial highlights include a stable Health Benefits Ratio (HBR) of 87.7%d and a slight increase in the SG&A expense ratio to 8.6%. The company also announced substantial stock repurchase programs, signaling a commitment to returning capital to shareholders.
02—Key points
Key Highlights
- Total revenues increased by 15% to $144.5 billion, driven by membership growth in Medicaid and Medicare and the acquisition of Magellan.
- Net earnings decreased by 11% to $1.2 billion, primarily impacted by $2.3 billion in impairment charges and divestiture-related expenses.
- Operating cash flow was strong at $6.3 billion, demonstrating effective cash generation.
- Year-end membership grew by 5% to 27.1 million, with notable increases in Medicaid and Medicare.
- Health Benefits Ratio (HBR) remained stable at 87.7%, indicating consistent medical cost management relative to revenue.
- The company is executing a Value Creation Plan, including significant divestitures (PANTHERx, Magellan Rx, Centurion, HealthSmart) and a real estate optimization initiative expected to save over $200 million annually.
- Centene repurchased $3.0 billion of its common stock and has $2.8 billion remaining under its authorization, indicating a focus on capital return to shareholders.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Centene Corp kept $0.01.
- Revenue$144.55B100.0%
- Cost of revenue−$127.63B88.3%
- Gross profit$16.92B11.7%
- Operating costs−$15.60B10.8%
- Operating income$1.32B0.9%
- Interest, other & tax−$116.0M0.1%
- Net income$1.20B0.8%
Where FY2022 revenue went
$144.55B- Other operating costs: $124.61B, 86% of revenue
- Net income: $1.20B, 0.8% of revenue
- Cost of revenue: $7.03B, 4.9% of revenue
- SG&A: $11.59B, 8.0% of revenue
Kept 0.8% as net incomeNet income $1.20B · 0.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 21, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $144.55B$125.98B | +14.7% |
| Cost of Revenue | $7.03B$4.89B | +43.7% |
| Gross Profit | $16.92B$14.49B | +16.8% |
| SG&A Expenses | $11.59B$9.60B | +20.7% |
| Operating Expenses | $143.23B$124.20B | +15.3% |
| Operating Income | $1.32B$1.78B | −26.1% |
| Interest Expense | $665.00M$665.00M | 0.0% |
| Net Income | $1.20B$1.35B | −10.8% |
| EPS (Basic) | $2.09$2.31 | −9.5% |
| EPS (Diluted) | $2.07$2.28 | −9.2% |
| Shares Outstanding (Basic) | 575.19M582.83M | −1.3% |
| Shares Outstanding (Diluted) | 582.04M590.52M | −1.4% |
05—Questions
Frequently Asked Questions
What were Centene's key financial performance indicators for 2022?
Centene reported total revenues of $144.5 billion, a 15% increase year-over-year. Net earnings were $1.2 billion, a decrease of 11% compared to 2021, largely due to significant impairment charges ($2.3 billion). Operating cash flow was strong at $6.3 billion. The Health Benefits Ratio (HBR) was stable at 87.7%, while the SG&A expense ratio increased slightly to 8.6%.
What is the impact of Centene's Value Creation Plan on its operations?
Centene's Value Creation Plan is driving strategic initiatives such as divesting non-core businesses and optimizing its real estate footprint. These actions are aimed at improving operational efficiency, reducing costs, and fostering profitable growth. The divestitures of businesses like PANTHERx, Magellan Rx, Centurion, and HealthSmart, along with the real estate optimization, are key components of this plan. The real estate optimization alone is expected to save over $200 million in annualized lease expenses.
How did Centene's membership perform in 2022?
Centene experienced a 5% increase in total membership, reaching 27.1 million members by the end of 2022. This growth was primarily driven by increases in its Medicaid and Medicare segments, benefiting from factors such as the ongoing suspension of Medicaid eligibility redeterminations and strong Medicare annual enrollment.
What is Centene's approach to capital allocation?
Centene is actively returning capital to shareholders through its stock repurchase program. In 2022, the company repurchased $3.0 billion of its common stock and has approximately $2.8 billion remaining under its authorized repurchase program. This reflects a commitment to shareholder value alongside strategic investments and operational improvements.
06—Continue