10-QPeriod: Q2 FY2002

CENTENE CORP Quarterly Report for Q2 Ended Jun 30, 2002

Filed July 24, 2002For Securities:CNC

Summary

Centene Corporation (CNC) reported solid revenue growth for the six months ended June 30, 2002, driven by a 30.7% increase in membership across its Wisconsin, Indiana, and Texas health plans. Total revenues reached $203.4 million, up from $150.9 million in the prior year period, primarily from premium revenues. Profitability showed improvement, with net earnings attributable to common stockholders rising to $9.5 million for the six months ended June 30, 2002, compared to $5.2 million in the same period of 2001. This increase was supported by stable medical cost ratios and improved general and administrative expense ratios, reflecting operational efficiencies and membership growth. The company also successfully raised capital through a follow-on public offering, enhancing its liquidity position and providing resources for future expansion.

Key Highlights

  • 1Total revenues increased by 34.8% to $203.2 million for the six months ended June 30, 2002, driven by significant membership growth.
  • 2Membership grew by 30.7% year-over-year, reaching 278,600 members across Wisconsin, Indiana, and Texas.
  • 3Net earnings attributable to common stockholders increased to $9.5 million for the six months ended June 30, 2002, up from $5.2 million in the prior year period.
  • 4The health benefits ratio remained stable at 82.2% for the six months ended June 30, 2002, indicating effective management of medical costs relative to revenue.
  • 5The general and administrative expense ratio improved to 11.0% for the six months ended June 30, 2002, down from 12.2% in the prior year, demonstrating leverage of infrastructure.
  • 6The company raised $10.3 million in net proceeds from a follow-on public offering in May and June 2002, strengthening its capital position.
  • 7Centene acquired Bankers Reserve Life Insurance Company of Wisconsin in March 2002 for $3.5 million to be used as a reinsurance company for its managed care Medicaid entities.

Frequently Asked Questions

Centene Corporation provides managed care programs and related services primarily to individuals enrolled in state Medicaid and Children's Health Insurance Program (CHIP) benefits. Its primary revenue source is premiums received from states based on a fixed per-member, per-month rate for providing healthcare services. The company also generates revenue from administrative services fees for non-risk management services provided to SSI members.

Centene experienced substantial membership growth of 30.7% from June 30, 2001, to June 30, 2002, reaching 278,600 members. This growth directly contributed to a significant increase in total revenues, which rose by 34.8% to $203.2 million for the six months ended June 30, 2002, compared to $150.7 million in the same period of 2001.

Centene's profitability has improved, with net earnings attributable to common stockholders increasing to $9.5 million for the first six months of 2002, up from $5.2 million in the prior year. This improvement is attributed to consistent revenue growth, stable health benefits ratios (around 82%), and a decreasing general and administrative expense ratio (from 12.2% to 11.0%). These factors indicate effective cost management and operational leverage as membership grows.

During the first half of 2002, Centene acquired Bankers Reserve Life Insurance Company of Wisconsin for $3.5 million, intending to use it as a reinsurance company. Additionally, the company completed a follow-on public offering, raising $10.3 million in net proceeds to bolster its capital for expansion and operational needs.