10-Q/APeriod: Q3 FY2004

CENTENE CORP Quarterly Report (Amendment) for Q3 Ended Sep 30, 2004

Filed December 17, 2004For Securities:CNC

Summary

Centene Corporation (CNC) reported solid financial performance for the nine months ended September 30, 2004, marked by significant revenue growth and improved profitability. Total revenues increased by 26.8% to $712.9 million compared to the same period in 2003, driven primarily by membership growth in its Medicaid Managed Care segment and strategic acquisitions. The company's focus on government-subsidized programs like Medicaid, SSI, and SCHIP continues to be a key growth driver, with total membership increasing by 37.4% year-over-year. Despite rising medical costs, Centene demonstrated effective cost management, leading to a decrease in its health benefits ratio. Net earnings saw a substantial 37.0% increase to $32.3 million, and diluted earnings per share grew to $0.74. The company also strengthened its financial position by securing a new $100 million revolving credit facility and maintained a healthy investment portfolio. Looking ahead, Centene is pursuing further expansion through acquisitions, notably the pending acquisition of FirstGuard in Kansas and Missouri, underscoring its commitment to growth in the managed care sector.

Key Highlights

  • 1Total revenues grew by 26.8% to $712.9 million for the nine months ended September 30, 2004, compared to the prior year period.
  • 2Total membership increased by 37.4% to 641,600 as of September 30, 2004, driven by organic growth and acquisitions.
  • 3Net earnings increased by 37.0% to $32.3 million for the nine months ended September 30, 2004.
  • 4Diluted earnings per share rose to $0.74 for the nine months ended September 30, 2004, from $0.64 in the prior year.
  • 5The health benefits ratio improved, decreasing to 80.9% for the nine months ended September 30, 2004, from 82.9% in the prior year, indicating better cost management.
  • 6Centene secured a new five-year, $100 million revolving credit facility in September 2004 to support its financial flexibility.
  • 7The company announced a definitive agreement to acquire two health plan entities, FirstGuard, for approximately $93 million, signaling continued expansion efforts.

Frequently Asked Questions

Centene's revenue growth is primarily driven by membership expansion in its Medicaid Managed Care segment, both through organic growth and strategic acquisitions. The company also benefits from premium rate adjustments and the addition of new members through contracts like the Texas SCHIP EPO.

Centene is actively managing its medical costs through initiatives such as reducing inappropriate emergency room usage and establishing preferred drug lists. These efforts have contributed to a decrease in the health benefits ratio, indicating improved cost efficiency in providing healthcare services.

Centene continues to pursue its acquisition strategy, highlighted by the announced agreement to acquire FirstGuard, a transaction expected to close in early 2005. The company has also recently integrated acquisitions like Family Health Plan, Inc. in Ohio.

The new $100 million revolving credit facility, secured in September 2004, enhances Centene's financial flexibility and provides an additional source of liquidity. While no funds had been drawn as of September 30, 2004, it supports potential future investments and operational needs.