10-QPeriod: Q3 FY2005

CENTENE CORP Quarterly Report for Q3 Ended Sep 30, 2005

Filed October 25, 2005For Securities:CNC

Summary

Centene Corporation (CNC) reported strong revenue growth in the third quarter of 2005, driven by significant membership increases in its Medicaid Managed Care segment, both organically and through strategic acquisitions. Total revenues for the nine months ended September 30, 2005, rose by 51.9% to $1.08 billion compared to the prior year, primarily fueled by a 52.4% surge in premium revenue. The company also demonstrated improved profitability, with net earnings for the nine months increasing by 29.3% to $41.8 million. This growth was achieved despite an increase in the health benefits ratio, largely due to a lawsuit settlement and expansion into new markets. Centene's proactive approach to managing its financial position is evident in its strengthened balance sheet, with total assets growing to $639.6 million, and a substantial increase in cash and cash equivalents. The company also successfully expanded its credit facility, providing additional financial flexibility.

Key Highlights

  • 1Total revenues for the nine months ended September 30, 2005, increased significantly by 51.9% to $1.08 billion, compared to $712.9 million in the prior year.
  • 2Net earnings for the nine months ended September 30, 2005, rose by 29.3% to $41.8 million, demonstrating improved profitability.
  • 3Medicaid Managed Care membership grew by 32.1% year-over-year, driven by a combination of organic growth and strategic acquisitions.
  • 4The company acquired AirLogix, Inc. and certain Medicaid-related assets from SummaCare, Inc., integrating new services and expanding its market presence.
  • 5Cash and cash equivalents increased substantially to $121.4 million as of September 30, 2005, up from $84.1 million at the end of 2004.
  • 6The revolving credit facility was amended and increased to $200 million, enhancing liquidity and financial flexibility.
  • 7The company reached a settlement with Aurora Health Care, Inc. for $9.5 million, resolving a lawsuit and entering into a new five-year contract.

Frequently Asked Questions

Centene's revenue growth was primarily driven by a significant increase in membership within its Medicaid Managed Care segment, fueled by both organic growth and strategic acquisitions. Additionally, premium rate increases across its markets contributed to the revenue surge.

Centene's net earnings increased by 29.3% year-over-year. While the health benefits ratio saw an increase due to a lawsuit settlement and expansion into new markets, the company managed overall profitability through effective cost management and the revenue growth generated by its expanding membership base.

The acquisitions of AirLogix, Inc. and certain Medicaid-related assets from SummaCare, Inc. contributed to revenue growth and expanded Centene's service offerings. These acquisitions, along with the acquisition of FirstGuard, have been integrated into the consolidated financial statements, demonstrating Centene's strategy of growth through consolidation.

Centene's liquidity has strengthened, with cash and cash equivalents increasing significantly. The company also enhanced its financial flexibility by amending its revolving credit facility, increasing the available amount to $200 million, which is now an unsecured facility. This provides greater capacity for operational needs and strategic initiatives.