10-QPeriod: Q1 FY2008

CENTENE CORP Quarterly Report for Q1 Ended Mar 31, 2008

Filed April 22, 2008For Securities:CNC

Summary

Centene Corporation (CNC) reported solid revenue growth for the first quarter of 2008, driven by an increase in membership within its Medicaid Managed Care segment and growth in its Specialty Services segment. Total revenues reached $816.6 million, a 22.9% increase year-over-year. The company demonstrated improved operational efficiency, with its Health Benefits Ratio (HBR) decreasing to 83.0% and the General and Administrative (G&A) expense ratio falling to 12.5%. Earnings from operations more than doubled to $36.9 million, leading to diluted earnings per share of $0.57, up significantly from $0.26 in the prior year. Despite a decrease in net earnings due to the cessation of discontinued operations, the core business showed substantial improvement.

Key Highlights

  • 1Total revenues increased by 22.9% to $816.6 million compared to Q1 2007.
  • 2Earnings from operations saw a significant increase of 133.7% to $36.9 million.
  • 3Diluted earnings per share from continuing operations rose to $0.57 from $0.26 year-over-year.
  • 4Medicaid Managed Care membership grew by 4.8% to 1,156,800 members compared to the prior year.
  • 5The Health Benefits Ratio (HBR) improved to 83.0% from 84.6% in Q1 2007.
  • 6The General and Administrative (G&A) expense ratio decreased to 12.5% from 13.4% in Q1 2007.
  • 7The company announced the planned acquisition of Celtic Insurance Company, signaling strategic expansion.

Frequently Asked Questions

Centene's revenue growth was primarily driven by an increase in membership within its Medicaid Managed Care segment and growth in its Specialty Services segment. This was further supported by premium rate increases received from states.

Profitability improved significantly, with earnings from operations more than doubling to $36.9 million. This was reflected in diluted earnings per share from continuing operations, which rose to $0.57, a substantial increase from $0.26 in the prior year's quarter. The improved Health Benefits Ratio and G&A expense ratio also contributed to enhanced profitability.

The HBR decreased primarily due to the recognition of a retroactive premium rate increase in Georgia and overall increased premium yield. These factors were partially offset by rising medical costs, including those related to the flu season and higher-than-anticipated costs in the SSI business in Ohio.

Centene highlighted several strategic moves, including the acquisition of PhyTrust of South Carolina and Physician’s Choice, LLC, a partial acquisition of Access Health Solutions, LLC in Florida, and expansion of services in Texas and Ohio. The company also announced its planned acquisition of Celtic Insurance Company, subject to regulatory approval.