Summary
Centene Corporation's first quarter 2012 report shows significant revenue growth driven by an expansion in managed care membership, particularly in Medicaid and CHIP programs. Total revenues increased by 40.8% year-over-year to $1.71 billion, primarily due to new contracts and expanded services in states like Arizona, Illinois, Kentucky, and Louisiana. Despite strong top-line growth, net earnings attributable to Centene Corporation saw a slight decrease of 1.0% to $23.978 million, resulting in diluted earnings per share of $0.45, down from $0.46 in the prior year. The company experienced a notable increase in its Health Benefits Ratio (HBR) to 88.2% from 84.9% in the prior year, mainly attributed to higher medical costs in key markets like Kentucky and Texas. However, this was partially offset by an improvement in the General and Administrative (G&A) expense ratio, which decreased to 9.8% from 12.0%, reflecting better cost leverage over increased revenues and reduced performance-based compensation. Operationally, Centene added 607,000 members year-over-year, reaching a total of 2,149,500 at-risk managed care members. Cash flow from operations turned negative for the quarter at ($32.1) million, impacted by timing differences in premium payments from state customers, a deviation from the $94.0 million positive cash flow in the same period last year. The company maintained a strong regulatory capital position, with statutory capital and surplus significantly exceeding required minimums.
Financial Highlights
49 data points| Revenue | $1.56B |
| Operating Expenses | $1.68B |
| Operating Income | $34.20M |
| Interest Expense | $4.80M |
| Net Income | $23.98M |
| EPS (Basic) | $0.12 |
| EPS (Diluted) | $0.11 |
| Shares Outstanding (Basic) | 204.50M |
| Shares Outstanding (Diluted) | 214.04M |
Key Highlights
- 1Total revenues surged 40.8% year-over-year to $1.71 billion, driven by substantial membership growth and new contract wins in key states.
- 2Managed care membership increased by 607,000 year-over-year to 2,149,500 at-risk members, indicating strong market penetration.
- 3Health Benefits Ratio (HBR) increased to 88.2% from 84.9% in Q1 2011, primarily due to higher medical costs in expanding markets like Kentucky and Texas.
- 4General and Administrative (G&A) expense ratio improved to 9.8% from 12.0% in Q1 2011, demonstrating effective cost management and operational leverage.
- 5Net earnings attributable to Centene Corporation remained relatively flat, slightly decreasing by 1.0% to $24.0 million, with diluted EPS at $0.45, down from $0.46 in the prior year.
- 6Operating cash flow turned negative at ($32.1) million due to state payment timing, a significant change from $94.0 million in the prior year's first quarter.
- 7The company proactively manages its investment portfolio, which is largely comprised of high-quality fixed-income securities, with a focus on liquidity and capital preservation.