10-QPeriod: Q3 FY2013

CENTENE CORP Quarterly Report for Q3 Ended Sep 30, 2013

Filed October 22, 2013For Securities:CNC

Summary

Centene Corporation (CNC) reported solid financial performance for the nine months ended September 30, 2013. Total revenues grew by 30.4% year-over-year to $8.175 billion, driven by expansions in key states like Texas, Mississippi, and Florida, as well as strategic acquisitions. The company demonstrated improved operational efficiency, with its Health Benefits Ratio (HBR) decreasing to 88.9% for the nine-month period, down from 91.7% in the prior year, indicating better management of medical costs relative to premium revenues. Net earnings attributable to Centene Corporation turned positive, reaching $111.8 million for the nine months ended September 30, 2013, a significant turnaround from a net loss of $7.2 million in the same period of 2012. This profitability reflects successful integration of new contracts and acquisitions, coupled with strategic operational improvements. The company's balance sheet strengthened, with total assets increasing to $3.139 billion, supported by growth in goodwill and intangible assets, reflecting the impact of acquisitions like AcariaHealth.

Financial Highlights

50 data points
Beta

Revenue

$2.79B

Net Income

$49.00M

1.8% Net Margin

EPS (Diluted)

$0.21

Total Assets

$3.14B

Cash & Equivalents

$741.28M

Free Cash Flow

$114.41M

Financial Statements
Beta
Revenue$2.79B
Operating Expenses$2.71B
Operating Income$83.99M
Interest Expense$6.60M
Net Income$49.00M
EPS (Basic)$0.23
EPS (Diluted)$0.21
Shares Outstanding (Basic)218.72M
Shares Outstanding (Diluted)227.73M

Key Highlights

  • 1Total revenues increased by 30.4% to $8.175 billion for the nine months ended September 30, 2013, compared to the prior year.
  • 2The Health Benefits Ratio (HBR) improved to 88.9% for the nine months ended September 30, 2013, down from 91.7% in the comparable period of 2012.
  • 3Net earnings attributable to Centene Corporation were $111.8 million for the nine months ended September 30, 2013, a substantial improvement from a net loss of $7.2 million in the prior year.
  • 4The company acquired AcariaHealth, Inc. in April 2013 for $142.5 million, integrating a specialty pharmacy company and adding $91.3 million in goodwill.
  • 5At-risk managed care membership grew by 4.4% to 2,612,500 members as of September 30, 2013, compared to the prior year.
  • 6The company successfully renegotiated and expanded several state contracts, including new operations in Kansas, Florida, and Ohio.
  • 7Total assets grew to $3.139 billion as of September 30, 2013, reflecting increased investments and acquisitions.

Frequently Asked Questions

Centene's revenue growth was primarily driven by expansions in key states such as Texas, Mississippi, and Florida, the addition of new contracts like the one in Kansas, and strategic acquisitions, most notably AcariaHealth, Inc.

Centene demonstrated a significant improvement in profitability. For the nine months ended September 30, 2013, the company reported net earnings attributable to Centene Corporation of $111.8 million, a substantial turnaround from a net loss of $7.2 million in the same period of 2012.

The acquisition of AcariaHealth, Inc. in April 2013 for $142.5 million was a key strategic move, adding a specialty pharmacy company to Centene's portfolio. This acquisition contributed to revenue growth and expanded the company's service offerings, while also adding significant goodwill and intangible assets to the balance sheet.

Centene anticipates future growth through continued contract wins, expansions in existing markets, and potential new product offerings. The company expects its available cash, investments, operating cash flow, and revolving credit facility to be sufficient to finance operations and capital expenditures for at least the next 12 months. They are also actively pursuing opportunities in the health insurance exchanges and dual-eligible markets.