Summary
Centene Corporation (CNC) reported strong revenue growth in the second quarter and first half of 2017, driven primarily by the acquisition of Health Net and expansion in various state programs and the Health Insurance Marketplace. Total revenues for the second quarter increased by 10% year-over-year to $12.0 billion, and for the six months ended June 30, 2017, revenues grew by 33% to $23.7 billion. The company experienced significant membership growth, increasing its managed care membership by 7% year-over-year to over 12.2 million members. Net earnings attributable to Centene Corporation also saw substantial increases, with a 49% rise in the second quarter to $254 million ($1.44 diluted EPS) and a 155% increase for the first half to $393 million ($2.23 diluted EPS). While medical costs increased in line with revenue, the health benefits ratio (HBR) remained stable and slightly improved year-over-year. The company also benefited from the moratorium on the Health Insurer Fee for 2017, which positively impacted its income tax expense and effective tax rate. Financially, Centene demonstrated solid operational cash flow generation of $942 million for the first six months of 2017, a significant improvement from the prior year. The company's liquidity position remains strong, with a positive working capital of $682 million as of June 30, 2017. Despite increased debt levels due to the Health Net acquisition, Centene remains compliant with its debt covenants.
Financial Highlights
53 data points| Revenue | $11.95B |
| Cost of Revenue | $456.00M |
| Gross Profit | $11.50B |
| SG&A Expenses | $1.06B |
| Operating Expenses | $11.52B |
| Operating Income | $438.00M |
| Interest Expense | $62.00M |
| Net Income | $254.00M |
| EPS (Basic) | $0.74 |
| EPS (Diluted) | $0.72 |
| Shares Outstanding (Basic) | 344.71M |
| Shares Outstanding (Diluted) | 352.84M |
Key Highlights
- 1Total revenues increased by 10% year-over-year to $12.0 billion in Q2 2017, and by 33% to $23.7 billion for the first six months of 2017, largely driven by the Health Net acquisition and market expansion.
- 2Managed care membership grew by 7% year-over-year to 12.2 million members as of June 30, 2017.
- 3Net earnings attributable to Centene Corporation increased by 49% in Q2 2017 to $254 million, resulting in diluted EPS of $1.44, and by 155% for the first six months to $393 million ($2.23 diluted EPS).
- 4The Health Benefits Ratio (HBR) remained stable at 86.3% for Q2 2017, indicating effective management of medical costs relative to premium revenues.
- 5Operating cash flow was a strong $942 million for the first six months of 2017, a substantial improvement from -$223 million in the prior year period.
- 6The company benefited from the Health Insurer Fee moratorium in 2017, which suspended the fee and positively impacted tax expenses.
- 7Centene is actively expanding its offerings and entering new markets, with plans for Kansas, Missouri, and Nevada in 2018, demonstrating a continued growth strategy.