Summary
Centene Corporation (CNC) reported strong revenue growth in the third quarter of 2019, with total revenues increasing by 17% year-over-year to $19.0 billion, driven by membership growth across its Medicaid, Commercial, and Health Insurance Marketplace segments, as well as strategic acquisitions. Despite revenue expansion, the Health Benefits Ratio (HBR) increased to 88.2%, primarily due to the absence of the Health Insurer Fee (HIF) in 2019 and specific state-directed payments. Notably, the company recorded a significant non-cash goodwill and intangible asset impairment of $271 million, largely related to its USMM physician home health business, which impacted reported earnings per share. However, adjusted diluted EPS showed a modest increase to $0.96 from $0.89 in the prior year. The company continues to advance its significant acquisition of WellCare, with key regulatory approvals progressing and an expected closing in the first half of 2020. This strategic move is anticipated to be accretive to earnings. Centene's balance sheet reflects increased assets and liabilities compared to the prior year, with a focus on managing its investment portfolio and debt levels as it prepares for the WellCare integration. The company maintains sufficient liquidity and remains compliant with its debt covenants.
Financial Highlights
54 data points| Revenue | $18.98B |
| Cost of Revenue | $619.00M |
| Gross Profit | $18.36B |
| SG&A Expenses | $1.62B |
| Operating Expenses | $18.80B |
| Operating Income | $176.00M |
| Interest Expense | $99.00M |
| Net Income | $95.00M |
| EPS (Basic) | $0.23 |
| EPS (Diluted) | $0.23 |
| Shares Outstanding (Basic) | 413.62M |
| Shares Outstanding (Diluted) | 419.96M |
Key Highlights
- 1Total revenues grew 17% year-over-year to $19.0 billion, driven by a 6% increase in managed care membership and expansion in key markets.
- 2The Health Benefits Ratio (HBR) increased to 88.2% from 86.3% in Q3 2018, influenced by the suspension of the Health Insurer Fee (HIF) and state-specific payment dynamics.
- 3Selling, General, and Administrative (SG&A) expenses decreased by 16% year-over-year due to lower acquisition-related costs compared to the prior year's Fidelis Care acquisition.
- 4A significant non-cash goodwill and intangible asset impairment charge of $271 million was recorded, primarily related to the USMM physician home health business.
- 5Adjusted Diluted Earnings Per Share (EPS) increased to $0.96 from $0.89 in the prior year's quarter, demonstrating underlying operational performance.
- 6The acquisition of WellCare remains on track, with expected closing in the first half of 2020 and significant progress on regulatory approvals.
- 7Operating cash flows were impacted by large payments for risk adjustment and minimum MLR programs, resulting in negative cash flow for the quarter but positive cash flow of $2.1 billion for the nine-month period.