Summary
Centene Corporation (CNC) reported its first quarter 2020 results, marked by the significant completion of the WellCare Health Plans, Inc. acquisition on January 23, 2020. This transformative acquisition more than doubled the company's size and significantly expanded its Medicare and Medicaid offerings. Total revenues surged by 41% year-over-year to $26.0 billion, primarily driven by the WellCare integration, health insurer fee reinstatement, and organic growth in various programs. Despite revenue growth, net earnings attributable to Centene Corporation saw a substantial decrease to $46 million from $522 million in the prior year's quarter, largely due to increased acquisition-related expenses and debt extinguishment costs associated with the WellCare acquisition. The company also experienced a negative operating cash flow of $240 million, impacted by a delay in New York premium payments and working capital needs from its Medicare Prescription Drug Plan business. The company's balance sheet reflects the impact of the acquisition, with total assets growing significantly. However, liabilities also increased considerably, particularly long-term debt, to finance the transaction. Management highlighted the ongoing uncertainties related to the COVID-19 pandemic, including potential impacts on membership, utilization trends, and investment income. Despite these challenges and the near-term earnings impact of the acquisition, Centene maintained its full-year Adjusted diluted EPS guidance, reflecting confidence in its long-term strategy and operational resilience.
Financial Highlights
53 data points| Revenue | $26.02B |
| Cost of Revenue | $825.00M |
| Gross Profit | $25.20B |
| SG&A Expenses | $2.38B |
| Operating Expenses | $25.84B |
| Operating Income | $188.00M |
| Interest Expense | $180.00M |
| Net Income | $46.00M |
| EPS (Basic) | $0.08 |
| EPS (Diluted) | $0.08 |
| Shares Outstanding (Basic) | 544.44M |
| Shares Outstanding (Diluted) | 552.06M |
Key Highlights
- 1Completed the transformative acquisition of WellCare Health Plans, Inc. on January 23, 2020, significantly expanding the company's scale and market reach.
- 2Total revenues increased by 41% to $26.0 billion, largely driven by the WellCare acquisition and the reinstatement of the health insurer fee.
- 3Net earnings attributable to Centene Corporation decreased significantly to $46 million ($0.08 per diluted share) from $522 million ($1.24 per diluted share) in Q1 2019, primarily due to acquisition-related expenses and debt extinguishment costs.
- 4Adjusted diluted EPS was $0.86, a decrease from $1.39 in Q1 2019, reflecting the impact of lower investment income and increased interest expense.
- 5Managed care membership grew by 61% year-over-year to 23.8 million, largely due to the WellCare acquisition.
- 6Operating cash flows were negative at $(240) million, impacted by a delay in premium payments from New York and working capital requirements in the Medicare PDP business.
- 7Total assets increased substantially to $66.4 billion, driven by the acquisition, while total liabilities also rose significantly to $42.7 billion, with long-term debt increasing to support the acquisition financing.