01—Abstract
Summary
Summary of the 10-Q filed April 26, 2024. Cited figures are marked; the original filing is the authoritative source.
Centene Corporation (CNC) reported its first quarter 2024 financial results, showcasing solid revenue growth driven by its Commercial Marketplace business.
Total revenues reached $40.4 billiona, a 4% increase year-over-year, primarily fueled by a 41% membership surge in its Ambetter Health product. Despite overall revenue growth, the company experienced a slight decrease in managed care membership and a nominal increase in the health benefits ratio (HBR) to 87.1%. Net earnings attributable to Centene Corporation were $1.16 billion, or $2.16 per diluted share, an increase from the prior year.
The company also highlighted progress in divesting non-core international assets and expanding its Medicaid footprint in various states. Operationally, Centene is navigating the complex landscape of Medicaid redeterminations, which have impacted membership but are expected to see most states conclude by the second quarter of 2024. The company is strategically positioned to capture members transitioning from Medicaid to the Health Insurance Marketplace.
While Medicare Advantage revenue saw a decline due to lower Star quality ratings, the Medicare Prescription Drug Plan (PDP) membership saw significant growth. Centene's proactive approach to market changes, ongoing value creation plan, and focus on operational efficiency provide a stable outlook despite regulatory shifts.
02—Key points
Key Highlights
- Total revenues grew 4% to $40.4 billion, driven by the Commercial Marketplace business, which saw 41% membership growth.
- Net earnings attributable to Centene Corporation were $1.16 billion ($2.16 per diluted share), an increase from $1.13 billion ($2.04 per diluted share) in Q1 2023.
- Health Benefits Ratio (HBR) slightly increased to 87.1% from 87.0% year-over-year, influenced by Medicare Advantage revenue impacts and higher Medicaid acuity.
- Managed care membership remained stable at 28.4 million, a slight decrease of 33,000 members year-over-year.
- The company completed divestitures of non-core international assets (Operose Health and Circle Health).
- Medicaid membership declined due to ongoing eligibility redeterminations, but the company is well-positioned to transition members to its Commercial Marketplace products.
- Medicare Prescription Drug Plan (PDP) membership increased by 44% year-over-year.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Centene Corp kept $0.03.
- Revenue$40.41B100.0%
- Cost of revenue−$35.67B88.3%
- Gross profit$4.74B11.7%
- Operating costs−$3.63B9.0%
- Operating income$1.11B2.7%
- Interest, other & tax$57.0M0.1%
- Net income$1.16B2.9%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed April 26, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $40.41B$38.89B | +3.9% |
| Cost of Revenue | $669.00M$870.00M | −23.1% |
| Gross Profit | $4.74B$4.65B | +1.9% |
| SG&A Expenses | $3.22B$3.01B | +6.9% |
| Operating Expenses | $39.30B$37.67B | +4.3% |
| Operating Income | $1.11B$1.22B | −9.2% |
| Interest Expense | $178.00M$180.00M | −1.1% |
| Net Income | $1.16B$1.13B | +2.9% |
| EPS (Basic) | $2.17$2.05 | +5.9% |
| EPS (Diluted) | $2.16$2.04 | +5.9% |
| Shares Outstanding (Basic) | 535.11M550.78M | −2.8% |
| Shares Outstanding (Diluted) | 538.06M553.85M | −2.9% |
05—Questions
Frequently Asked Questions
What is Centene's overall financial performance for the first quarter of 2024?
Centene Corporation reported total revenues of $40.4 billion, a 4% increase year-over-year, driven by growth in its Commercial Marketplace business. Net earnings attributable to Centene Corporation were $1.16 billion, or $2.16 per diluted share, representing an increase from the prior year's first quarter.
How is the company managing the impact of Medicaid redeterminations?
Centene is actively engaging with members to confirm their Medicaid eligibility or help them find alternative coverage. The company believes it is well-positioned to transition members to its Ambetter Health Marketplace product as Medicaid redeterminations continue, with most states expected to conclude by the second quarter of 2024.
What is the outlook for Centene's Medicare business?
While Medicare Advantage revenue saw a decrease due to the impact of lower Star quality ratings, the Medicare Prescription Drug Plan (PDP) membership experienced significant growth, increasing by 44% year-over-year. The company has a multi-year plan to improve quality across its Medicare Advantage contracts.
Has Centene completed its divestitures of non-core assets?
Yes, Centene has completed the divestitures of its international operations, Operose Health Group in December 2023 and Circle Health in January 2024. The company continues to focus on optimizing its portfolio.
06—Continue