8-KRegulation FD

CENTENE CORP 8-K Report, Regulation FD Disclosure (Nov 19, 2015)

Filed November 19, 2015For Securities:CNC

Summary

Centene Corporation (CNC) issued this 8-K filing on November 19, 2015, to provide an update following a competitor's announcement of significant reductions in their Health Insurance Marketplace (HIM) business performance. Centene reiterated its 2015 diluted earnings per share guidance of $2.84 to $2.90, excluding Health Net merger related costs, indicating its HIM business remains on track. The company emphasized that its HIM operations are primarily focused on individuals below 250% of the federal poverty level and are performing in line with expectations. The filing also detailed Centene's financial exposure related to its HIM business as of September 30, 2015, with $77 million in payables for risk adjustment, $31 million for risk corridors, and $14 million for minimum medical loss ratio. This disclosure appears intended to reassure investors that Centene's strategy and execution in this segment are distinct from those experiencing difficulties elsewhere in the market, particularly given the ongoing Health Net merger.

Key Highlights

  • 1Centene reiterated its 2015 diluted EPS guidance of $2.84-$2.90, excluding Health Net merger costs.
  • 2The company's Health Insurance Marketplace (HIM) business is performing in line with expectations.
  • 3Centene's HIM focus is primarily on individuals below 250% of the federal poverty level.
  • 4As of September 30, 2015, Centene had $77M in HIM risk adjustment payables.
  • 5Additional HIM payables included $31M for risk corridors and $14M for minimum medical loss ratio.
  • 6Centene maintained a consistent methodology for HIM pricing for 2016, similar to 2014 and 2015.
  • 7The company continues to utilize a tailored network for its HIM products, focusing on subsidized individuals.

Frequently Asked Questions

Centene issued this 8-K filing to provide an update and reassure investors following a competitor's announcement of significant issues within their Health Insurance Marketplace business. Centene aimed to differentiate its performance and reiterate its positive outlook.

No, Centene stated that its Health Insurance Marketplace (HIM) business is performing in line with expectations. Their HIM strategy is primarily focused on individuals eligible for subsidies (below 250% of the federal poverty level) and uses a tailored network approach.

As of September 30, 2015, Centene reported payables related to its HIM business totaling $77 million for risk adjustment, $31 million for risk corridor programs, and $14 million for minimum medical loss ratio requirements.

Centene indicated that it followed a consistent methodology for HIM pricing for 2016 as it did for 2014 and 2015. They also continue to maintain a tailored network for this product, specifically designed to meet the needs of individuals eligible for subsidies.