8-KOther EventsExhibits & Filings

CENTENE CORP 8-K Report, Corporate Update (Jun 14, 2021)

Filed June 14, 2021For Securities:CNC

Summary

Centene Corporation (CNC) has reached no-fault agreements with the Attorneys General of Ohio and Mississippi to resolve claims related to its pharmacy benefits manager subsidiary, Envolve Pharmacy Solutions. These settlements involve payments of $88 million to Ohio and $55 million to Mississippi, addressing practices primarily from 2017 and 2018. The company explicitly denies any liability in these settlements. In addition to these resolved claims, Centene has recorded a reserve estimate of $1.1 billion for similar concerns in other states, excluding the amounts paid to Ohio and Mississippi. Importantly, these settlement costs and the reserve estimate will not affect Centene's Adjusted Earnings Per Share (EPS) guidance but will impact its GAAP EPS guidance. This filing indicates the company is actively working towards a broader resolution of these pharmacy benefit issues. The company is also engaged in discussions with a plaintiff's group to achieve a final resolution across other affected states. While the specifics of these ongoing discussions are not detailed, the substantial reserve suggests management anticipates significant financial impact from potential future settlements or resolutions. Investors should monitor developments regarding these ongoing discussions and their ultimate financial implications, which could affect GAAP earnings in the near term.

Key Highlights

  • 1Centene reached no-fault settlement agreements with Ohio ($88 million) and Mississippi ($55 million) regarding claims against its subsidiary Envolve Pharmacy Solutions.
  • 2The settlements address practices from Envolve primarily during 2017 and 2018.
  • 3Centene denies any liability for the practices addressed in the settlements.
  • 4A reserve of $1.1 billion has been recorded for similar potential issues in other states, excluding the Ohio and Mississippi settlements.
  • 5These settlement costs and the reserve will not impact Adjusted EPS guidance.
  • 6GAAP EPS guidance will be impacted by these settlement costs and the reserve estimate.
  • 7Centene is in discussions with a plaintiff's group to resolve similar concerns in other affected states.

Frequently Asked Questions

The total financial impact from the settlements with Ohio and Mississippi is $88 million for Ohio and $55 million for Mississippi, totaling $143 million. These amounts will impact GAAP EPS but not Adjusted EPS.

The $1.1 billion reserve represents Centene's estimated financial exposure for resolving similar claims or concerns related to Envolve's practices in other states, beyond those settled with Ohio and Mississippi. This is a significant accrual that could impact future GAAP earnings.

The settlement costs and the $1.1 billion reserve estimate will not impact Centene's Adjusted EPS guidance. However, they will negatively impact the company's previously disclosed GAAP EPS guidance.

Centene has explicitly denied any liability in connection with the practices addressed in the settlements with Ohio and Mississippi. The company is actively engaging in discussions to resolve concerns in other states.