8-KEarnings & Results

CENTENE CORP 8-K Report, Financial Results (Jul 23, 2024)

Filed July 23, 2024For Securities:CNC

Summary

Centene Corporation (CNC) has filed an 8-K report on July 23, 2024, primarily addressing the finalization of 2023 risk adjustment transfers by the Centers for Medicare and Medicaid Services (CMS). Initially, Centene had recorded a $1.3 billion payable related to the 2023 benefit year. However, the final CMS determination resulted in a $0.0 billion receivable, leading to a significant positive financial impact for Centene. This favorable outcome is primarily due to a net outperformance from the 2023 risk adjustment calculation, partially offset by an increase in Minimum Medical Loss Ratio (MLR) payable and estimated other offsets from competitors' insolvencies. The company is also providing preliminary second quarter 2024 financial results, expecting GAAP diluted EPS of $2.16 and adjusted diluted EPS of $2.42. These figures include the positive impact of the 2023 risk adjustment outperformance. Centene expects to reaffirm its full-year 2024 guidance, with a floor of greater than $5.94 for GAAP diluted EPS and greater than $6.80 for adjusted diluted EPS. Investors should note that these are preliminary results for Q2 2024 and actual results may differ.

Key Highlights

  • 1Final 2023 CMS risk adjustment transfers resulted in a $0.0 billion receivable for Centene, a significant improvement from the previously estimated $1.3 billion payable.
  • 2Centene recorded a net outperformance of $0.7 billion in Q2 2024 related to the 2023 risk adjustment, contributing positively to earnings.
  • 3Preliminary Q2 2024 GAAP diluted EPS is expected to be $2.16, and adjusted diluted EPS is expected to be $2.42.
  • 4The company anticipates reaffirming its full-year 2024 EPS guidance, with a floor of greater than $5.94 for GAAP diluted EPS and greater than $6.80 for adjusted diluted EPS.
  • 5An increase in the Minimum Medical Loss Ratio (MLR) payable for the 2024 benefit year by approximately $0.1 billion is expected due to outperformance, impacting the second half of 2024.
  • 6Estimated other offsets of approximately $0.3 billion due to competitor insolvencies also contributed to the favorable net outperformance.

Frequently Asked Questions

The final 2023 risk adjustment transfers from CMS resulted in a $0.0 billion receivable for Centene, compared to a previously recorded payable of $1.3 billion as of March 31, 2024. This led to a net outperformance of approximately $0.7 billion recognized in the second quarter of 2024.

Centene expects to report preliminary GAAP diluted EPS of $2.16 and adjusted diluted EPS of $2.42 for the second quarter of 2024. These figures include the positive impact from the 2023 risk adjustment outperformance.

Centene expects to reaffirm its 2024 full-year guidance, with a floor of greater than $5.94 for GAAP diluted EPS and greater than $6.80 for adjusted diluted EPS. Investors should refer to the upcoming earnings call for further details.

Yes, while there was a significant net outperformance, the company expects an increase in the Minimum Medical Loss Ratio (MLR) payable for the 2024 benefit year by approximately $0.1 billion. This increase is due to outperformance and will impact the second half of 2024.