Centene Corporation Reports 2008 Second Quarter Earnings.ST. LOUIS -- Centene Corporation Centene Corporation is in the industry of Medicaid managed care. Centene is a multi-line healthcare enterprise operating primarily in two segments: Medicaid Managed Care and Specialty Services. (NYSE NYSE See: New York Stock Exchange : CNC (Computerized Numerical Control) See numerical control. CNC - Collaborative Networked Communication ) today announced its net earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the for the quarter ended June 30, 2008 were $18.0 million, or $0.41 per diluted share, compared to $10.2 million, or $0.23 per diluted share in the 2007 second quarter. As a reminder, the 2008 first quarter results included the benefit of the July 1 through December 31, 2007 period rate increase for Georgia of approximately $0.28 per diluted share. Unless specifically noted, the discussions below are in the context of continuing operations. Second Quarter Highlights * Quarter-end Medicaid Managed Care membership of 1.2 million. * Revenues of $860.1 million, or $837.9 million net of premium taxes, an 18.2% increase over the 2007 second quarter. * Health Benefits Ratio (HBR HBR Harvard Business Review HBR Harbor HBR High Bit Rate HBR Human Behavioral Representation HBR Heijmans Blackwell Remediation HBR Hydrobromide Acid HBR House Budget Resolution HBR Hybrid Block Repair HBR Host-Based Replication ), which reflects medical costs as a percent of premium revenues, of 83.3%, compared to 83.6% in the 2007 second quarter. * General and administrative (G&A) expense ratio of 13.5%, compared to 14.4% in the 2007 second quarter. * Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses of $60.0 million. * Days in claims payable of 48.5. Other Events * Commenced operations under our Texas Foster Care contract, effective April 1, 2008. * Repurchased 347,432 shares during the second quarter for approximately $6.4 million. * Completed the previously announced acquisition of Celtic Insurance Company, or Celtic, a health insurance carrier focused on the individual health insurance market, effective July 1, 2008. * Concluded operations for SSI (1) See server-side include and single-system image. (2) (Small-Scale Integration) Less than 100 transistors on a chip. See MSI, LSI, VLSI and ULSI. 1. (electronics) SSI - small scale integration. 2. recipients in the Northwest region
The Northwest Region of Ohio, effective June 30, 2008. * Awarded a contract by the Arizona Health Care Cost Containment System The Arizona Health Care Cost Containment System (AHCCCS) is the name of the Medicaid program in the state of Arizona. As with all Medicaid programs, it is a joint program between the state and the Centers for Medicare and Medicaid Services (CMS). to provide Acute Care services to Medicaid recipients in the Yavapai service area. Membership operations are expected to commence on October 1, 2008. Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "We are pleased with the progress our results show this quarter and believe they set a foundation for improvement that we can build on for the rest of 2008 and beyond. Our team remains committed to the goal of margin expansion and we expect to achieve a runrate pretax margin of 4% by the end of 2008 through focused medical management and G&A leverage. While the new growth opportunities available to us remain robust, we will employ a disciplined and selective approach to pursuing them," concluded Neidorff. The following table depicts membership in Centene's managed care organizations, by state, at June 30, 2008 and 2007: [TABLE OMITTED] The following table depicts membership in Centene's managed care organizations, by member category, at June 30, 2008 and 2007: [TABLE OMITTED] Statement of Operations See Income statement. * For the 2008 second quarter, revenues, net of premium taxes, increased 18.4% to $837.9 million from $707.9 million in the 2007 second quarter. The increase was primarily driven by premium rate increases in Georgia, membership growth in Texas and Ohio, which are the two markets that added SSI products in 2007, as well as growth in Texas from the new Foster Care contract commencing in April 2008. * The consolidated HBR, which reflects medical costs as a percent of premium revenues, was 83.3%, a decrease from 83.6% in the 2007 second quarter. The decrease is primarily due to overall increased premium yield and improvement in our Georgia market. Sequentially, our consolidated HBR increased from 83.0% in the 2008 first quarter to 83.3% due to the effect of the Georgia rate increase included in the first quarter, offset by moderating medical cost trends, especially related to SSI members in Ohio. * Consolidated G&A expense as a percent of premium and service revenues was 13.5% in the second quarter of 2008, a decrease from 14.4% in the second quarter of 2007. * Earnings per diluted share from continuing operations were $0.41, compared to $0.23 in the 2007 second quarter. Balance Sheet and Cash Flow At June 30, 2008, the Company had cash and investments of $709.9 million, including $680.9 million held by its regulated entities and $29.0 million held by its unregulated entities. Medical claims liabilities totaled $363.7 million, representing 48.5 days in claims payable, an increase of 2.3 days from June 30, 2007 and a decrease of 0.8 days from March 31, 2008. Total debt was $222.1 million and debt to capitalization was 32.6%. Year to date cash flow from operations was $86.7 million. A reconciliation of the Company's change in days in claims payable from the immediately preceding quarter-end is presented below: [TABLE OMITTED] Outlook The table below depicts the Company's annual guidance for 2008: [TABLE OMITTED] Eric R. Slusser, Centene's Chief Financial Officer, stated, "We are increasing our revenue guidance, but maintaining our previous earnings per share guidance for the year. With the acquisition of Celtic and our new Arizona contract, our revenue expectations have increased for the second half of the year. However, we do not expect either of these to have a material contribution to earnings in 2008. We are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about the second half of the year as we continue to invest in infrastructure and execute on new and existing opportunities. We continue to expect an overall HBR range for the full year of 82.0% to 84.0%." Conference Call As previously announced, the Company will host a conference call Tuesday, July 22, 2008, at 8:00 A.M. (Eastern Time) to review the financial results for the second quarter ended June 30, 2008, and to discuss its business outlook. Michael F. Neidorff and Eric R. Slusser will host the conference call. Investors are invited to participate in the conference call by dialing 800-273-1254 in the U.S. and Canada, 706-679-8592 from abroad, or via a live internet broadcast on the Company's website at www.centene.com, under the Investor Relations Investor relations The process by which the corporation communicates with its investors. section. A replay will be available for on-demand listening shortly after the completion of the call until 11:59 P.M. (Eastern Time) on August 5, 2008 at the aforementioned URL URL in full Uniform Resource Locator Address of a resource on the Internet. The resource can be any type of file stored on a server, such as a Web page, a text file, a graphics file, or an application program. , or by dialing 800-642-1687 in the U.S. and Canada, or 706-645-9291 from abroad, and entering access code 51471537. About Centene Corporation Centene Corporation is a leading multi-line healthcare enterprise that provides programs and related services to individuals receiving benefits under Medicaid, including the State Children's Health Children's Health Definition Children's health encompasses the physical, mental, emotional, and social well-being of children from infancy through adolescence. Insurance Program (SCHIP SCHIP State Children's Health Insurance Program ), Foster Care, Supplemental Security Income Supplemental Security Income A Social Security program established to help the blind, disabled, and poor. (SSI) and Medicare (Special Needs Plans). The Company operates health plans in Arizona, Georgia, Indiana, New Jersey, Ohio, South Carolina South Carolina, state of the SE United States. It is bordered by North Carolina (N), the Atlantic Ocean (SE), and Georgia (SW). Facts and Figures Area, 31,055 sq mi (80,432 sq km). Pop. (2000) 4,012,012, a 15. , Texas and Wisconsin. In addition, the Company contracts with other healthcare and commercial organizations to provide specialty services including behavioral health Behavioral health was first used in the 1980's to name the combination of the fields mental health and substance abuse. As an example, an organization serving both mental health and substance abuse clients might refer to its practice as behavioral health or , life and health management, long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. , managed vision, nurse triage triage Division of patients for priority of care, usually into three categories: those who will not survive even with treatment; those who will survive without treatment; and those whose survival depends on treatment. , pharmacy benefits management and treatment compliance. Information regarding Centene is available via the Internet at www.centene.com. The information provided in this press release contains forward-looking statements that relate to future events and future financial performance of Centene. Subsequent events and developments may cause the Company's estimates to change. The Company disclaims any obligation to update this forward-looking financial information in the future. Readers are cautioned that matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, regulatory, competitive and other factors that may cause Centene's or its industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Actual results may differ from projections or estimates due to a variety of important factors, including Centene's ability to accurately predict and effectively manage health benefits and other operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , competition, changes in healthcare practices, changes in federal or state laws or regulations, inflation, provider contract changes, new technologies, reduction in provider payments by governmental payors, major epidemics, disasters and numerous other factors affecting the delivery and cost of healthcare. The expiration, cancellation or suspension of Centene's Medicaid Managed Care contracts by state governments would also negatively affect Centene. [Tables Follow] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] Centene's claims reserving process utilizes a consistent actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin methodology to estimate Centene's ultimate liability. Any reduction in the "Incurred related to: Prior period" claims may be offset as Centene actuarially determines "Incurred related to: Current period." As such, only in the absence of a consistent reserving methodology would favorable development of prior period claims liability estimates reduce medical costs. Centene believes it has consistently applied its claims reserving methodology in each of the periods presented. |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion