Centene Corporation Reports Fourth Quarter and Year-End Results; Company Achieves $1.5 Billion in Full Year Revenue.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 financial results for the fourth quarter and year ended December December: see month. 31, 2005.
----------------------------------------------------------------------
Fourth Quarter Highlights Full Year Highlights
---------------------------------- ----------------------------------
-- Revenues increased 46.9% to -- Revenues increased 50.4% to
$423.2 million $1.5 billion
-- Earnings from operations -- Earnings from operations
increased 17.0% to $20.4 increased 22.7% to $79.2
million million
-- EPS increased 14.8% to $0.31 -- EPS increased 21.6% to $1.24
-- Operating cash flows of $29.1 -- Operating cash flows of $74.0
million million
Additional Highlights --Acquired US Script, Inc., a pharmacy pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. benefits manager. --Membership growth of 12.8% over the fourth quarter of 2004; organic membership growth of 7.8% over the same prior year period. --Days in claims payable of 45.4. --Authorized stock repurchase Stock repurchase A firm's repurchase of outstanding shares of its common stock. program of up to 4 million shares of Centene's common stock. --Announced key management appointments to support stated goal of building a multi-line healthcare enterprise. --Named to The Forbes Forbes , B(ertie) C(harles) 1880-1954. American publisher and businessman who founded and edited (1916-1954) Forbes magazine. His son Malcolm Stevenson Forbes Platinum platinum (plăt`ənəm), metallic chemical element; symbol Pt; at. no. 78; at. wt. 195.08; m.p. 1,772°C;; b.p. 3,827±100°C;; sp. gr. 21.45 at 20°C;; valence +2 or +4. 400, a list of America's Best Big Companies. Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "We are pleased with our 2005 results, given some market specific challenges that we faced during the year. The strength of our information systems, disciplined contracting methodology and growing business diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. give us ongoing visibility and confidence in the stability and predictability of our business model. "During the quarter, growth in our Kansas Kansas, state, United States Kansas (kăn`zəs), midwestern state occupying the center of the coterminous United States. It is bordered by Missouri (E), Oklahoma (S), Colorado (W), and Nebraska (N). , Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). and New Jersey markets was strong. Specifically, Indiana completed the conversion of its remaining counties to mandatory Peremptory; obligatory; required; that which must be subscribed to or obeyed. Mandatory statutes are those that require, as opposed to permit, a particular course of action. status. We are pleased that, despite intense competition for these recipients, we achieved this significant growth in Indiana while remaining disciplined in contracting and in our approach to gaining membership. The primary challenge in converting recipients into a managed care setting is educating them on how best to access the healthcare system, which takes time and temporarily increases our medical costs. We saw this occur in the Indiana expansion and expect a similar impact as we roll out Georgia Georgia, country, Asia Georgia (jôr`jə), Georgian Sakartvelo, Rus. Gruziya, officially Republic of Georgia, republic (2005 est. pop. 4,677,000), c.26,900 sq mi (69,700 sq km), in W Transcaucasia. later this year. We are well-positioned for growth in Kansas and the State has plans to extend its existing Medicaid Medicaid, national health insurance program in the United States for low-income persons; established in 1965 with passage of the Social Security Amendments and now run by the Centers for Medicare and Medicaid Services. contract through the end of 2006. "In Texas, there were a number of factors that affected our membership results during the fourth quarter, including the State's conversion to both a new enrollment broker and a new eligibility system. We achieved increased penetration The successful unauthorized breach of a security perimeter. See penetration test. in our existing service areas, while the overall market contracted. We believe that this market condition could continue to cause enrollment issues similar to those that were experienced in this fourth quarter. However, we still anticipate the service area expansion awards to be effective September September: see month. 1, 2006. "Regarding Georgia, our newest state, we anticipate that membership operations will commence on April 1; we are fully prepared to meet that schedule, and are working with the State to minimize In a graphical environment, to hide an application that is currently displayed on screen. For example, in Windows and Mac, the application's window is removed from the screen and represented by an icon on the Windows Taskbar. In the Mac, the icon is placed in the Dock. See Win Minimize windows. further delays. "We are pleased with our recent acquisition of US Script, Inc., a pharmacy benefits manager, which adds another important service component to our specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. company business and will help us to contain and manage the most significant cost driver in healthcare-prescription drug costs. "We are looking forward to the opportunities in 2006, and are confident that we are well positioned with strong operating systems Operating systems can be categorized by technology, ownership, licensing, working state, usage, and by many other characteristics. In practice, many of these groupings may overlap. , growing depth of management and financial resources to meet them," concluded Neidorff. The following table depicts Medicaid Managed Care membership by state at December 31, 2005 and 2004:
2005 2004
-------------- --------------
Indiana 193,300 150,600
Kansas 113,300 94,200
Missouri 36,000 41,200
New Jersey 56,500 52,800
Ohio 58,700 23,800
Texas 242,000 244,300
Wisconsin 172,100 165,800
-------------- --------------
TOTAL 871,900 772,700
============== ==============
2005 2004
-------------- --------------
Medicaid 681,100 580,200
SCHIP 175,900 182,100
SSI 14,900(a) 10,400(b)
-------------- --------------
TOTAL 871,900 772,700
============== ==============
(a) 8,100 at-risk; 6,800 ASO
(b) 4,600 at-risk; 5,800 ASO
The following table depicts Specialty Services membership (1) by state at December 31, 2005 and 2004:
2005 2004
-------------- --------------
Arizona 94,700 -
Kansas 38,800 -
-------------- --------------
TOTAL 133,500 -
============== ==============
(1) Includes behavioral health contracts only.
Statement of Earnings Highlights --For the fourth quarter of 2005, revenues increased 46.9% to $423.2 million from $288.1 million in the fourth quarter of 2004. --For the fourth quarter of 2005, the 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 ) for Centene's Medicaid and SCHIP SCHIP State Children's Health Insurance Program populations was 82.1%, within the guided range of 81.5% to 83.5%, which primarily reflected increased costs associated with transitioning Indiana membership from an unmanaged setting into Medicaid managed care. Centene's HBR for the 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. population was 105.4% during the quarter, primarily due to growth in its Wisconsin Wisconsin, state, United States Wisconsin (wĭskŏn`sən, –sĭn), upper midwestern state of the United States. It is bounded by Lake Superior and the Upper Peninsula of Michigan, from which it is divided by the Menominee market. One of the factors which affected the SSI HBR is a sixty-day continuity of care requirement in Wisconsin. The continuity of care requirement limits our ability to implement generic drug generic drug, a drug sold or prescribed under the nonproprietary name of its active ingredients or under a generally descriptive name rather than under a brand or trade name. substitution Substitution Arsinoë put her own son in place of Orestes; her son was killed and Orestes was saved. [Gk. Myth.: Zimmerman, 32] Barabbas robber freed in Christ’s stead. [N.T.: Matthew 27:15–18; Swed. Lit. or formulary formulary /for·mu·lary/ (for´mu-lar?e) a collection of recipes, formulas, and prescriptions. National Formulary see under N. for·mu·lar·y n. utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be , appropriately manage inpatient inpatient /in·pa·tient/ (in´pa-shent) a patient who comes to a hospital or other health care facility for diagnosis or treatment that requires an overnight stay. in·pa·tient n. utilization and monitor excessive durable medical equipment Durable medical equipment is a term of art used to describe certain Medicare benefits, that is, whether Medicare may pay for the item. The item is defined by Title XVIII the Social Security Act: --The table below depicts Centene's HBR by member category:
Three Months Ended
December 31,
--------------------------------
2005 2004
-------------- --------------
Medicaid and SCHIP 82.1% 80.2%
SSI 105.4 84.7
Specialty Services 85.0 -
--Our Medicaid Managed Care general and administrative (G&A) expenses as a percent of revenues was 10.3% in the fourth quarter of 2005 compared to 11.4% in the fourth quarter of 2004. This reduction reflected lower compensation costs related to Centene's year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. performance bonuses, which in part is driven by stock performance. --Earnings from operations increased 17.0% to $20.4 million in the fourth quarter of 2005 from $17.4 million in the fourth quarter of 2004. --Net earnings were $13.9 million, or $0.31 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, for the fourth quarter of 2005 compared to $12.0 million, or $0.27 per diluted share, for the fourth quarter of 2004. --For the year ended December 31, 2005, revenues increased 50.4% to $1.5 billion from $1.0 billion in 2004. The HBR for the Medicaid and SCHIP populations was 81.7% in 2005 compared to 80.4% in 2004. The increase is comprised of 0.3% of Aurora Aurora, cities, United States Aurora (ərôr`ə, ô–). 1 City (1990 pop. 222,103), Adams and Arapahoe counties, N central Colo., a growing suburb on the east side of Denver; inc. 1903. litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlement costs and 0.3% for medical costs experience in the new Indiana service areas. The remaining balance is normal variations. Earnings from operations increased 22.7% to $79.2 million in 2005 from $64.5 million in 2004. Net earnings improved to $55.6 million, or $1.24 per diluted share, in 2005 compared to $44.3 million, or $1.02 per diluted share, in 2004. Balance Sheet Highlights At December 31, 2005, the Company had cash and investments of $350.3 million, of which $322.6 million was held by Centene's regulated reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. entities. Medical claims liabilities totaled $170.5 million, representing 45.4 days in claims payable. A reconciliation of the Company's change in days in claims payable from the immediately preceding quarter is presented below:
Days in claims payable, September 30, 2005 41.4
Increase in claims inventory 4.3
Payment of quarterly provider settlements (0.3)
--------------
Days in claims payable, December 31, 2005 45.4
==============
Outlook Karey L. Witty wit·ty adj. wit·ti·er, wit·ti·est 1. Possessing or demonstrating wit in speech or writing; very clever and humorous. 2. , Centene's Chief Financial Officer, commented, "Our first quarter 2006 revenue guidance is in the range of $444 million to $449 million, and we anticipate net earnings of $0.17 to $0.21 per diluted share. For full year 2006, we anticipate revenue in the range of $2.15 billion to $2.25 billion, and net earnings per diluted share of $1.61 to $1.78." Guidance for 2006 includes the effect of new accounting rules requiring the expensing of stock options. The Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). (FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). ) has issued FASB Statement FASB Statement A standard set by the Financial Accounting Standards Board regarding a financial accounting and reporting method. Essentially, FASB statements determine the acceptable accounting practices that Certified Public Accountants use in reporting No. 123R, "Share-Based Payment," which covers a range of share-based compensation arrangements, including stock options. Centene began expensing stock options effective January January: see month. 1, 2006, in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the requirements of FASB Statement No. 123R, the effect of which is expected to reduce diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $0.04 per share in the first quarter of 2006 and $0.15 per share for the full year. A review of the results for the fourth quarter and additional details on management's outlook for 2006 will take place during the Company's scheduled fourth quarter earnings call.
2006
----------------------------------------------
Q1 Year
---------------------- ----------------------
Low High Low High
---------- ---------- ---------- ----------
Revenue (in millions) $ 444 $ 449 $ 2,150 $ 2,250
Earnings per share $ 0.34 $ 0.35 $ 1.72 $ 1.87
Georgia implementation
costs (0.11) (0.09) (a) (a)
SFAS No. 123R (0.04) (0.04) (0.15) (0.15)
US Script (0.02) (0.01) 0.04 0.06
---------- ---------- ---------- ----------
Adjusted earnings per
share $ 0.17 $ 0.21 $ 1.61 $ 1.78
========== ========== ========== ==========
(a) Georgia effective April 1, 2006
Conference Call As previously announced, the Company will host a conference call today, February February: see month. 7, 2006, at 8:30 a.m. (Eastern Time) to review the financial results for the quarter and year ended December 31, 2005, and to discuss its business outlook. Michael F. Neidorff and Karey L. Witty 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 Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , 706-679-8592 from abroad, or via a live Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the 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 February 21, 2006 at the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. 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 3978030. About Centene Corporation Centene Corporation provides multi-line managed care programs and related services to individuals receiving benefits under Medicaid, including Supplemental Security Income Supplemental Security Income A Social Security program established to help the blind, disabled, and poor. (SSI), and 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). The Company operates health plans in Indiana, Kansas, Missouri Missouri, state, United States Missouri (mĭz  r`ē, –ə), one of the midwestern states of the United States. , New Jersey, Ohio, Texas and
Wisconsin. In addition, the Company contracts with other healthcare
organizations to provide Specialty Services including behavioral health,
disease management, nurse triage triageDivision 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 benefit management A Pharmacy Benefit Manager (PBM) is a third party administrator of prescription drug programs. They are primarily responsible for processing and paying prescription drug claims. and treatment compliance. Information regarding Centene is available via the Internet at www.centene.com. The information provided in the second, third and fourth paragraphs immediately following the bulleted bul·let·ed adj. Printing Highlighted or set off with bullets: a bulleted list. listings under "Additional Highlights," the second bulleted listing under "Statement of Earnings Highlights," and the paragraphs under "Outlook" above contain forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that relate to future events and future financial performance of Centene. These forward-looking statements represent the Company's estimates as of February 7, 2006. Subsequent events and developments may cause the Company's estimates to change. The Company disclaims any obligation to update this forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. 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 reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. , 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 Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. 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 This article is a list of major epidemics. Worldwide Pandemics
2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created , cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. or suspension of Centene's Medicaid managed care contracts by state governments would also negatively affect Centene. In addition, the actual effect of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123R on Centene's earnings per share may vary significantly due to changes in its future stock-based compensation strategy, stock price volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the , forfeitures and employee stock option exercise behavior.
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31,
---------------------
2005 2004
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $147,358 $84,105
Premium and related receivables, net of
allowances of $343 and $462, respectively 44,108 31,475
Short-term investments, at fair value
(amortized cost $56,863 and $94,442,
respectively) 56,700 94,283
Other current assets 24,439 14,429
--------- ---------
Total current assets 272,605 224,292
Long-term investments, at fair value (amortized
cost $126,039 and $117,177, respectively) 123,661 116,787
Restricted deposits, at fair value (amortized
cost $22,821 and $22,295, respectively) 22,555 22,187
Property, software and equipment, net 67,199 43,248
Goodwill 157,278 101,631
Other intangible assets, net 17,368 14,439
Other assets 7,364 5,350
--------- ---------
Total assets $668,030 $527,934
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Medical claims liabilities $170,514 $165,980
Accounts payable and accrued expenses 29,790 31,737
Unearned revenue 13,648 3,956
Current portion of long-term debt and
notes payable 699 486
--------- ---------
Total current liabilities 214,651 202,159
Long-term debt 92,448 46,973
Other liabilities 8,883 7,490
--------- ---------
Total liabilities 315,982 256,622
Stockholders' equity:
Common stock, $.001 par value; authorized
100,000,000 shares; issued and outstanding
42,988,230 and 41,316,122 shares,
respectively 43 41
Additional paid-in capital 191,840 165,391
Accumulated other comprehensive income:
Unrealized loss on investments, net of tax (1,754 ) (407)
Retained earnings 161,919 106,287
--------- ---------
Total stockholders' equity 352,048 271,312
--------- ---------
Total liabilities and stockholders'
equity $668,030 $527,934
========= =========
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except share data)
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
--------------------- ----------------------
2005 2004 2005 2004
--------------------- ----------------------
(Unaudited)
Revenues:
Premium $416,872 $286,117 $1,491,899 $991,673
Service 6,346 1,947 13,965 9,267
----------- --------- ----------- ----------
Total revenues 423,218 288,064 1,505,864 1,000,940
----------- --------- ----------- ----------
Expenses:
Medical costs 345,888 229,756 1,226,909 800,476
Cost of services 2,278 1,916 5,851 8,065
General and
administrative
expenses 54,639 38,948 193,913 127,863
----------- --------- ----------- ----------
Total operating
expenses 402,805 270,620 1,426,673 936,404
----------- --------- ----------- ----------
Earnings from
operations 20,413 17,444 79,191 64,536
Other income (expense):
Investment and other
income 3,194 1,902 10,655 6,431
Interest expense (1,604) (363) (3,990) (680)
----------- --------- ----------- ----------
Earnings before income
taxes 22,003 18,983 85,856 70,287
Income tax expense 8,137 6,973 30,224 25,975
----------- --------- ----------- ----------
Net earnings $13,866 $12,010 $55,632 $44,312
=========== ========= =========== ==========
Earnings per share:
Basic earnings per
common share $0.32 $0.29 $1.31 $1.09
Diluted earnings per
common share $0.31 $0.27 $1.24 $1.02
Weighted average number of
shares outstanding:
Basic 42,885,900 41,199,463 42,312,522 40,820,909
Diluted 44,812,159 44,309,636 45,027,633 43,616,445
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended
December 31,
----------------------
2005 2004
---------- ----------
Cash flows from operating activities:
Net earnings $55,632 $44,312
Adjustments to reconcile net earnings to net
cash provided by operating activities--
Depreciation and amortization 13,069 10,014
Tax benefits related to stock options 6,469 3,316
Stock compensation expense 4,974 650
Loss (gain) on sale of investments 70 (138)
Loss on disposal of property and
equipment 454 --
Deferred income taxes 1,786 (1,638)
Changes in assets and liabilities--
Premium and related receivables (10,305) (425)
Other current assets (6,177) (786)
Other assets (525) (728)
Medical claims liabilities 4,534 34,501
Unearned revenue 8,182 283
Accounts payable and accrued expenses (4,215) 9,951
Other operating activities 100 93
--------- ---------
Net cash provided by operating
activities 74,048 99,405
--------- ---------
Cash flows from investing activities:
Purchase of property, software and equipment (26,909) (25,009)
Purchase of investments (150,444) (254,358)
Sales and maturities of investments 176,387 243,623
Acquisitions, net of cash acquired (55,485) (86,739)
--------- ---------
Net cash used in investing activities (56,451) (122,483)
--------- ---------
Cash flows from financing activities:
Proceeds from exercise of stock options 5,621 4,066
Proceeds from borrowings 45,000 45,860
Reduction of long-term debt and notes payable (4,552) (6,596)
Other financing activities (413) (493)
--------- ---------
Net cash provided by financing
activities 45,656 42,837
--------- ---------
Net increase in cash and cash
equivalents 63,253 19,759
--------- ---------
Cash and cash equivalents, beginning of period 84,105 64,346
--------- ---------
Cash and cash equivalents, end of period $147,358 $84,105
========= =========
Interest paid $3,291 $494
Income taxes paid $31,287 $20,518
Supplemental schedule of non-cash investing and
financing activities:
Common stock issued for acquisitions $8,991 $--
Property acquired under capital leases $5,026 $--
CENTENE CORPORATION
SUPPLEMENTAL FINANCIAL DATA
Q4 Q3 Q2 Q1
2005 2005 2005 2005
--------- --------- --------- ---------
MEMBERSHIP
Medicaid Managed Care:
Indiana 193,300 176,300 152,800 149,900
Kansas 113,300 107,600 103,000 94,900
Missouri 36,000 37,300 39,900 41,300
New Jersey 56,500 50,900 52,900 52,700
Ohio 58,700 58,100 59,600 23,900
Texas 242,000 243,600 243,800 243,700
Wisconsin 172,100 173,900 173,400 170,900
--------- --------- --------- ---------
TOTAL 871,900 847,700 825,400 777,300
========= ========= ========= =========
Medicaid 681,100 657,500 637,300 588,100
SCHIP 175,900 176,900 176,200 178,500
SSI 14,900 13,300 11,900 10,700
--------- --------- --------- ---------
TOTAL 871,900 847,700 825,400 777,300
========= ========= ========= =========
Specialty Services:
Arizona 94,700 94,300 - -
Kansas 38,800 37,500 37,100 35,400
--------- --------- --------- ---------
TOTAL 133,500 131,800 37,100 35,400
========= ========= ========= =========
REVENUE PER MEMBER(a) $152.48 $147.73 $143.41 $142.15
CLAIMS(a)
Period-end inventory 255,000 206,900 195,500 227,700
Average inventory 153,500 148,300 170,300 191,900
Period-end inventory per
member 0.29 0.24 0.24 0.29
(a) Revenue per member and claims information are presented for the
Medicaid Managed Care segment.
DAYS IN CLAIMS PAYABLE(b) 45.4 41.4 49.5 59.7
(b) Days in Claims Payable is a calculation of Medical Claims
Liabilities at the end of the period divided by average claims
expense per calendar day for such period.
CASH AND INVESTMENTS (in millions)
Regulated $322.6 $305.1 $260.5 $295.0
Unregulated 27.7 27.7 27.4 42.1
TOTAL $350.3 $332.8 $287.9 $337.1
========= ========= ========= =========
ANNUALIZED RETURN
ON EQUITY (c) 16.2% 14.9% 20.0% 20.5%
(c) Annualized Return on Equity is calculated as follows: (net income
for quarter x 4) divided by ((beginning of period equity + end
of period equity) divided by 2).
HEALTH BENEFITS RATIO BY CATEGORY:
Three Months Twelve Months
Ended Dec. 31, Ended Dec. 31,
--------------- -----------------
2005 2004 2005 2004
--------------- -----------------
Medicaid and SCHIP 82.1% 80.2% 81.7% 80.4%
SSI 105.4 84.7 97.5 93.8
Specialty Services 85.0 - 88.1 -
GENERAL AND ADMINISTRATIVE EXPENSE RATIO BY BUSINESS SEGMENT:
Three Months Twelve Months
Ended Dec. 31, Ended Dec. 31,
------------------ ---------------
2005 2004 2005 2004
------------------ ---------------
Medicaid Managed Care 10.3% 11.4% 10.5% 10.7%
Specialty Services 30.3 53.7 35.4 52.3
MEDICAL CLAIMS LIABILITIES
(In thousands)
Changes in medical claims liabilities during 2005 are summarized as
follows:
Balance, January 1, 2005 $165,980
Acquisitions --
Incurred related to:
Current period 1,244,600
Prior period (17,691)
-----------
Total incurred 1,226,909
-----------
Paid related to:
Current period 1,075,204
Prior period 147,171
-----------
Total paid 1,222,375
-----------
Balance, December 31, 2005 $170,514
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Centene's claims reserving process utilizes a consistent actuarial
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.
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