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    CENTENE CORPORATION REPORTS FIRST QUARTER 2024 RESULTS

    4/26/24 6:00:00 AM ET
    $CNC
    Medical Specialities
    Health Care
    Get the next $CNC alert in real time by email

    -- Diluted EPS of $2.16; Adjusted Diluted EPS of $2.26 --

    -- Increases 2024 Full Year Guidance --

    • 2024 adjusted diluted EPS of $2.26, up over 7% from $2.11 in the first quarter of 2023.
    • Increases 2024 full year adjusted diluted EPS guidance by $0.10 to greater than $6.80.
    • Premium and service revenues of $36.3 billion in the first quarter of 2024. Increases 2024 full year premium and service revenue guidance by $1.0 billion.
    • Membership increase of 41% in Marketplace, compared to the first quarter of 2023.

    ST. LOUIS, April 26, 2024 /PRNewswire/ -- Centene Corporation (NYSE:CNC) ("the Company") announced today its financial results for the first quarter ended March 31, 2024. In summary, the 2024 first quarter results were as follows:

    Total revenues (in millions)

    $             40,407



    Premium and service revenues (in millions)

    $             36,337



    Health benefits ratio

    87.1 %



    SG&A expense ratio

    8.9 %



    Adjusted SG&A expense ratio (1)

    8.7 %



    GAAP diluted EPS

    $                  2.16



    Adjusted diluted EPS (1)

    $                  2.26



    Total cash flow used in operations (in millions)

    $                  (456)















    (1)

    Represents a non-GAAP financial measure. A full reconciliation of the adjusted diluted earnings per share (EPS) and adjusted selling, general and administrative (SG&A) expenses is shown in the Non-GAAP Financial Presentation section of this release.

    "Centene's first quarter results demonstrate the strength of our diversified platform. We are pleased to raise full year 2024 guidance as we look to maximize the positive momentum being generated by our core businesses. We are executing against our strategic plans for growth and increasing access to affordable, high-quality healthcare for our members and the communities we serve," said Chief Executive Officer of Centene, Sarah M. London.

    Other Events

    • On April 1, 2024, Centene's Oklahoma subsidiary, Oklahoma Complete Health, commenced the statewide contracts to provide managed care for the SoonerSelect and SoonerSelect Children's Specialty Plan programs. The new contracts have a one-year term with five, one-year renewal options.



    • Also in April, the state of Florida announced its intent to award contracts to five health plans, including Centene's Florida subsidiary, Sunshine Health, as a result of the reprocurement of the Statewide Medicaid Managed Care program.



    • Centene's Michigan subsidiary, Meridian in Michigan, was selected in April by the Michigan Department of Health and Human Services to continue to serve as a Medicaid health plan for the Comprehensive Health Care Program. The proposed Medicaid contracts are expected to begin on October 1, 2024, and run through September 30, 2029, with three, one-year optional extensions.

    Awards & Community Engagement

    • In April, Centene was recognized by Forbes as one of the Best Employers for Diversity 2024, as well as by Newsweek, which named Centene one of America's Greatest Workplaces for Mental Wellbeing 2024.



    • In March, Centene's Kansas subsidiary, Sunflower Health Plan, and Centene Foundation announced a $160,000 grant to the Hays Medical Center Foundation to provide on-demand and scheduled telepsychiatry services at Hays Medical Center. The partnership will bolster capacity for telehealth behavioral health services across central and western Kansas by providing 24-hour access to board-certified psychiatrists, alleviating pressure on rural emergency rooms.



    • In March, Fortune recognized Centene as one of America's Most Innovative Companies for 2024.



    • In February, Centene's Michigan subsidiary, Meridian in Michigan, and the Centene Foundation announced a partnership with the Wayne Mobile Health Unit (WMHU) to improve maternal and infant health and broadly support the WMHU's community outreach efforts to deliver preventative health services directly in neighborhoods, at homes and in workplaces.

    Membership

    The following table sets forth membership by line of business:



    March 31,



    2024



    2023

    Traditional Medicaid (1)

    11,750,000



    14,521,100

    High Acuity Medicaid (2)

    1,547,600



    1,801,200

    Total Medicaid

    13,297,600



    16,322,300

    Commercial Marketplace

    4,348,800



    3,093,600

    Commercial Group

    422,700



    437,200

    Total Commercial

    4,771,500



    3,530,800

    Medicare (3)

    1,146,800



    1,343,800

    Medicare PDP

    6,438,900



    4,459,300

    Total at-risk membership

    25,654,800



    25,656,200

    TRICARE eligibles

    2,768,000



    2,799,300

    Total

    28,422,800



    28,455,500















    (1)

    Membership includes Temporary Assistance for Needy Families (TANF), Medicaid Expansion, Children's Health Insurance

    Program (CHIP), Foster Care and Behavioral Health.

    (2)

    Membership includes Aged, Blind, or Disabled (ABD), Intellectual and Developmental Disabilities (IDD), Long-Term

    Services and Supports (LTSS) and Medicare-Medicaid Plans (MMP) Duals.

    (3)

    Membership includes Medicare Advantage and Medicare Supplement.

     

    Premium and Service Revenues

    The following table sets forth supplemental revenue information ($ in millions):





    Three Months Ended March 31,





    2024



    2023



    % Change

    Medicaid

    $         21,460



    $         22,227



    (3) %

    Commercial

    7,751



    5,252



    48 %

    Medicare (1)

    5,935



    5,876



    1 %

    Other

    1,191



    1,597



    (25) %

    Total premium and service revenues

    $         36,337



    $         34,952



    4 %



















    (1)

    Medicare includes Medicare Advantage, Medicare Supplement, D-SNPs and Medicare Prescription Drug Plan (PDP).

     

    Statement of Operations: Three Months Ended March 31, 2024

    • For the first quarter of 2024, premium and service revenues increased 4% to $36.3 billion from $35.0 billion in the comparable period of 2023. The increase was driven by membership growth in the Marketplace business due to strong product positioning as well as overall market growth, partially offset by recent divestitures in the Other segment and lower Medicaid membership primarily due to redeterminations.



    • Health benefits ratio (HBR) of 87.1% for the first quarter of 2024 represents an increase from 87.0% in the comparable period in 2023.



    • The SG&A expense ratio was 8.9% for the first quarter of 2024, compared to 8.6% in the first quarter of 2023. The adjusted SG&A expense ratio was 8.7% for the first quarter of 2024, compared to 8.5% in the first quarter of 2023. The increases were driven by growth in the Marketplace business, which operates at a meaningfully higher SG&A ratio as compared to Medicaid, along with Medicare distribution costs. The increases were partially offset by ongoing SG&A reduction initiatives and the divestiture of Circle Health Group (Circle Health), which operated at a higher SG&A expense ratio. The SG&A expense ratio in the first quarter of 2024 was also impacted by higher acquisition and divestiture related costs in addition to severance costs due to a restructuring.



    • The effective tax rate was 21.4% for the first quarter of 2024, compared to 18.8% in the first quarter of 2023. The effective tax rate for the first quarter of 2024 reflects tax effects of the Circle Health divestiture. The effective tax rate for the first quarter of 2023 reflects the tax effects of the distribution of long-term stock awards to the estate of the Company's former CEO as well as the Magellan Specialty Health gain. For the first quarter of 2024, our effective tax rate on adjusted earnings was 24.6%, compared to 24.3% in the first quarter of 2023.



    • Cash flow used in operations for the first quarter of 2024 was $456 million, primarily driven by net earnings, more than offset by timing of experience rebate payments, a delay in premium payments from one of our state partners subsequently received in April 2024 and pharmacy rebate remittance timing as we transitioned to the new third-party pharmacy benefits manager (PBM), which commenced in January 2024.

    Balance Sheet

    At March 31, 2024, the Company had cash, investments and restricted deposits of $37.5 billion and maintained $205 million of cash and cash equivalents in its unregulated entities. Medical claims liabilities totaled $18.1 billion. The Company's days in claims payable was 53 days, a decrease of one day as compared to the fourth quarter of 2023 and the first quarter of 2023. The decrease of one day was driven by an increase from the timing of claims receipts due to impacts of the Change Healthcare cybersecurity incident, more than offset by a decrease in outstanding pharmacy payables and the acceleration of state-directed payments. Total debt was $18.0 billion, which included $350 million of borrowings on the $2.0 billion Revolving Credit Facility at quarter end.

    During the first quarter of 2024, the Company repurchased 681 thousand shares for $51 million. In April 2024, the Company repurchased an additional 2.7 million shares for $200 million. As of April 26, 2024, $5.0 billion remains available under the Company's stock repurchase program.

    Outlook

    The Company is updating its 2024 diluted EPS guidance floor to greater than $5.94 and its 2024 adjusted diluted EPS guidance floor to greater than $6.80. The Company's annual guidance for 2024 is as follows and will be discussed further on our conference call:







    Full Year 2024



    GAAP diluted EPS                                                               



    > $5.94



    Adjusted diluted EPS (1)



    > $6.80







    (1)

    A full reconciliation of adjusted diluted EPS is shown in the Non-GAAP

    Financial Presentation section of this release.











    Full Year 2024









    Low



    High 



    Total revenues (in billions)



    $   147.5



    $   150.5



    Premium and service revenues (in billions)



    $   135.5



    $   138.5



    HBR



    87.3 %



    87.9 %



    SG&A expense ratio



    8.4 %



    9.0 %



    Adjusted SG&A expense ratio (2)



    8.4 %



    9.0 %



    Effective tax rate



    22.9 %



    23.9 %



    Adjusted effective tax rate (3)



    24.1 %



    25.1 %



    Diluted shares outstanding (in millions)



    522.2



    525.2





















    (2)

    Represents a non-GAAP financial measure. Adjusted SG&A expense ratio

    excludes acquisition and divestiture related expenses and severance costs

    due to a restructuring of approximately $85 million to $95 million.

    (3)

    Represents a non-GAAP financial measure. Adjusted effective tax rate excludes

    income tax effects of adjustments of approximately $200 million to $210 million.

     

    Conference Call

    As previously announced, the Company will host a conference call Friday, April 26, 2024, at 8:30 a.m. ET to review the financial results for the first quarter ended March 31, 2024.

    Investors and other interested parties are invited to listen to the conference call by dialing 1-877-883-0383 in the U.S. and Canada; +1-412-902-6506 from abroad, including the following Elite Entry Number: 9229812 to expedite caller registration; or via a live, audio webcast on the Company's website at www.centene.com, under the Investors section.

    A webcast replay will be available for on-demand listening shortly following the completion of the call for the next 12 months or until 11:59 p.m. ET on Friday, April 25, 2025, at the aforementioned URL. In addition, a digital audio playback will be available until 9 a.m. ET on Friday, May 3, 2024, by dialing 1-877-344-7529 in the U.S., 1-855-669-9658 in Canada, or +1-412-317-0088 from abroad, and entering access code 7730668.

    Non-GAAP Financial Presentation

    The Company is providing certain non-GAAP financial measures in this release as the Company believes that these figures are helpful in allowing investors to more accurately assess the ongoing nature of the Company's operations and measure the Company's performance more consistently across periods. The Company uses the presented non-GAAP financial measures internally in evaluating the Company's performance and for planning purposes, by allowing management to focus on period-to-period changes in the Company's core business operations, and in determining employee incentive compensation. Therefore, the Company believes that this information is meaningful in addition to the information contained in the GAAP presentation of financial information. The Company strongly encourages investors to review its consolidated financial statements and publicly filed reports in their entirety and cautions investors that the non-GAAP financial measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

    The Company believes the presentation of non-GAAP financial measures that excludes amortization of acquired intangible assets, acquisition and divestiture related expenses, as well as other items, allows investors to develop a more meaningful understanding of the Company's core performance over time.

    The tables below provide reconciliations of non-GAAP items ($ in millions, except per share data):



    Three Months Ended March 31,



    2024



    2023

    GAAP net earnings attributable to Centene

    $                1,163



    $                1,130

    Amortization of acquired intangible assets

    173



    183

    Acquisition and divestiture related expenses

    61



    23

    Other adjustments (1)

    (99)



    (53)

    Income tax effects of adjustments (2)

    (81)



    (114)

    Adjusted net earnings

    $                1,217



    $                1,169

     

    (1)  

    Other adjustments include the following pre-tax items:









      2024:















    (a)

    for the three months ended March 31, 2024: net gain on the previously reported divestiture of Magellan Specialty Health due to the achievement of contingent consideration of $81 million, net gain on the sale of property, subject to closing costs, of $24 million, Health Net Federal Services asset impairment due to the 2024 final ruling on the TRICARE Managed Care Support Contracts of $14 million, gain on the previously reported divestiture of Circle Health of $10 million, severance costs due to a restructuring of $9 million and gain on the previously reported divestiture of HealthSmart due to the finalization of working capital adjustments of $7 million:









      2023:















    (a)

    for the three months ended March 31, 2023: Magellan Specialty Health divestiture gain of $79 million and real estate impairments of $26 million.







    (2)  

    The income tax effects of adjustments are based on the effective income tax rates applicable to each adjustment. The three months ended March 31, 2023, includes a one-time income tax benefit of $69 million resulting from the distribution of long-term stock awards to the estate of the Company's former CEO.

     



    Three Months Ended March 31,



    Annual Guidance

    December 31, 2024



    2024



    2023



    GAAP diluted earnings per share attributable to Centene

    $                  2.16



    $                  2.04



    greater than $5.94

    Amortization of acquired intangible assets

    0.32



    0.33



    ~$1.32

    Acquisition and divestiture related expenses

    0.11



    0.04



    ~$0.12

    Other adjustments (3)

    (0.18)



    (0.09)



    ~$(0.18)

    Income tax effects of adjustments (4)

    (0.15)



    (0.21)



    ~$(0.40)

    Adjusted diluted EPS

    $                  2.26



    $                  2.11



    greater than $6.80

     

    (3)

    Other adjustments include the following pre-tax items:











    2024:

















    (a)

    for the three months ended March 31, 2024: net gain on the previously reported divestiture of Magellan Specialty Health due to the achievement of contingent consideration of $0.15 ($0.11 after-tax), net gain on the sale of property, subject to closing costs, of $0.04 ($0.03 after-tax), Health Net Federal Services asset impairment due to the 2024 final ruling on the TRICARE Managed Care Support Contracts of $0.03 ($0.02 after-tax), gain on the previously reported divestiture of Circle Health of $0.02 ($0.10 after-tax), severance costs due to a restructuring of $0.01 ($0.01 after-tax) and gain on the previously reported divestiture of HealthSmart due to the finalization of working capital adjustments of $0.01 ($0.01 after-tax);













    (b)

    for the year ended December 31, 2024, an estimated: $0.15 ($0.11 after-tax) net gain on the previously reported divestiture of Magellan Specialty Health due to the achievement of contingent consideration, $0.04 ($0.03 after-tax) net gain on the sale of property, subject to closing costs,, $0.03 ($0.02 after-tax) Health Net Federal Services asset impairment due to the 2024 final ruling on the TRICARE Managed Care Support Contracts, $0.02 ($0.10 after-tax) gain on the previously reported divestiture of Circle Health, $0.01 ($0.01 after-tax) severance costs due to a restructuring and $0.01 ($0.01 after-tax) gain on the previously reported divestiture of HealthSmart due to the finalization of working capital adjustments.











    2023:

















    (a)

    for the three months ended March 31, 2023: Magellan Specialty Health divestiture gain of impairments of $0.14 ($0.12 after-tax) and real estate impairments of $0.05 ($0.04 after-tax).









    (4)

    The income tax effects of adjustments are based on the effective income tax rates applicable to each adjustment. The three months ended March 31, 2023, include a one-time tax benefit of $0.13 resulting from the distribution of long-term stock awards to the estate of the Company's former CEO.

     



    Three Months Ended March 31,



    2024



    2023

    GAAP selling, general and administrative expenses

    $                3,218



    $                3,011

    Less:







    Acquisition and divestiture related expenses

    61



    23

    Restructuring costs

    9



    —

    Real estate optimization

    —



    6

    Adjusted selling, general and administrative expenses

    $                3,148



    $                2,982

     

    To provide clarity on the way management defines certain key metrics and ratios, the Company is providing a description of how the metric or ratio is calculated as follows:

    • Health Benefits Ratio (HBR) (GAAP) = Medical costs divided by premium revenues.



    • SG&A Expense Ratio (GAAP) = Selling, general and administrative expenses divided by premium and service revenues.



    • Adjusted SG&A Expense Ratio (non-GAAP) = Adjusted selling, general and administrative expenses divided by premium and service revenues.



    • Adjusted Effective Tax Rate (non-GAAP) = GAAP income tax expense (benefit) excluding the income tax effects of adjustments to net earnings divided by adjusted earnings (loss) before income tax expense.



    • Adjusted Net Earnings (non-GAAP) = Net earnings less amortization of acquired intangible assets, less acquisition and divestiture related expenses, as well as adjustments for other items, net of the income tax effect of the adjustments.



    • Adjusted Diluted EPS (non-GAAP) = Adjusted net earnings divided by weighted average common shares outstanding on a fully diluted basis.



    • Debt to Capitalization Ratio (GAAP) = Total debt, divided by total debt plus total stockholder's equity.



    • Average Medical Claims Expense (GAAP) = Medical costs for the period divided by number of days in such period. Average medical claims expense is most often calculated for the quarterly reporting period.



    • Days in Claims Payable (GAAP) = Medical claims liabilities divided by average medical claims expense. Days in claims payable is most often calculated for the quarterly reporting period.

    In addition, the following terms are defined as follows:

    • State-directed Payments: Payments directed by a state that have minimal risk but are administered as a premium adjustment. These payments are recorded as premium revenue and medical costs at close to a 100% HBR. In many instances, the Company has little visibility to the timing of these payments until they are paid by a state.



    • Pass-through Payments: Non-risk supplemental payments from a state that the Company is required to pass through to designated contracted providers. These payments are recorded as premium tax revenue and premium tax expense.

    About Centene Corporation 

    Centene Corporation, a Fortune 500 company, is a leading healthcare enterprise that is committed to helping people live healthier lives. The Company takes a local approach – with local brands and local teams – to provide fully integrated, high-quality, and cost-effective services to government-sponsored and commercial healthcare programs, focusing on under-insured and uninsured individuals. Centene offers affordable and high-quality products to nearly 1 in 15 individuals across the nation, including Medicaid and Medicare members (including Medicare Prescription Drug Plans) as well as individuals and families served by the Health Insurance Marketplace and the TRICARE program. The Company also contracts with other healthcare and commercial organizations to provide a variety of specialty services focused on treating the whole person. Centene focuses on long-term growth and value creation as well as the development of its people, systems and capabilities so that it can better serve its members, providers, local communities and government partners.

    Centene uses its investor relations website to publish important information about the Company, including information that may be deemed material to investors. Financial and other information about Centene is routinely posted and is accessible on Centene's investor relations website, https://investors.centene.com.

    Forward-Looking Statements

    All statements, other than statements of current or historical fact, contained in this press release are forward-looking statements. Without limiting the foregoing, forward-looking statements often use words such as "guidance," "believe," "anticipate," "plan," "expect," "estimate," "intend," "seek," "target," "goal," "may," "will," "would," "could," "should," "can," "continue" and other similar words or expressions (and the negative thereof). Centene Corporation and its subsidiaries (Centene, the Company, our or we) intends such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we are including this statement for purposes of complying with these safe-harbor provisions. In particular, these statements include, without limitation, statements about our future operating or financial performance, market opportunity, competition, expected contract start dates and terms, expected activities in connection with completed and future acquisitions and dispositions, our investments, and the adequacy of our available cash resources. These forward-looking statements reflect our current views with respect to future events and are based on numerous assumptions and assessments made by us in light of our experience and perception of historical trends, current conditions, business strategies, operating environments, future developments, and other factors we believe appropriate. By their nature, forward-looking statements involve known and unknown risks and uncertainties and are subject to change because they relate to events and depend on circumstances that will occur in the future, including economic, regulatory, competitive, and other factors that may cause our or our 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. These statements are not guarantees of future performance and are subject to risks, uncertainties, and assumptions. All forward-looking statements included in this press release are based on information available to us on the date hereof. Except as may be otherwise required by law, we undertake no obligation to update or revise the forward-looking statements included in this press release, whether as a result of new information, future events, or otherwise, after the date hereof. You should not place undue reliance on any forward-looking statements, as actual results may differ materially from projections, estimates, or other forward-looking statements due to a variety of important factors, variables, and events including, but not limited to: our ability to design and price products that are competitive and/or actuarially sound including but not limited to any impacts resulting from Medicaid redeterminations; our ability to maintain or achieve improvement in the Centers for Medicare and Medicaid Services (CMS) Star ratings and maintain or achieve improvement in other quality scores in each case that can impact revenue and future growth; our ability to accurately predict and effectively manage health benefits and other operating expenses and reserves, including fluctuations in medical utilization rates; competition, including for providers, broker distribution networks, contract reprocurements and organic growth; our ability to adequately anticipate demand and provide for operational resources to maintain service level requirements; our ability to manage our information systems effectively; disruption, unexpected costs, or similar risks from business transactions, including acquisitions, divestitures, and changes in our relationships with third parties; impairments to real estate, investments, goodwill, and intangible assets; changes in senior management, loss of one or more key personnel or an inability to attract, hire, integrate and retain skilled personnel; membership and revenue declines or unexpected trends; rate cuts or other payment reductions or delays by governmental payors and other risks and uncertainties affecting our government businesses; changes in healthcare practices, new technologies, and advances in medicine; increased healthcare costs; inflation and interest rates; the effect of social, economic, and political conditions and geopolitical events, including as a result of changes in U.S. presidential administrations or Congress;  changes in market conditions; changes in federal or state laws or regulations, including changes with respect to income tax reform or government healthcare programs as well as changes with respect to the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act (collectively referred to as the ACA) and any regulations enacted thereunder; uncertainty concerning government shutdowns, debt ceilings or funding; tax matters; disasters, climate-related incidents, acts of war or aggression or major epidemics; changes in expected contract start dates and terms; changes in provider, broker, vendor, state, federal, foreign, and other contracts and delays in the timing of regulatory approval of contracts, including due to protests; the expiration, suspension, or termination of our contracts with federal or state governments (including, but not limited to, Medicaid, Medicare or other customers); the difficulty of predicting the timing or outcome of legal or regulatory audits, investigations, proceedings or matters including, but not limited to, our ability to resolve claims and/or allegations made by states with regard to past practices on acceptable terms, or at all, or whether additional claims, reviews or investigations will be brought by states, the federal government or shareholder litigants, or government investigations; challenges to our contract awards; cyber-attacks or other data security incidents; the exertion of management's time and our resources, and other expenses incurred and business changes required in connection with complying with the terms of our contracts and the undertakings in connection with any regulatory, governmental, or third party consents or approvals for acquisitions or dispositions; any changes in expected closing dates, estimated purchase price, or accretion for acquisitions or dispositions; losses in our investment portfolio; restrictions and limitations in connection with our indebtedness; a downgrade of our corporate family rating, issuer rating or credit rating of our indebtedness; the availability of debt and equity financing on terms that are favorable to us and risks and uncertainties discussed in the reports that Centene has filed with the Securities and Exchange Commission (SEC). This list of important factors is not intended to be exhaustive. We discuss certain of these matters more fully, as well as certain other factors that may affect our business operations, financial condition, and results of operations, in our filings with the SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Due to these important factors and risks, we cannot give assurances with respect to our future performance, including without limitation our ability to maintain adequate premium levels or our ability to control our future medical and selling, general and administrative costs. The guidance in this press release is only effective as of the date given, April 26, 2024, and will not be updated or affirmed unless and until we publicly announce updated or affirmed guidance.

     

    CENTENE CORPORATION AND SUBSIDIARIES

    CONSOLIDATED BALANCE SHEETS

    (In millions, except shares in thousands and per share data in dollars)





    March 31,

    2024



    December 31, 2023



    (Unaudited)





    ASSETS







    Current assets:







    Cash and cash equivalents

    $                  17,585



    $                  17,193

    Premium and trade receivables

    16,824



    15,532

    Short-term investments

    2,082



    2,459

    Other current assets

    1,957



    5,572

    Total current assets

    38,448



    40,756

    Long-term investments

    16,496



    16,286

    Restricted deposits

    1,383



    1,386

    Property, software and equipment, net

    1,988



    2,019

    Goodwill

    17,558



    17,558

    Intangible assets, net

    5,928



    6,101

    Other long-term assets

    823



    535

    Total assets

    $                  82,624



    $                  84,641

    LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY







    Current liabilities:







    Medical claims liability

    $                  18,109



    $                  18,000

    Accounts payable and accrued expenses

    12,130



    16,420

    Return of premium payable

    1,751



    1,462

    Unearned revenue

    681



    715

    Current portion of long-term debt

    113



    119

    Total current liabilities

    32,784



    36,716

    Long-term debt

    17,887



    17,710

    Deferred tax liability

    734



    641

    Other long-term liabilities

    4,155



    3,618

    Total liabilities

    55,560



    58,685

    Commitments and contingencies







    Redeemable noncontrolling interests

    16



    19

    Stockholders' equity:







    Preferred stock, $0.001 par value; authorized 10,000 shares; no shares issued or outstanding at

    March 31, 2024 and December 31, 2023

    —



    —

    Common stock, $0.001 par value; authorized 800,000 shares; 619,173 issued and 536,383 outstanding

    at March 31, 2024, and 615,291 issued and 534,484 outstanding at December 31, 2023

    1



    1

    Additional paid-in capital

    20,388



    20,304

    Accumulated other comprehensive (loss)

    (630)



    (652)

    Retained earnings

    13,206



    12,043

    Treasury stock, at cost (82,790 and 80,807 shares, respectively)

    (6,007)



    (5,856)

    Total Centene stockholders' equity

    26,958



    25,840

    Nonredeemable noncontrolling interest

    90



    97

    Total stockholders' equity

    27,048



    25,937

    Total liabilities, redeemable noncontrolling interests and stockholders' equity

    $                  82,624



    $                  84,641

     

    CENTENE CORPORATION AND SUBSIDIARIES

    CONSOLIDATED STATEMENTS OF OPERATIONS

    (In millions, except shares in thousands and per share data in dollars)

    (Unaudited)





    Three Months Ended March 31,



    2024



    2023

    Revenues:







    Premium

    $                  35,529



    $                  33,825

    Service

    808



    1,127

    Premium and service revenues

    36,337



    34,952

    Premium tax

    4,070



    3,937

    Total revenues

    40,407



    38,889

    Expenses:







    Medical costs

    30,932



    29,434

    Cost of services

    669



    870

    Selling, general and administrative expenses

    3,218



    3,011

    Depreciation expense

    135



    142

    Amortization of acquired intangible assets

    173



    183

    Premium tax expense

    4,161



    4,011

    Impairment

    13



    20

    Total operating expenses

    39,301



    37,671

    Earnings from operations

    1,106



    1,218

    Other income (expense):







    Investment and other income

    545



    353

    Interest expense

    (178)



    (180)

    Earnings before income tax

    1,473



    1,391

    Income tax expense

    315



    261

    Net earnings

    1,158



    1,130

    Loss attributable to noncontrolling interests

    5



    —

    Net earnings attributable to Centene Corporation

    $                    1,163



    $                    1,130









    Net earnings per common share attributable to Centene Corporation:

    Basic earnings per common share

    $                       2.17



    $                       2.05

    Diluted earnings per common share

    $                       2.16



    $                       2.04









    Weighted average number of common shares outstanding:





    Basic

    535,109



    550,779

    Diluted

    538,060



    553,845

     

    CENTENE CORPORATION AND SUBSIDIARIES

    CONSOLIDATED STATEMENTS OF CASH FLOWS

    (In millions, unaudited)





    March 31,



    2024



    2023

    Cash flows from operating activities:







    Net earnings

    $           1,158



    $           1,130

    Adjustments to reconcile net earnings to net cash (used in) provided by operating activities







    Depreciation and amortization

    308



    325

    Stock compensation expense

    70



    61

    Impairment

    13



    20

    Deferred income taxes

    104



    (159)

    (Gain) loss on divestitures, net

    (98)



    (79)

    Other adjustments, net

    (2)



    7

    Changes in assets and liabilities







    Premium and trade receivables

    (1,211)



    (1,938)

    Other assets

    (474)



    (315)

    Medical claims liabilities

    108



    759

    Unearned revenue

    (34)



    1,919

    Accounts payable and accrued expenses

    (1,411)



    1,548

    Other long-term liabilities

    1,013



    970

    Other operating activities, net

    —



    21

    Net cash (used in) provided by operating activities

    (456)



    4,269

    Cash flows from investing activities:







    Capital expenditures

    (151)



    (225)

    Purchases of investments

    (1,317)



    (1,619)

    Sales and maturities of investments

    1,441



    1,148

    Divestiture proceeds, net of divested cash

    879



    443

    Net cash provided by (used in) investing activities

    852



    (253)

    Cash flows from financing activities:







    Proceeds from long-term debt

    350



    287

    Payments and repurchases of long-term debt

    (187)



    —

    Common stock repurchases

    (151)



    (423)

    Proceeds from common stock issuances

    14



    12

    Purchase of noncontrolling interest

    —



    (58)

    Other financing activities, net

    (3)



    (1)

    Net cash provided by (used in) financing activities

    23



    (183)

    Effect of exchange rate changes on cash, cash equivalents and restricted cash

    6



    2

    Net increase in cash, cash equivalents and restricted cash and cash equivalents

    425



    3,835

    Cash, cash equivalents and restricted cash and cash equivalents, beginning of period

    17,452



    12,330

    Cash, cash equivalents and restricted cash and cash equivalents, end of period

    $         17,877



    $         16,165

    Supplemental disclosures of cash flow information:







    Interest paid

    $              155



    $              144

    Income taxes paid

    $                13



    $                11









    The following table provides a reconciliation of cash, cash equivalents and restricted cash and cash equivalents reported within the Consolidated Balance Sheets to the totals above:



    March 31,



    2024



    2023

    Cash and cash equivalents

    $         17,585



    $         15,853

    Restricted cash and cash equivalents, included in restricted deposits

    292



    312

    Total cash, cash equivalents and restricted cash and cash equivalents

    $         17,877



    $         16,165

     

    CENTENE CORPORATION

    SUPPLEMENTAL FINANCIAL DATA







    Q1



    Q4



    Q3



    Q2



    Q1





    2024



    2023



    2023



    2023



    2023

    MEMBERSHIP



















    Traditional Medicaid (1)

    11,750,000



    12,754,000



    13,470,900



    14,260,400



    14,521,100

    High Acuity Medicaid (2)

    1,547,600



    1,718,000



    1,769,600



    1,799,200



    1,801,200

    Total Medicaid

    13,297,600



    14,472,000



    15,240,500



    16,059,600



    16,322,300

    Commercial Marketplace

    4,348,800



    3,900,100



    3,681,600



    3,295,200



    3,093,600

    Commercial Group

    422,700



    427,500



    424,200



    435,000



    437,200

    Total Commercial

    4,771,500



    4,327,600



    4,105,800



    3,730,200



    3,530,800

    Medicare (3)

    1,146,800



    1,284,200



    1,310,600



    1,329,000



    1,343,800

    Medicare PDP

    6,438,900



    4,617,800



    4,539,800



    4,493,700



    4,459,300

    Total at-risk membership

    25,654,800



    24,701,600



    25,196,700



    25,612,500



    25,656,200

    TRICARE eligibles

    2,768,000



    2,773,200



    2,773,200



    2,799,300



    2,799,300

    Total

    28,422,800



    27,474,800



    27,969,900



    28,411,800



    28,455,500























    (1)  Membership includes TANF, Medicaid Expansion, CHIP, Foster Care and Behavioral Health.

    (2)  Membership includes ABD, IDD, LTSS and MMP Duals.

    (3)  Membership includes Medicare Advantage and Medicare Supplement.























    NUMBER OF EMPLOYEES

    59,900



    67,700



    67,800



    68,300



    67,200





    DAYS IN CLAIMS PAYABLE

    53



    54



    53



    52



    54























    CASH, INVESTMENTS AND RESTRICTED DEPOSITS (in millions)

    Regulated

    $        36,528



    $        36,314



    $        35,988



    $        35,799



    $        34,103

    Unregulated

    1,018



    1,010



    1,020



    1,046



    1,031

    Total

    $        37,546



    $        37,324



    $        37,008



    $        36,845



    $        35,134























    DEBT TO CAPITALIZATION

    40.0 %



    40.7 %



    41.5 %



    41.1 %



    42.1 %

     

    OPERATING RATIOS

    Three Months Ended March 31,



    2024



    2023

    HBR

    87.1 %



    87.0 %

    SG&A expense ratio

    8.9 %



    8.6 %

    Adjusted SG&A expense ratio                                                                                                     

    8.7 %



    8.5 %

     

    HBR BY PRODUCT

    Three Months Ended March 31,





    2024



    2023

    Medicaid

    90.9 %



    90.0 %

    Commercial                                                                                                                                

    73.3 %



    76.3 %

    Medicare (4)

    90.8 %



    85.2 %











    (4)  Medicare includes Medicare Advantage, Medicare Supplement, D-SNPs and Medicare PDP.

     

    MEDICAL CLAIMS LIABILITY 

    The changes in medical claims liability are summarized as follows (in millions):

    Balance, March 31, 2023



    $                      17,504

    Less: Reinsurance recoverables



    27

    Balance, March 31, 2023, net



    17,477

    Incurred related to:





    Current period



    121,837

    Prior periods



    (1,745)

    Total incurred



    120,092

    Paid related to:





    Current period



    105,925

    Prior periods



    13,871

    Total paid



    119,796

    Plus: Premium deficiency reserve



    300

    Balance, March 31, 2024, net



    18,073

    Plus: Reinsurance recoverables



    36

    Balance, March 31, 2024



    $                      18,109

    Centene's claims reserving process utilizes a consistent actuarial methodology to estimate Centene's ultimate liability. Any reduction in the "Incurred related to: Prior periods" amount may be offset as Centene actuarially determines the "Incurred related to: Current period." Centene believes it has consistently applied its claims reserving methodology. Additionally, approximately $378 million was recorded as a reduction to premium revenues resulting from development within "Incurred related to: Prior periods" due to minimum HBR and other return of premium programs.

    The amount of the "Incurred related to: Prior periods" above represents favorable development and includes the effects of reserving under moderately adverse conditions, new markets where we use a conservative approach in setting reserves during the initial periods of operations, receipts from other third party payors related to coordination of benefits and lower medical utilization and cost trends for dates of service March 31, 2023, and prior.

    Cision View original content:https://www.prnewswire.com/news-releases/centene-corporation-reports-first-quarter-2024-results-302128269.html

    SOURCE Centene Corporation

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