CENTENE CO. ST. LOUIS, Oct. 28, 2014 /PRNewswire/ -- Centene Corporation (NYSE: CNC) today announced its financial results for the quarter ended September 30, 2014. The following discussions, with the exception of cash flow information, are in the context of continuing operations. For the third quarter of 2014, we reported net earnings per diluted share of $1.34. Details of the earnings per diluted share are highlighted below:
Third Quarter
-------------
2014 2013
---- ----
Net earnings per diluted share $1.34 $0.88
Impact of Health Insurer Fee 0.15 -
Acquisition transaction costs 0.06 -
Benefit for tax adjustment
related to prior periods (0.33) -
Total, excluding above items $1.22 $0.88
===== =====
Included in the table above are the following items:
-- A $0.15 per diluted share impact for the health insurer fee related to
two states where we have not yet received signed agreements.
-- Transaction costs of $0.06 per diluted share associated with
acquisitions in the third quarter.
-- An income tax benefit of $0.33 per diluted share for periods prior to
the third quarter 2014. During the third quarter of 2014, the Internal
Revenue Service (IRS) issued final regulations related to compensation
deduction limitations applicable to certain health insurance issuers.
As a result, we no longer believe the deduction limitations apply to
Centene for 2013 and 2014. Accordingly, we reversed previously recorded
tax expense from prior periods for this item.
Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "The underlying operations performed well during the quarter, delivering over 50% revenue growth over 2013. We continue to successfully execute our growth strategy and expect performance to remain strong over the remainder of 2014."
Key financial metrics for the third quarter of 2014 are summarized as follows:
-- Quarter-end managed care membership of 3,705,300, including non-risk
membership of 303,500, an increase of 1,092,800 members, or 42% year
over year.
-- Premium and service revenues of $4.2 billion, representing 53% growth
year over year.
-- Health Benefits Ratio of 89.7%, compared to 87.8% in 2013.
-- General and Administrative expense ratio of 8.0%, compared to 9.1% in
2013.
-- Operating cash flow of $441.8 million for the third quarter of 2014.
Other Events
-- In October 2014, our subsidiary, Louisiana Healthcare Connections, was
recommended for a contract award by the Louisiana Department of Health
and Hospitals to serve Bayou Health (Medicaid) beneficiaries. The new
Bayou Health contract is expected to commence early in the first quarter
of 2015.
-- In August and September 2014, respectively, our Missouri subsidiary,
Home State Health, and our Florida subsidiary, Sunshine Health, received
accreditation from the National Committee for Quality Assurance.
-- In September 2014, Centene was added to the S&P MidCap 400 Index and the
Barron's 400 Index.
Membership
The following table sets forth the Company's membership by state for its managed care organizations:
September 30,
-------------
2014 2013
---- ----
Arizona 7,000 23,700
Arkansas 36,600 -
California 144,700 -
Florida 411,200 217,800
Georgia 382,600 314,100
Illinois 31,300 22,800
Indiana 199,500 198,400
Kansas 144,200 137,700
Louisiana 150,800 152,600
Massachusetts 46,600 23,200
Minnesota 9,500 -
Mississippi 99,300 76,900
Missouri 64,900 58,200
New Hampshire 56,600 -
Ohio 261,000 170,900
South Carolina 106,500 89,400
Tennessee 21,200 20,400
Texas 961,100 957,300
Washington 192,500 77,100
Wisconsin 74,700 72,000
------ ------
Total at-risk membership 3,401,800 2,612,500
Non-risk membership 303,500 -
-------
Total 3,705,300 2,612,500
========= =========
At September 30, 2014, the Company served 193,100 Medicaid members in Medicaid expansion programs in California, Illinois, Massachusetts, New Hampshire, Ohio and Washington included in the table above. The Company also served 195,500 members at September 30, 2014 under its behavioral health contract in Arizona, compared to 160,700 members at September 30, 2013.
The following table sets forth our membership by line of business:
September 30,
-------------
2014 2013
---- ----
Medicaid 2,578,300 1,953,300
CHIP & Foster Care 247,700 274,900
ABD, Medicare & Duals 383,400 302,000
Health Insurance Marketplace
(HIM) 76,000 -
Hybrid Programs 19,900 19,600
Long Term Care (LTC) 55,200 31,600
Correctional Services 41,300 31,100
------ ------
Total at-risk membership 3,401,800 2,612,500
Non-risk membership 303,500 -
------- ---
Total 3,705,300 2,612,500
========= =========
The following table identifies our dual eligible membership by line of business. The membership tables above include these members.
September 30,
-------------
2014 2013
---- ----
ABD 119,300 72,000
LTC 35,500 19,600
Medicare 9,800 6,100
----- -----
Total 164,600 97,700
======= ======
Statement of Operations: Three Months Ended September 30, 2014
-- For the third quarter of 2014, Premium and Service Revenues increased
53% to $4.2 billion from $2.7 billion in the third quarter of 2013. The
increase was primarily as a result of the expansions in Florida, Ohio,
Washington and Illinois, growth in the AcariaHealth business, the
addition of California and New Hampshire operations and our
participation in the Health Insurance Marketplaces.
-- Consolidated HBR for the third quarter of 2014, was 89.7%, compared to
87.8% in the same period in 2013. The HBR increase compared to 2013 is
attributable to an increase in higher acuity membership. Consolidated
HBR increased from 88.9% in the second quarter of 2014 due to an
increase in higher acuity membership.
-- The following table compares the results for new business and existing
business for the quarters ended September 30,:
2014 2013
---- ----
Premium and Service
Revenue
New business 27% 14%
Existing business 73% 86%
HBR
New business 91.4% 96.5%
Existing business 89.0% 86.3%
-- Consolidated G&A expense ratio for the third quarter of 2014 was 8.0%,
compared to 9.1% in the prior year. The year over year decrease
primarily reflects the leveraging of expenses over higher revenue in
2014.
-- Earnings from operations were $108.0 million in the third quarter of
2014 compared to $84.0 million in the third quarter of 2013. Net
earnings attributable to Centene Corporation were $81.1 million in the
third quarter of 2014. This compares to $50.3 million in the third
quarter of 2013.
-- Diluted earnings per share of $1.34, or $1.22 excluding a $(0.15) impact
associated with the health insurer fee, a $(0.06) impact from
transaction costs and a $0.33 benefit associated with the final
regulations on the deduction of compensation, compared to $0.88 in 2013.
Balance Sheet and Cash Flow
At September 30, 2014, the Company had cash, investments and restricted deposits of $2,898.6 million, including $70.3 million held by its unregulated entities. Medical claims liabilities totaled $1,588.8 million, representing 43.1 days in claims payable. Total debt was $954.9 million, which includes $140.0 million of borrowings on the $500 million revolving credit facility at quarter end. Debt to capitalization was 35.0% at September 30, 2014, excluding the $70.7 million non-recourse mortgage note. Cash flow from operations for the three months ended September 30, 2014, was $441.8 million, or 5.6 times net earnings.
A reconciliation of the Company's change in days in claims payable from the immediately preceding quarter-end is presented below:
Days in claims payable, June
30, 2014 42.9
Timing of claim payments 0.2
---
Days in claims payable,
September 30, 2014 43.1
====
Outlook
The table below depicts the Company's annual GAAP guidance for 2014.
Full Year 2014
--------------
Low High
--- ----
Premium and Service Revenues
(in millions) $15,300 $15,800
Diluted EPS $4.35 $4.50
Consolidated Health Benefits
Ratio 88.9% 89.4%
General & Administrative
expense ratio 8.2% 8.6%
Effective Tax Rate 40.0% 42.0%
Diluted Shares Outstanding (in
thousands) 60,000 60,400
The table below provides a roll-forward of diluted EPS from the Company's prior guidance to its current 2014 annual GAAP guidance.
Full Year 2014
--------------
Low High
--- ----
Prior Diluted EPS Guidance $3.70 $3.90
Increase From Improved Performance 0.14 0.09
---- ----
3.84 3.99
Tax Effect Related to Prior Years 0.24 0.24
Tax Effect Related to 2014 0.27 0.27
Revised 2014 Diluted EPS Guidance 4.35 4.50
==== ====
The 2014 guidance amounts reflect the following items:
-- We anticipate receiving an additional signed agreement for Texas in the
fourth quarter related to the Health Insurer Fee such that the Health
Insurer Fee will not have a significant impact on full year 2014
results.
-- Included in the guidance for 2014 is approximately $0.24 per diluted
share, or $14.5 million, in tax benefits resulting from the reversal of
amounts recorded in prior years. For 2014, the benefit related to the
final regulations on compensation deduction limitations is approximately
$0.27 per diluted share.
-- Acquisition transaction costs of $0.12 are included in the full year
guidance amounts.
Excluding the impact of the reversal of tax expense associated with periods prior to 2014, the Company expects its 2014 annual effective tax rate, including the fourth quarter, to be between 45% - 46%.
Conference Call
As previously announced, the Company will host a conference call Tuesday, October 28, 2014, at 8:30 A.M. (Eastern Time) to review the financial results for the third quarter ended September 30, 2014, and to discuss its business outlook. Michael F. Neidorff and William N. Scheffel will host the conference call.
Investors and other interested parties are invited to listen to the conference call by dialing 1-866-739-7850 in the U.S. and Canada; +1-412-902-6577 from abroad; or via a live, audio webcast on the Company's website at www.centene.com, under the Investors section. Or, participants can register for the conference call in advance by navigating to http://dpregister.com/10052334, to receive a dial-in number upon registration. A webcast replay will be available for on-demand listening shortly after the completion of the call for the next twelve months or until 11:59 PM (Eastern Time) on Tuesday, October 27, 2015, at the aforementioned URL. In addition, a digital audio playback will be available until 9:00 AM Eastern Time on Wednesday, November 5, 2014, by dialing 1-877-344-7529 in the U.S. and Canada, or +1-412-317-0088 from abroad, and entering access code 10052334.
Other Information
The discussion in the third bullet under the heading "Statement of Operations: Three Months Ended September 30, 2014" contains financial information for new and existing businesses. Existing businesses are primarily state markets or significant geographic expansion in an existing state or product that we have managed for four complete quarters. New businesses are primarily new state markets or significant geographic expansion in an existing state or product that conversely, we have not managed for four complete quarters.
About Centene Corporation
Centene Corporation, a Fortune 500 company, is a leading multi-line healthcare enterprise that provides programs and services to government sponsored healthcare programs, focusing on under-insured and uninsured individuals. Many receive benefits provided under Medicaid, including the State Children's Health Insurance Program (CHIP), as well as Aged, Blind or Disabled (ABD), Foster Care and Long Term Care (LTC), in addition to other state-sponsored/hybrid programs, and Medicare (Special Needs Plans). The Company operates local health plans and offers a range of health insurance solutions. It also contracts with other healthcare and commercial organizations to provide specialty services including behavioral health, care management software, correctional systems healthcare, in-home health services, life and health management, managed vision, pharmacy benefits management, specialty pharmacy and telehealth services.
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 and reserves; competition; membership and revenue projections; timing of regulatory contract approval; changes in healthcare practices; changes in federal or state laws or regulations, including the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act and any regulations enacted thereunder; changes in expected contract start dates; changes in expected closing dates, estimated purchase price and accretion for acquisitions; inflation; provider and state contract changes; new technologies; advances in medicine; 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 our Medicare or Medicaid managed care contracts by federal or state governments; the outcome of pending legal proceedings; availability of debt and equity financing, on terms that are favorable to us; and general economic and market conditions, as well as those factors disclosed in the Company's publicly filed documents.
[Tables Follow]
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
September 30, 2014 December 31, 2013
------------------ -----------------
ASSETS
Current assets:
Cash and cash equivalents of continuing
operations $1,523,596 $974,304
Cash and cash equivalents of
discontinued operations 59,376 63,769
------ ------
Total cash and cash equivalents 1,582,972 1,038,073
Premium and related receivables 685,188 428,570
Short term investments 166,993 102,126
Other current assets 319,700 217,661
Other current assets of discontinued
operations 12,858 13,743
------ ------
Total current assets 2,767,711 1,800,173
Long term investments 1,108,261 791,900
Restricted deposits 99,727 46,946
Property, software and equipment, net 424,229 395,407
Goodwill 753,060 348,432
Intangible assets, net 127,297 48,780
Other long term assets 140,429 59,357
Long term assets of discontinued
operations 25,631 38,305
------ ------
Total assets $5,446,345 $3,529,300
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Medical claims liability $1,588,798 $1,111,709
Accounts payable and accrued expenses 926,780 375,862
Unearned revenue 94,961 38,191
Current portion of long term debt 5,131 3,065
Current liabilities of discontinued
operations 18,623 30,294
------ ------
Total current liabilities 2,634,293 1,559,121
Long term debt 949,720 665,697
Other long term liabilities 80,371 60,015
Long term liabilities of discontinued
operations 411 1,028
--- -----
Total liabilities 3,664,795 2,285,861
Commitments and contingencies
Redeemable noncontrolling interest 140,499 -
Stockholders' equity:
Common stock, $.001 par value;
authorized 200,000,000 shares;
61,357,390 issued and 58,666,797
outstanding at September 30, 2014, and
58,673,215 issued and 55,319,239
outstanding at December 31, 2013 61 59
Additional paid-in capital 811,752 594,326
Accumulated other comprehensive loss (605) (2,620)
Retained earnings 896,385 731,919
Treasury stock, at cost (2,690,593 and
3,353,976 shares, respectively) (74,690) (89,643)
------- -------
Total Centene stockholders' equity 1,632,903 1,234,041
Noncontrolling interest 8,148 9,398
----- -----
Total stockholders' equity 1,641,051 1,243,439
--------- ---------
Total liabilities and stockholders'
equity $5,446,345 $3,529,300
========== ==========
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- --------------------------------
2014 2013 2014 2013
---- ---- ---- ----
Revenues:
Premium $3,780,256 $2,613,567 $10,182,201 $7,415,518
Service 378,833 112,497 1,070,036 251,290
------- ------- --------- -------
Premium and service revenues 4,159,089 2,726,064 11,252,237 7,666,808
Premium tax and health insurer
fee 192,772 69,504 583,212 264,781
------- ------ ------- -------
Total revenues 4,351,861 2,795,568 11,835,449 7,931,589
--------- --------- ---------- ---------
Expenses:
Medical costs 3,390,090 2,293,616 9,092,644 6,582,445
Cost of services 327,232 100,479 935,404 218,844
General and administrative
expenses 333,878 249,028 950,432 675,783
Premium tax expense 160,744 68,453 491,691 262,188
Health insurer fee expense 31,985 - 94,640 -
------ --- ------ ---
Total operating expenses 4,243,929 2,711,576 11,564,811 7,739,260
--------- --------- ---------- ---------
Earnings from operations 107,932 83,992 270,638 192,329
Other income (expense):
Investment and other income 5,676 4,757 17,652 13,099
Interest expense (9,282) (6,603) (24,909) (20,261)
------ ------ ------- -------
Earnings from continuing
operations, before income tax
expense 104,326 82,146 263,381 185,167
Income tax expense 26,696 32,280 106,125 72,937
------ ------ ------- ------
Earnings from continuing
operations, net of income tax
expense 77,630 49,866 157,256 112,230
Discontinued operations, net
of income tax expense
(benefit) of $(142), $(620),
$1,311, and $(970),
respectively 1,521 (952) 2,368 (1,394)
Net earnings 79,151 48,914 159,624 110,836
Noncontrolling interest (3,469) (459) (4,842) (1,023)
------ ---- ------ ------
Net earnings attributable to
Centene Corporation $82,620 $49,373 $164,466 $111,859
======= ======= ======== ========
Amounts attributable to Centene Corporation common shareholders:
Earnings from continuing
operations, net of income tax
expense $81,099 $50,325 $162,098 $113,253
Discontinued operations, net
of income tax expense
(benefit) 1,521 (952) 2,368 (1,394)
Net earnings $82,620 $49,373 $164,466 $111,859
======= ======= ======== ========
Net earnings (loss) per common share attributable to Centene Corporation:
Basic:
Continuing operations $1.38 $0.92 $2.80 $2.10
Discontinued operations 0.03 (0.02) 0.04 (0.02)
Basic earnings per common
share $1.41 $0.90 $2.84 $2.08
===== ===== ===== =====
Diluted:
Continuing operations $1.34 $0.88 $2.70 $2.02
Discontinued operations 0.02 (0.01) 0.04 (0.02)
Diluted earnings per common
share $1.36 $0.87 $2.74 $2.00
===== ===== ===== =====
Weighted average number of common shares outstanding:
Basic 58,613,484 54,679,660 57,956,152 53,863,779
Diluted 60,681,875 56,933,056 59,936,699 55,956,421
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September 30,
--------------------------------
2014 2013
---- ----
Cash flows from operating activities:
Net earnings $159,624 $110,836
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization 65,008 50,220
Stock compensation expense 34,613 27,252
Deferred income taxes (64,931) 1,626
Changes in assets and liabilities
Premium and related receivables (243,032) (58,587)
Other current assets (24,678) (19,133)
Other assets (51,625) (65,397)
Medical claims liabilities 476,414 103,895
Unearned revenue 54,000 7,976
Accounts payable and accrued
expenses 427,128 48,840
Other operating activities 21,213 4,142
------ -----
Net cash provided by operating
activities 853,734 211,670
------- -------
Cash flows from investing activities:
Capital expenditures (68,528) (46,383)
Purchases of investments (738,474) (666,016)
Sales and maturities of
investments 319,711 451,034
Investments in acquisitions, net
of cash acquired (94,154) (62,773)
------- -------
Net cash used in investing
activities (581,445) (324,138)
-------- --------
Cash flows from financing activities:
Proceeds from exercise of stock
options 5,472 7,674
Proceeds from borrowings 1,385,000 30,000
Payment of long-term debt (1,117,576) (40,842)
Proceeds from stock offering - 15,225
Excess tax benefits from stock
compensation 6,903 1,140
Common stock repurchases (5,632) (5,677)
Contribution from noncontrolling
interest 5,407 5,864
Debt issue costs (6,475) (3,587)
------ ------
Net cash provided by financing
activities 273,099 9,797
------- -----
Effect of exchange rate changes
on cash and cash equivalents (489) -
---- ---
Net increase (decrease) in cash
and cash equivalents 544,899 (102,671)
------- --------
Cash and cash equivalents,
beginning of period 1,038,073 843,952
--------- -------
Cash and cash equivalents, end
of period $1,582,972 $741,281
========== ========
Supplemental disclosures of cash flow
information:
Interest paid $17,902 $16,738
Health insurer fee paid 126,187 -
Income taxes paid 167,283 40,921
Equity issued in connection with
acquisition 190,412 75,425
CENTENE CORPORATION
SUPPLEMENTAL FINANCIAL DATA FROM CONTINUING OPERATIONS
Q3 Q2 Q1 Q4 Q3
2014 2014 2014 2013 2013
---- ---- ---- ---- ----
AT-RISK MEMBERSHIP
Managed Care:
Arizona 7,000 7,000 7,100 7,100 23,700
Arkansas 36,600 31,100 16,400 - -
California 144,700 131,100 118,100 97,200 -
Florida 411,200 313,800 230,300 222,000 217,800
Georgia 382,600 373,000 331,400 318,700 314,100
Illinois 31,300 29,500 22,400 22,300 22,800
Indiana 199,500 200,500 198,700 195,500 198,400
Kansas 144,200 146,100 145,000 139,900 137,700
Louisiana 150,800 148,600 149,800 152,300 152,600
Massachusetts 46,600 47,200 50,800 22,600 23,200
Minnesota 9,500 9,400 9,400 - -
Mississippi 99,300 97,400 85,400 78,300 76,900
Missouri 64,900 58,700 58,100 59,200 58,200
New Hampshire 56,600 39,500 37,100 33,600 -
Ohio 261,000 225,900 181,800 173,200 170,900
South Carolina 106,500 101,800 96,300 91,900 89,400
Tennessee 21,200 21,300 21,100 20,700 20,400
Texas 961,100 921,500 904,000 935,100 957,300
Washington 192,500 193,800 151,700 82,100 77,100
Wisconsin 74,700 67,300 70,800 71,500 72,000
------ ------ ------ ------ ------
Total at-risk membership 3,401,800 3,164,500 2,885,700 2,723,200 2,612,500
--------- --------- --------- --------- ---------
Non-risk membership 303,500 - - - -
------- --- --- --- ---
TOTAL 3,705,300 3,164,500 2,885,700 2,723,200 2,612,500
========= ========= ========= ========= =========
Medicaid 2,578,300 2,385,500 2,169,100 2,054,700 1,953,300
CHIP & Foster Care 247,700 261,800 269,200 275,100 274,900
ABD, Medicare & Duals 383,400 329,700 300,500 305,300 302,000
HIM 76,000 75,700 39,700 - -
Hybrid Programs 19,900 17,000 14,400 19,000 19,600
LTC 55,200 53,500 51,800 37,800 31,600
Correctional Services 41,300 41,300 41,000 31,300 31,100
------ ------ ------ ------ ------
Total at-risk membership 3,401,800 3,164,500 2,885,700 2,723,200 2,612,500
--------- --------- --------- --------- ---------
Non-risk membership 303,500 - - - -
------- --- --- --- ---
TOTAL 3,705,300 3,164,500 2,885,700 2,723,200 2,612,500
========= ========= ========= ========= =========
Specialty Services(a):
Cenpatico Behavioral
Health Arizona 195,500 182,200 162,700 156,600 160,700
(a) Includes external membership only.
REVENUE PER MEMBER PER
MONTH(b) $370 $359 $355 $335 $328
CLAIMS(b)
Period-end inventory 970,200 745,400 808,500 622,200 698,900
Average inventory 637,100 584,000 555,400 511,700 505,800
Period-end inventory
per member 0.29 0.24 0.28 0.23 0.27
(b) Revenue per member and claims information are presented for the Managed Care at-risk members.
NUMBER OF EMPLOYEES 12,900 12,300 11,200 8,800 8,200
Q3 Q2 Q1 Q4 Q3
2014 2014 2014 2013 2013
---- ---- ---- ---- ----
DAYS IN CLAIMS PAYABLE (c) 43.1 42.9 42.6 42.4 40.6
(c) 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, INVESTMENTS AND RESTRICTED DEPOSITS (in millions)
Regulated $2,828.3 $2,352.3 $2,166.4 $1,870.6 $1,612.9
Unregulated 70.3 $50.3 49.3 44.7 37.6
---- ----- ---- ---- ----
TOTAL $2,898.6 $2,402.6 $2,215.7 $1,915.3 $1,650.5
======== ======== ======== ======== ========
DEBT TO CAPITALIZATION 36.8% 37.5% 36.5% 35.0% 30.5%
DEBT TO CAPITALIZATION
EXCLUDING NON-RECOURSE
DEBT(d) 35.0% 35.5% 34.4% 32.4% 27.4%
Debt to Capitalization is calculated as follows: total debt divided by (total debt + total equity).
(d) The non-recourse debt represents the Company's mortgage note payable ($70.7 million at September 30, 2014).
Operating
Ratios:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
2014 2013 2014 2013
---- ---- ---- ----
Health
Benefits
Ratios:
Medicaid,
CHIP,
Foster
Care
& HIM 86.5% 84.8% 86.1% 87.9%
ABD,
LTC &
Medicare 93.9 92.1 94.0 90.5
Specialty
Services 86.8 86.8 84.9 84.4
Total 89.7 87.8 89.3 88.8
Total
General
&
Administrative
Expense
Ratio 8.0% 9.1% 8.4% 8.8%
MEDICAL CLAIMS LIABILITY (In thousands)
The changes in medical claims liability are summarized as follows:
Balance, September 30, 2013 $1,013,246
Incurred related to:
Current period 11,652,971
Prior period (148,132)
--------
Total incurred 11,504,839
Paid related to:
Current period 10,087,868
Prior period 841,419
-------
Total paid 10,929,287
==========
Balance, September 30, 2014 $1,588,798
==========
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" amount 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.
The amount of the "Incurred related to: Prior period" 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 prior to September 30, 2013.
SOURCE Centene Corporation
