CENTENE CO. ST. LOUIS, April 25, 2017 /PRNewswire/ -- Centene Corporation (NYSE: CNC) announced today its financial results for the first quarter ended March 31, 2017, reporting diluted earnings per share (EPS) of $0.79, and Adjusted Diluted EPS of $1.12. A summary of diluted EPS is highlighted below:
GAAP diluted EPS $0.79
Amortization of acquired
intangible assets 0.14
Health Net acquisition related
expenses 0.02
Penn Treaty assessment expense 0.17
----
Adjusted Diluted EPS $1.12
=====
Our previous annual guidance included $0.20 per diluted share of conservatism associated with lower margins on the Health Insurance Marketplace business. Due to the performance of the marketplace business in the first quarter of 2017, $0.04 of the original $0.20 of conservatism was recognized. The Company's updated annual GAAP diluted EPS and Adjusted Diluted EPS guidance includes the remaining $0.16 per diluted share of conservatism associated with the 2017 Health Insurance Marketplace margins.
In the three months ended March 31, 2017, the Company recognized $47 million for our estimated share of the undiscounted guaranty association assessment resulting from a court ordered liquidation of the Pennsylvania based Penn Treaty Network America Insurance Company and its subsidiary (Penn Treaty) as selling, general and administrative (SG&A) expenses.
In summary, the 2017 first quarter results were as follows:
Total revenues (in millions) $11,724
Health benefits ratio 87.6%
SG&A expense ratio 9.8%
SG&A expense ratio, excluding
the Penn Treaty assessment and
Health Net acquisition related
expenses 9.3%
GAAP diluted EPS $0.79
Adjusted Diluted EPS $1.12
Total cash flow provided by
operations (in millions) $1,248
--------------------------- ------
Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "We are pleased with the operating results for the first quarter, providing momentum for the remainder of the year."
The following discussions, with the exception of cash flow information, are in the context of continuing operations.
First Quarter Highlights
-- March 31, 2017 managed care membership of 12.1 million, an increase of
605,000 members, or 5% over 2016.
-- Total revenues for the first quarter of 2017 of $11.7 billion,
representing 69% growth, compared to the first quarter of 2016.
-- Health benefits ratio (HBR) of 87.6% for the first quarter of 2017,
compared to 88.7% in the first quarter of 2016.
-- SG&A expense ratio of 9.8% for the first quarter of 2017, compared to
11.3% for the first quarter of 2016.
-- SG&A expense ratio excluding the Penn Treaty assessment and Health Net
acquisition related expenses of 9.3% for the first quarter of 2017,
compared to 8.3% for the first quarter of 2016.
-- Operating cash flow of $1.2 billion for the first quarter of 2017.
-- Diluted EPS for the first quarter of 2017 of $0.79, compared to $(0.12)
for the first quarter of 2016.
-- Adjusted Diluted EPS for the first quarter of 2017 of $1.12, compared to
$0.74 for the first quarter of 2016.
Other Events
-- In February 2017, we announced the appointment of Chris Koster to Senior
Vice President, Corporate Services.
Accreditations & Awards
-- In April 2017, at the 2017 Hermes Creative Awards, we earned several
Platinum and Gold awards, including recognition for numerous book and
video publications.
-- In January 2017, at the 2017 AVA Digital Awards, our subsidiary,
Envolve, Inc., earned a Gold award for its "Did You Know?" Clinical
Leader Video Series and Honorable Mention award for its health tip
animation series.
Membership
The following table sets forth the Company's membership by state for its managed care organizations:
March 31,
2017 2016
---- ----
Arizona 684,300 607,000
Arkansas 98,100 50,700
California 2,980,100 3,125,400
Florida 872,000 660,800
Georgia 568,300 495,500
Illinois 253,800 239,100
Indiana 335,800 290,300
Kansas 133,100 141,100
Louisiana 484,100 381,200
Massachusetts 44,200 52,400
Michigan 2,100 2,600
Minnesota 9,500 9,500
Mississippi 349,500 328,300
Missouri 106,100 100,000
Nebraska 79,200 -
New Hampshire 77,800 81,500
New Mexico 7,100 -
Ohio 328,900 314,000
Oregon 211,900 209,000
South Carolina 121,900 107,700
Tennessee 21,900 20,100
Texas 1,243,900 1,036,700
Vermont 1,600 1,500
Washington 254,400 226,500
Wisconsin 71,700 78,400
------ ------
Total at-risk membership 9,341,300 8,559,300
TRICARE eligibles 2,804,100 2,819,700
Non-risk membership - 161,400
--- -------
Total 12,145,400 11,540,400
========== ==========
The following table sets forth our membership by line of business:
March 31,
2017 2016
---- ----
Medicaid:
TANF, CHIP & Foster Care 5,714,100 5,464,200
ABD & LTC 825,600 757,600
Behavioral Health 466,900 456,500
Commercial 1,864,700 1,487,900
Medicare & Duals (1) 328,100 334,100
Correctional 141,900 59,000
------- ------
Total at-risk membership 9,341,300 8,559,300
TRICARE eligibles 2,804,100 2,819,700
Non-risk membership - 161,400
--- -------
Total 12,145,400 11,540,400
========== ==========
(1) Membership includes Medicare
Advantage, Medicare Supplement,
Special Needs Plans, and
Medicare-Medicaid Plans.
The following table sets forth additional membership statistics, which are included in the membership information above:
March 31,
2017 2016
---- ----
Dual-eligible 458,700 435,100
Health Insurance Marketplace 1,188,700 683,000
Medicaid Expansion 1,091,300 984,900
Statement of Operations: Three Months Ended March 31, 2017
-- For the first quarter of 2017, total revenues increased 69% to $11.7
billion from $7.0 billion in the comparable period in 2016. The increase
over prior year was primarily a result of the acquisition of Health Net,
as well as the impact from expansions and new programs in many of our
states in 2016 and 2017, and growth in the Health Insurance Marketplace
business in 2017. Premium and service revenue increased 5% sequentially;
however, total revenues decreased 2% sequentially partially due to the
health insurer fee moratorium, which suspended the health insurance
provider fee for the 2017 calendar year. Also, the fourth quarter of
2016 benefited from $500 million of additional revenue associated with
pass through payments from the state of California and $195 million of
additional revenue associated with the minimum medical loss ratio (MLR)
amendment in California. These sequential revenue decreases were
partially offset by growth in the business.
-- HBR of 87.6% for the first quarter of 2017 represents a decrease from
88.7% in the comparable period in 2016 and an increase from 84.8% in the
fourth quarter of 2016. The year over year HBR decrease is primarily
attributable to the acquisition of Health Net, which operates at a lower
HBR due to a greater mix of commercial business and growth in the Health
Insurance Marketplace business in 2017. Sequentially, HBR increased from
84.8% from the fourth quarter of 2016. The fourth quarter of 2016
benefited from the recognition of revenue relating to amendments to our
California contracts with the Department of Health Care Services to
amend the Medicaid expansion minimum MLR definition. HBR also increased
sequentially due to an increase in flu related costs over the fourth
quarter.
-- The SG&A expense ratio was 9.8% for the first quarter of 2017, compared
to 11.3% for the first quarter of 2016 and 10.0% for the fourth quarter
of 2016.
-- The SG&A expense ratio excluding the Penn Treaty assessment and Health
Net acquisition related expenses was 9.3% for the first quarter of 2017,
compared to 8.3% for the first quarter of 2016. The increase in the SG&A
expense ratio excluding the Penn Treaty assessment and Health Net
acquisition related expenses is primarily attributable to the addition
of the Health Net business, which operates at a higher SG&A ratio due to
a greater mix of commercial and Medicare business. Sequentially, the
SG&A expense ratio excluding the Penn Treaty assessment and Health Net
acquisition related expenses decreased from 9.9% from the fourth quarter
of 2016 due to a higher level of seasonal costs related to the open
enrollment period for the Health Insurance Marketplace business and a
charitable contribution to our foundation in the fourth quarter of 2016.
Balance Sheet and Cash Flow
At March 31, 2017, the Company had cash, investments and restricted deposits of $10.3 billion, including $306 million held by its unregulated entities. Medical claims liabilities totaled $4.3 billion. The Company's days in claims payable was 41. Total debt was $4.6 billion, which includes $100 million of borrowings on the $1 billion revolving credit facility at quarter-end. The debt to capitalization ratio was 43.0% at March 31, 2017, excluding the $63 million non-recourse mortgage note.
Cash flow provided by operations for the three months ended March 31, 2017 was $1.2 billion. The cash provided by operating activities during the quarter was due to net earnings, an increase in medical claims liabilities resulting from growth in the Health Insurance Marketplace business and the commencement of the Nebraska health plan, an increase in other long-term liabilities driven by the recognition of risk adjustment payable for Health Insurance Marketplace in 2017 and an increase in unearned revenue primarily due to the receipt of several April capitation payments in March.
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,
December 31, 2016 42
Timing of claims payments (1)
Days in claims payable,
March 31, 2017 41
===
Outlook
The table below depicts the Company's updated annual guidance for 2017. The Company's annual GAAP diluted EPS and Adjusted Diluted EPS guidance includes the remaining $0.16 per diluted share of conservatism associated with 2017 Health Insurance Marketplace margins.
Full Year 2017
Low High
--- ----
Total revenues (in billions) $46.0 $46.8
GAAP diluted EPS $3.75 $4.15
Adjusted Diluted EPS (1) $4.50 $4.90
HBR 87.0% 87.5%
SG&A expense ratio 9.1% 9.6%
Adjusted SG&A expense ratio (2) 9.0% 9.5%
Effective tax rate 39.0% 41.0%
Diluted shares outstanding (in
millions) 176.9 177.9
(1) Adjusted Diluted EPS excludes
amortization of acquired
intangible assets of $0.54 to
$0.58 per diluted share,
Health Net acquisition related
expenses of $0.02 to $0.03 per
diluted share, and Penn Treaty
assessment expense of $0.17
per diluted share.
(2) Adjusted SG&A expense ratio
excludes Health Net
acquisition related expenses
of $5 million to $8 million
and the Penn Treaty assessment
expense of $47 million.
Conference Call
As previously announced, the Company will host a conference call Tuesday, April 25, 2017, at approximately 8:30 AM (Eastern Time) to review the financial results for the first quarter ended March 31, 2017, and to discuss its business outlook. Michael Neidorff and Jeffrey Schwaneke will host the conference call.
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: 5591957 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 after the completion of the call for the next twelve months or until 11:59 PM (Eastern Time) on Tuesday, April 24, 2018, at the aforementioned URL. In addition, a digital audio playback will be available until 9:00 AM (Eastern Time) on Tuesday, May 2, 2017, by dialing 1-877-344-7529 in the U.S. and Canada, or +1-412-317-0088 from abroad, and entering access code 10103060.
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 to allow management to focus on period-to-period changes in the Company's core business operations. Therefore, the Company believes that this information is meaningful in addition to the information contained in the GAAP presentation of financial information. The presentation of this additional non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.
Specifically, the Company believes the presentation of non-GAAP financial information that excludes amortization of acquired intangible assets, Health Net acquisition related expenses, as well as other items, allows investors to develop a more meaningful understanding of the Company's performance over time. The tables below provide reconciliations of non-GAAP items ($ in millions, except per share data):
Three Months Ended
March 31,
2017 2016
---- ----
GAAP net earnings (loss) from continuing operations $139 $(15)
Amortization of acquired intangible assets 40 9
Health Net acquisition related expenses 5 189
Penn Treaty assessment expense (1) 47 -
Income tax effects of adjustments (2) (34) (87)
Adjusted net earnings from continuing operations $197 $96
==== ===
(1) Additional expense of $47
million for the Company's
estimated share of guaranty
association assessment
resulting from the liquidation
of Penn Treaty.
(2) The income tax effects of
adjustments are based on the
effective income tax rates
applicable to adjusted (non-
GAAP) results.
Three Months Ended Annual
March 31, Guidance
December 31,
2017 2016 2017
---- ---- ----
GAAP diluted
earnings (loss)
per share (EPS) $0.79 $(0.12) $3.75 - $4.15
Amortization of
acquired
intangible assets
(1) 0.14 0.04 $0.54 - $0.58
Health Net
acquisition
related expenses
(2) 0.02 0.82 $0.02 - $0.03
Penn Treaty
assessment
expense (3) 0.17 - $0.17
---- --- -----
Adjusted Diluted
EPS from
continuing
operations $1.12 $0.74 $4.50 - $4.90
===== ===== =============
(1) The amortization of acquired
intangible assets per diluted
share presented above are net
of an income tax benefit of
$0.09 and $0.03 for the three
months ended March 31, 2017
and 2016, respectively and
estimated $0.31 to $0.35 for
the year ended December 31,
2017.
(2) The Health Net acquisition
related expenses per diluted
share presented above are net
of an income tax benefit of
$0.01 and $0.64 for the three
months ended March 31, 2017
and 2016, respectively and
estimated $0.01 to $0.02 for
the year ended December 31,
2017.
(3) The Penn Treaty assessment
expense per diluted share is
net of an income tax benefit
of $0.09 for the three months
ended March 31, 2017 and
estimated for the year ended
December 31, 2017.
Three Months Ended
March 31,
2017 2016
---- ----
GAAP SG&A expenses $1,091 $722
Health Net acquisition related expenses 5 189
Penn Treaty assessment expense 47 -
--- ---
Adjusted SG&A expenses $1,039 $533
====== ====
About Centene Corporation
Centene Corporation is a diversified, multi-national healthcare enterprise that provides a portfolio of services to government sponsored and commercial 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 programs, Medicare (including the Medicare prescription drug benefit commonly known as "Part D"), dual eligible programs and programs with the U.S. Department of Defense and U.S. Department of Veterans Affairs. Centene also provides healthcare services to groups and individuals delivered through commercial health plans. Centene 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 management, care management software, correctional healthcare services, dental benefits management, in-home health services, life and health management, managed vision, pharmacy benefits management, specialty pharmacy and telehealth services.
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, http://www.centene.com/investors.
Forward-Looking Statements
The company and its representatives may from time to time make written and oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act ("PSLRA") of 1995, including statements in this and other press releases, in presentations, filings with the Securities and Exchange Commission ("SEC"), reports to stockholders and in meetings with investors and analysts. In particular, the information provided in this press release may contain certain forward-looking statements with respect to the financial condition, results of operations and business of Centene and certain plans and objectives of Centene with respect thereto, including but not limited to the expected benefits of the acquisition of Health Net, Inc. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Without limiting the foregoing, forward-looking statements often use words such as "anticipate", "seek", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "hope", "aim", "continue", "will", "may", "can", "would", "could" or "should" or other words of similar meaning or the negative thereof. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in PSLRA. A number of factors, variables or events could cause actual plans and results to differ materially from those expressed or implied in forward-looking statements. Such factors include, but are not limited to, Centene's ability to accurately predict and effectively manage health benefits and other operating expenses and reserves; competition; membership and revenue declines or unexpected trends; changes in healthcare practices, new technologies, and advances in medicine; increased health care costs; changes in economic, political or market conditions; changes in federal or state laws or regulations, including changes with respect to government health care programs as well as changes with respect to the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act and any regulations enacted thereunder that may result from changing political conditions; rate cuts or other payment reductions or delays by governmental payors and other risks and uncertainties affecting Centene's government businesses; Centene's ability to adequately price products on federally facilitated and state based Health Insurance Marketplaces; tax matters; disasters or major epidemics; the outcome of legal and regulatory proceedings; changes in expected contract start dates; provider, state, federal and other contract changes and timing of regulatory approval of contracts; the expiration, suspension or termination of Centene's contracts with federal or state governments (including but not limited to Medicaid, Medicare, and TRICARE); challenges to Centene's contract awards; cyber-attacks or other privacy or data security incidents; the possibility that the expected synergies and value creation from acquired businesses, including, without limitation, the Health Net acquisition, will not be realized, or will not be realized within the expected time period, including, but not limited to, as a result of conditions, terms, obligations or restrictions imposed by regulators in connection with their approval of, or consent to, the acquisition; the exertion of management's time and Centene's resources, and other expenses incurred and business changes required in connection with complying with the undertakings in connection with certain regulatory approvals; disruption from the acquisition making it more difficult to maintain business and operational relationships; the risk that unexpected costs will be incurred in connection with, among other things, the acquisition and/or the integration; changes in expected closing dates, estimated purchase price and accretion for acquisitions; the risk that acquired businesses will not be integrated successfully; Centene's ability to maintain or achieve improvement in the Centers for Medicare and Medicaid Services (CMS) Star ratings and other quality scores that impact revenue; availability of debt and equity financing, on terms that are favorable to Centene; inflation; foreign currency fluctuations; and risks and uncertainties discussed in the reports that Centene has filed with the SEC. These forward-looking statements reflect Centene's current views with respect to future events and are based on numerous assumptions and assessments made by Centene in light of its experience and perception of historical trends, current conditions, business strategies, operating environments, future developments and other factors it believes 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. The factors described in the context of such forward-looking statements in this press release could cause Centene's plans with respect to the Health Net acquisition, actual results, performance or achievements, industry results and developments to differ materially from those expressed in or implied by such forward-looking statements. Although it is currently believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and persons reading this press release are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as of the date of this press release. Centene does not assume any obligation to update the information contained in this press release (whether as a result of new information, future events or otherwise), except as required by applicable law. This list of important factors is not intended to be exhaustive. We discuss certain of these matters more fully, as well as certain other risk factors that may affect Centene's business operations, financial condition and results of operations, in Centene's filings with the SEC, including the annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
[Tables Follow]
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
March 31, 2017 December 31, 2016
-------------- -----------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $4,839 $3,930
Premium and related receivables 3,121 3,098
Short-term investments 725 505
Other current assets 723 832
--- ---
Total current assets 9,408 8,365
Long-term investments 4,636 4,545
Restricted deposits 140 138
Property, software and equipment, net 841 797
Goodwill 4,712 4,712
Intangible assets, net 1,504 1,545
Other long-term assets 121 95
--- ---
Total assets $21,362 $20,197
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Medical claims liability $4,290 $3,929
Accounts payable and accrued expenses 4,275 4,377
Unearned revenue 633 313
Current portion of long-term debt 4 4
--- ---
Total current liabilities 9,202 8,623
Long-term debt 4,643 4,651
Other long-term liabilities 1,295 869
----- ---
Total liabilities 15,140 14,143
Commitments and contingencies
Redeemable noncontrolling interests 138 145
Stockholders' equity:
Preferred stock, $0.001 par value;
authorized 10,000,000 shares; no shares
issued or outstanding at March 31, 2017
and December 31, 2016 - -
Common stock, $0.001 par value;
authorized 400,000,000 shares;
178,669,935 issued and 172,271,202
outstanding at March 31, 2017, and
178,134,306 issued and 171,919,071
outstanding at December 31, 2016 - -
Additional paid-in capital 4,224 4,190
Accumulated other comprehensive loss (21) (36)
Retained earnings 2,059 1,920
Treasury stock, at cost (6,398,733 and
6,215,235 shares, respectively) (192) (179)
---- ----
Total Centene stockholders' equity 6,070 5,895
Noncontrolling interest 14 14
--- ---
Total stockholders' equity 6,084 5,909
----- -----
Total liabilities and stockholders'
equity $21,362 $20,197
======= =======
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share data)
(Unaudited)
Three Months Ended March 31,
2017 2016
---- ----
Revenues:
Premium $10,638 $5,986
Service 527 425
--- ---
Premium and service revenues 11,165 6,411
Premium tax and health insurer
fee 559 542
--- ---
Total revenues 11,724 6,953
------ -----
Expenses:
Medical costs 9,322 5,311
Cost of services 441 367
Selling, general and
administrative expenses 1,091 722
Amortization of acquired
intangible assets 40 9
Premium tax expense 590 450
Health insurer fee expense - 74
--- ---
Total operating expenses 11,484 6,933
------ -----
Earnings from operations 240 20
Other income (expense):
Investment and other income 41 15
Interest expense (62) (33)
--- ---
Earnings from continuing
operations, before income tax
expense 219 2
Income tax expense 87 16
--- ---
Earnings (loss) from
continuing operations, net of
income tax expense 132 (14)
Discontinued operations, net
of income tax (benefit) - (1)
--- ---
Net earnings (loss) 132 (15)
(Earnings) loss attributable
to noncontrolling interests 7 (1)
--- ---
Net earnings (loss)
attributable to Centene
Corporation $139 $(16)
==== ====
Amounts attributable to Centene
Corporation common shareholders:
Earnings (loss) from
continuing operations, net of
income tax expense $139 $(15)
Discontinued operations, net
of income tax (benefit) - (1)
Net earnings (loss) $139 $(16)
==== ====
Net earnings (loss) per common share
attributable to Centene Corporation:
Basic:
Continuing operations $0.81 $(0.12)
Discontinued operations - (0.01)
Basic earnings (loss) per
common share $0.81 $(0.13)
===== ======
Diluted:
Continuing operations $0.79 $(0.12)
Discontinued operations - (0.01)
Diluted earnings (loss) per
common share $0.79 $(0.13)
===== ======
Weighted average number of common shares
outstanding:
Basic 172,073,968 125,543,076
Diluted 175,836,290 125,543,076
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended March 31,
2017 2016
---- ----
Cash flows from operating activities:
Net earnings (loss) $132 $(15)
Adjustments to reconcile net earnings
(loss) to net cash provided by operating
activities
Depreciation and amortization 86 35
Stock compensation expense 32 51
Deferred income taxes (51) (17)
Gain on contingent consideration - (1)
Changes in assets and liabilities
Premium and related receivables 59 (174)
Other assets 89 (46)
Medical claims liabilities 358 196
Unearned revenue 320 (64)
Accounts payable and accrued
expenses (237) 35
Other long-term liabilities 459 192
Other operating activities, net 1 4
--- ---
Net cash provided by operating
activities 1,248 196
----- ---
Cash flows from investing activities:
Capital expenditures (83) (45)
Purchases of investments (594) (212)
Sales and maturities of
investments 349 203
Investments in acquisitions, net
of cash acquired - (782)
Other investing activities, net (1) -
--- ---
Net cash used in investing
activities (329) (836)
---- ----
Cash flows from financing activities:
Proceeds from long-term debt 560 3,790
Payments of long-term debt (560) (1,388)
Common stock repurchases (13) (22)
Debt issuance costs - (51)
Other financing activities, net 3 (13)
Net cash (used in) provided by
financing activities (10) 2,316
--- -----
Net increase in cash and cash
equivalents 909 1,676
--- -----
Cash and cash equivalents,
beginning of period 3,930 1,760
----- -----
Cash and cash equivalents, end
of period $4,839 $3,436
====== ======
Supplemental disclosures of cash flow
information:
Interest paid $72 $3
Income taxes paid $2 $33
Equity issued in connection with
acquisitions $ - $3,105
CENTENE CORPORATION
SUPPLEMENTAL FINANCIAL DATA FROM CONTINUING OPERATIONS
Q1 Q4 Q3 Q2 Q1
2017 2016 2016 2016 2016
---- ---- ---- ---- ----
MANAGED CARE MEMBERSHIP BY STATE
Arizona 684,300 598,300 601,500 597,700 607,000
Arkansas 98,100 58,600 57,700 52,800 50,700
California 2,980,100 2,973,500 3,004,500 3,097,600 3,125,400
Florida 872,000 716,100 732,700 726,200 660,800
Georgia 568,300 488,000 498,000 493,300 495,500
Illinois 253,800 237,700 236,700 234,700 239,100
Indiana 335,800 285,800 289,600 291,000 290,300
Kansas 133,100 139,700 145,100 144,800 141,100
Louisiana 484,100 472,800 455,600 375,300 381,200
Massachusetts 44,200 48,300 45,300 47,100 52,400
Michigan 2,100 2,000 2,100 2,200 2,600
Minnesota 9,500 9,400 9,400 9,500 9,500
Mississippi 349,500 310,200 313,900 323,800 328,300
Missouri 106,100 105,700 104,700 102,900 100,000
Nebraska 79,200 - - - -
New Hampshire 77,800 77,400 78,400 79,700 81,500
New Mexico 7,100 7,100 7,100 7,100 -
Ohio 328,900 316,000 319,500 319,000 314,000
Oregon 211,900 217,800 218,400 221,500 209,000
South Carolina 121,900 122,500 119,700 113,700 107,700
Tennessee 21,900 21,700 21,600 20,800 20,100
Texas 1,243,900 1,072,400 1,041,600 1,037,000 1,036,700
Vermont 1,600 1,600 1,700 1,600 1,500
Washington 254,400 238,400 240,500 239,700 226,500
Wisconsin 71,700 73,800 75,100 76,100 78,400
------ ------ ------ ------ ------
Total at-risk membership 9,341,300 8,594,800 8,620,400 8,615,100 8,559,300
TRICARE eligibles 2,804,100 2,847,000 2,815,700 2,815,700 2,819,700
Non-risk membership - - - - 161,400
--- --- --- --- -------
Total 12,145,400 11,441,800 11,436,100 11,430,800 11,540,400
========== ========== ========== ========== ==========
Medicaid:
TANF, CHIP & Foster Care 5,714,100 5,630,000 5,583,900 5,541,200 5,464,200
ABD & LTC 825,600 785,400 754,900 757,500 757,600
Behavioral Health 466,900 466,600 465,300 455,800 456,500
Commercial 1,864,700 1,239,100 1,333,000 1,391,500 1,487,900
Medicare & Duals (1) 328,100 334,300 333,500 332,600 334,100
Correctional 141,900 139,400 149,800 136,500 59,000
------- ------- ------- ------- ------
Total at-risk membership 9,341,300 8,594,800 8,620,400 8,615,100 8,559,300
TRICARE eligibles 2,804,100 2,847,000 2,815,700 2,815,700 2,819,700
Non-risk membership - - - - 161,400
--- --- --- --- -------
Total 12,145,400 11,441,800 11,436,100 11,430,800 11,540,400
========== ========== ========== ========== ==========
(1) Membership includes Medicare Advantage, Medicare Supplement, Special Needs Plans, and Medicare-Medicaid Plans.
NUMBER OF EMPLOYEES 30,900 30,500 29,400 28,900 28,000
Q1 Q4 Q3 Q2 Q1
2017 2016 2016 2016 2016
---- ---- ---- ---- ----
DAYS IN CLAIMS PAYABLE (a) 41 42 41 43 66
(a) 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. On a pro-forma basis, DCP for Q1 2016 was 42, reflecting adjusted medical
costs to include a full quarter of Health Net operations.
CASH, INVESTMENTS AND RESTRICTED DEPOSITS (in millions)
Regulated $10,034 $8,854 $7,825 $7,324 $7,682
Unregulated 306 264 268 196 139
--- --- --- --- ---
Total $10,340 $9,118 $8,093 $7,520 $7,821
======= ====== ====== ====== ======
DEBT TO CAPITALIZATION 43.3% 44.1% 44.5% 44.8% 44.6%
DEBT TO CAPITALIZATION
EXCLUDING NON-RECOURSE DEBT
(b) 43.0% 43.7% 44.1% 44.4% 44.3%
(b) The non-recourse debt represents the Company's mortgage note payable ($63 million at March 31, 2017).
Debt to capitalization is calculated as follows: total debt divided by (total debt + total equity).
OPERATING RATIOS
Three Months Ended March 31,
2017 2016
---- ----
HBR 87.6% 88.7%
SG&A expense ratio 9.8% 11.3%
Adjusted SG&A expense
ratio 9.3% 8.3%
MEDICAL CLAIMS LIABILITY
The changes in medical claims liability are summarized as follows (in millions):
Balance, March 31, 2016 $3,863
Incurred related to:
Current period 35,036
Prior period (389)
----
Total incurred 34,647
Paid related to:
Current period 30,825
Prior period 3,403
Total paid 34,228
------
Balance, March 31, 2017, net 4,282
Plus: Reinsurance recoverable 8
---
Balance, March 31, 2017 $4,290
======
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. Additionally, as a result of minimum HBR and other return of premium programs, approximately $28 million of the "Incurred related to: Prior period" was recorded as a reduction to premium revenues.
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 March 31, 2016, and prior.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/centene-corporation-reports-2017-first-quarter-results--updates-2017-guidance-300444918.html
SOURCE Centene Corporation
