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Analysis

Adjusted EPS Rose 40% for Centene in 2018, Revenues Top $60B

By Jack O'Brien  
   February 05, 2019

Centene finished a strong 2018 with an even stronger final quarter, as revenues, membership, and earnings per share increased.

Centene Corp. posted total revenues of nearly $16.6 billion, leading to more than $60 billion for the entire year, according to its Q4 earnings report released Tuesday morning.

The St. Louis-based insurer was bolstered by its managed care membership reaching 14 million, an increase of 15% year-over-year, and growth among three additional membership categories: dual-eligible enrollees, those on the health insurance marketplace, and Medicaid expansion enrollees.

Centene reported an adjusted earnings per share (EPS) of $4.52 per share for 2018, an increase of 40% compared to 2017. As a result of impressive financials for both Q4 and 2018 as a whole, Centene leadership have raised the company's annual guidance, anticipating total revenues between $70.3 billion and $71.1 billion in 2019.

C-suite perspective: 

"We were pleased with the strong fourth quarter performance to finish another successful year," Michael Neidorff, CEO of Centene, said in a statement. "Our 2018 Adjusted Diluted EPS results were 40% higher than 2017. Looking ahead, the higher than expected membership growth in the Health Insurance Marketplace business, new contract wins and other strategic investments provide operating momentum heading into 2019." 

Related: Centene Continues on Strong as Revenues Grow 36% Year-Over-Year

Despite the mostly positive metrics, Centene did record a negative cash flow of $634 million for Q4 due to paying the 2018 health insurer fee and $370 million in Medicaid expansion minimum medical loss ratio (MLR) rebate payments in California.

Similar to its competitor WellCare Health Plans, Centene was awarded, along with four other healthcare organizations, an 'unprecedented' $6 billion worth of privatized Medicaid contracts by the state of North Carolina.

The highlight of 2018 for Centene was its $3.75 billion purchase of Fidelis Care from the Archdiocese of New York. As previously reported in HealthLeaders, Centene's entrance into the Empire State market is expected to generate more than $11 billion in revenue.

Related: Centene Shuffles Leadership After $3 Billion New York Acquisition

Internally, Centene will distribute a two-for-one split of its stock in the form of a 100% dividend on February 6. 

Additional Centene Q4 earnings report highlights:  

  • Centene's net earnings for Q4 2018 were $241 million, an increase of $11 million year-over-year.

  • For yet another quarter, the insurer's Medicaid and Medicare revenues eclipsed those of 2017. 

  • Medicaid revenues rose 28% while Medicare revenues rose 27%.

  • Commercial revenues again led the way with 47% growth year-over-year.

Related: Best Known for Obamacare, Centene Makes Global Play

For complete financial information, review Centene's filing with the Securities and Exchange Commission.

Jack O'Brien is the finance editor at HealthLeaders. 

Photo credit: Milan, Italy - August 10, 2017: Centene logo on the website homepage. - Image / Editorial credit: Casimiro PT / Shutterstock.com


KEY TAKEAWAYS

2018 was a strong year for the St. Louis-based insurer, finishing with more than $60.1 in revenues.

Managed care membership reached 14 million, an increase of 15% year-over-year.

Centene did record a negative cash flow of $634 million for Q4 due to paying the 2018 health insurer fee and $370 million in MLR rebate payments in California.


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