TEXT - S&P comments on Centene Corp

Nov 5 - As Standard & Poor's Ratings Services previously announced, its 'BB'
rating on Centene Corp.'s $250 million senior unsecured notes maturing June 1,
2017, remains unchanged after the company issued a $150 million add-on to the
notes.

The company will use the proceeds of the notes for general corporate purposes,
including funding statutory surplus at its operating subsidiaries to support
business growth.

We believe that Centene has a good competitive position in the managed
Medicaid market with a growing presence in this market segment, which helps to
mitigate its relatively narrow market-segment focus on government-sponsored
managed Medicaid programs. We expect the company to continue to grow and
generate stable cash flow in the intermediate term (12 to 24 months) to meet
its debt-service requirements and pay for expenses related to expansion into
new markets.

However, our counterparty credit rating on Centene is constrained by the
concentration of its revenue stream in the government-sponsored managed
Medicaid programs, with a smaller percentage of premiums coming from specialty
services from external customers. This narrow market focus is a key credit
risk, as it exposes the company to adverse regulatory and legislative
developments. Accordingly, profitability and sustained revenue growth depend
heavily on continued government funding for these programs to keep pace with
medical cost trends.

We expect Centene's key holding-company credit metrics to remain consistent
with the current rating level. At year-end 2012 we expect its debt-to-capital
ratio to be in the 30%-35% range (excluding the mortgage note and including
operating lease obligation treated as debt), up from 26.5% as of year-end
2011. In our calculation of 2012 EBIT ROR and EBITDA we adjust for certain
one-time items including the premium deficiency reserve for its Kentucky
Health Plan and goodwill and intangible write-down related to its Celtic
subsidiary. We expect adjusted EBITDA interest coverage in 2012-2013 to be
more than 7x. We expect risk-adjusted capitalization to remain redundant at
the 'BBB' level per our capital model. For 2012 we expect adjusted EBIT ROR to
be in the 2% range and to improve in 2013 to the 2%-3% range. EBIT ROR for
2012 reflects higher-than-expected medical costs in its Kentucky Health Plan
and the Hidalgo service area in its Texas Health Plan, as well as in the
Celtic individual health business.

We expect premium rate increases in its Texas Health Plan and the planned exit
from Kentucky to improve operating results in 2013.

RELATED CRITERIA AND RESEARCH
Holding Company Analysis, June 11, 2009

Ratings List
Centene Corp.
Counterparty Credit Rating BB/Negative/--
Sr. Unsec. Debt Due 2017 BB