Centene Corporation Reports 2012 Fourth Quarter And Full Year Results

Tue Feb 5, 2013 6:00am EST

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ST. LOUIS, Feb. 5, 2013 /PRNewswire/ -- Centene Corporation (NYSE: CNC) today
announced its financial results for the quarter and year ended December 31,
2012.

 2012 Results                                                                                  
                                             Q4                   Full Year                
 Premium and Service Revenues (in millions)  $    2,301.4       $     8,238.9          
 Consolidated Health Benefits Ratio          91.3           %    91.6            %       
 General & Administrative expense ratio      8.4            %    8.6             %       
 Diluted earnings per share (EPS)            $    0.17          $     0.03             
 Cash flow from operations (in millions)     $    (28.6)        $     278.7            


Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated,
"While 2012 had its challenges, we continue to make progress on premium rates in
 Texas  and believe we have addressed the issues in  Kentucky  with our planned
exit of the State.  In 2012, we delivered on our growth strategy by increasing
membership by 41% and revenues by 59% from 2011.  We were successful in winning
seven new contracts in 2012 and have continued in 2013 with the long-term care
program recommendations in Florida.  In addition, with the pending acquisition
of AcariaHealth, we will expand our ability to manage the costs of specialized
pharmacy benefit services for complex diseases.  We believe with these awards
and initiatives we are very well positioned to drive margins and earnings growth
in 2013 and beyond."

Fourth Quarter Highlights

* Quarter-end at-risk managed care membership of 2,560,300, an increase of
744,300 members, or 41% year over year.  
* Premium and service revenues of  $2.3 billion, representing 58% growth year
over year.  
* Health Benefits Ratio of 91.3%, compared to 85.9% in 2011.  
* General and Administrative expense ratio of 8.4%, compared to 11.0% in 2011.  
* Diluted EPS of  $0.17, including medical costs associated with flu of  $0.30 
higher than experienced in 2011.  
* Employees increased from 5,300 at December 31, 2011 to 6,800 at December 31,
2012, reflecting our continued business expansions.

Other Events

* In  November 2012, pursuant to a shelf registration statement, we issued an
additional  $175 million  of non-callable 5.75% Senior Notes due  June 1, 2017 
at a premium to yield 4.29%.   
* In  November 2012, our  Illinois  subsidiary, IlliniCare Health Plan, was
selected to serve dual-eligible members in  Cook,  DuPage,  Lake,  Kane, 
Kankakee  and  Will  counties (Greater Chicago  region) as part of the Illinois
Medicare-Medicaid Alignment Initiative.  Enrollment is expected to begin in late
2013.  
* In  January 2013, our  Kansas  subsidiary, Sunflower State Health Plan, began
operating under a statewide contract to serve members in the state's KanCare
program, which includes TANF, ABD (dual and non-dual), foster care, long-term
care and CHIP beneficiaries.  
* In  January 2013, our  Florida  subsidiary, Sunshine State Health Plan, was
notified by the Florida Agency for Health Care Administration it has been
recommended for a contract award in 10 of 11 regions of the Medicaid Managed
Care Long Term Care program. Upon execution of a contract and regulatory
approval, enrollment will be implemented by region, beginning in  August 2013 
and continuing through  March 2014.  
* In  January 2013, we signed a definitive agreement to acquire AcariaHealth, a
comprehensive specialty pharmacy company, for  $152.0 million. The transaction
consideration is anticipated to be financed through a combination of Centene
common stock, cash on hand and existing credit facilities. The acquisition is
expected to close in the first quarter of 2013, subject to regulatory approval
and other customary conditions.  
* In  October 2012, we were awarded the Platinum Award at the 2012 URAC Best
Practices in Health Care Consumer Empowerment and Protection Awards for our
Asthma Solutions for a Managed Medicaid Population.

The following table sets forth the Company's membership by state for its managed
care organizations:

                           December 31,                             
                           2012                  2011             
 Arizona                   23,500               23,700          
 Florida                   214,000              198,300         
 Georgia                   313,700              298,200         
 Illinois                  18,000               16,300          
 Indiana                   204,000              206,900         
 Kentucky                  135,800              180,700         
 Louisiana                 165,600              -               
 Massachusetts             21,500               35,700          
 Mississippi               77,200               31,600          
 Missouri                  59,600               -               
 Ohio                      157,800              159,900         
 South Carolina            90,100               82,900          
 Texas                     949,900              503,800         
 Washington                57,200               -               
 Wisconsin                 72,400               78,000          
 Total at-risk membership  2,560,300            1,816,000       
 Non-risk membership       -                    4,900           
 Total                     2,560,300            1,820,900       


The following table sets forth our membership by line of business:

                           December 31,                             
                           2012                  2011             
 Medicaid                  1,977,200            1,336,800       
 CHIP & Foster Care        237,700              213,900         
 ABD & Medicare            307,800              218,000         
 Hybrid Programs           29,100               40,500          
 Long-term Care            8,500                6,800           
 Total at-risk membership  2,560,300            1,816,000       
 Non-risk membership       -                    4,900           
 Total                     2,560,300            1,820,900       


The following table identifies the Company's dual eligible membership by line of
business.  The membership tables above include these members.

                 December 31,                       
                 2012               2011          
 ABD             72,800            45,400       
 Long-term Care  7,700             6,200        
 Medicare        5,100             3,200        
 Total           85,600            54,800       


Statement of Operations: Three Months Ended December 31, 2012

* For the fourth quarter of 2012, Premium and Service Revenues increased 58% to 
$2.3 billion  from  $1.5 billion  in the fourth quarter of 2011.  The increase
was primarily driven by the  Texas  expansion, pharmacy carve-in in  Texas, the
additions between years of  Kentucky,  Louisiana,  Missouri  and  Washington 
contracts and membership growth.    
* Consolidated HBR of 91.3% for the fourth quarter of 2012 represents an
increase from 85.9% in the comparable period in 2011 and a decrease from 93.3%
in the third quarter of 2012.  The increase compared to last year primarily
reflects an increase in medical costs associated with flu of  $0.30  per diluted
share as well as increased medical costs in our  Kentucky  and  Texas  health
plans.  Excluding the  Kentucky  health plan operations, the fourth quarter 2012
HBR was 90.7%.  
* The following table compares the results for new business and existing
business for the quarter ended  December 31,:

                              2012          2011        
 Premium and Service Revenue                            
 New business                 35    %      16    %    
 Existing business            65    %      84    %    
                                                        
 HBR                                                    
 New business                 96.7  %      93.1  %    
 Existing business            88.5  %      84.6  %    
 Total                        91.3  %      85.9  %    


* Consolidated G&A expense ratio for the fourth quarter of 2012 was 8.4%,
compared to 11.0% in the prior year.  The year over year decrease reflects the
leveraging of expenses over higher revenues and a reduction in performance based
compensation expense which lowered the ratio by 60 basis points.    
* Earnings from operations were  $13.1 million  in the fourth quarter 2012
compared to  $47.4 million  in the fourth quarter 2011.  Net earnings
attributable to Centene Corporation were  $9.1 million  in the fourth quarter
2012, compared to  $30.1 million  in the fourth quarter of 2011.   
* Diluted EPS was  $0.17  in the fourth quarter of 2012 compared to  $0.57  in
the prior year.

Statement of Operations: Year Ended December 31, 2012

* For the year ended December 31, 2012, Premium and Service Revenues increased
59.0% to  $8.2 billion  over the corresponding period in 2011 as a result of the
additional revenue between years from our  Illinois,  Kentucky,  Louisiana, 
Missouri  and  Washington  contracts,  Texas  and  Arizona  expansions, pharmacy
carve-ins in  Texas  and  Ohio, and organic membership growth.    
* Consolidated HBR of 91.6% for 2012, compared to 85.2% in 2011.  The increase
compared to last year primarily reflects (1) the continued high level of medical
costs in  Kentucky  including a  $41.5 million  premium deficiency reserve for
the contract period  January 1, 2013  through  July 5, 2013, (2) a high level of
medical costs in the  March 1, 2012  expansion areas in  Texas, (3) a high level
of medical costs in our individual health business, especially for policies
issued to members who converted in the first quarter of 2012 and (4) a high
level of flu costs during the fourth quarter of 2012.  Excluding our  Kentucky 
operations, the HBR for the year ended  December 31, 2012, was 89.6%.  
* Consolidated G&A expense ratio for 2012 was 8.6%, compared to 11.3% in 2011.
The decrease is primarily due to  leveraging our expenses over higher revenues
and a reduction in performance based compensation expense which lowered the
ratio by 60 basis points.   
* Diluted EPS of  $0.03  in 2012.  Included in the year ended  December 31,
2012, results are the following items: (1) an operating loss in our  Kentucky 
health plan, including a  $41.5 million  pre-tax premium deficiency reserve; (2)
an impairment loss for the write down of goodwill and intangible assets in the
Celtic reporting unit; (3) a gain on the sale of investments; and (4) a state
income tax benefit.  The impact of these items to diluted EPS is provided
below:

                                2012             
 Diluted EPS                    $    0.03       
 Loss from Kentucky operations  1.71             
 Celtic impairment loss         0.50             
 Investment gains               (0.23)           
 Tax benefit                    (0.11)           
 Total                          $    1.90       


* Total operating cash flows of  $278.7 million.

Balance Sheet and Cash Flow  

At December 31, 2012, the Company had cash, investments and restricted deposits
of  $1,632.6 million, including  $37.3 million  held by its unregulated
entities.  Medical claims liabilities totaled  $926.3 million, representing 41.1
days in claims payable excluding the liability for the  Kentucky  premium
deficiency reserve.  Total debt was  $538.9 million  which reflects no
borrowings on the  $350 million  revolving credit facility at year end.  Debt to
capitalization was 32.7% at December 31, 2012, excluding the  $75.4 million 
non-recourse mortgage note.  Cash flow from operations for the year ended
December 31, 2012 was  $278.7 million.

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, September 30, 2012             42.8         
 Timing of claim payments including pharmacy flu costs  (1.9)        
 Other                                                  0.2          
 Days in claims payable, December 31, 2012              41.1         
                                                                       


Outlook  

The table below depicts the Company's annual guidance for 2013.

                                               Full Year 2013                                    
                                               Low                      High                   
 Premium and Service Revenues (in millions)    $     9,700            $     10,000         
 Diluted EPS                                   $     2.60             $     2.90           
 Consolidated Health Benefits Ratio            88.0          %         89.0           %      
 General & Administrative expense ratio        9.0           %         9.5            %      
 Diluted Shares Outstanding (in thousands)     54,800                  55,200                
                                                                                               


The guidance in the table above does not include the pending acquisition of
AcariaHealth or revenue and medical costs of the recently announced long-term
care program recommendations in Florida.  However, business expansion costs for
the  Florida  long-term care award are incorporated in our guidance.    

Conference Call

As previously announced, the Company will host a conference call Tuesday,
February 5, 2013, at  8:30 A.M. (Eastern Time)  to review the financial results
for the fourth quarter and year ended December 31, 2012, 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 1-877-270-2148 in the U.S. and  Canada;
+1-412-902-6510 from abroad; 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,
February 4, 2014, at the aforementioned URL. In addition, a digital audio
playback will be available until  9:00 AM Eastern Time  on  Tuesday, February
12, 2013, by dialing 1-877-344-7529 in the U.S. and  Canada, or +1-412-317-0088
from abroad, and entering access code 10023301.

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 individuals to
more accurately assess the ongoing nature of the Company's operations and
measure the Company's performance more consistently.  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.

The discussion in the third bullet under the heading "Statement of Operations:
Three Months Ended December 31, 2012" contains financial information for new and
existing businesses.  Existing businesses are primarily state markets,
significant geographic expansion in an existing state or product that we have
managed for four complete quarters. New businesses are primarily new state
markets, 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 related services to the rising number of
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). Centene's CeltiCare subsidiary offers states unique, "exchange
based" and other cost-effective coverage solutions for low-income populations.
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, life and health
management, managed vision, telehealth services, and pharmacy benefits
management.  

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, changes in expected contract start dates,
inflation, provider and state contract changes, new technologies, reduction in
provider payments by governmental payors, major epidemics, disasters and
numerous other factors affecting the delivery and cost of healthcare, as well as
those factors disclosed in the Company's publicly filed documents. The
expiration, cancellation or suspension of Centene's Medicaid Managed Care
contracts, or the loss of any appeal of or protest to any such expiration,
cancellation or suspension, by state governments would also negatively affect
Centene.

                                                                                                                                                                                                                                                                 
 [Tables Follow]                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                                 
 CENTENE CORPORATION AND SUBSIDIARIES                                                                                                                                                                                                                               
 
CONSOLIDATED BALANCE SHEETS                                                                                                                                                                                                                                       
 
(In thousands, except share data)                                                                                                                                                                                                                                 
 
(Unaudited)                                                                                                                                                                                                                                                       
                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                         December 31,                 December 31,               
                                                                                                                                                                                                         
2012                        
2011                      
 ASSETS                                                                                                                                                                                                                                                          
 Current assets:                                                                                                                                                                                                                                                 
 Cash and cash equivalents                                                                                                                                                                               $      843,952             $      573,698           
 Premium and related receivables                                                                                                                                                                         263,452                     157,450                   
 Short-term investments                                                                                                                                                                                  139,118                     130,499                   
 Other current assets                                                                                                                                                                                    127,080                     78,363                    
 Total current assets                                                                                                                                                                                    1,373,602                   940,010                   
 Long-term investments                                                                                                                                                                                   614,723                     506,140                   
 Restricted deposits                                                                                                                                                                                     34,793                      26,818                    
 Property, software and equipment, net                                                                                                                                                                   377,726                     349,622                   
 Goodwill                                                                                                                                                                                                256,288                     281,981                   
 Intangible assets, net                                                                                                                                                                                  20,268                      27,430                    
 Other long-term assets                                                                                                                                                                                  64,282                      58,335                    
 Total assets                                                                                                                                                                                            $      2,741,682           $      2,190,336         
 LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                                                                                                            
 Current liabilities:                                                                                                                                                                                                                                            
 Medical claims liability                                                                                                                                                                                $      926,302             $      607,985           
 Premium deficiency reserve                                                                                                                                                                              41,475                      -                         
 Accounts payable and accrued expenses                                                                                                                                                                   191,343                     216,504                   
 Unearned revenue                                                                                                                                                                                        34,597                      9,890                     
 Current portion of long-term debt                                                                                                                                                                       3,373                       3,234                     
 Total current liabilities                                                                                                                                                                               1,197,090                   837,613                   
 Long-term debt                                                                                                                                                                                          535,481                     348,344                   
 Other long-term liabilities                                                                                                                                                                             55,344                      67,960                    
 Total liabilities                                                                                                                                                                                       1,787,915                   1,253,917                 
 Commitments and contingencies                                                                                                                                                                                                                                   
 Stockholders' equity:                                                                                                                                                                                                                                           
 Common stock, $.001 par value; authorized 100,000,000 shares; 55,339,160 issued and 52,329,248 outstanding at December 31, 2012, and 53,586,726 issued and 50,864,618 outstanding at December 31, 2011  55                          54                        
 Additional paid-in capital                                                                                                                                                                              450,856                     421,981                   
 Accumulated other comprehensive income:                                                                                                                                                                                                                         
 Unrealized gain on investments, net of tax                                                                                                                                                              5,189                       5,761                     
 Retained earnings                                                                                                                                                                                       566,820                     564,961                   
 Treasury stock, at cost (3,009,912 and 2,722,108 shares, respectively)                                                                                                                                  (69,864)                    (57,123)                  
 Total Centene stockholders' equity                                                                                                                                                                      953,056                     935,634                   
 Noncontrolling interest                                                                                                                                                                                 711                         785                       
 Total stockholders' equity                                                                                                                                                                              953,767                     936,419                   
 Total liabilities and stockholders' equity                                                                                                                                                              $      2,741,682           $      2,190,336         


                                                                                                                                                                    
 CENTENE CORPORATION AND SUBSIDIARIES                                                                                                                                  
 
CONSOLIDATED STATEMENTS OF OPERATIONS                                                                                                                                
 
(In thousands, except share data)                                                                                                                                    
 
(Unaudited)                                                                                                                                                          
                                                                                                                                                                    
                                                             Three Months Ended                                   Year Ended                                        
                                                             
December 31,                                        
December 31,                                     
                                                             2012                       2011                    2012                      2011                  
 Revenues:                                                                                                                                                      
 Premium                                                     $     2,272,736           $     1,436,413        $     8,126,205          $     5,077,242      
 Service                                                     28,680                     22,136                  112,742                   103,765               
 Premium and service revenues                                2,301,416                  1,458,549               8,238,947                 5,181,007             
 Premium tax                                                 95,181                     48,627                  428,665                   159,575               
 Total revenues                                              2,396,597                  1,507,176               8,667,612                 5,340,582             
 Expenses:                                                                                                                                                      
 Medical costs                                               2,075,957                  1,233,739               7,446,037                 4,324,746             
 Cost of services                                            20,808                     17,397                  87,705                    78,114                
 General and administrative expenses                         192,282                    159,937                 704,604                   587,004               
 Premium tax expense                                         94,482                     48,726                  428,354                   160,394               
 Impairment loss                                             -                          -                       28,033                    -                     
 Total operating expenses                                    2,383,529                  1,459,799               8,694,733                 5,150,258             
 Earnings (loss) from operations                             13,068                     47,377                  (27,121)                  190,324               
 Other income (expense):                                                                                                                                        
 Investment and other income                                 3,377                      3,990                   35,957                    13,369                
 Debt extinguishment costs                                   -                          -                       -                         (8,488)               
 Interest expense                                            (6,067)                    (4,797)                 (20,460)                  (20,320)              
 Earnings (loss) from operations, before income tax expense  10,378                     46,570                  (11,624)                  174,885               
 Income tax expense (benefit)                                5,739                      17,306                  (329)                     66,522                
 Net earnings (loss)                                         4,639                      29,264                  (11,295)                  108,363               
 Noncontrolling interest                                     (4,422)                    (848)                   (13,154)                  (2,855)               
 Net earnings attributable to Centene Corporation            $     9,061               $     30,112           $     1,859              $     111,218        
                                                                                                                                                                
 Net earnings per common share attributable to Centene Corporation:                                                                                                    
 Basic earnings per common share                             $     0.17                $     0.60             $     0.04               $     2.22           
 Diluted earnings per common share                           $     0.17                $     0.57             $     0.03               $     2.12           
                                                                                                                                                                
 Weighted average number of common shares outstanding:                                                                                                          
 Basic                                                       51,817,066                 50,522,726              51,509,366                50,198,954            
 Diluted                                                     54,055,209                 52,894,701              53,714,375                52,474,238            


                                                                                                                                       
 CENTENE CORPORATION AND SUBSIDIARIES                                                                                                   
 
CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                                 
 
(In thousands)                                                                                                                        
 
(Unaudited)                                                                                                                           
                                                                                                                                       
                                                                                     Year Ended December 31,                           
                                                                                     2012                        2011                
 Cash flows from operating activities:                                                                                               
 Net earnings (loss)                                                                 $     (11,295)             $     108,363      
 Adjustments to reconcile net earnings to net cash provided by operating activities                                                  
 Depreciation and amortization                                                       65,866                      58,327              
 Stock compensation expense                                                          25,332                      18,171              
 Impairment loss                                                                     28,033                      -                   
 Gain on sale of investment in convertible note                                      (17,880)                    -                   
 Gain on sale of investments, net                                                    (1,484)                     (287)               
 Debt extinguishment costs                                                           -                           8,488               
 Deferred income taxes                                                               (14,438)                    2,031               
 Changes in assets and liabilities                                                                                                   
 Premium and related receivables                                                     (116,558)                   (11,306)            
 Other current assets                                                                (36,818)                    (11,812)            
 Other assets                                                                        2,825                       (2)                 
 Medical claims liabilities                                                          359,792                     149,756             
 Unearned revenue                                                                    24,707                      (109,082)           
 Accounts payable and accrued expenses                                               (21,474)                    38,889              
 Other operating activities                                                          (7,917)                     10,160              
 Net cash provided by operating activities                                           278,691                     261,696             
 Cash flows from investing activities:                                                                                               
 Capital expenditures                                                                (82,144)                    (73,708)            
 Purchases of investments                                                            (695,687)                   (318,397)           
 Sales and maturities of investments                                                 589,921                     267,404             
 Investments in acquisitions, net of cash acquired                                   -                           (4,375)             
 Net cash used in investing activities                                               (187,910)                   (129,076)           
 Cash flows from financing activities:                                                                                               
 Proceeds from exercise of stock options                                             15,912                      15,815              
 Proceeds from borrowings                                                            400,500                     419,183             
 Payment of long-term debt                                                           (218,234)                   (416,283)           
 Excess tax benefits from stock compensation                                         10,996                      4,435               
 Common stock repurchases                                                            (12,741)                    (7,809)             
 Contribution from (to) noncontrolling interest                                      1,092                       813                 
 Purchase of noncontrolling interest                                                 (14,429)                    -                   
 Debt issue costs                                                                    (3,623)                     (9,242)             
 Net cash provided by financing activities                                           179,473                     6,912               
 Net increase in cash and cash equivalents                                           270,254                     139,532             
 Cash and cash equivalents,  beginning of period                                     573,698                     434,166             
 Cash and cash equivalents,  end of period                                           $     843,952              $     573,698      
 Supplemental disclosures of cash flow information:                                                                                  
 Interest paid                                                                       $     21,605               $     27,383       
 Income taxes paid                                                                   $     42,877               $     50,444       


                                                                                                                                              
 CENTENE CORPORATION                                                                                                                                   
 
SUPPLEMENTAL FINANCIAL DATA                                                                                                                          
                                                                                                                                              
                                  Q4                    Q3                    Q2                    Q1                    Q4                  
                                  2012                  2012                  2012                  2012                  2011                
 MEMBERSHIP                                                                                                                                   
 Managed Care:                                                                                                                                
 Arizona                          23,500               23,800               24,000               23,100               23,700             
 Florida                          214,000              209,600              204,100              199,500              198,300            
 Georgia                          313,700              312,400              313,300              306,000              298,200            
 Illinois                         18,000               17,900               17,800               17,400               16,300             
 Indiana                          204,000              205,400              205,000              206,300              206,900            
 Kentucky                         135,800              145,400              143,500              145,700              180,700            
 Louisiana                        165,600              167,200              168,700              51,300               -                  
 Massachusetts                    21,500               28,000               41,400               36,000               35,700             
 Mississippi                      77,200               30,600               30,100               29,500               31,600             
 Missouri                         59,600               53,900               -                    -                    -                  
 Ohio                             157,800              173,800              166,800              161,000              159,900            
 South Carolina                   90,100               89,400               87,800               86,700               82,900             
 Texas                            949,900              930,700              919,200              811,000              503,800            
 Washington                       57,200               42,000               -                    -                    -                  
 Wisconsin                        72,400               72,900               75,800               76,000               78,000             
 Total at-risk membership         2,560,300            2,503,000            2,397,500            2,149,500            1,816,000          
 Non-risk membership              -                    -                    -                    -                    4,900              
 TOTAL                            2,560,300            2,503,000            2,397,500            2,149,500            1,820,900          
                                                                                                                                              
                                                                                                                                              
 Medicaid                         1,977,200            1,939,400            1,848,500            1,634,800            1,336,800          
 CHIP & Foster Care               237,700              229,600              222,600              218,800              213,900            
 ABD & Medicare                   307,800              289,800              269,900              247,400              218,000            
 Hybrid Programs                  29,100               35,700               48,100               41,500               40,500             
 Long-term Care                   8,500                8,500                8,400                7,000                6,800              
 Total at-risk membership         2,560,300            2,503,000            2,397,500            2,149,500            1,816,000          
 Non-risk membership              -                    -                    -                    -                    4,900              
 TOTAL                            2,560,300            2,503,000            2,397,500            2,149,500            1,820,900          
                                                                                                                                              
 Specialty Services(a):                                                                                                                       
 Cenpatico Behavioral Health                                                                                                                  
 Arizona                          157,900              162,000              159,900              162,100              168,900            
 Kansas                           49,800               48,500               44,300               46,000               46,200             
 TOTAL                            207,700              210,500              204,200              208,100              215,100            
                                                                                                                                              
 (a) Includes external membership only.                                                                                                                
                                                                                                                                              
 REVENUE PER MEMBER PER MONTH(b)  $      292          $      283          $      279          $      269          $      262        
                                                                                                                                              
 CLAIMS(b)                                                                                                                                    
 Period-end inventory             641,000              826,800              1,195,000            735,000              495,500            
 Average inventory                555,200              547,400              640,600              457,400              367,600            
 Period-end inventory per member  0.25                 0.33                 0.50                 0.34                 0.27               
 (b)  Revenue per member and claims information are presented for the Managed Care at-risk members.                                                    
                                                                                                                                              
 NUMBER OF EMPLOYEES              6,800                6,400                6,200                5,700                5,300              
                                                                                                                                    


                             Q4                                    Q3                    Q2                    Q1                    Q4                  
                             2012                                  2012                  2012                  2012                  2011                
                                                                                                                                                         
 DAYS IN CLAIMS PAYABLE (c)  41.1                                 42.8                 41.4                 44.7                 45.3               
 (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, excluding the Kentucky premium deficiency reserve liability. 
                                                                                                                                                         
 CASH AND INVESTMENTS (in millions)                                                                                                                        
 Regulated                   $        1,595.3                    $    1,493.8        $    1,198.2        $    1,166.9        $    1,198.9      
 Unregulated                 37.3                                 36.0                 40.6                 35.5                 38.2               
 TOTAL                       $        1,632.6                    $    1,529.8        $    1,238.8        $    1,202.4        $    1,237.1      
                                                                                                                                                         
 DEBT TO CAPITALIZATION      36.1               %                 29.2           %     30.1           %     26.4           %     27.3           %   
 DEBT TO CAPITALIZATION      32.7               %                 25.0           %     25.9           %     21.8           %     22.6           %   
 EXCLUDING NON-RECOURSE                                                                                                                             
 DEBT(d)                                                                                                                                            
 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 ($75.4 million at December 31, 2012).                                                   


                                                                                                                       
 Operating Ratios:                                                                                                        
                                                                                                                       
                                               Three Months Ended                       Year Ended                     
                                               
December 31,                            
December 31,                  
                                               2012                  2011             2012             2011        
 Health Benefits Ratios:                                                                                           
 Medicaid and CHIP                             92.4   %             82.9   %        91.2  %         82.4  %    
 ABD and Medicare                              89.1                 88.8            92.1            89.8       
 Specialty Services                            92.7                 94.0            92.5            89.1       
 Total                                         91.3                 85.9            91.6            85.2       
                                                                                                                   
 Total General & Administrative Expense Ratio  8.4    %             11.0   %        8.6   %         11.3  %    


                                                        
 MEDICAL CLAIMS LIABILITY (In thousands)                   
 
     The changes in medical claims liability are summarized as follows: 
                                                        
 Balance, December 31, 2011          $     607,985      
 Incurred related to:                                    
 Current period                      7,499,437           
 Prior period                        (53,400)            
 Total incurred                      7,446,037           
 Paid related to:                                        
 Current period                      6,535,537           
 Prior period                        550,708             
 Total paid                          7,086,245           
 Less: Premium Deficiency Reserve    41,475              
 Balance, December 31, 2012          $     926,302      


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 December 31, 2011.  Excluding the impact of
retroactive assignment of members in our  Kentucky  health plan, the amount of
"Incurred related to: Prior period" shown in the table above would have been 
$61.7 million.

 

 

SOURCE  Centene Corporation


Investor Relations Inquiries, Edmund E. Kroll, Senior Vice President, Finance &
Investor Relations, +1-212-759-0382, or Media Inquiries,Deanne Lane, Vice
President, Media Affairs, +1-314-725-4477

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