(Reuters) - Health insurer Centene Corp reported better-than-expected quarterly revenue and profit, helped by its Health Net acquisition and growth in its Obamacare individual business.
Centene’s results come at a time when the health insurance industry faces a turbulent period with President Donald Trump and Republicans vowing to repeal Obamacare, formally known as the Affordable Care Act, but having been unable to agree on a law to do that.
The St. Louis, Missouri-based company, which bought rival Health Net for $6.30 billion last year, said it had 12.15 million members as of March. 31, an increase of 5 percent from a year earlier.
Centene, which primarily focuses on government-backed health insurance plans, reported a net profit of $139 million, or 79 cents per share, for the first quarter, compared with a loss of $16 million, or 13 cents per share, a year earlier.
Excluding items, Centene earned $1.12 per share, beating the average analyst estimate of $1.05, according to Thomson Reuters I/B/E/S.
The company’s health benefits ratio, or the amount it spends on medical claims compared with its income from premiums, reduced to 87.6 percent in the quarter, from 88.7 percent, mostly due to the acquisition of Health Net.
Health Net operates at a lower HBR due to a greater mix of commercial business and growth in its Obamacare business in 2017.
Centene’s results suggest the shortfalls associated with last year’s Health Net premium are on track to be resolved as management has indicated, Evercore ISI analysts said in a note.
The company also raised its full-year 2017 adjusted profit guidance to $4.50-$4.90 per share, from $4.40-$4.85.
Centene’s revenue jumped 69 percent to $11.72 billion, above analysts’ estimate of $11.42 billion.
Shares of the company were up 1.4 percent at $73.00 in light premarket trading on Tuesday. Up to Monday’s close, the stock had risen 27.4 percent this year.
Reporting by Nikhil Subba in Bengaluru; Editing by Maju Samuel