(Reuters) - Health insurer Centene Corp reported a better-than-expected quarterly profit as it added more states under its Medicaid contracts and expanded its coverage in existing ones.
The company raised its full-year forecast for premium and service revenue to $10.1 billion to $10.4 billion, and reiterated its profit forecast of $2.60 to $2.90 per share.
“We believe we are well positioned for profitable growth in 2014 and beyond,” CEO Michael Neidorff said in a statement.
Net income fell marginally to $23 million, or 42 cents per share, in the first quarter from $24 million, or 45 cents per share, a year earlier.
Premium and service revenue rose 53 percent to $2.54 billion, mainly driven by the expansion of contracts in Texas, Mississippi and Louisiana, and contract additions in Kansas, Missouri and Washington, the company said.
Analysts were expecting a profit of 37 cents per share, on revenue of $2.46 billion, according to Thomson Reuters I/B/E/S.
Health benefits ratio, a measure of medical expenses expressed as a percentage of premium revenue, rose to 90.4 percent from 88.2 percent a year earlier.
The increase in medical expenses reflected a higher level of flu costs during the first quarter, and a higher level of medical costs in new business, the company said.
Insurers take a hit from the flu because of an increase in claims related to visits to doctors and hospitals.
Centene was hit by high costs at its Medicaid contracts in Texas and Kentucky last year as higher utilization of its services in the states ate into profit.
The insurer intends to exit Kentucky from July 5.
Several other health insurers providing Medicaid services in the two states had also experienced high medical costs.
Shares of the St. Louis, Missouri-based Centene closed at $45.35 on Monday on the New York Stock Exchange.
Reporting by Esha Dey in Bangalore; Editing by Roshni Menon