(Source: Business Wire)
Centene Corporation (NYSE: CNC) today announced its net earnings from continuing operations for the quarter ended June 30, 2009 were $20.7 million, or $0.47 per diluted share, compared to $17.9 million, or $0.40 per diluted share in the 2008 second quarter. The results of operations for our New Jersey health plan, University Health Plans, are classified as discontinued operations. The discussions below, with the exception of cash flow information, are in the context of continuing operations and all financial ratios are calculated using revenues excluding premium taxes and investment income.
Second Quarter Highlights
Quarter-end managed care at-risk membership of 1,289,000, an increase of 140,200 lives year over year.
Premium and Service revenues of $931.3 million, representing 16.1% year over year growth.
Health Benefits Ratio (HBR) of 83.1%.
General and administrative (G&A) expense ratio of 13.9%.
Cash flow from operations of $38.7 million, which is 2.0x net earnings.
Days in claims payable of 47.5, an increase from 45.3 days at March 31, 2009.
Diluted earnings per share from continuing operations of $0.47, representing 17.5% year over year growth.
Increased 2009 EPS guidance range to $1.88-$1.96.
Other Events
On July 1, 2009, CeltiCare Health Plan of Massachusettsbegan serving the Central, Northern, Boston and Southern regions under the Commonwealth Care program. CeltiCare was also recently granted a seal of approval by the Commonwealth Connector Authority for the Commonwealth Choice program. Commonwealth Choice is part of Massachusetts' health care program, serving the individual and small group market and is not a subsidized program. CeltiCare now participates in two of the three health coverage programs in Massachusetts.
In July 2009, the Company was awarded a tentative contract from the Texas Health and Human Services Commission (HHSC) for the Children's Health Insurance Program (CHIP) Rural Services Area Managed Care Organization Procurement. The award is contingent upon the successful negotiation and execution of a contract with HHSC. Our Texas health plan will begin serving members under the new contract on September 1, 2010, continuing through August 31, 2013. The award covers up to 174 primarily rural counties in Texas.
Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "We are pleased that our strategic and operational focus on fundamentals continues to drive this positive operating momentum."
The following table depicts membership in Centene's managed care organizations, by state, at June 30, 2009 and 2008:
June 30, 2009 2008 Arizona 16,200 -- Florida 22,300 -- Georgia 292,800 278,800 Indiana 196,100 161,700 Ohio 141,200 137,300 South Carolina 46,000 22,500 Texas 443,200 423,700 Wisconsin 131,200 124,800 Total at-risk membership 1,289,000 1,148,800 Non-risk membership 114,000 * 3,500 Total 1,403,000 1,152,300 ______________________________ * Increase mainly due to consolidation of our Access Health Solutions LLC investment, effective January 1, 2009. -------------------------------------------------------------------------------
The following table depicts membership in Centene's managed care organizations, by member category, at June 30, 2009 and 2008:
June 30, 2009 2008 Medicaid 958,600 828,700 CHIP & Foster Care 261,400 256,900 ABD & Medicare 69,000 63,200 Total at-risk membership 1,289,000 1,148,800 Non-risk membership 114,000 3,500 Total 1,403,000 1,152,300 -------------------------------------------------------------------------------
Statement of Operations
For the 2009 second quarter, Premium and Service Revenues increased 16.1% to $931.3 million from $802.5 million in the 2008 second quarter. The increase was primarily driven by membership growth, especially related to the commencement of our Arizona acute care contract in October 2008, the consolidation of Access and conversion of members to our at-risk plan, premium rate increases and the recent acquisition of Celtic in July 2008.
The consolidated HBR, which reflects medical costs as a percent of premium revenues, was 83.1%, relatively flat compared to 83.0% in the 2008 second quarter. Sequentially, our consolidated HBR decreased from 83.5% in the 2009 first quarter to 83.1% as a result of normal seasonality. During the second quarter, an increase in outpatient expense attributable to swine flu concerns was offset by lower inpatient and pharmacy costs.
Consolidated G&A expense as a percent of premium and service revenues was 13.9% in the second quarter of 2009, an increase from 13.6% in the second quarter of 2008. G&A expense increased in the quarter ended June 30, 2009 compared to 2008 as a result of new business initiatives including the acquisition of Celtic, the consolidation of Access Health Solutions LLC and the start up of CeltiCare health plan in Massachusetts.
Earnings per diluted share from continuing operations were $0.47, compared to $0.40 in the 2008 second quarter.
Balance Sheet and Cash Flow
At June 30, 2009, the Company had cash and investments of $852.8 million, including $825.8 million held by its regulated entities and $27.0 million held by its unregulated entities. Medical claims liabilities totaled $394.8 million, representing 47.5 days in claims payable, an increase of 2.2 days from March 31, 2009. Total debt was $288.8 million and debt to capitalization was 33.0%. Year to date cash flow from operations was $62.1 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, March 31, 2009 45.3 Timing of claims payments 1.5 Increase in claims processing inventory 1.1 Payment of annual provider bonuses (0.4 ) Days in claims payable, June 30, 2009 47.5 -------------------------------------------------------------------------------
Outlook
The table below depicts the Company's annual guidance for 2009:
Full Year 2009 Low High Premium and Service revenues (in millions) $ 3,750 $ 3,850 Earnings per diluted share $ 1.88 $ 1.96 -------------------------------------------------------------------------------
Conference Call
As previously announced, the Company will host a conference call Tuesday, July 28, 2009, at 8:30 A.M. (Eastern Time) to review the financial results for the second quarter ended June 30, 2009, 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 800-273-1254 in the U.S. and Canada, 973-638-3440 from abroad, or via a live Internet broadcast on the Company's website at www.centene.com, under the Investor Relations section. A replay will be available for on-demand listening shortly after the completion of the call until 11:59 PM (Eastern Time) on Tuesday, August 11, 2009, at the aforementioned URL, or by dialing 800-642-1687 in the U.S. and Canada, or 706-645-9291 from abroad, and entering access code 15407585.
About Centene Corporation
Centene Corporation is a leading multi-line healthcare enterprise that provides programs and related services to individuals receiving benefits under Medicaid, including the Children's Health Insurance Program (CHIP), as well as Aged, Blind, or Disabled (ABD), Foster Care, Long-Term Care and Medicare (Special Needs Plans). The Company operates local health plans and offers a wide range of health insurance solutions to individuals and the rising number of uninsured Americans. It also contracts with other healthcare and commercial organizations to provide specialty services including behavioral health, life and health management, managed vision, telehealth services, pharmacy benefits management and medication adherence. Information regarding Centene is available via the Internet at www.centene.com.
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.
