Oct. 23, 2018
Dive Brief:
- St.
Louis-based Centene reported revenue rose 36% to $16.2 billion for the
third quarter, while income fell significantly to $19 million from $205
million during the previous quarter. The decline was "obscured"
by three offsetting adjustments, two of which were related to expired
contracts, CEO Michael Neidorff told investors Tuesday morning.
- Revenue
growth came in part from the payer's acquisition of New-York based
Fidelis Care in July.
- Total
managed care membership increased 17% to 14.4 million members. Centene now
covers more than 1.5 members on the Affordable Care Act exchanges.
Dive Insight:
Centene now
has a major foothold in the health insurance exchange marketplace with more
than 1.5 million members. The individual mandate penalty will soon zero
out, but Neidorff said he does not expect it to have a
"meaningful impact" on the business. Exchange members have an 80%
re-enrollment rate, suggesting many are happy with their coverage, he said.
Centene's contract
to provide healthcare coordination to the U.S. Department of Veterans
Affairs under the Patient-Centered Community Care and Veterans Choice
Programs has expired. The company had a pre-tax charge of $110
million for negotiated settlements and severance costs, officials
said.
The
payer also recorded a $30 million pre-tax expenses related to a commitment to
its charitable foundation.
Centene
now covers about 417,000 Medicare beneficiaries, which includes supplemental
plan members and Medicare Advantage members. Neidorff said he's committed
to growing the MA business and believes it will fuel the company's growth over
the next decade. But he said it's important to "get the fundamentals
right," before expanding too quickly.
The
company did increase some of its guidance. Dissecting the figures is
complicated by the Fidelis buy, Jefferies noted.
By
the Jefferies' accounting, Centene reported a slightly higher
revenue outlook, modestly lower MLR guidance, and a 25 basis point
increase to the SG&A forecast.
Many
of the nation's payers gathered in D.C. last week to discuss these
fundamentals and better ways to coordinate care. Much focus was on social
determinants of health and how plans can better intervene to improve members'
health. The expansion on benefit opportunities in MA plans may offer a chance
to insurers to do more on that front.
A
potential positive for Centene heading in the midterms is the prospect of
voters choosing to expand Medicaid in a number of states where the policy is on
the ballot.
Expanding
the program in additional states provides a potential benefit for
increased business for Medicaid managed care companies like Centene.
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