Feb. 5, 2019
Dive Brief:
·
Managed care giant Centene added 1.8
million members during 2018, a 15% increase from the year prior.
Centene now covers 14 million people across the country. The growth in
membership was thanks to increased participation in the Affordable Care Act
exchanges and through state contract wins to provide Medicaid services, the
company said during its fourth
quarter earnings call with investors Tuesday.
·
Revenue soared to $16.6 billion and $60.1
billion for the fourth quarter and full year, respectively. Revenue for the
quarter increased 29% from the prior-year quarter and 24% from the
prior year-end in 2017. Fourth quarter earnings beat analyst expectations
by 4.5%, Jefferies said, coming in at $1.15 per share and $4.52 per share for
the full year. However, administrative costs were higher than expected.
Jefferies said that's likely "a purposeful decision" to reinvest back
into the company.
·
Centene raised its guidance, now
expecting revenue for the year to be between $70.3 billion and $71.1
billion. Jefferies characterized the increase as "modest" as
earnings per share for the year are expected to be between $4.11-4.31
from $4.08-4.28.
Dive Insight:
Centene said
higher-than-expected membership growth in its health insurance exchange
business helped fuel its overall profitability in 2018. The payer's
exchange business grew to cover 1.5 million people by the end of 2018,
contributing $10 billion of the company's $60 billion in annual revenue,
executives said Tuesday.
Despite a
legal ruling out of Texas that determined the ACA is unconstitutional, CEO
Michael Neidorff said the company stuck to business as usual.
"We
have not been distracted by ACA legal headlines. As we agree with all the legal
experts, it will be reversed. While there has been chatter about possible
disruption to the exchanges, individuals like to have an insurance card with
comprehensive coverage," Neidorff said.
More people
across the country were able to buy a Centene Ambetter plan on the
exchanges in 2018 for coverage that started in 2019. Centene sold in three
new states and expanded its offerings in six other states.
It also
secured new contract wins for its core business of providing Medicaid coverage
on behalf of states. The company won contract renewals in Arizona, Florida,
Washington and Kansas and won new contracts in New Mexico and North
Carolina.
However,
Centene is considering appealing the decision out of North Carolina given
it did not win a statewide contract, Neidorff said. Although he's pleased
to have won a contract to provide coverage in two regions, one of which is the
state's largest, the state did not understand Centene's innovative approach to
providing coverage in partnership with providers, he said.
Neidorff
also disclosed Tuesday the board has asked him to stay on longer with the St.
Louis-based company. His current contract runs through 2020. He is now
expected to stay on as CEO until 2023 and as executive chairman of the board
through 2024, according to a recent SEC filing.
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