Making Sense Of The 40% Jump In Centene’s Stock Since Early October

Trefis Team Contributor Dec 3, 2019, 07:00am

Centene Corporation (NYSE: CNC) is a full-line managed services company which services both government sponsored and private insurance health care programs. It’s stock has rallied nearly 40% in the last 2 months primarily due to two factors:

·       Strong Q3 results, with a 6% increase in managed care membership, 17% growth in revenues and 8% growth in adjusted profits year-on-year.

·       The announcement of a strategic partnership between Centene, Walgreens and RxAdvance to introduce a new model for pharmacy management that aims to increase transparency and enhance customer experience.

We step back from these recent swings to review Centene Corporation’s performance over the last few years, as a context for what might come next. Our Interactive dashboard- Why has Centene Corporation’s stock price rallied by 40% in the last 2 months?, reviews the near term reasons and the big picture.

The context for the last few years:

A closer look At Centene Corporation’s Total Revenues over the last few years and the outlook.

Total Revenues for Centene significantly increased from $48.4 Bil in 2017 to $60.1 Bil in 2018, an increase of 24.3%.

This compares with Total Revenues growth of:

·       37.4% in 2015, on account of expansion of programs in multiple states.

·       78.4% in 2016 (acquisition of Health Net)

·       19.1% in 2017

We expect Total Revenues growth of 23.1% in 2019.

TREFIS

A closer look At Centene Corporation’s Total Expenses over the last few years and the outlook.

Total Expense for Centene significantly increased from $47.2 Bil in 2017 to $58.7 Bil in 2018, an increase of 24.3%.

This compares with Total Expense growth of:

·       37.0% in 2015, on account of expansion of programs in multiple states.

·       78.8% in 2016 (acquisition of Health Net)

·       19.8% in 2017

We expect Total Expense growth to be 22% in 2019.

How does Centene Corporation’s Revenue Growth compare with rivals?

For more information on how Centene Corporations’ revenue growth compares with WellCare Health Plans, Anthem and Humana, view our interactive dashboard analysis.

How has Centene Corporation’s EBT trended?

EBT for Centene increased significantly by 20.6% from $1.13 Bil in 2017 to $1.37 Bil in 2018.

We expect EBT to increase 69.2% to $2.3 Bil in 2019, on account higher other income as well as moratorium on Health Insurance Fees.

How has Centene Corporation’s Net Income and EPS trended?

For more details about Centene Corporations’ Net Income and EPS, view our interactive dashboard analysis.

https://www.forbes.com/sites/greatspeculations/2019/12/03/making-sense-of-the-40-jump-in-centenes-stock-since-early-october/#9d3ec341d11c