Centene Touts Strong Medicare, Medicaid Performance in 3Q

by Carrie Pallardy

Centene Corp. reported solid results for the third quarter of 2021, achieving Medicare and Medicaid membership increases and raising revenue guidance for the full year. To Jefferies analyst David Windley, the company’s results “reflect an improvement from a messy 2Q.”

COVID-19-related costs, a headwind called out in Centene’s second-quarter earnings call, peaked in August. Their decline continued in October. “Similar to peers, [Centene’s management] noted an offset dynamic between rising COVID costs and declining non-COVID utilization due to Delta,” Windley noted.

Medicare, Medicaid delivered strong performances:

• The company’s third-quarter consolidated medical loss ratio (MLR) was 88.1%, compared to 86.4% in the prior-year period. MLR in 2021 was negatively affected by the ACA health insurance tax repeal, according to Centene.
• Centene reported adjusted diluted earnings per share (EPS) of $1.26, beating the consensus of $1.24.
• While the company’s Medicare and Medicaid businesses delivered strong performances, the exchange business felt some pressure related to COVID costs. “We delivered a strong membership increase in Medicaid, are positioned for continued growth in Medicare and we continue to stay the course in marketplace,” said Centene Chairman and CEO Michael Neidorff, during the insurer’s Oct. 26 earnings call.
• The company’s marketplace membership sits at just under 2.2 million. Centene plans to add new marketplace products in 2022 and enter five new states.

Insurer to issuer RFP for new PBM:

• Centene is also in the process of consolidating all its pharmacy benefit management operations into one PBM platform. In fact, Centene executives said the insurer will issue a request for proposals in 2022 for PBM services, which Centene’s Chief Financial Officer Drew Asher remarked is “going to be a huge opportunity for an external PBM.” In addition to using its own internal PBM, Envolve Pharmacy Solutions, and a cloud-based platform that it has invested in, RxAdvance, Centene has a contract with CVS Health Corp.’s Caremark that expires at the end of 2023.
• The company is anticipating $125.2 billion to $126.4 billion in revenue for full-year 2021, up from previous guidance of $123.3 billion to $125.3 billion. Centene also narrowed its 2021 earnings per share guidance to a range of $5.05 to $5.15, compared with $5.05 to $5.35.

From Health Plan Weekly