Centene posts increased Q4 profit on membership growth

Centene Corp.’s profit doubled in the fourth quarter of fiscal 2014, beating analysts’ estimates as Medicaid expansion continued to boost membership.

The St.Louis-based health insurer posted net earnings of $107 million, or $1.76 per share. That’s a 50 percent increase from $53 million, or $0.93 per share, in the prior-year quarter. Excluding certain items, the company earned $1.74 per share, topping analysts’ estimates of $1.69 per share.

Total revenue for the final quarter rose 61 percent compared to the fourth quarter of 2013, to $4.7 billion. Premium and service revenues rose 54 percent, to $4.4 billion, in the fourth quarter as the health insurer expanded in Florida, Ohio, Washington, Texas and Illinois; added operations in California and New Hampshire; and participated in the Health Insurance Marketplace.

For all of 2014, revenues rose 52 percent, to $16.56 billion. Centene’s managed care membership rose 41 percent, to 4.1 million members, in 2014. Medicaid membership grew by 34 percent.

“By any measure, 2014 was a significant year in the history of Centene,” Michael Neidorff, the company’s chairman and CEO, said in a news release. “Membership grew by 1.2 million lives, revenue by almost 50 percent, and EPS by 55 percent. We are more diversified by product and geography — including our entry into the international market. We look forward to continued progress in 2015 and beyond.”

Centene also posted a health benefits ratio of 89.3 percent, up from 88.1 percent a year earlier. The ratio compares the insurer’s expenses for providing health care to the premium income it receives. Centene said the benefit of premium income was offset by flu spikes in the last months of the year. Future potential flu spikes could also mitigate 2015 first quarter earnings. However, full-year projections will not be impacted, the company said.

The health insurer announced a 2-for-1 stock split to increase liquidity for shareholders, forecasting 2015 earnings will settle between $5.05 and $5.35.

Centene followed the final quarter of fiscal 2014 with an active first month of fiscal 2015. The company last week announced its acquisition of Agate Resources, an Oregon-based holding company that offers an array of health care products and services. It was the second purchase of the year for Centene, following its acquisition of LiveHealthier, a health management adviser.

Centene officials said they hope to learn from Agate’s unique business model for Medicaid.


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