Centene's earnings crush estimates and company raises guidance

By Ciara Linnane

Commercial revenue rose 48% in the quarter to offset softness in other business lines

Centene Corp.'s stock surrendered early gains to trade down 4% Friday, after the managed healthcare provider blew past earnings estimates for the first quarter and raised its full-year guidance.

St. Louis-based Centene (CNC) reported net profit of $1.163 billion, or $2.16 a share, for the quarter, up from $1.130 billion, or $2.04 a share, in the year-earlier period.

Excluding one-time items, the company's adjusted per-share earnings came to $2.26, well ahead of the $2.06 FactSet consensus.

Revenue rose to $40.407 billion from $38.889 billion a year ago and also beat the FactSet consensus of $36.432 billion.

Premium and services revenue rose 4% to $36.337 billion, led by commercial revenue, which was up 48% to $7.751 billion. Medicaid revenue fell 3% and Medicare revenue was up 1%.

The company scored several Medicaid contract wins in Oklahoma, Florida and Michigan. At the end of the quarter, it had 28.4 million members across its product lines, down from 28.5 million in the fourth quarter.

Medicaid enrollment fell about 3 million as the company worked its way through the redetermination process, which assesses whether individuals are still eligible for the program. But membership of the Obamacare marketplace plans rose 41% from the first quarter of 2023.

The company's health benefits ratio, which measures profitability, stood at 87.1%, down from 87.7% in the fourth quarter.

The ratio is calculated by dividing total medical costs by the total insurance premiums gathered with a lower ratio indicating higher profitability as it shows a larger amount of premiums left over after paying customer insurance claims.

The company is raising its full-year guidance after the strong quarter and is now expecting the floor for EPS to be greater than $5.94 and the floor for adjusted EPS to exceed $6.80. The FactSet consensus is for EPS of $6.77.

It expects revenue to range from $147.5 billion to $150.5 billion, while FactSet is expecting $146.3 billion. The company expects its health benefits ratio to range from 87.3% to 87.9%.

The stock has fallen 2% in the year to date, while the S&P 500 has gained 5.8%.

-Ciara Linnane

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04-26-24 1128ET

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