Centene boasts $1.1 billion in profit in Q2
Profit and revenue have increased since the company posted $1.05B in profit and $37.6B in revenue in Q2 2023.
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Centene's second-quarter earnings report brought good financial news for the insurer as it posted $1.1 billion in profit and $39.8 billion revenue, both improvements over the $1.05 billion in profit and $37.6 billion revenue it logged in Q2 2023.
Premium and service revenues increased 3% to $36 billion, up from $34.8 billion in Q2 of last year. The increase was primarily driven by membership growth in the marketplace business due to strong product positioning, as well as overall market growth and outperformance in marketplace risk adjustment for the 2023 benefit year.
This, Centene said, was partially offset by recent divestitures in the Other segment and lower Medicaid membership, primarily due to redeterminations.
The health benefits ratio (HBR) of 87.6% for Q2 represents an increase from 87% a year ago. The increase was driven by higher acuity in Medicaid as Centene progressed through the redetermination process and continued to work with states to match rates with acuity. Medicare Star Ratings also had an impact.
The SG&A expense ratio was 8% for the second quarter, compared to 8.7% in Q2 2023. The adjusted SG&A expense ratio was 8% for the second quarter of 2024, compared to 8.6% in the second quarter of 2023. The decreases were driven by Marketplace risk adjustment revenue, the divestiture of Circle Health Group (which operated at a higher SG&A expense ratio) and ongoing SG&A reduction initiatives.
Cash flow provided by operations for the second quarter of 2024 was $2.2 billion, primarily driven by net earnings and risk adjustment accruals for the 2024 benefit year.
WHAT'S THE IMPACT?
As of June 30, Centene had cash, investments and restricted deposits of $38.5 billion. It maintained $217 million of cash and cash equivalents in its unregulated entities. Medical claims liabilities totaled $18.2 billion.
Days in claims payable was 54 days, an increase of one day, compared to the first quarter of 2024, and an increase of two days as compared to the second quarter of 2023. Total debt was $17.6 billion, which included no borrowings on the $2 billion Revolving Credit Facility at quarter's end.
Also in the quarter, Centene repurchased 10.7 million shares for $800 million. As of July 26, $4.4 billion remains available under the company's stock repurchase program.
THE LARGER TREND
The insurer reaffirmed its 2024 GAAP diluted EPS guidance floor of greater than $5.94 and its 2024 adjusted diluted EPS guidance floor of greater than $6.80. It's increasing its 2024 premium and service revenues guidance range by $5 billion to a range of $141 to $143 billion to reflect an additional $2 billion in commercial premium revenue, $2 billion in Medicare premium revenue and $1 billion in Medicaid premium revenue.
The company's total revenue guidance has been updated to $155.0 billion to $157.0 billion.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
