Centene profits hit $738 million in the third quarter
This financial performance is attributable to a couple of factors, including Medicare membership increasing by 22%.
Photo: Martin Barraud/Getty Images
Insurer Centene has increased its year-over-year profits, logging $738 million in profit in the third quarter of this year, up from $584 million a year ago.
According to the earnings report Centene released this week, that brings total profit for the nine months ended September 30 up to $1.4 billion, once again an increase over 2021, in which the insurer collected $748 million during the same period.
On the revenue side, the $35.9 billion the company posted in the third quarter brings nine-month total revenue up to $109 billion. Both are increases from the previous year, when Centene logged $32.4 billion in revenue in the third quarter and $93.4 billion through the first three quarters.
This financial performance is attributable to a couple of factors, including Medicare membership increasing by 22% and the news that it would be partnering with Express Scripts as its pharmacy benefit manager in 2024.
Operating cash flow for the third quarter was $3.3 billion, driven by the receipt of $2.9 billion in Centers for Medicare and Medicaid Services payments for October on the last day of September.
Year-to-date operating cash flow for 2022 was $7.8 billion; excluding the early receipt of $2.9 billion in CMS payments, year-to-date operating cash flow would have been $4.9 billion, or 3.5 times net earnings.
WHAT'S THE IMPACT?
Due to the higher-than-expected performance, Centene is raising the bottom of adjusted EPS range by $0.05.
In October, CMS published updated Medicare Star quality ratings for the 2023 rating year, in which Centene's star quality ratings declined. The company attributed the decrease to the expiration of certain disaster relief provisions, as well as deterioration in "select metrics."
Over the past year, Centene's leadership team launched a multi-year plan to build and improve quality across the enterprise, with a focus on enhanced patient experience and access to care. The company said it expects to begin to see the results of these efforts with the 2024 rating year (2025 revenue year).
THE LARGER TREND
Centene announced in May that it's divesting two of its pharmacy businesses, Magellan Rx and PANTHERx Rare. The company has signed two definitive agreements and will sell the former to Prime Therapeutics and the latter to a consortium of the Vistria Group for a combined total of about $2.8 billion.
Centene framed the moves as the next step in its ongoing portfolio review. They follow the company's plan, announced last year, to exit the pharmacy benefit management (PBM) space.
In June, Centene agreed to pay $13.7 million to New Mexico to settle an investigation into its subsidiaries' inflationary pricing and reporting of pharmacy benefits in the state's Medicaid program, which is overseen by the state's Human Services Department. Centene, among the largest Medicaid managed care organizations in the United States, was accused of submitting inaccurate billing requests to the state in its capacity as pharmacy benefit manager, according to the New Mexico Attorney General's office.
Three months later, in September, the company settled with Texas for $165 million to resolve claims of Medicaid fraud by the Texas attorney general. Centene made no admission of liability and maintained that its business practices were lawful.
Under the terms of the settlement, Centene will pay more than $165.6 million to resolve Attorney General Ken Paxton's investigation into whether certain of Centene's business practices violated the Texas Medicaid Fraud Prevention Act. The AG alleged that Centene overcharged Medicaid in the prescription drug program.
Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com
