Centene pulls in $45 million in profit in Q4
For 2023, Centene logged $2.7 billion in profit and $154 billion in revenue, both year-over-year improvements.
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The final quarter of 2022 saw Centene pull in $45 million in profit while total revenue hit about $39.5 billion, the company revealed in its latest earnings report.
That's an improvement over Q4 2022, in which the organization experienced a $213 million loss and $35.6 billion in revenue.
For 2023 as a whole, Centene logged $2.7 billion in profit and $154 billion in revenue, both year-over-year improvements – 2022 saw profits at just $1.2 billion and revenues at $143.2 billion.
CEO Sarah London said the performance is slightly ahead of the company's previous guidance, giving the company momentum heading into this year.
"Looking ahead, we are excited by the opportunities we see within our core businesses as we execute against our strategic plan, fortify our foundational assets and drive cost savings," she said. "With increased focus and reduced complexity, Centene is well positioned to continue navigating the dynamic operating landscape while creating shareholder value."
WHAT'S THE IMPACT?
For the fourth quarter of 2023, premium and service revenues increased 5% to $35.3 billion from $33.6 billion in the comparable period of 2022. The increase was driven by membership growth in the Marketplace business due to strong product positioning as well as overall market growth, partially offset by recent divestitures and lower Medicaid membership due to redeterminations.
The health benefits ratio of 89.5% for the fourth quarter of 2023 represents an increase from 88.7% in the comparable period in 2022, primarily driven by the $250 million premium deficiency reserve recorded in connection with the 2024 Medicare Advantage business.
Cash flow provided by operations for the fourth quarter of 2023 was $217 million, primarily driven by net earnings and partially offset by the decreased unearned revenue spurred by the early receipt of fourth-quarter payments from the Centers for Medicare and Medicaid Services.
For the full year, premium and service revenues increased 3% to $140.1 billion from $135.5 billion in the comparable period of 2022, driven by 88% membership growth in the Marketplace business. The increases were partially offset by divestitures, Medicaid membership redeterminations and pharmacy carve-outs in early 2023.
The company is increasing its 2024 premium and service revenues guidance range by $2.5 billion, to a range of $134.5 billion to $137.5 billion. This is to reflect additional Commercial premium revenue from a stronger-than-expected Marketplace open enrollment.
THE LARGER TREND
A third-quarter earnings call in October revealed that Centene, the largest Medicaid managed care organization in the country, is down over one million members since March.
The loss of 1.1 million Medicaid members is due to the Medicaid redetermination process that began on April 1. From April through August, Centene experienced rejoining rates in the mid 20% range. Importantly, the 90-day grace period in most states means that the majority of these members had no break in coverage as they returned to the Medicaid program, the company said.
Centene said its view of 2024 Medicaid performance is unchanged other than revenue looking to be a little stronger than the $77 billion the company outlined during its first quarter call.
At the tail end of 2022, Centene sold off Magellan Rx to Prime Therapeutics for $1.5 billion. The agreement included a number of Magellan Rx business segments, including specialty drug management and full-service specialty pharmacies; a state government division serving 28 states and Washington, D.C.; and a pharmacy benefit manager serving about 1.7 million members.
This followed an announcement that Centene was selling Magellan Specialty Health to Evolent Health for about $750 million in aggregate proceeds, including potential earnout. Magellan Specialty Health is a specialty benefit management organization that offers utilization management solutions to health plans, including radiology management, musculoskeletal management, physical medicine management and genetic testing solutions.
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
