Centene Corporation Q3 2024 Earnings Report

Centene (NYSE:CNC) Corporation reported robust third-quarter results on October 30, 2024, achieving an adjusted diluted earnings per share (EPS) of $1.62, exceeding expectations. CEO Sarah London and CFO Drew Asher reaffirmed the company’s full-year 2024 adjusted diluted EPS guidance of over $6.80 during the earnings call. The strong performance from the Medicaid and Marketplace segments and the integration of AI in contract management were highlighted as key operational drivers.

Key Takeaways

• Adjusted diluted EPS for Q3 was $1.62, above expectations.
• Full-year 2024 adjusted diluted EPS guidance set over $6.80.
• 13 million Medicaid members served, with many returning after drops.
• Restructuring of Medicare Advantage with projected revenue for 2025 estimated between $14 billion and $16 billion.
• Marketplace business expanded to 4.5 million members, targeted pre-tax margins of 5% to 7.5%.
• Investor Day scheduled for December 12, 2024, to discuss future outlook and potential post-election scenarios.

Company Outlook

• Centene expects a composite adjustment rate of 4.5% to 5% for the latter half of 2024.
• Anticipated growth in the Part D business from recent policy changes.
• Full-year premium and service revenue guidance increased by $2 billion.
• Positioned to navigate potential post-election scenarios.

Bearish and Bullish Highlights

Bearish:
– Heightened Health Benefit Ratio (HBR) pressures from member return delays.
– Expected seasonal HBR increases in Medicare and commercial segments in Q4.

Bullish:
– Positive movements in Medicaid rate discussions and mid-cycle acuity adjustments.
– Anticipated improvements in Medicaid HBR as a tailwind for 2025.
– Growth expected in adjusted EPS for 2025 due to ongoing visibility into rate updates.

Misses

• Lack of specific quantifiable benefits reported from AI initiatives.
• General and Administrative spending projected to rise in Q4 due to seasonal activities.

Q&A Highlights

• Management discussed the impact of GLP-1 medications on rates and formularies.
• Growth in Medicaid per member per month (PMPM) related to state-directed payments.
• Strategy reaffirmed for achieving target margins of 5% to 7.5%.

Centene’s third-quarter results indicate a positive trajectory, bolstered by a stable membership in Medicaid and growth in its Marketplace segment. The focus on operational efficiency and strategic initiatives, including AI integration, positions the company favorably for future success as it prepares for the upcoming Investor Day.

InvestingPro Insights

Centene’s vibrant Q3 results reflect a solid market capital of $33.88 billion, indicating its significance in the healthcare sector. The adjusted P/E ratio of 10.63 suggests that the stock may be undervalued. The firm’s financial health seems solid with $144.06 billion revenue, representing a 4.32% growth over the past twelve months. Management's aggressive share buyback also signals confidence in future prospects.

Full Transcript

The full transcript includes operational details and analyses from the earnings call, featuring insights from executives addressing questions from investors about various facets of the business, including Medicaid utilization trends, G&A expenses, and the influence of legislative changes.

This article was generated with AI support and reviewed by an editor. For more information, see our T&C.