Centene's (CNC) Q1 Earnings Miss Estimates, Decline Y/Y
Centene Corporation CNC reported first-quarter 2020 adjusted earnings per share of 86 cents, missing the Zacks Consensus Estimate by 14.9% due to lower investment income and incremental senior note interest expense. The bottom line also tumbled 38.1% year over year.
For the first quarter, total revenues rose 41% to $26 billion from the year-ago period, primarily aided by the WellCare buyout, growth in Health Insurance Marketplace business, expansions and new programs across many states in 2019 and 2020 as well as the reinstatement of the health insurer fee in 2020. However, this upside was offset by the Illinois health plan divestiture and the timing of pass through payments from New York to some extent.
Meanwhile, the top line surpassed the Zacks Consensus mark by almost 7%.
Centene Corporation Price, Consensus and EPS Surprise
Centene Corporation price-consensus-eps-surprise-chart | Centene Corporation Quote
Quarterly Operational Update
As of Mar 31, 2020, managed care membership came in at 23.8 million, up 61% year over year.
Health Benefit Ratio (HBR) for the reported quarter was 88% compared with 85.7% in the prior-year period. This increase can be attributable to the Health Insurance Marketplace business, WellCare buyout, new or expanded markets, partly offset by the reinstatement of the health insurer fee.
Adjusted Selling, General & Administrative (SG&A) expense ratio was 8.6% for the quarter compared with 9.5% for the same period last year. This year-over-year contraction of 90 basis points can be attributed to the WellCare acquisition and leveraging of costs over higher revenues.
Financial Update
As of Mar 31, 2020, the company's cash and cash equivalents totaled $9.3 billion, down 23.2% from the figure at 2019 end.
As of Mar 31, 2020, total assets were up 62.1% to $66.4 billion from the level at 2019 end.
Centene’s long-term debt summed $17.2 billion, up 25.8% year over year.
Net cash flow used in operating activities as of Mar 31, 2020 was $240 million compared with the cash flow provided by operating activities of $1.3 billion a year ago.
Highlights
In January 2020, Centene acquired WellCare Health for a total value of $19.6 billion.
2020 Outlook
The company now expects revenues in the range of $110-$112.4 billion.
Adjusted EPS is anticipated between $4.56 to $4.76 per share.
Zacks Rank
Centene carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases From Medical Sector
Some stocks worth considering from the medical sector with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:
Molina Healthcare, Inc MOH has an Earnings ESP of +9.38% and a Zacks Rank of 2. The company is scheduled to release first-quarter earnings on Apr 29.
Anthem Inc. ANTM is set to report first-quarter earnings on Apr 29. The stock is #3 Ranked and has an Earnings ESP of +1.28%.
Humana Inc. HUM is slated to announce first-quarter earnings on Apr 29. The stock has an Earnings ESP of +11.37% and a Zacks Rank #3.
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