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Centene's (CNC) Q2 Earnings Miss Estimates, Improve Y/Y

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Centene Corporation CNC reported second-quarter 2021 adjusted earnings per share of $1.25, which missed the Zacks Consensus Estimate by 11.3%. However, the bottom line improved 47.9% year over year attributable to higher revenues.

In the second quarter, total revenues improved 12% year over year to $31 billion, led by the recent PANTHERx buyout, membership growth in the Medicare business and the continuing suspension of Medicaid eligibility redeterminations. The top line also outpaced the consensus mark by 3%.

Centene Corporation Price, Consensus and EPS Surprise

Centene Corporation Price, Consensus and EPS Surprise
Centene Corporation Price, Consensus and EPS Surprise

Centene Corporation price-consensus-eps-surprise-chart | Centene Corporation Quote

Quarterly Operational Update

As of Jun 30, 2021, managed care membership totaled 25.4 million, which climbed 3% year over year.

In the reported quarter, Health Benefits Ratio (HBR) came in at 88.3%, which expanded 620 basis points (bps) year over year. The reason can primarily be attributed to reduced medical utilization trends stemming from the COVID-19 pandemic and higher utilization in the Marketplace business along with an unfavourable 2020 risk adjustment that took place in 2021.

Adjusted selling, general and administrative (SG&A) expense ratio was 7.7% in the quarter, down 80 bps year over year. The decline could be attributed to lower short-term variable compensation costs, leveraging of costs over higher revenues from increased Medicaid enrolment and a recent few buyouts.

Financial Update (as of Jun 30, 2021)

Total assets were up 4.1% from the 2020-end figure to $71.5 billion.

Centene’s long-term debt was $16.5 billion, which dipped 0.9% from the figure at 2020 end.

In the first six months of 2021, net cash provided by operating activities totaled $1.7 billion, down 50.3% year over year.

2021 Guidance Updated

Concurrent with second-quarter results, the company revised its full-year outlook.

For the current year, management anticipates revenues in the $123.3-$125.3 billion range, up from the previous band of $120.1-$122.1 billion.

In 2021, the company’s adjusted EPS is still expected to be $5.05-$5.35.

This year, HBR is forecast between 87.5% and 88.1% compared with the prior range of 87.1-87.7%.

The guidance for adjusted SG&A expense ratio now stands in the range of 8-8.4%.

Zacks Rank

Centene currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Medical Sector Releases

Among other players from the medical space that have reported second-quarter earnings so far, the bottom-line results of UnitedHealth Group Incorporated UNH, Tenet Healthcare Corporation THC and HCA Healthcare, Inc. HCA beat estimates.

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UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report

Tenet Healthcare Corporation (THC) : Free Stock Analysis Report

HCA Healthcare, Inc. (HCA) : Free Stock Analysis Report

Centene Corporation (CNC) : Free Stock Analysis Report

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