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Centene's (CNC) Q3 Earnings Improve Y/Y on High Revenues

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Zacks Equity Research
·3 min read
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Centene Corporation CNC reported third-quarter 2020 adjusted earnings per share of $1.26, beating the Zacks Consensus Estimate by 31.3%. The bottom line also soared by the same percentage year over year on the back of solid revenues.

For the third quarter, total revenues surged 53% to $29.1 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 as well as the reinstatement of the health insurer fee in 2020 along with the ACA risk corridor receivable settlement. However, this upside was offset by the Illinois health plan divestiture.

Meanwhile, the top line surpassed the consensus mark by 2.5%.

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 Sep 30, 2020, managed care membership came in at 25.2 million, up 65% year over year.

Health Benefit Ratio (HBR) for the reported quarter was 86.4% compared with 88.2% in the prior-year period. This decrease can be attributed to the prevalent COVID-19 pandemic as well as the ACA risk corridor receivable settlement.

Adjusted Selling, General & Administrative (SG&A) expense ratio was 8.9% in the quarter compared with 8.8% in the same period last year.

Financial Update

As of Sep 30, 2020, the company's cash and cash equivalents totaled $12.2 billion, up 0.6% from the figure at 2019 end.

As of Sep 30, 2020, total assets were up 66.8% to $68.4 billion from the level at 2019 end.

Centene’s long-term debt summed $16.7 billion, up 22.7% from the figure at 2019 end.

Net cash provided by operating activities as of Sep 30, 2020 was $2.5 billion compared with net cash provided by operating activities of $2.1 billion a year ago.

2020 Outlook

The company now expects revenues in the range of $109.8-$111.4 billion, the upper limit tightened from the previous anticipation of $109-$111.4 billion.

Adjusted EPS is anticipated between $4.90 and $5.06, up from the previous projection of $4.76-$4.96.

Zacks Rank

Centene carries a Zacks Rank #2 (Buy), currently. 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 the perfect mix of elements to surpass estimates in the next releases are as follows:

Select Medical Holdings Corporation SEM has an Earnings ESP of +10.00% and a Zacks Rank of 2, currently. The company is scheduled to release third-quarter earnings on Oct 29. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Bausch Health Cos Inc. BHC is set to report third-quarter earnings on Nov 3. The stock is currently a #3 Ranked player and has an Earnings ESP of +5.80%.

Canopy Growth Corporation CGC is set to report third-quarter earnings on Nov 12. The stock presently has a Zacks Rank #3 and an Earnings ESP of +7.55%.

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Centene Corporation (CNC) : Free Stock Analysis Report
 
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Bausch Health Cos Inc. (BHC) : Free Stock Analysis Report
 
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