Centene Corporation (CNC) Bundle
A Brief History of Centene Corporation
Centene Corporation, a prominent player in the healthcare sector, has undergone significant transformations over the years, particularly leading into 2024. As of September 30, 2024, Centene reported total revenues of $42.0 billion, reflecting a 10% growth year-over-year.
Financial Performance
In the third quarter of 2024, Centene's premium and service revenues amounted to $36.9 billion, marking a 6% increase compared to the same period in the previous year. The company's net earnings for the three months ended September 30, 2024, were $710 million, a substantial rise from $475 million in the third quarter of 2023.
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Total Revenues | $42.0 billion | $38.0 billion | 10% |
| Premium and Service Revenues | $36.9 billion | $34.8 billion | 6% |
| Net Earnings | $710 million | $475 million | 49% |
| Diluted EPS | $1.36 | $0.87 | 56% |
Membership Growth
As of the end of September 2024, Centene reported managed care membership of 28.6 million, representing an increase of 670,000 members, or 2% year-over-year. This growth can be attributed to strategic initiatives and the expansion of healthcare services across various states.
Operational Highlights
Centene's Health Benefits Ratio (HBR) for the third quarter of 2024 was 89.2%, compared to 87.0% in the prior year. This increase reflects the higher acuity of Medicaid beneficiaries resulting from recent redetermination processes. The Selling, General & Administrative (SG&A) expense ratio was reported at 8.3%, down from 8.7% in Q3 2023.
Investment and Divestitures
In terms of investments, Centene's investment portfolio as of September 30, 2024, consisted primarily of fixed-income securities with an average duration of 3.3 years. The company had unregulated cash and investments totaling $1.2 billion. Notably, during the first nine months of 2024, Centene recorded total impairment charges of $13 million, significantly lower than the $478 million recorded in the same period of 2023.
| Investment Metric | Value |
|---|---|
| Total Impairment Charges (2024) | $13 million |
| Total Impairment Charges (2023) | $478 million |
| Average Duration of Investment Portfolio | 3.3 years |
| Unregulated Cash and Investments | $1.2 billion |
Debt and Financing Activities
As of September 30, 2024, Centene had an aggregate principal amount of $15.7 billion in senior notes issued and outstanding. The company's debt-to-capital ratio was reported at 39.1%, down from 40.7% at the end of 2023. Financing activities utilized cash of $2.4 billion in the nine months ended September 30, 2024, primarily driven by stock repurchases totaling $2.2 billion.
| Debt Metrics | Value |
|---|---|
| Aggregate Senior Notes | $15.7 billion |
| Debt-to-Capital Ratio | 39.1% |
| Cash Used in Financing Activities (2024) | $2.4 billion |
| Stock Repurchases (2024) | $2.2 billion |
In summary, as of 2024, Centene Corporation continues to strengthen its market position through strategic growth, effective cost management, and focused investments in healthcare services, positioning itself for future success in an evolving healthcare landscape.
A Who Owns Centene Corporation (CNC)
Major Shareholders
As of 2024, Centene Corporation's ownership is distributed among various institutional investors and individual shareholders. The largest shareholders include:
| Shareholder Type | Shareholder Name | Percentage Ownership |
|---|---|---|
| Institutional Investor | The Vanguard Group, Inc. | 8.5% |
| Institutional Investor | BlackRock, Inc. | 7.8% |
| Institutional Investor | State Street Corporation | 4.2% |
| Institutional Investor | FMR LLC (Fidelity Investments) | 3.9% |
| Institutional Investor | Invesco Ltd. | 3.5% |
Executive and Board Ownership
Executive officers and members of the board of directors also hold significant shares in Centene Corporation. Notable ownership includes:
| Name | Position | Shares Owned |
|---|---|---|
| Sarah London | CEO | 300,000 |
| David P. M. O'Connor | CFO | 150,000 |
| Michael F. Neidorff | Former Executive Chairman | 600,000 |
| Board Member | Various | Approximately 1,000,000 |
Recent Stock Performance
As of September 30, 2024, Centene's stock performance has shown the following key metrics:
| Metric | Value |
|---|---|
| Current Stock Price | $73.50 |
| Market Capitalization | $45.5 billion |
| 52-Week High | $84.00 |
| 52-Week Low | $60.25 |
| Dividend Yield | 0.6% |
Stock Buybacks
Centene Corporation has engaged in stock repurchase activities, reflecting its strategy to return capital to shareholders:
| Period | Shares Repurchased | Cost (in millions) |
|---|---|---|
| Q3 2024 | 16,373,000 | $1,227 |
| Q3 2023 | 11,620,000 | $774 |
| 9 Months 2024 | 29,060,000 | $2,181 |
| 9 Months 2023 | 23,267,000 | $1,602 |
Conclusion on Ownership Trends
Centene Corporation's ownership landscape reveals a strong presence of institutional investors, with significant stakes held by major asset management firms. The executive team's ownership aligns their interests with those of shareholders, while ongoing stock buyback programs indicate a commitment to enhancing shareholder value.
Centene Corporation (CNC) Mission Statement
Mission Statement Overview
Centene Corporation's mission is to transform the health of the community, one person at a time, by providing accessible, high-quality healthcare solutions. The company is committed to delivering innovative services that improve health outcomes for individuals and communities.
Core Values and Principles
- Integrity: Acting ethically and transparently in all operations.
- Quality: Delivering high-quality healthcare services that meet the needs of members.
- Innovation: Embracing new ideas and technologies to enhance healthcare delivery.
- Collaboration: Partnering with stakeholders to improve health outcomes.
- Community Focus: Supporting and advocating for the communities served.
Financial Performance Metrics
As of September 30, 2024, Centene Corporation reported the following financial metrics:
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenues | $42.0 billion | $38.0 billion | 10% |
| Net Earnings | $713 million | $469 million | 52% |
| Diluted Earnings per Share (EPS) | $1.36 | $0.87 | 56% |
| Adjusted Diluted EPS | $1.62 | $2.00 | -19% |
| Gross Margin | $4.0 billion | $4.6 billion | -14% |
| Operating Cash Flow | $(1.0 billion) | $3.0 billion | -133% |
Segment Performance
Centene operates in four main segments: Medicaid, Medicare, Commercial, and Other. Below are the total revenues for each segment for the three months ended September 30, 2024:
| Segment | Total Revenues (Q3 2024) | Total Revenues (Q3 2023) | Change (%) |
|---|---|---|---|
| Medicaid | $26.4 billion | $24.7 billion | 7% |
| Medicare | $5.6 billion | $5.4 billion | 4% |
| Commercial | $8.7 billion | $6.5 billion | 35% |
| Other | $1.2 billion | $1.5 billion | -15% |
Membership Growth
As of September 30, 2024, Centene reported a managed care membership of 28.6 million, which reflects an increase of 670 thousand members or 2% year-over-year. This growth is attributed to effective product positioning and market expansion strategies.
Healthcare Benefit Ratios (HBR)
The Health Benefit Ratio (HBR) for the three months ended September 30, 2024, was 89.2%, compared to 87.0% for the same period in 2023. This increase is primarily driven by higher acuity in Medicaid due to the redetermination process and impacts from Medicare Star ratings.
Operating Expenses
For the three months ended September 30, 2024, the Selling, General and Administrative (SG&A) expense ratio was 8.3%, a decrease from 8.7% in the same quarter of the previous year. The adjusted SG&A expense ratio also decreased from 8.6% to 8.3% during this period.
How Centene Corporation (CNC) Works
Business Model
Centene Corporation operates primarily as a managed care organization, providing services to government-sponsored healthcare programs. The company’s offerings include Medicaid, Medicare, and commercial health insurance plans.
Financial Performance Overview
For the third quarter of 2024, Centene reported total revenues of $42.0 billion, marking a growth of 10% compared to the same period in 2023. The revenue breakdown by segment is as follows:
| Segment | Q3 2024 Revenues ($ millions) | Q3 2023 Revenues ($ millions) | % Change |
|---|---|---|---|
| Medicaid | 26,440 | 24,694 | 7% |
| Medicare | 5,643 | 5,430 | 4% |
| Commercial | 8,693 | 6,453 | 35% |
| Other | 1,247 | 1,465 | (15%) |
| Total | 42,023 | 38,042 | 10% |
Gross Margin Analysis
Centene's gross margin for the third quarter of 2024 totaled $4.006 billion, down 14% from $4.632 billion in Q3 2023. The gross margin by segment is detailed below:
| Segment | Q3 2024 Gross Margin ($ millions) | Q3 2023 Gross Margin ($ millions) | % Change |
|---|---|---|---|
| Medicaid | 1,475 | 2,012 | (27%) |
| Medicare | 675 | 968 | (30%) |
| Commercial | 1,736 | 1,364 | 27% |
| Other | 120 | 288 | (58%) |
| Total | 4,006 | 4,632 | (14%) |
Membership and Market Growth
As of September 30, 2024, Centene reported managed care membership of 28.6 million, which reflects an increase of 670,000 members or 2% year-over-year.
Operating Expenses
The company’s medical costs for the third quarter of 2024 amounted to $29.479 billion, leading to a Health Benefit Ratio (HBR) of 89.2%, compared to 87.0% in Q3 2023. The increase was attributed to higher acuity in Medicaid due to the redetermination process and impacts from Medicare Star ratings.
Income Tax and Earnings
In Q3 2024, Centene recorded an income tax expense of $211 million on pre-tax earnings of $921 million, resulting in an effective tax rate of 22.9%. Net earnings for the quarter were $710 million, a 49% increase from $475 million in Q3 2023.
Stockholder Equity and Comprehensive Earnings
As of September 30, 2024, Centene's total stockholders' equity was $27.396 billion. The comprehensive earnings for the third quarter totaled $1.130 billion, compared to $351 million in Q3 2023.
Debt and Financial Position
Centene’s total debt as of September 30, 2024, was $17.605 billion, which includes senior notes and term loans. The debt structure is as follows:
| Debt Type | Amount ($ millions) |
|---|---|
| 4.25% Senior Notes due 2027 | 2,397 |
| 2.45% Senior Notes due 2028 | 2,302 |
| 4.625% Senior Notes due 2029 | 3,277 |
| 3.375% Senior Notes due 2030 | 2,000 |
| 3.00% Senior Notes due 2030 | 2,200 |
| 2.50% Senior Notes due 2031 | 2,200 |
| 2.625% Senior Notes due 2031 | 1,300 |
| Total Senior Notes | 15,676 |
Cash Flow Summary
Net cash provided by operating activities for the nine months ended September 30, 2024, was $741 million, a significant decrease from $7.836 billion in the same period of 2023. Cash flows used in investing activities amounted to $1.154 billion, while financing activities used $2.393 billion.
How Centene Corporation (CNC) Makes Money
Overview of Revenue Streams
Centene Corporation generates revenue primarily through its managed care services, which include Medicaid, Medicare, and Commercial segments. The company has seen significant growth in its Commercial segment, particularly in its Marketplace business.
Financial Performance for 2024
As of September 30, 2024, Centene reported total revenues of $42.0 billion, representing a 10% increase compared to the same period in 2023. This growth was primarily driven by Medicaid rate increases and membership growth in the Marketplace business.
| Segment | Total Revenues (Q3 2024) | Total Revenues (Q3 2023) | % Change |
|---|---|---|---|
| Medicaid | $26,440 million | $24,694 million | 7% |
| Medicare | $5,643 million | $5,430 million | 4% |
| Commercial | $8,693 million | $6,453 million | 35% |
| Other | $1,247 million | $1,465 million | (15%) |
| Total | $42,023 million | $38,042 million | 10% |
Segment Analysis
The revenue growth in the Medicaid segment was driven by increased premium tax revenue and rate increases, although it was partially offset by lower membership due to redeterminations. The Medicare segment's growth was influenced by a 49% increase in PDP membership. The Commercial segment saw substantial growth of 35%, primarily due to a 22% increase in Marketplace membership.
Gross Margin and Operating Expenses
For the third quarter of 2024, the consolidated gross margin was $4.006 billion, a decrease from $4.632 billion in Q3 2023. The overall gross margin percentage was impacted by the following:
| Segment | Gross Margin (Q3 2024) | Gross Margin (Q3 2023) | % Change |
|---|---|---|---|
| Medicaid | $1,475 million | $2,012 million | (27%) |
| Medicare | $675 million | $968 million | (30%) |
| Commercial | $1,736 million | $1,364 million | 27% |
| Other | $120 million | $288 million | (58%) |
| Total | $4,006 million | $4,632 million | (14%) |
Operating Expenses
The company's operating expenses included a medical cost ratio (HBR) of 89.2% for Q3 2024, compared to 87.0% in Q3 2023. The Selling, General and Administrative (SG&A) expense ratio was recorded at 8.3%, down from 8.7% in the prior year.
Investment and Other Income
Centene's investment and other income for Q3 2024 amounted to $432 million, a significant increase from $214 million in Q3 2023. This increase was attributed to higher interest income on investments due to larger cash balances.
Net Earnings and Earnings Per Share
Net earnings for Q3 2024 were reported at $713 million, compared to $469 million in Q3 2023. The diluted earnings per share (EPS) attributable to Centene was $1.36 for Q3 2024, a notable increase from $0.87 in Q3 2023.
Cash Flows
Operating cash flows showed a decrease, with $741 million in cash provided by operating activities for the nine months ended September 30, 2024, compared to $7.8 billion in the same period the previous year. Net cash used in investing activities was $(1.154 billion), and net cash used in financing activities was $(2.393 billion).
| Cash Flow Category | 2024 (Nine Months) | 2023 (Nine Months) |
|---|---|---|
| Net cash provided by operating activities | $741 million | $7,836 million |
| Net cash used in investing activities | $(1,154 million) | $(242 million) |
| Net cash used in financing activities | $(2,393 million) | $(1,457 million) |
| Net increase (decrease) in cash | $(2,799 million) | $6,156 million |
Conclusion of Financial Performance Metrics
Centene Corporation's diversified revenue streams, particularly in Medicaid, Medicare, and Commercial sectors, have driven substantial growth in 2024. However, challenges such as membership redeterminations and increased medical costs have impacted gross margins. The company's strategic focus on improving Marketplace membership and operational efficiencies is essential for sustaining growth.
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Article updated on 8 Nov 2024
Resources:
- Centene Corporation (CNC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Centene Corporation (CNC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Centene Corporation (CNC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.