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2014

- Centene Corporation Reports 2013 Fourth Quarter And Full Year Results -

-- 2013 Diluted Earnings Per Share From Continuing Operations: --

- Fourth quarter - $0.84

- Full Year - $2.87 ($2.95 excluding $0.08 of AcariaHealth transaction costs)

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ST. LOUIS, Feb. 4, 2014 /PRNewswire/ -- Centene Corporation (NYSE: CNC) today announced its financial results for the quarter and year ended December 31, 2013.  Our subsidiary, Kentucky Spirit Health Plan (KSHP), ceased serving Medicaid members in Kentucky as of July 6, 2013.  Accordingly, the results of operations for KSHP are classified as discontinued operations.  The following discussions, with the exception of cash flow information, are in the context of continuing operations.

2013 Results


Q4


Full Year


Premium and Service Revenues (in millions)

$

2,859



$

10,526



Consolidated Health Benefits Ratio

88.1%



88.6%



General & Administrative expense ratio

8.9%



8.8%



Diluted earnings per share (EPS)

$

0.84



$

2.87



Diluted EPS excluding AcariaHealth transaction costs

$

0.84



$

2.95



Total cash flow from operations (in millions)

$

170.9



$

382.5



Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "We are pleased with the strong financial performance and development of our organization and business in 2013.  This sets the stage for continued positive momentum in 2014 and beyond."

Fourth Quarter and Full Year Highlights

  • December 31, 2013 at-risk managed care membership of 2,723,200, an increase of 298,700 members, or 12% year over year.
  • Premium and service revenues for the fourth quarter of $2.9 billion, representing 31% growth compared to the fourth quarter of 2012 and $10.5 billion for 2013, representing 37% growth year over year.
  • Health Benefits Ratio of 88.1% for the fourth quarter 2013, compared to 90.7% in the fourth quarter of 2012 and 88.6% for the full year 2013 compared to 89.6% for 2012. 
  • General and Administrative expense ratio of 8.9% for the fourth quarter of 2013, compared to 8.4% in the fourth quarter of 2012 and 8.8% for both of the full years 2013 and 2012. 
  • Operating cash flow of $170.9 million and $382.5 million for the fourth quarter and full year of 2013, representing 3.1 and 2.3 times net earnings, respectively.
  • Diluted EPS for the fourth quarter of 2013 of $0.84, compared to $0.35 in 2012.

Other Events

  • In November 2013, our South Carolina subsidiary, Absolute Total Care, was selected by the South Carolina Department of Health and Human Services to serve dual-eligible members as part of the state's pilot program to provide integrated and coordinated care for individuals who are eligible for both Medicare and Medicaid.  Operations are expected to commence in the second half of 2014.
  • In December 2013, our California subsidiary, California Health and Wellness Plan (CHWP), began operating under a new contract with the California Department of Health Care Services to serve Medicaid beneficiaries in 18 rural counties under the state's Medi-Cal Managed Care Rural Expansion program.  Also in December 2013, CHWP began operating under a new contract to serve Medi-Cal beneficiaries in Imperial County.
  • In December 2013, we signed a definitive agreement to purchase a majority stake in Fidelis SecureCare of Michigan, Inc. (Fidelis), a subsidiary of Fidelis SeniorCare, Inc.  The transaction is expected to close in the fourth quarter of 2014, subject to certain closing conditions including regulatory approvals, and will involve cash purchase price payments contingent on the performance of the plan over the course of 2015.  Fidelis was recently selected by the Michigan Department of Community Health to provide integrated healthcare services to members who are dually eligible for Medicare and Medicaid in Macomb and Wayne counties.  Enrollment is expected to commence in the fourth quarter of 2014.
  • In December 2013, our subsidiary, New Hampshire Healthy Families, began operating under a new contract with the Department of Health and Human Services to serve Medicaid beneficiaries.
  • In January 2014, we acquired a majority interest in U.S. Medical Management, LLC, a management services organization and provider of in-home health services for high acuity populations, for approximately $200.0 million.  The transaction consideration was financed through a combination of cash on hand and 2,243,217 shares of Centene common stock.
  • In January 2014, we began serving members enrolled in Health Insurance Marketplaces in certain regions of 9 states: Arkansas, Florida, Georgia, Indiana, Massachusetts, Mississippi, Ohio, Texas and Washington.
  • In January 2014, our CeltiCare subsidiary began operating under a new contract with the Massachusetts Executive Office of Health and Human Services to participate in the MassHealth CarePlus program in all five regions.
  • In January 2014, Centurion began operating under a new agreement with the Minnesota Department of Corrections to provide managed healthcare services to offenders in the state's correctional facilities.
  • In February 2014, our Mississippi subsidiary, Magnolia Health Plan, was awarded a statewide managed care contract to continue serving members enrolled in the Mississippi Coordinated Access Network (MississippiCAN) program, as one of two contractors.  Under the new contract, Magnolia will continue providing outpatient, behavioral health, pharmacy, vision and dental services, and will also begin providing non-emergency transportation as of July 1, 2014. 

The following table sets forth the Company's membership by state for its managed care organizations:


December 31,



2013


2012

Arizona

7,100



23,500


California

97,200




Florida

222,000



214,000


Georgia

318,700



313,700


Illinois

22,300



18,000


Indiana

195,500



204,000


Kansas

139,900




Louisiana

152,300



165,600


Massachusetts

22,600



21,500


Mississippi

78,300



77,200


Missouri

59,200



59,600


New Hampshire

33,600




Ohio

173,200



157,800


South Carolina

91,900



90,100


Tennessee

20,700




Texas

935,100



949,900


Washington

82,100



57,200


Wisconsin

71,500



72,400


Total

2,723,200



2,424,500


Membership by line of business:


December 31,



2013


2012

Medicaid

2,054,700



1,877,100


CHIP & Foster Care

275,100



235,200


ABD & Medicare

305,300



274,600


Hybrid Programs

19,000



29,100


LTC

37,800



8,500


Correctional Services

31,300




Total

2,723,200



2,424,500


Dual eligible membership (included in tables above):


December 31,



2013


2012

ABD

71,700



62,600


LTC

28,800



7,700


Medicare

6,500



5,100


Total

107,000



75,400


At December 31, 2013, the Company also served 156,600 members under its behavioral health contract in Arizona, compared to 157,900 members in 2012.

Statement of Operations: Three Months Ended December 31, 2013

  • For the fourth quarter of 2013, Premium and Service Revenues increased 31% to $2.9 billion from $2.2 billion in the fourth quarter of 2012.  The increase was primarily driven as a result of the addition of the Kansas, California and New Hampshire contracts, increased premium rates in Texas, expansions in Mississippi, Ohio and Florida, the acquisition of AcariaHealth and the commencement of the correctional health care contracts in Massachusetts and Tennessee.
  • Consolidated HBR of 88.1% for the fourth quarter of 2013 represents a decrease from 90.7% in the comparable period in 2012 and an increase from 87.8% in the third quarter of 2013.  The HBR improvement compared to 2012 reflects the rate increase in Texas and ongoing medical management initiatives.  The increase from the prior quarter is due to normal seasonality.
  • The following table compares the results for new business and existing business for the quarters ended December 31:

2013


2012

Premium and Service Revenue




New business

17%



31%


Existing business

83%



69%






HBR




New business

95.4%



95.3%


Existing business

86.6%



88.7%


  • Consolidated G&A expense ratio for the fourth quarter of 2013 was 8.9%, compared to 8.4% in the prior year.   The year over year increase reflects an increase in performance based compensation expense in 2013 and higher start-up costs, partially offset by the benefits of leveraging of expenses over higher revenue in 2013 and our efforts to control costs.  
  • Earnings from operations were $85.1 million in the fourth quarter of 2013 compared to $25.9 million in the fourth quarter of 2012.  Net earnings attributable to Centene Corporation were $53.2 million in the fourth quarter of 2013, compared to $9.1 million in the fourth quarter of 2012. 
  • Diluted EPS of $0.84 in the fourth quarter of 2013, compared to $0.35 in 2012.

Statement of Operations: Year Ended December 31, 2013

  • Premium and service revenues increased 37.0% in the year ended December 31, 2013 over the corresponding period in 2012 as a result of the Texas, Mississippi, Louisiana and Florida expansions, pharmacy carve-ins in Texas and Louisiana, the additions of the Kansas, Missouri, Washington, California and New Hampshire contracts, commencement of the correctional service contracts in Massachusetts and Tennessee, rate increases in several of our markets and the acquisition of AcariaHealth.
  • The consolidated HBR for the year ended December 31, 2013, of 88.6% was a decrease of 100 basis points over the comparable period in 2012.  The 2013 HBR reflects performance improvement in Texas and our individual insurance business from 2012.
  • The consolidated G&A expense ratio for the years ended December 31, 2013 and 2012 was 8.8%.  The G&A expense ratio reflects an increase in performance based compensation expense in 2013 as well as AcariaHealth transaction costs, offset by the benefits of leveraging of expenses over higher revenue in 2013 and our efforts to control costs.
  • Diluted net earnings per share for 2013 of $2.87 including AcariaHealth transaction costs of $0.08 per diluted share, compared to $1.65 in 2012.

Balance Sheet and Cash Flow

At December 31, 2013, the Company had cash, investments and restricted deposits of $1,915.3 million, including $44.7 million held by its unregulated entities.  Medical claims liabilities totaled $1,111.7 million, representing 42.4 days in claims payable.  Total debt was $668.8 million which includes $150.0 million of borrowings on the $500 million revolving credit facility at quarter end.  Debt to capitalization was 32.4% at December 31, 2013, excluding the $72.8 million non-recourse mortgage note.  Cash flow from operations for the three months ended December 31, 2013, was $170.9 million, or 3.1 times net earnings.

A reconciliation of the Company's change in days in claims payable from the immediately preceding quarter-end is presented below:


Days in claims payable, September 30, 2013

40.6



Timing of claim payments

1.1



ACA provider parity payments in process

0.7



Days in claims payable, December 31, 2013

42.4




Outlook

The table below depicts the Company's annual guidance for 2014.



Full Year 2014




Low


High 


Premium and Service Revenues (in millions)


$

13,800



$

14,300



Diluted EPS


$

3.50



$

3.80



Consolidated Health Benefits Ratio


88.7%



89.2%



General & Administrative expense ratio


8.5%



9.0%



Effective Tax Rate


50.0%



51.0%



Diluted Shares Outstanding (in thousands)


59,700



60,200









The guidance in the table above includes the impact of the acquisition of U.S. Medical Management and related transaction costs as well as the ACA health insurer fee.

Conference Call

As previously announced, the Company will host a conference call Tuesday, February 4, 2014, at 8:30 A.M. (Eastern Time) to review the financial results for the fourth quarter and year ended December 31, 2013, and to discuss its business outlook.  Michael F. Neidorff and William N. Scheffel will host the conference call. 

Investors and other interested parties are invited to listen to the conference call by dialing 1-877-270-2148 in the U.S. and Canada; +1-412-902-6510 from abroad; or via a live, audio webcast on the Company's website at www.centene.com, under the Investors section.  Or, participants can register for the conference call in advance by navigating to

http://dpregister.com/10039178, which includes a calendar entry and PIN code to be activated one hour before the call.  A webcast replay will be available for on-demand listening shortly after the completion of the call for the next twelve months or until 11:59 PM (Eastern Time) on Tuesday, February 3, 2015, at the aforementioned URL. In addition, a digital audio playback will be available until 9:00 AM Eastern Time on Wednesday, February 12, 2014, by dialing 1-877-344-7529 in the U.S. and Canada, or +1-412-317-0088 from abroad, and entering access code 10039178.

Other Information

The discussion in the third bullet under the heading "Statement of Operations: Three Months Ended December 31, 2013" contains financial information for new and existing businesses.  Existing businesses are primarily state markets or significant geographic expansion in an existing state or product that we have managed for four complete quarters.  New businesses are primarily new state markets or significant geographic expansion in an existing state or product that conversely, we have not managed for four complete quarters.

Non-GAAP Financial Presentation

The Company is providing certain non-GAAP financial measures in this release as the Company believes that these figures are helpful in allowing individuals to more accurately assess the ongoing nature of the Company's operations and measure the Company's performance more consistently. The Company uses the presented non-GAAP financial measures such as internally to allow management to focus on period-to-period changes in the Company's core business operations. Therefore, the Company believes that this information is meaningful in addition to the information contained in the GAAP presentation of financial information. The presentation of this additional non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

About Centene Corporation

Centene Corporation, a Fortune 500 company, is a leading multi-line healthcare enterprise that provides programs and services to government sponsored healthcare programs, focusing on under-insured and uninsured individuals.  Many receive benefits provided under Medicaid, including the State Children's Health Insurance Program (CHIP), as well as Aged, Blind or Disabled (ABD), Foster Care and Long Term Care (LTC), in addition to other state-sponsored/hybrid programs, and Medicare (Special Needs Plans).  The Company operates local health plans and offers a range of health insurance solutions.  It also contracts with other healthcare and commercial organizations to provide specialty services including behavioral health, care management software, correctional systems healthcare, in-home health services, life and health management, managed vision, pharmacy benefits management, specialty pharmacy and telehealth services.

The information provided in this press release contains forward-looking statements that relate to future events and future financial performance of Centene.  Subsequent events and developments may cause the Company's estimates to change.  The Company disclaims any obligation to update this forward-looking financial information in the future.  Readers are cautioned that matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, regulatory, competitive and other factors that may cause Centene's or its industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Actual results may differ from projections or estimates due to a variety of important factors, including Centene's ability to accurately predict and effectively manage health benefits and other operating expenses and reserves, competition, membership and revenue projections, timing of regulatory contract approval, changes in healthcare practices, changes in federal or state laws or regulations, changes in expected contract start dates, inflation, provider and state contract changes, new technologies, reduction in provider payments by governmental payors, major epidemics, disasters and numerous other factors affecting the delivery and cost of healthcare, as well as those factors disclosed in the Company's publicly filed documents.  The expiration, cancellation or suspension of Centene's Medicaid Managed Care contracts, or the loss of any appeal of or protest to any such expiration, cancellation or suspension, by state governments would also negatively affect Centene.

[Tables Follow]


CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)



December 31,
2013


December 31,
2012

ASSETS




Current assets:




Cash and cash equivalents of continuing operations

$

974,304


$

745,933

Cash and cash equivalents of discontinued operations

63,769


98,019

   Total cash and cash equivalents

1,038,073


843,952

Premium and related receivables

428,570


251,473

Short term investments

102,126


138,101

Other current assets

217,661


93,322

Other current assets of discontinued operations

13,743


78,977

Total current assets

1,800,173


1,405,825

Long term investments

791,900


554,770

Restricted deposits

46,946


34,286

Property, software and equipment, net

395,407


375,893

Goodwill

348,432


256,288

Intangible assets, net

48,780


20,268

Other long term assets

59,357


64,278

Long term assets of discontinued operations

38,305


62,297

Total assets

$

3,529,300


$

2,773,905

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Medical claims liability

$

1,111,709


$

815,161

Accounts payable and accrued expenses

375,862


219,066

Unearned revenue

38,191


34,597

Current portion of long-term debt

3,065


3,373

Current liabilities of discontinued operations

30,294


157,116

Total current liabilities

1,559,121


1,229,313

Long term debt

665,697


535,481

Other long term liabilities

60,015


54,987

Long term liabilities of discontinued operations

1,028


357

Total liabilities

2,285,861


1,820,138

Commitments and contingencies




Stockholders' equity:




Common stock, $.001 par value; authorized 100,000,000 shares; 58,673,215 issued and 55,319,239 outstanding at December 31, 2013, and 55,339,160 issued and 52,329,248 outstanding at December 31, 2012

59


55

Additional paid-in capital

594,326


450,856

Accumulated other comprehensive income:




Unrealized (loss) gain on investments, net of tax

(2,620)


5,189

Retained earnings

731,919


566,820

Treasury stock, at cost (3,353,976 and 3,009,912 shares, respectively)

(89,643)


(69,864)

Total Centene stockholders' equity

1,234,041


953,056

Noncontrolling interest

9,398


711

Total stockholders' equity

1,243,439


953,767

Total liabilities and stockholders' equity

$

3,529,300


$

2,773,905

 



CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

(Unaudited)



Three Months Ended
December 31,


Year Ended

December 31,


2013


2012


2013


2012

Revenues:








Premium

$

2,737,942


$

2,148,189


$

10,153,460


$

7,568,889

Service

121,290


28,680


372,580


112,742

Premium and service revenues

2,859,232


2,176,869


10,526,040


7,681,631

Premium tax

72,508


95,181


337,289


428,665

Total revenues

2,931,740


2,272,050


10,863,329


8,110,296

Expenses:








Medical costs

2,412,195


1,948,304


8,994,641


6,781,081

Cost of services

108,080


20,808


326,924


87,705

General and administrative expenses

255,355


182,519


931,137


677,157

Premium tax expense

71,022


94,482


333,210


428,354

Impairment loss




28,033

Total operating expenses

2,846,652


2,246,113


10,585,912


8,002,330

Earnings from operations

85,088


25,937


277,417


107,966

Other income (expense):








Investment and other income

5,358


3,172


18,457


35,285

Interest expense

(6,696)


(6,067)


(26,957)


(20,460)

Earnings from continuing operations, before income tax expense

83,750


23,042


268,917


122,791

Income tax expense

34,143


8,785


107,080


47,412

Earnings from continuing operations, net of income tax expense

49,607


14,257


161,837


75,379

Discontinued operations, net of income tax expense (benefit) of $3,254, $(3,046), $2,284, and $(47,741), respectively

5,275


(9,618)


3,881


(86,674)

Net earnings

54,882


4,639


165,718


(11,295)

Noncontrolling interest

1,642


(4,422)


619


(13,154)

Net earnings attributable to Centene Corporation

$

53,240


$

9,061


$

165,099


$

1,859









Amounts attributable to Centene Corporation common shareholders:








Earnings from continuing operations, net of income tax expense

$

47,965


$

18,679


$

161,218


$

88,533

Discontinued operations, net of income tax expense (benefit)

5,275


(9,618)


3,881


(86,674)

Net earnings

$

53,240


$

9,061


$

165,099


$

1,859









Net earnings (loss) per common share attributable to Centene Corporation:

Basic:








Continuing operations

$

0.87


$

0.36


$

2.98


$

1.72

Discontinued operations

0.10


(0.19)


0.07


(1.68)

Basic earnings per common share

$

0.97


$

0.17


$

3.05


$

0.04











Diluted:










Continuing operations

$

0.84


$

0.35


$

2.87


$

1.65

Discontinued operations

0.09


(0.18)


0.07


(1.62)

Diluted earnings per common share

$

0.93


$

0.17


$

2.94


$

0.03









Weighted average number of common shares outstanding:

Basic

54,906,274


51,817,066


54,126,545


51,509,366

Diluted

57,078,257


54,055,209


56,247,173


53,714,375

 


CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



Year Ended December 31,


2013


2012

Cash flows from operating activities:




Net earnings (loss)

$

165,718


$

(11,295)

Adjustments to reconcile net earnings to net cash provided by operating activities




Depreciation and amortization

67,420


65,866

Stock compensation expense

36,656


25,332

Impairment loss


28,033

Gain on sale of investment in convertible note


(17,880)

Deferred income taxes

(2,293)


(14,438)

Changes in assets and liabilities




Premium and related receivables

(142,977)


(116,558)

Other current assets

(79,588)


(36,818)

Other assets

(736)


2,825

Medical claims liabilities

171,569


359,792

Unearned revenue

2,724


24,707

Accounts payable and accrued expenses

151,712


(21,474)

Other operating activities

12,321


(9,401)

Net cash provided by operating activities

382,526


278,691

Cash flows from investing activities:




Capital expenditures

(67,835)


(82,144)

Purchases of investments

(790,653)


(695,687)

Sales and maturities of investments

579,161


589,921

Investments in acquisitions, net of cash acquired

(62,773)


Net cash used in investing activities

(342,100)


(187,910)

Cash flows from financing activities:




Proceeds from exercise of stock options

8,983


15,912

Proceeds from borrowings

180,000


400,500

Proceeds from stock offering

15,225


Payment of long term debt

(41,593)


(218,234)

Excess tax benefits from stock compensation

6,380


10,996

Common stock repurchases

(19,779)


(12,741)

Contribution from noncontrolling interest

8,068


1,092

Purchase of noncontrolling interest


(14,429)

Debt issue costs

(3,589)


(3,623)

Net cash provided by financing activities

153,695


179,473

Net increase in cash and cash equivalents

194,121


270,254

Cash and cash equivalents, beginning of period

843,952


573,698

Cash and cash equivalents, end of period

$

1,038,073


$

843,952

Supplemental disclosures of cash flow information:




Interest paid

$

30,009


$

21,605

Income taxes paid

$

84,681


$

42,877

Equity issued in connection with acquisition

$

75,425


$

 

CENTENE CORPORATION

SUPPLEMENTAL FINANCIAL DATA FROM CONTINUING OPERATIONS



Q4


Q3


Q2


Q1


Q4


2013


2013


2013


2013


2012

AT-RISK MEMBERSHIP










Managed Care:










Arizona

7,100


23,700


23,200


23,300


23,500

California

97,200





Florida

222,000


217,800


216,200


214,600


214,000

Georgia

318,700


314,100


316,600


314,000


313,700

Illinois

22,300


22,800


18,000


18,000


18,000

Indiana

195,500


198,400


200,000


202,400


204,000

Kansas

139,900


137,700


137,500


133,700


Louisiana

152,300


152,600


153,700


162,900


165,600

Massachusetts

22,600


23,200


15,200


17,300


21,500

Mississippi

78,300


76,900


77,300


77,000


77,200

Missouri

59,200


58,200


58,800


57,900


59,600

New Hampshire

33,600





Ohio

173,200


170,900


156,700


157,700


157,800

South Carolina

91,900


89,400


88,800


90,100


90,100

Tennessee

20,700


20,400




Texas

935,100


957,300


960,400


948,400


949,900

Washington

82,100


77,100


67,600


63,500


57,200

Wisconsin

71,500


72,000


73,400


72,600


72,400

TOTAL

2,723,200


2,612,500


2,563,400


2,553,400


2,424,500











Medicaid

2,054,700


1,953,300


1,953,600


1,951,300


1,877,100

CHIP & Foster Care

275,100


274,900


273,200


265,400


235,200

ABD & Medicare

305,300


302,000


289,800


288,400


274,600

Hybrid Programs

19,000


19,600


22,400


24,600


29,100

Long-term Care

37,800


31,600


24,400


23,700


8,500

Correctional Services

31,300


31,100




TOTAL

2,723,200


2,612,500


2,563,400


2,553,400


2,424,500











Specialty Services(a):










Cenpatico Behavioral Health










Arizona

156,600


160,700


157,100


156,200


157,900

Kansas





49,800

TOTAL

156,600


160,700


157,100


156,200


207,700











(a) Includes external membership only.











REVENUE PER MEMBER PER MONTH(b)

$

335


$

328


$

306


$

304


$

291











CLAIMS(b)










Period-end inventory

622,200


698,900


703,400


940,200


619,200

Average inventory

511,700


505,800


510,000


555,800


515,600

Period-end inventory per member

0.23


0.27


0.27


0.37


0.26

(b) Revenue per member and claims information are presented for the Managed Care at-risk members.











NUMBER OF EMPLOYEES

8,800


8,200


7,900


7,100


6,800

















Q4


Q3


Q2


Q1


Q4


2013


2013


2013


2013


2012











DAYS IN CLAIMS PAYABLE (c)

42.4


40.6


41.5


39.7


38.5

(c) Days in Claims Payable is a calculation of Medical Claims Liabilities at the end of the period divided by average claims expense per calendar day for such period. 











CASH AND INVESTMENTS (in millions)











Regulated

$

1,870.6


$

1,612.9


$

1,502.9


$

1,494.0


$

1,435.8

Unregulated

44.7


37.6


33.8


45.5


37.3

TOTAL

$

1,915.3


$

1,650.5


$

1,536.7


$

1,539.5


$

1,473.1











DEBT TO CAPITALIZATION

35.0%


30.5%


32.9%


35.2%


36.1%

DEBT TO CAPITALIZATION EXCLUDING NON-RECOURSE DEBT(d)

32.4%


27.4%


29.8%


31.9%


32.7%

Debt to Capitalization is calculated as follows: total debt divided by (total debt + total equity).

(d) The non-recourse debt represents the Company's mortgage note payable ($72.8 million at December 31, 2013).


Operating Ratios:



Three Months Ended
December 31,


Year Ended
December 31,


2013


2012


2013


2012

Health Benefits Ratios:








Medicaid and CHIP

86.5%


91.5%


87.5%


88.8%

ABD and Medicare

90.4


89.3


90.4


90.7

Specialty Services

87.7


91.3


85.4


92.0

Total

88.1


90.7


88.6


89.6









Total General & Administrative Expense Ratio

8.9%


8.4%


8.8%


8.8%


MEDICAL CLAIMS LIABILITY (In thousands)

     The changes in medical claims liability are summarized as follows:


Balance, December 31, 2012


$

815,161

Incurred related to:



Current period


9,072,867

Prior period


(78,226)

Total incurred


8,994,641

Paid related to:



Current period


7,975,367

Prior period


722,726

Total paid


8,698,093

Balance, December 31, 2013


$

1,111,709

Centene's claims reserving process utilizes a consistent actuarial methodology to estimate Centene's ultimate liability.  Any reduction in the "Incurred related to: Prior period" amount may be offset as Centene actuarially determines "Incurred related to: Current period."  As such, only in the absence of a consistent reserving methodology would favorable development of prior period claims liability estimates reduce medical costs.  Centene believes it has consistently applied its claims reserving methodology in each of the periods presented.

The amount of the "Incurred related to: Prior period" above represents favorable development and includes the effects of reserving under moderately adverse conditions, new markets where we use a conservative approach in setting reserves during the initial periods of operations, receipts from other third party payors related to coordination of benefits and lower medical utilization and cost trends for dates of service prior to December 31, 2012. 

SOURCE Centene Corporation



RELATED LINKS
http://www.centene.com

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