Centene Corporation Reports 2012 Fourth Quarter And Full Year Results

05 Feb, 2013, 06:00 ET from Centene Corporation

ST. LOUIS, Feb. 5, 2013 /PRNewswire/ -- Centene Corporation (NYSE: CNC) today announced its financial results for the quarter and year ended December 31, 2012. 

2012 Results

Q4

Full Year

Premium and Service Revenues (in millions)

$

2,301.4

$

8,238.9

Consolidated Health Benefits Ratio

91.3

%

91.6

%

General & Administrative expense ratio

8.4

%

8.6

%

Diluted earnings per share (EPS)

$

0.17

$

0.03

Cash flow from operations (in millions)

$

(28.6)

$

278.7

Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "While 2012 had its challenges, we continue to make progress on premium rates in Texas and believe we have addressed the issues in Kentucky with our planned exit of the State.  In 2012, we delivered on our growth strategy by increasing membership by 41% and revenues by 59% from 2011.  We were successful in winning seven new contracts in 2012 and have continued in 2013 with the long-term care program recommendations in Florida.  In addition, with the pending acquisition of AcariaHealth, we will expand our ability to manage the costs of specialized pharmacy benefit services for complex diseases.  We believe with these awards and initiatives we are very well positioned to drive margins and earnings growth in 2013 and beyond."

Fourth Quarter Highlights

  • Quarter-end at-risk managed care membership of 2,560,300, an increase of 744,300 members, or 41% year over year.
  • Premium and service revenues of $2.3 billion, representing 58% growth year over year.
  • Health Benefits Ratio of 91.3%, compared to 85.9% in 2011.
  • General and Administrative expense ratio of 8.4%, compared to 11.0% in 2011.
  • Diluted EPS of $0.17, including medical costs associated with flu of $0.30 higher than experienced in 2011.
  • Employees increased from 5,300 at December 31, 2011 to 6,800 at December 31, 2012, reflecting our continued business expansions. 

Other Events

  • In November 2012, pursuant to a shelf registration statement, we issued an additional $175 million of non-callable 5.75% Senior Notes due June 1, 2017 at a premium to yield 4.29%. 
  • In November 2012, our Illinois subsidiary, IlliniCare Health Plan, was selected to serve dual-eligible members in Cook, DuPage, Lake, Kane, Kankakee and Will counties (Greater Chicago region) as part of the Illinois Medicare-Medicaid Alignment Initiative.  Enrollment is expected to begin in late 2013.
  • In January 2013, our Kansas subsidiary, Sunflower State Health Plan, began operating under a statewide contract to serve members in the state's KanCare program, which includes TANF, ABD (dual and non-dual), foster care, long-term care and CHIP beneficiaries.
  • In January 2013, our Florida subsidiary, Sunshine State Health Plan, was notified by the Florida Agency for Health Care Administration it has been recommended for a contract award in 10 of 11 regions of the Medicaid Managed Care Long Term Care program. Upon execution of a contract and regulatory approval, enrollment will be implemented by region, beginning in August 2013 and continuing through March 2014.
  • In January 2013, we signed a definitive agreement to acquire AcariaHealth, a comprehensive specialty pharmacy company, for $152.0 million. The transaction consideration is anticipated to be financed through a combination of Centene common stock, cash on hand and existing credit facilities. The acquisition is expected to close in the first quarter of 2013, subject to regulatory approval and other customary conditions.
  • In October 2012, we were awarded the Platinum Award at the 2012 URAC Best Practices in Health Care Consumer Empowerment and Protection Awards for our Asthma Solutions for a Managed Medicaid Population.

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

December 31,

2012

2011

Arizona

23,500

23,700

Florida

214,000

198,300

Georgia

313,700

298,200

Illinois

18,000

16,300

Indiana

204,000

206,900

Kentucky

135,800

180,700

Louisiana

165,600

Massachusetts

21,500

35,700

Mississippi

77,200

31,600

Missouri

59,600

Ohio

157,800

159,900

South Carolina

90,100

82,900

Texas

949,900

503,800

Washington

57,200

Wisconsin

72,400

78,000

Total at-risk membership

2,560,300

1,816,000

Non-risk membership

4,900

Total

2,560,300

1,820,900

The following table sets forth our membership by line of business: 

December 31,

2012

2011

Medicaid

1,977,200

1,336,800

CHIP & Foster Care

237,700

213,900

ABD & Medicare

307,800

218,000

Hybrid Programs

29,100

40,500

Long-term Care

8,500

6,800

Total at-risk membership

2,560,300

1,816,000

Non-risk membership

4,900

Total

2,560,300

1,820,900

The following table identifies the Company's dual eligible membership by line of business.  The membership tables above include these members. 

December 31,

2012

2011

ABD

72,800

45,400

Long-term Care

7,700

6,200

Medicare

5,100

3,200

Total

85,600

54,800

Statement of Operations: Three Months Ended December 31, 2012

  • For the fourth quarter of 2012, Premium and Service Revenues increased 58% to $2.3 billion from $1.5 billion in the fourth quarter of 2011.  The increase was primarily driven by the Texas expansion, pharmacy carve-in in Texas, the additions between years of Kentucky, Louisiana, Missouri and Washington contracts and membership growth.  
  • Consolidated HBR of 91.3% for the fourth quarter of 2012 represents an increase from 85.9% in the comparable period in 2011 and a decrease from 93.3% in the third quarter of 2012.  The increase compared to last year primarily reflects an increase in medical costs associated with flu of $0.30 per diluted share as well as increased medical costs in our Kentucky and Texas health plans.  Excluding the Kentucky health plan operations, the fourth quarter 2012 HBR was 90.7%.
  • The following table compares the results for new business and existing business for the quarter ended December 31,:

2012

2011

Premium and Service Revenue

New business

35

%

16

%

Existing business

65

%

84

%

HBR

New business

96.7

%

93.1

%

Existing business

88.5

%

84.6

%

Total

91.3

%

85.9

%

  • Consolidated G&A expense ratio for the fourth quarter of 2012 was 8.4%, compared to 11.0% in the prior year.  The year over year decrease reflects the leveraging of expenses over higher revenues and a reduction in performance based compensation expense which lowered the ratio by 60 basis points.  
  • Earnings from operations were $13.1 million in the fourth quarter 2012 compared to $47.4 million in the fourth quarter 2011.  Net earnings attributable to Centene Corporation were $9.1 million in the fourth quarter 2012, compared to $30.1 million in the fourth quarter of 2011. 
  • Diluted EPS was $0.17 in the fourth quarter of 2012 compared to $0.57 in the prior year.

Statement of Operations: Year Ended December 31, 2012

  • For the year ended December 31, 2012, Premium and Service Revenues increased 59.0% to $8.2 billion over the corresponding period in 2011 as a result of the additional revenue between years from our Illinois, Kentucky, Louisiana, Missouri and Washington contracts, Texas and Arizona expansions, pharmacy carve-ins in Texas and Ohio, and organic membership growth.  
  • Consolidated HBR of 91.6% for 2012, compared to 85.2% in 2011.  The increase compared to last year primarily reflects (1) the continued high level of medical costs in Kentucky including a $41.5 million premium deficiency reserve for the contract period January 1, 2013 through July 5, 2013, (2) a high level of medical costs in the March 1, 2012 expansion areas in Texas, (3) a high level of medical costs in our individual health business, especially for policies issued to members who converted in the first quarter of 2012 and (4) a high level of flu costs during the fourth quarter of 2012.  Excluding our Kentucky operations, the HBR for the year ended December 31, 2012, was 89.6%.
  • Consolidated G&A expense ratio for 2012 was 8.6%, compared to 11.3% in 2011. The decrease is primarily due to  leveraging our expenses over higher revenues and a reduction in performance based compensation expense which lowered the ratio by 60 basis points. 
  • Diluted EPS of $0.03 in 2012.  Included in the year ended December 31, 2012, results are the following items: (1) an operating loss in our Kentucky health plan, including a $41.5 million pre-tax premium deficiency reserve; (2) an impairment loss for the write down of goodwill and intangible assets in the Celtic reporting unit; (3) a gain on the sale of investments; and (4) a state income tax benefit.  The impact of these items to diluted EPS is provided below:

2012

Diluted EPS

$

0.03

Loss from Kentucky operations

1.71

Celtic impairment loss

0.50

Investment gains

(0.23)

Tax benefit

(0.11)

Total

$

1.90

  • Total operating cash flows of $278.7 million.

Balance Sheet and Cash Flow

At December 31, 2012, the Company had cash, investments and restricted deposits of $1,632.6 million, including $37.3 million held by its unregulated entities.  Medical claims liabilities totaled $926.3 million, representing 41.1 days in claims payable excluding the liability for the Kentucky premium deficiency reserve.  Total debt was $538.9 million which reflects no borrowings on the $350 million revolving credit facility at year end.  Debt to capitalization was 32.7% at December 31, 2012, excluding the $75.4 million non-recourse mortgage note.  Cash flow from operations for the year ended December 31, 2012 was $278.7 million.

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, 2012

42.8

Timing of claim payments including pharmacy flu costs

(1.9)

Other

0.2

Days in claims payable, December 31, 2012

41.1

Outlook

The table below depicts the Company's annual guidance for 2013.

Full Year 2013

Low

High 

Premium and Service Revenues (in millions)

$

9,700

$

10,000

Diluted EPS

$

2.60

$

2.90

Consolidated Health Benefits Ratio

88.0

%

89.0

%

General & Administrative expense ratio

9.0

%

9.5

%

Diluted Shares Outstanding (in thousands)

54,800

55,200

The guidance in the table above does not include the pending acquisition of AcariaHealth or revenue and medical costs of the recently announced long-term care program recommendations in Florida.  However, business expansion costs for the Florida long-term care award are incorporated in our guidance.  

Conference Call

As previously announced, the Company will host a conference call Tuesday, February 5, 2013, at 8:30 A.M. (Eastern Time) to review the financial results for the fourth quarter and year ended December 31, 2012, 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.  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 4, 2014, at the aforementioned URL. In addition, a digital audio playback will be available until 9:00 AM Eastern Time on Tuesday, February 12, 2013, by dialing 1-877-344-7529 in the U.S. and Canada, or +1-412-317-0088 from abroad, and entering access code 10023301.

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 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.

The discussion in the third bullet under the heading "Statement of Operations: Three Months Ended December 31, 2012" contains financial information for new and existing businesses.  Existing businesses are primarily state markets, significant geographic expansion in an existing state or product that we have managed for four complete quarters. New businesses are primarily new state markets, significant geographic expansion in an existing state or product that conversely, we have not managed for four complete quarters.

About Centene Corporation

Centene Corporation, a Fortune 500 company, is a leading multi-line healthcare enterprise that provides programs and related services to the rising number of 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). Centene's CeltiCare subsidiary offers states unique, "exchange based" and other cost-effective coverage solutions for low-income populations. 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, life and health management, managed vision, telehealth services, and pharmacy benefits management.

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,

2012

December 31,

2011

ASSETS

Current assets:

Cash and cash equivalents

$

843,952

$

573,698

Premium and related receivables

263,452

157,450

Short-term investments

139,118

130,499

Other current assets

127,080

78,363

Total current assets

1,373,602

940,010

Long-term investments

614,723

506,140

Restricted deposits

34,793

26,818

Property, software and equipment, net

377,726

349,622

Goodwill

256,288

281,981

Intangible assets, net

20,268

27,430

Other long-term assets

64,282

58,335

Total assets

$

2,741,682

$

2,190,336

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Medical claims liability

$

926,302

$

607,985

Premium deficiency reserve

41,475

Accounts payable and accrued expenses

191,343

216,504

Unearned revenue

34,597

9,890

Current portion of long-term debt

3,373

3,234

Total current liabilities

1,197,090

837,613

Long-term debt

535,481

348,344

Other long-term liabilities

55,344

67,960

Total liabilities

1,787,915

1,253,917

Commitments and contingencies

Stockholders' equity:

Common stock, $.001 par value; authorized 100,000,000 shares; 55,339,160 issued and 52,329,248 outstanding at December 31, 2012, and 53,586,726 issued and 50,864,618 outstanding at December 31, 2011

55

54

Additional paid-in capital

450,856

421,981

Accumulated other comprehensive income:

Unrealized gain on investments, net of tax

5,189

5,761

Retained earnings

566,820

564,961

Treasury stock, at cost (3,009,912 and 2,722,108 shares, respectively)

(69,864)

(57,123)

Total Centene stockholders' equity

953,056

935,634

Noncontrolling interest

711

785

Total stockholders' equity

953,767

936,419

Total liabilities and stockholders' equity

$

2,741,682

$

2,190,336

 

 

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

(Unaudited)

Three Months Ended

December 31,

Year Ended

December 31,

2012

2011

2012

2011

Revenues:

Premium

$

2,272,736

$

1,436,413

$

8,126,205

$

5,077,242

Service

28,680

22,136

112,742

103,765

Premium and service revenues

2,301,416

1,458,549

8,238,947

5,181,007

Premium tax

95,181

48,627

428,665

159,575

Total revenues

2,396,597

1,507,176

8,667,612

5,340,582

Expenses:

Medical costs

2,075,957

1,233,739

7,446,037

4,324,746

Cost of services

20,808

17,397

87,705

78,114

General and administrative expenses

192,282

159,937

704,604

587,004

Premium tax expense

94,482

48,726

428,354

160,394

Impairment loss

28,033

Total operating expenses

2,383,529

1,459,799

8,694,733

5,150,258

Earnings (loss) from operations

13,068

47,377

(27,121)

190,324

Other income (expense):

Investment and other income

3,377

3,990

35,957

13,369

Debt extinguishment costs

(8,488)

Interest expense

(6,067)

(4,797)

(20,460)

(20,320)

Earnings (loss) from operations, before income tax expense

10,378

46,570

(11,624)

174,885

Income tax expense (benefit)

5,739

17,306

(329)

66,522

Net earnings (loss)

4,639

29,264

(11,295)

108,363

Noncontrolling interest

(4,422)

(848)

(13,154)

(2,855)

Net earnings attributable to Centene Corporation

$

9,061

$

30,112

$

1,859

$

111,218

Net earnings per common share attributable to Centene Corporation:

Basic earnings per common share

$

0.17

$

0.60

$

0.04

$

2.22

Diluted earnings per common share

$

0.17

$

0.57

$

0.03

$

2.12

Weighted average number of common shares outstanding:

Basic

51,817,066

50,522,726

51,509,366

50,198,954

Diluted

54,055,209

52,894,701

53,714,375

52,474,238

 

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Year Ended December 31,

2012

2011

Cash flows from operating activities:

Net earnings (loss)

$

(11,295)

$

108,363

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

Depreciation and amortization

65,866

58,327

Stock compensation expense

25,332

18,171

Impairment loss

28,033

Gain on sale of investment in convertible note

(17,880)

Gain on sale of investments, net

(1,484)

(287)

Debt extinguishment costs

8,488

Deferred income taxes

(14,438)

2,031

Changes in assets and liabilities

Premium and related receivables

(116,558)

(11,306)

Other current assets

(36,818)

(11,812)

Other assets

2,825

(2)

Medical claims liabilities

359,792

149,756

Unearned revenue

24,707

(109,082)

Accounts payable and accrued expenses

(21,474)

38,889

Other operating activities

(7,917)

10,160

Net cash provided by operating activities

278,691

261,696

Cash flows from investing activities:

Capital expenditures

(82,144)

(73,708)

Purchases of investments

(695,687)

(318,397)

Sales and maturities of investments

589,921

267,404

Investments in acquisitions, net of cash acquired

(4,375)

Net cash used in investing activities

(187,910)

(129,076)

Cash flows from financing activities:

Proceeds from exercise of stock options

15,912

15,815

Proceeds from borrowings

400,500

419,183

Payment of long-term debt

(218,234)

(416,283)

Excess tax benefits from stock compensation

10,996

4,435

Common stock repurchases

(12,741)

(7,809)

Contribution from (to) noncontrolling interest

1,092

813

Purchase of noncontrolling interest

(14,429)

Debt issue costs

(3,623)

(9,242)

Net cash provided by financing activities

179,473

6,912

Net increase in cash and cash equivalents

270,254

139,532

Cash and cash equivalents, beginning of period

573,698

434,166

Cash and cash equivalents, end of period

$

843,952

$

573,698

Supplemental disclosures of cash flow information:

Interest paid

$

21,605

$

27,383

Income taxes paid

$

42,877

$

50,444

 

CENTENE CORPORATION

SUPPLEMENTAL FINANCIAL DATA

Q4

Q3

Q2

Q1

Q4

2012

2012

2012

2012

2011

MEMBERSHIP

Managed Care:

Arizona

23,500

23,800

24,000

23,100

23,700

Florida

214,000

209,600

204,100

199,500

198,300

Georgia

313,700

312,400

313,300

306,000

298,200

Illinois

18,000

17,900

17,800

17,400

16,300

Indiana

204,000

205,400

205,000

206,300

206,900

Kentucky

135,800

145,400

143,500

145,700

180,700

Louisiana

165,600

167,200

168,700

51,300

Massachusetts

21,500

28,000

41,400

36,000

35,700

Mississippi

77,200

30,600

30,100

29,500

31,600

Missouri

59,600

53,900

Ohio

157,800

173,800

166,800

161,000

159,900

South Carolina

90,100

89,400

87,800

86,700

82,900

Texas

949,900

930,700

919,200

811,000

503,800

Washington

57,200

42,000

Wisconsin

72,400

72,900

75,800

76,000

78,000

Total at-risk membership

2,560,300

2,503,000

2,397,500

2,149,500

1,816,000

Non-risk membership

4,900

TOTAL

2,560,300

2,503,000

2,397,500

2,149,500

1,820,900

Medicaid

1,977,200

1,939,400

1,848,500

1,634,800

1,336,800

CHIP & Foster Care

237,700

229,600

222,600

218,800

213,900

ABD & Medicare

307,800

289,800

269,900

247,400

218,000

Hybrid Programs

29,100

35,700

48,100

41,500

40,500

Long-term Care

8,500

8,500

8,400

7,000

6,800

Total at-risk membership

2,560,300

2,503,000

2,397,500

2,149,500

1,816,000

Non-risk membership

4,900

TOTAL

2,560,300

2,503,000

2,397,500

2,149,500

1,820,900

Specialty Services(a):

Cenpatico Behavioral Health

Arizona

157,900

162,000

159,900

162,100

168,900

Kansas

49,800

48,500

44,300

46,000

46,200

TOTAL

207,700

210,500

204,200

208,100

215,100

(a) Includes external membership only.

REVENUE PER MEMBER PER MONTH(b)

$

292

$

283

$

279

$

269

$

262

CLAIMS(b)

Period-end inventory

641,000

826,800

1,195,000

735,000

495,500

Average inventory

555,200

547,400

640,600

457,400

367,600

Period-end inventory per member

0.25

0.33

0.50

0.34

0.27

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

NUMBER OF EMPLOYEES

6,800

6,400

6,200

5,700

5,300

 

 

 

Q4

Q3

Q2

Q1

Q4

2012

2012

2012

2012

2011

DAYS IN CLAIMS PAYABLE (c)

41.1

42.8

41.4

44.7

45.3

(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, excluding the Kentucky premium deficiency reserve liability. 

CASH AND INVESTMENTS (in millions)

Regulated

$

1,595.3

$

1,493.8

$

1,198.2

$

1,166.9

$

1,198.9

Unregulated

37.3

36.0

40.6

35.5

38.2

TOTAL

$

1,632.6

$

1,529.8

$

1,238.8

$

1,202.4

$

1,237.1

DEBT TO CAPITALIZATION

36.1

%

29.2

%

30.1

%

26.4

%

27.3

%

DEBT TO CAPITALIZATION EXCLUDING NON-RECOURSE DEBT(d)

32.7

%

25.0

%

25.9

%

21.8

%

22.6

%

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 ($75.4 million at December 31, 2012).

 

 

Operating Ratios:

Three Months Ended

December 31,

Year Ended

December 31,

2012

2011

2012

2011

Health Benefits Ratios:

Medicaid and CHIP

92.4

%

82.9

%

91.2

%

82.4

%

ABD and Medicare

89.1

88.8

92.1

89.8

Specialty Services

92.7

94.0

92.5

89.1

Total

91.3

85.9

91.6

85.2

Total General & Administrative Expense Ratio

8.4

%

11.0

%

8.6

%

11.3

%

 

MEDICAL CLAIMS LIABILITY (In thousands)

     The changes in medical claims liability are summarized as follows:

Balance, December 31, 2011

$

607,985

Incurred related to:

Current period

7,499,437

Prior period

(53,400)

Total incurred

7,446,037

Paid related to:

Current period

6,535,537

Prior period

550,708

Total paid

7,086,245

Less: Premium Deficiency Reserve

41,475

Balance, December 31, 2012

$

926,302

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, 2011.  Excluding the impact of retroactive assignment of members in our Kentucky health plan, the amount of "Incurred related to: Prior period" shown in the table above would have been $61.7 million.

 

 

SOURCE Centene Corporation



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