Centene (CNC) 8-K Centene Corporation Reports 2008 First Quarter Earnings

Exhibit 99.1

N E W S  R E L E A S E

Contact:	Edmund E. Kroll
	Senior Vice President, Finance & Investor Relations
	(212) 759-0382
	Eric R. Slusser
	Executive Vice President and Chief Financial Officer
	(314) 725-4477

FOR IMMEDIATE RELEASE

CENTENE CORPORATION REPORTS 2008 FIRST QUARTER EARNINGS

ST. LOUIS, MISSOURI (April 22, 2008) -- Centene Corporation (NYSE: CNC) today announced its net earnings from continuing operations for the quarter ended March 31, 2008 were $25.5 million, or $0.57 per diluted share, compared to $11.6 million, or $0.26 per diluted share in the 2007 first quarter.  The first quarter results include the benefit of the July 1 through December 31, 2007 period rate increase for Georgia, approximately $0.28 per diluted share, which was included in our guidance for the first quarter.  Unless specifically noted, the discussions below are in the context of continuing operations.

First Quarter Highlights

-   Quarter-end Medicaid Managed Care membership of 1.2 million.

-   Revenues of $816.6 million, or $794.0 million net of premium taxes, a 22.8% increase over the 2007 first quarter.

-   Health Benefits Ratio (HBR), which reflects medical costs as a percent of premium revenues, of 83.0%, compared to 84.6% in the 2007 first quarter.  The first quarter 2008 HBR reflects the benefit of the previously mentioned Georgia rate increase.

-   General and administrative (G&A) expense ratio of 12.5%, compared to 13.4% in the 2007 first quarter.

-   Cash flow from operations of $26.7 million.

-   Days in claims payable of 49.3.

Other Events

-   Announced the acquisition of Celtic Insurance Company, a health insurance carrier focused on the individual health insurance market.  Pending regulatory approval, we expect to complete this acquisition in the third quarter of 2008.

-   Commenced operations under our Texas Foster Care contract effective April 1, 2008.

-   Notified the State of Ohio of our intent to withdraw from covering Aged, Blind or Disabled (ABD) members in the Northwest region of Ohio effective July 1.

-   Repurchased 350,332 shares during the first quarter for approximately $7.0 million.

Michael F. Neidorff, Centene’s Chairman and Chief Executive Officer, stated, “During the first quarter, our HBR was adversely affected by high medical costs in Ohio largely influenced by the ABD population and by a heavy flu season. But aside from these items and an extended rollout of full-risk enrollment in South Carolina, in aggregate our other markets and products performed generally in-line with our expectations.

“We are taking actions to improve margins in our Ohio ABD population including exiting the Northwest region as of July 1, 2008, rationalizing our provider networks in the remaining regions, and continuing an ongoing dialogue with the State on rate adequacy and benefit design. We remain committed to serving the needs of our customers in all of our markets, but are also committed to doing so only in markets and with products that produce consistent and adequate returns for our investors,” concluded Neidorff.

The following table depicts membership in Centene’s managed care organizations, by state, at March 31, 2008 and 2007:

	2008		2007
Georgia		282,700	291,300
Indiana		161,300	176,700
New Jersey		56,500	59,100
Ohio		131,100	118,300
South Carolina		29,300	—
Texas		369,000	318,500
Wisconsin		126,900	139,400
Total		1,156,800	1,103,300

The following table depicts membership in Centene’s managed care organizations, by member category, at March 31, 2008 and 2007:

	2008			2007
Medicaid		862,900			839,600
SCHIP		216,000			211,200
SSI/Medicare		77,900			52,500
Total		1,156,800	(a)		1,103,300	(b)
(a) 1,126,200 at-risk; 30,600 ASO
(b) 1,099,200 at-risk; 4,100 ASO

Statement of Operations

-   For the 2008 first quarter, revenues, net of premium taxes, increased 22.8% to $794.0 million from $646.4 million in the 2007 first quarter.  The increase was mainly driven by membership growth in Texas and Ohio, which are the two markets that added SSI products in 2007, as well as the recognition of the Georgia premium rate increase retroactive to July 1, 2007 of $20.8 million.

-   The consolidated HBR, which reflects medical costs as a percent of premium revenues, was 83.0%, a decrease from 84.6% in the 2007 first quarter.  The decrease resulted from the recognition of the Georgia premium rate increase, offset by increases from seasonal medical cost trends, in part related to the flu, and continued high medical costs in the Ohio ABD markets.

-   Consolidated G&A expense as a percent of premium and service revenues was 12.5% in the first quarter of 2008, a decrease from 13.4% in the first quarter of 2007.

-   Earnings per diluted share from continuing operations were $0.57, compared to $0.26 in the 2007 first quarter.

Balance Sheet and Cash Flow

At March 31, 2008, the Company had cash and investments of $676.9 million, including $651.1 million held by its regulated entities and $25.8 million held by its unregulated entities.  Medical claims liabilities totaled $347.5 million, representing 49.3 days in claims payable, an increase of 0.2 days from December 31, 2007.  Total debt was $216.2 million and debt to capitalization was 32.8%.  Cash flow from operations was $26.7 million.

Outlook

The table below depicts the Company’s guidance for the 2008 second quarter and full year.

	Q2 2008		2008
	Low	High	Low	High
Revenue (in millions)1	$     822	$     832	$    3,300	$  3,375
Earnings per diluted share	$    0.38	$    0.42	$      1.87	$    1.97
____________________________________
1 Revenue net of premium tax

Eric R. Slusser, Centene’s Chief Financial Officer, stated, “We are lowering the range of our annual revenue and earnings guidance to reflect a reduction in investment income resulting from actions taken by the Federal Reserve during the first quarter of 2008 as well as the current and expected lower results in the Ohio ABD market.  We expect an overall HBR range for the full year of 82.0% to 84.0%.”

Conference Call

As previously announced, the Company will host a conference call Tuesday, April 22, 2008, at 8:00 A.M. (Eastern Time) to review the financial results for the first quarter ended March 31, 2008, and to discuss its business outlook.  Michael F. Neidorff and Eric R. Slusser will host the conference call.  Investors are invited to participate in the conference call by dialing 800-273-1254 in the U.S. and Canada, 706-679-8592 from abroad, or via a live internet broadcast on the Company's website at www.centene.com, under the Investor Relations section.  A replay will be available for on-demand listening shortly after the completion of the call until 11:59 P.M. (Eastern Time) on May 6, 2008 at the aforementioned URL, or by dialing 800-642-1687 in the U.S. and Canada, or 706-645-9291 from abroad, and entering access code 41656800.

About Centene Corporation

Centene Corporation is a leading multi-line healthcare enterprise that provides programs and related services to individuals receiving benefits under Medicaid, including the State Children’s Health Insurance Program (SCHIP), Supplemental Security Income (SSI) and Medicare (Special Needs Plans). The Company operates health plans in Georgia, Indiana, New Jersey, Ohio, South Carolina, Texas and Wisconsin. In addition, the Company contracts with other healthcare and commercial organizations to provide specialty services including behavioral health, life and health management, long-term care, managed vision, nurse triage, pharmacy benefits management and treatment compliance. Information regarding Centene is available via the Internet at www.centene.com.

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, competition, changes in healthcare practices, changes in federal or state laws or regulations, inflation, provider 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.  The expiration, cancellation or suspension of Centene's Medicaid Managed Care contracts by state governments would also negatively affect Centene.

[Tables Follow]

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	March 31, 2008		December 31, 2007
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	263,780	$	268,584
Premium and related receivables		81,468		90,072
Short-term investments, at fair value (amortized cost $60,927 and $46,392, respectively)		60,989		46,269
Other current assets		37,373		41,414
Total current assets		443,610		446,339
Long-term investments, at fair value (amortized cost $319,881 and $314,681, respectively)		324,173		317,041
Restricted deposits, at fair value (amortized cost $27,411 and $27,056, respectively)		27,972		27,301
Property, software and equipment, net		151,265		138,139
Goodwill		141,023		141,030
Other intangible assets, net		12,608		13,205
Other assets		38,624		36,067
Total assets	$	1,139,275	$	1,119,122
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims liabilities	$	347,504	$	335,856
Accounts payable and accrued expenses		115,857		105,096
Unearned revenue		2,231		44,016
Current portion of long-term debt		416		971
Current liabilities of discontinued operations		754		861
Total current liabilities		466,762		486,800
Long-term debt		215,818		206,406
Other liabilities		13,460		10,869
Total liabilities		696,040		704,075
Stockholders’ equity:
Common stock, $.001 par value; authorized 100,000,000 shares; issued and outstanding 43,424,326 and 43,667,837 shares, respectively		44		44
Additional paid-in capital		222,719		221,693
Accumulated other comprehensive income:
Unrealized gain on investments, net of tax		3,110		1,571
Retained earnings		217,362		191,739
Total stockholders’ equity		443,235		415,047
Total liabilities and stockholders’ equity	$	1,139,275	$	1,119,122

 CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

	Three Months Ended March 31,
	2008			2007
	(Unaudited)
Revenues:
Premium	$	773,478		$	624,826
Premium tax		22,631			17,816
Service		20,530			21,592
Total revenues		816,639			664,234
Expenses:
Medical costs		641,619			528,520
Cost of services		16,176			15,630
General and administrative expenses		99,283			86,467
Premium tax		22,631			17,816
Total operating expenses		779,709			648,433
Earnings from operations		36,930			15,801
Other income (expense):
Investment and other income		7,769			6,017
Interest expense		(3,994	)		(3,132	)
Earnings before income taxes		40,705			18,686
Income tax expense	��	15,168			7,089
Net earnings from continuing operations		25,537			11,597
Discontinued operations, net of income tax expense (benefit) of $52 and $(26,780)		86			26,614
Net earnings	$	25,623		$	38,211
Net earnings per share:
Basic:
Continuing operations	$	0.59		$	0.27
Discontinued operations		—			0.61
Basic earnings per common share	$	0.59		$	0.88
Diluted:
Continuing operations	$	0.57		$	0.26
Discontinued operations		—			0.59
Diluted earnings per common share	$	0.57		$	0.85
Weighted average number of shares outstanding:
Basic		43,538,207			43,433,319
Diluted		44,742,893			44,923,340

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Three Months Ended March 31,
	2008			2007
	(Unaudited)
Cash flows from operating activities:
Net earnings	$	25,623		$	38,211
Adjustments to reconcile net earnings to net cash provided by operating activities —
Depreciation and amortization		7,798			6,274
Stock compensation expense		4,013			3,871
Deferred income taxes		9,472			(1,398	)
Gain on sale of FirstGuard Missouri		—			(4,218	)
Changes in assets and liabilities —
Premium and related receivables		8,612			13,588
Other current assets		(2,634	)		(26,336	)
Other assets		(1,031	)		(636	)
Medical claims liabilities		11,608			(4,340	)
Unearned revenue		(41,788	)		4,796
Accounts payable and accrued expenses		4,489			1,309
Other operating activities		554			4,859
Net cash provided by operating activities		26,716			35,980
Cash flows from investing activities:
Purchases of property, software and equipment		(19,879	)		(14,794	)
Purchases of investments		(86,025	)		(135,866	)
Sales and maturities of investments		70,888			122,835
Proceeds from asset sales		—			10,848
Investments in acquisitions and equity method investee, net of cash acquired		(2,194	)		(400	)
Net cash used in investing activities		(37,210	)		(17,377	)
Cash flows from financing activities:
Proceeds from exercise of stock options		1,148			868
Proceeds from borrowings		26,005			191,000
Payment of long-term debt		(17,148	)		(165,248	)
Excess tax benefits from stock compensation		2,638			417
Common stock repurchases		(6,953	)		(644	)
Debt issue costs		—			(4,138	)
Net cash provided by financing activities		5,690			22,255
Net (decrease) increase in cash and cash equivalents		(4,804	)		40,858
Cash and cash equivalents, beginning of period		268,584			271,047
Cash and cash equivalents, end of period	$	263,780		$	311,905
Interest paid	$	463		$	2,999
Income taxes paid	$	792		$	5,801

CENTENE CORPORATION

CONTINUING OPERATIONS SUPPLEMENTAL FINANCIAL DATA

	Q1		Q4		Q3		Q2
	2008		2007		2007		2007
MEMBERSHIP
Managed Care:
Georgia	282,700		287,900		286,200		281,400
Indiana	161,300		154,600		156,300		161,700
New Jersey	56,500		57,300		58,300		59,100
Ohio	131,100		128,700		127,500		128,200
South Carolina	29,300		31,800		29,300		31,100
Texas	369,000		354,400		347,000		333,900
Wisconsin	126,900		131,900		132,700		136,100
TOTAL	1,156,800		1,146,600		1,137,300		1,131,500
Medicaid	862,900		848,100		841,600		846,900
SCHIP	216,000		224,400		223,500		216,500
SSI & Medicare	77,900		74,100		72,200		68,100
TOTAL	1,156,800		1,146,600		1,137,300		1,131,500
Specialty Services(a):
Arizona	97,900		99,900		99,000		95,200
Kansas	39,400		39,000		35,600		37,500
TOTAL	137,300		138,900		134,600		132,700
(a) Includes behavioral health contracts only.
REVENUE PER MEMBER(b)	$	215.35	$	210.34	$	201.05	$	193.09
CLAIMS(b)
Period-end inventory	393,700		312,700		265,400		281,000
Average inventory	281,600		288,700		319,900		248,200
Period-end inventory per member	0.34		0.28		0.24		0.26
(b) Revenue per member and claims information are presented for the Medicaid Managed Care segment.

	Q1		Q4		Q3		Q2
	2008		2007		2007		2007
DAYS IN CLAIMS PAYABLE (c)	49.3		49.1		49.1		46.2
(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	$	651.1	$	626.2	$	593.6	$	527.9
Unregulated		25.8		33.0		45.9		65.8
TOTAL	$	676.9	$	659.2	$	639.5	$	593.7
DEBT TO CAPITALIZATION(d)	32.8%		33.3%		33.1%		34.0%
(d) Debt to Capitalization is calculated as follows: total debt divided by (total debt + equity).

OPERATING RATIOS:

	Three Months Ended March 31,
	2008			2007
Health Benefits Ratios
Medicaid and SCHIP		79.5	%		84.5	%
SSI and Medicare		97.5			88.5
Specialty Services		84.1			79.7
Total		83.0			84.6
General & Administrative Expense Ratio		12.5	%		13.4	%

MEDICAL CLAIMS LIABILITIES (In thousands)

Four rolling quarters of the changes in medical claims liabilities are summarized as follows:

Balance, March 31, 2007	$	267,980
Incurred related to:
Current period		2,449,237
Prior period		(11,652	)
Total incurred		2,437,585
Paid related to:
Current period		2,110,081
Prior period		247,980
Total paid		2,358,061
Balance, March 31, 2008	$	347,504

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” claims 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.