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

Exhibit 99.1

N E W S  R E L E A S E

Contact:	Investor Relations Inquiries Edmund E. Kroll
	Senior Vice President, Finance & Investor Relations
	(212) 759-0382
	Media Inquiries
	Sandy McBride
	Senior Director, Corporate Marketing & Communications
	(314) 725-4477

FOR IMMEDIATE RELEASE

CENTENE CORPORATION REPORTS 2008 FOURTH QUARTER EARNINGS

ST. LOUIS, MISSOURI (February 10, 2009) -- Centene Corporation (NYSE: CNC) today announced its financial results for the quarter and year ended December 31, 2008.  As discussed on our December 19, 2008 guidance call, the results of operations for University Health Plans, or UHP, our New Jersey health plan, are now classified as discontinued operations as a result of our decision to sell certain assets of UHP.  Unless specifically noted, the discussions below are in the context of net earnings from continuing operations and all financial ratios are calculated using revenues excluding premium taxes and investment income.

2008 Highlights
	Q4			Full Year
Total Revenues (in millions)	$	902.8		$	3,364.5
Consolidated HBR		82.3	%		82.5	%
Diluted EPS	$	0.53		$	1.90

Fourth Quarter Highlights

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

·   Revenues of $902.8 million, or $878.8 million net of premium taxes, a 22.2% increase over the 2007 fourth quarter.

·   Health Benefits Ratio (HBR), which reflects medical costs as a percent of premium revenues, of 82.3%, compared to 85.3% in the 2007 fourth quarter.

·   General and administrative (G&A) expense ratio of 13.8%, compared to 14.9% in the 2007 fourth quarter.

·   Cash flow from operations of $95.5 million.

·   Days in claims payable of 48.5.

·   Diluted earnings per share, or EPS, from continuing operations of $0.53.  Total (including New Jersey) diluted EPS of $0.49, including a $0.05 one-time charge related to the sale of our New Jersey health plan.

Other Events

·   In February 2009, we began converting membership in Florida from Access, on a non-risk basis, to our new subsidiary, Sunshine State Health Plan, on an at-risk basis.

·   Peach State Health Plan, Inc., our Georgia subsidiary, received Accreditation Status by the National Committee for Quality Assurance (NCQA) under the New Health Plan Accreditation Program.

Michael F. Neidorff, Centene’s Chairman and Chief Executive Officer, stated, “We were pleased with the results of the fourth quarter and year, which reflect our focus on fundamentals that we will maintain going forward.”

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

	2008		2007
Georgia		288,300		287,900
Indiana		175,300		154,600
Ohio		133,400		128,700
South Carolina(a)		31,300		31,800
Texas		431,700		354,400
Wisconsin		124,800		131,900
Total		1,184,800		1,089,300
_______________
(a) Substantially all of the 2007 membership in South Carolina was on a non-risk basis.

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

	2008			2007
Medicaid		862,500			807,600
SCHIP/Foster Care		257,300			214,600
ABD/Medicare		65,000			67,100
Total		1,184,800	(a)		1,089,300	(b)
_______________
(a) 1,181,100 at-risk; 3,700 ASO
(b) 1,054,200 at-risk; 35,100 ASO

Statement of Operations

·   For the 2008 fourth quarter, revenues, net of premium taxes, increased 22.2% to $878.8 million from $719.4 million in the 2007 fourth quarter.  The increase was primarily driven by membership growth, especially related to the new Foster Care contract in Texas, premium rate increases and the recent acquisition of Celtic, which closed on July 1, 2008.

·   The consolidated HBR, which reflects medical costs as a percent of premium revenues, was 82.3%, a decrease from 85.3% in the 2007 fourth quarter.  The decrease is primarily due to overall increased premium yield, a moderating medical cost trend and the acquisition of Celtic.  Sequentially, our consolidated HBR increased from 82.2% in the 2008 third quarter to 82.3%.

·   Consolidated G&A expense as a percent of premium and service revenues was 13.8% in the fourth quarter of 2008, a decrease from 14.9% in the fourth quarter of 2007.  The decrease was due primarily to the restructuring charge recorded in the fourth quarter of 2007.

·   Loss from discontinued operations in the fourth quarter of 2008 includes a $3.7 million pre-tax, or $0.05 per diluted share, charge primarily for asset impairments and employee severance related to the sale of our New Jersey health plan.

·   For the year ended December 31, 2008, revenues, net of premium taxes, from continuing operations increased 21.6% to $3.3 billion from $2.7 billion for the same period in the prior year.  G&A expenses as a percent of premium and service revenues decreased to 13.6% in the year ended December 31, 2008, compared to 14.3% in the year ended December 31, 2007.  Earnings from operations increased to $131.6 million in the year ended December 31, 2008 from $55.3 million in the year ended December 31, 2007.  Net earnings from continuing operations, were $84.2 million, or $1.90 per diluted share in 2008.

·   The following table reconciles diluted EPS from continuing operations to total diluted EPS:

EPS Reconciliation:
Diluted EPS from continuing operations (1)	$	1.90
Discontinued health plan operations		0.03
New Jersey one-time exit charges		(0.05)
Total diluted EPS	$	1.88
_______________
(1)Includes $0.28 recorded during the first quarter of 2008 related to the Georgia premium rate increase for July 1, 2007 – December 31, 2007.

Balance Sheet and Cash Flow

At December 31, 2008, the Company had cash and investments of $822.1 million, including $798.0 million held by its regulated entities and $24.1 million held by its unregulated entities.  Medical claims liabilities totaled $373.0 million, representing 48.5 days in claims payable, an increase of 0.2 days from December 31, 2007 and an increase of 0.6 days from September 30, 2008.  Total debt was $264.9 million and debt to capitalization was 34.6%.  Year to date cash flow from operations was $222.0 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, 2008	47.9
State medical expense reconciliation	0.5
Other	0.1
Days in claims payable, December 31, 2008	48.5

Outlook

The table below depicts the Company’s annual guidance for 2009:

	Full Year 2009
	Low	High
Revenue (in millions) (1)	$    3,650	$  3,775
Earnings per diluted share	$      1.82	$    1.94
_________________
(1) Revenue net of premium tax

The Company is maintaining its previously issued 2009 financial guidance.

Conference Call

As previously announced, the Company will host a conference call Tuesday, February 10, 2009, at 8:30 A.M. (Eastern Time) to review the financial results for the fourth quarter and year ended December 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, 973-638-3440 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 February 24, 2009 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 81401888.

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), as well as Aged, Blind, or Disabled (ABD), Foster Care, Long-Term Care and Medicare (Special Needs Plans). The Company operates local health plans and offers a range of healthcare solutions for the rising number of uninsured Americans. It also contracts with other healthcare and commercial organizations to provide specialty services including behavioral health, life and health management, 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)

	December 31,
	2008		2007
ASSETS
Current assets:
Cash and cash equivalents of continuing operations	$	370,999	$	267,305
Cash and cash equivalents of discontinued operations		8,100		1,279
Total cash and cash equivalents		379,099		268,584
Premium and related receivables, net of allowance for uncollectible accounts of $595 and $258, respectively		92,531		79,492
Short-term investments, at fair value (amortized cost $108,469 and $46,193, respectively)		109,393		46,074
Other current assets		75,333		39,382
Current assets of discontinued operations other than cash		9,987		12,807
Total current assets		666,343		446,339
Long-term investments, at fair value (amortized cost $329,330 and $314,681, respectively)		332,411		317,041
Restricted deposits, at fair value (amortized cost $9,124 and $6,383, respectively)		9,254		6,430
Property, software and equipment, net		175,858		135,883
Goodwill		163,380		138,862
Intangible assets, net		17,575		11,337
Other long-term assets		59,083		36,067
Long-term assets of discontinued operations		27,248		29,865
Total assets	$	1,451,152	$	1,121,824
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims liability	$	373,037	$	313,364
Accounts payable and accrued expenses		219,566		102,944
Unearned revenue		17,107		44,016
Current portion of long-term debt		255		971
Current liabilities of discontinued operations		31,013		25,505
Total current liabilities		640,978		486,800
Long-term debt		264,637		206,406
Other long-term liabilities		43,539		13,300
Long-term liabilities of discontinued operations		726		271
Total liabilities		949,880		706,777
Commitments and contingencies
Stockholders’ equity:
Common stock, $.001 par value; authorized 100,000,000 shares; issued and outstanding 42,987,764 and 43,667,837 shares, respectively		43		44
Additional paid-in capital		222,841		221,693
Accumulated other comprehensive income:
Unrealized gain on investments, net of tax		3,152		1,571
Retained earnings		275,236		191,739
Total stockholders’ equity		501,272		415,047
Total liabilities and stockholders’ equity	$	1,451,152	$	1,121,824

 CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

	Three Months Ended December 31,						Year Ended December 31,
	2008			2007			2008			2007
	(Unaudited)						(Unaudited)
Revenues:
Premium	$	860,811		$	700,030		$	3,199,360		$	2,611,953
Premium tax		23,952			20,393			90,202			76,567
Service		17,995			19,399			74,953			80,508
Total revenues		902,758			739,822			3,364,515			2,769,028
Operating expenses:
Medical costs		708,163			596,971			2,640,335			2,190,898
Cost of services		13,453			15,530			56,920			61,348
General and administrative expenses		121,343			107,159			444,733			384,970
Premium tax		24,329			20,393			90,966			76,567
Total operating expenses		867,288			740,053			3,232,954			2,713,783
Earnings from operations		35,470			(231	)		131,561			55,245
Other income (expense):
Investment and other income		6,004			6,069			21,728			24,452
Interest expense		(4,237	)		(4,110	)		(16,673	)		(15,626	)
Earnings before income tax expense		37,237			1,728			136,616			64,071
Income tax expense		13,971			97			52,435			23,031
Net earnings from continuing operations		23,266			1,631			84,181			41,040
Discontinued operations, net of income tax (benefit) expense of $(671), $940, $(281), and $(31,563), respectively		(1,843	)		(158	)		(684	)		32,362
Net earnings	$	21,423		$	1,473		$	83,497		$	73,402
Net earnings per share:
Basic:
Continuing operations	$	0.54		$	0.04		$	1.95		$	0.95
Discontinued operations		(0.04	)		(0.01	)		(0.02	)		0.74
Basic earnings per common share	$	0.50		$	0.03		$	1.93		$	1.69
Diluted:
Continuing operations	$	0.53		$	0.04		$	1.90		$	0.92
Discontinued operations		(0.04	)		(0.01	)		(0.02	)		0.72
Diluted earnings per common share	$	0.49		$	0.03		$	1.88		$	1.64
Weighted average number of shares outstanding:
Basic		42,957,593			43,574,811			43,275,187			43,539,950
Diluted		44,043,749			44,951,016			44,398,955			44,823,082

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Year Ended December 31,
	2008			2007
Cash flows from operating activities:
Net earnings	$	83,497		$	73,402
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization		35,414			27,807
Stock compensation expense		15,328			15,781
Loss on sale of investments, net		4,988			106
Gain on sale of FirstGuard Missouri		—			(7,472	)
Impairment loss		2,546			7,207
Deferred income taxes		1,286			(10,223	)
Changes in assets and liabilities
Premium and related receivables		(1,548	)		1,663
Other current assets		(4,244	)		(6,253	)
Other assets		(2,700	)		(348	)
Medical claims liability		46,337			56,287
Unearned revenue		(36,447	)		10,085
Accounts payable and accrued expenses		75,112			31,234
Other operating activities		2,409			2,964
Net cash provided by operating activities		221,978			202,240
Cash flows from investing activities:
Capital expenditures		(65,156	)		(53,937	)
Purchase of investments		(549,652	)		(606,366	)
Sales and maturities of investments		546,264			456,738
Proceeds from asset sales		—			14,102
Investments in acquisitions and equity method investee, net of cash acquired		(85,377	)		(36,001	)
Net cash used in investing activities		(153,921	)		(225,464	)
Cash flows from financing activities:
Proceeds from exercise of stock options		5,354			5,464
Proceeds from borrowings		236,005			212,000
Payment of long-term debt and notes payable		(178,491	)		(181,981	)
Excess tax benefits from stock compensation		3,100			—
Common stock repurchases		(23,510	)		(9,541	)
Debt issue costs		—			(5,181	)
Net cash provided by financing activities		42,458			20,761
Net increase (decrease) in cash and cash equivalents		110,515			(2,463	)
Cash and cash equivalents, beginning of period		268,584			271,047
Cash and cash equivalents, end of period	$	379,099		$	268,584
Supplemental disclosures of cash flow information:
Interest paid	$	15,312		$	11,945
Income taxes paid	$	36,801		$	7,348
Supplemental disclosure of non-cash investing and financing activities:
Property acquired under capital lease obligations	$	—		$	1,736

CENTENE CORPORATION

CONTINUING OPERATIONS SUPPLEMENTAL FINANCIAL DATA

	Q4		Q3		Q2		Q1		Q4
	2008		2008		2008		2008		2007
MEMBERSHIP
Managed Care:
Georgia	288,300		283,900		278,800		282,700		287,900
Indiana	175,300		172,400		161,700		161,300		154,600
Ohio	133,400		132,500		137,300		131,100		128,700
South Carolina	31,300		26,600		22,500		29,300		31,800
Texas	431,700		436,900		427,200		369,000		354,400
Wisconsin	124,800		122,500		124,800		126,900		131,900
TOTAL	1,184,800		1,174,800		1,152,300		1,100,300		1,089,300
Medicaid	862,500		850,500		828,700		823,600		807,600
SCHIP & Foster Care	257,300		261,800		256,900		206,300		214,600
ABD & Medicare	65,000		62,500		66,700		70,400		67,100
TOTAL	1,184,800		1,174,800		1,152,300		1,100,300		1,089,300
Specialty Services(a):
Cenpatico Behavioral Health
Arizona	105,000		102,400		99,400		97,900		99,900
Kansas	41,100		40,100		40,000		39,400		39,000
Bridgeway Health Solutions
Long-term Care	2,100		1,900		1,800		1,700		1,600
Acute Care	14,900		—		—		—		—
TOTAL	163,100		144,400		141,200		139,000		140,500
(a) Includes external Specialty Service membership only.
REVENUE PER MEMBER(b)	$	218.52	$	213.28	$	214.76	$	215.39	$	210.11
CLAIMS(b)
Period-end inventory	269,300		323,200		389,100		411,700		329,200
Average inventory	288,600		298,400		235,300		285,700		244,600
Period-end inventory per member	0.23		0.28		0.34		0.37		0.30
(b) Revenue per member and claims information are presented for the Medicaid Managed Care segment.

	Q4		Q3		Q2		Q1		Q4
	2008		2008		2008		2008		2007
DAYS IN CLAIMS PAYABLE (c)	48.5		47.9		47.8		48.3		48.3
(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.
CASH AND INVESTMENTS (in millions)
Regulated	$	798.0	$	692.6	$	653.1	$	627.1	$	603.9
Unregulated		24.1		26.8		29.0		25.8		33.0
TOTAL	$	822.1	$	719.4	$	682.1	$	652.9	$	636.9
DEBT TO CAPITALIZATION(d)	34.6%		34.4%		32.6%		32.8%		33.3%
(d) Debt to Capitalization is calculated as follows: total debt divided by (total debt + equity).

OPERATING RATIOS:

	Three Months Ended December 31,						Year Ended December 31,
	2008			2007			2008			2007
Health Benefits Ratios
Medicaid and SCHIP		80.3	%		83.7	%		80.6	%		82.8	%
ABD and Medicare		90.1			94.4			91.1			91.4
Specialty Services		85.4			78.5			83.8			78.4
Total		82.3			85.3			82.5			83.9
General & Administrative Expense Ratios
Medicaid Managed Care		10.4	%		11.9	%		10.4	%		11.2	%
Specialty Services		16.7			15.7			16.4			15.8
Total		13.8			14.9			13.6			14.3

MEDICAL CLAIMS LIABILITIES (In thousands)

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

Balance, December 31, 2007	$	313,364
Acquisitions		15,398
Incurred related to:
Current period		2,659,036
Prior period		(18,701	)
Total incurred		2,640,335
Paid related to:
Current period		2,303,473
Prior period		292,587
Total paid		2,596,060
Balance, December 31, 2008	$	373,037

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.