Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 16, 2015 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | CENTENE CORP | |
Entity Central Index Key | 1,071,739 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 119,202,788 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 1,665 | $ 1,610 |
Premium and related receivables | 1,281 | 912 |
Short term investments | 162 | 177 |
Other current assets | 488 | 335 |
Total current assets | 3,596 | 3,034 |
Long term investments | 1,992 | 1,280 |
Restricted deposits | 106 | 100 |
Property, software and equipment, net | 488 | 445 |
Goodwill | 849 | 754 |
Intangible assets, net | 161 | 120 |
Other long term assets | 130 | 91 |
Total assets | 7,322 | 5,824 |
Current liabilities: | ||
Medical claims liability | 2,144 | 1,723 |
Accounts payable and accrued expenses | 1,035 | 768 |
Return of premium payable | 313 | 236 |
Unearned revenue | 66 | 168 |
Current portion of long term debt | 5 | 5 |
Total current liabilities | 3,563 | 2,900 |
Long term debt | 1,276 | 874 |
Other long term liabilities | 274 | 159 |
Total liabilities | $ 5,113 | $ 3,933 |
Commitments and contingencies | ||
Redeemable noncontrolling interests | $ 156 | $ 148 |
Stockholders' equity: | ||
Preferred stock, $0.001 par value; authorized 10,000,000 shares; no shares issued or outstanding at September 30, 2015 and December 31, 2014 | 0 | 0 |
Common stock, $.001 par value; authorized 200,000,000 shares; 124,940,103 issued and 119,201,560 outstanding at September 30, 2015, and 124,274,864 issued and 118,433,416 outstanding at December 31, 2014 | 0 | 0 |
Additional paid-in capital | 909 | 840 |
Accumulated other comprehensive loss | (2) | (1) |
Retained earnings | 1,247 | 1,003 |
Treasury stock, at cost (5,738,543 and 5,841,448 shares, respectively) | (103) | (98) |
Total Centene stockholders’ equity | 2,051 | 1,744 |
Noncontrolling interest | 2 | (1) |
Total stockholders’ equity | 2,053 | 1,743 |
Total liabilities and stockholders’ equity | $ 7,322 | $ 5,824 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
Stockholders' equity | ||
Preferred stock, par value (in dollar per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 124,940,103 | 124,274,864 |
Common stock, shares outstanding (in shares) | 119,201,560 | 118,433,416 |
Treasury stock, at cost (in shares) | 5,738,543 | 5,841,448 |
Consolidated Statements Of Oper
Consolidated Statements Of Operations - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues: | ||||
Premium | $ 4,983 | $ 3,780 | $ 13,974 | $ 10,182 |
Service | 480 | 379 | 1,434 | 1,070 |
Premium and service revenues | 5,463 | 4,159 | 15,408 | 11,252 |
Premium tax and health insurer fee | 358 | 193 | 1,050 | 584 |
Total revenues | 5,821 | 4,352 | 16,458 | 11,836 |
Expenses: | ||||
Medical costs | 4,433 | 3,390 | 12,475 | 9,093 |
Cost of services | 413 | 327 | 1,234 | 935 |
General and administrative expenses | 464 | 334 | 1,309 | 951 |
Premium tax expense | 274 | 161 | 794 | 492 |
Health insurer fee expense | 54 | 32 | 161 | 94 |
Total operating expenses | 5,638 | 4,244 | 15,973 | 11,565 |
Earnings from operations | 183 | 108 | 485 | 271 |
Other income (expense): | ||||
Investment and other income | 8 | 6 | 27 | 18 |
Interest expense | (11) | (9) | (32) | (25) |
Earnings from continuing operations, before income tax expense | 180 | 105 | 480 | 264 |
Income tax expense | 87 | 27 | 234 | 107 |
Earnings from continuing operations, net of income tax expense | 93 | 78 | 246 | 157 |
Discontinued operations, net of income tax expense of $0, $0, $0, and $1, respectively | 1 | 1 | 0 | 2 |
Net earnings | 94 | 79 | 246 | 159 |
(Earnings) loss attributable to noncontrolling interests | (1) | 3 | (2) | 5 |
Net earnings attributable to Centene Corporation | 93 | 82 | 244 | 164 |
Earnings from continuing operations, net of income tax expense | $ 92 | $ 81 | $ 244 | $ 162 |
Basic: | ||||
Continuing operations (in dollar per share) | $ 0.77 | $ 0.69 | $ 2.05 | $ 1.40 |
Discontinued operations (in dollar per share) | 0.01 | 0.01 | 0 | 0.01 |
Basic earnings per common share (in dollar per share) | 0.78 | 0.70 | 2.05 | 1.41 |
Diluted: | ||||
Continuing operations (in dollar per share) | 0.75 | 0.67 | 1.99 | 1.35 |
Discontinued operations (in dollar per share) | 0.01 | 0.01 | 0 | 0.02 |
Diluted earnings per common share ( in dollar per share) | $ 0.76 | $ 0.68 | $ 1.99 | $ 1.37 |
Weighted Average Number of Common Shares Outstanding (in shares) | ||||
Basic (in shares) | 119,121,524 | 117,226,968 | 118,970,853 | 115,912,304 |
Diluted (in shares) | 123,131,810 | 121,363,750 | 122,904,476 | 119,873,398 |
Consolidated Statements Of Ope5
Consolidated Statements Of Operations Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement [Abstract] | ||||
Discontinued operations, income tax expense (benefit) | $ 0 | $ 0 | $ 0 | $ 1 |
Consolidated Statement Of Compr
Consolidated Statement Of Comprehensive Earnings - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 94 | $ 79 | $ 246 | $ 159 |
Reclassification adjustment, net of tax | 0 | 0 | 0 | 0 |
Change in unrealized gain on investments, net of tax | 2 | (3) | 3 | 2 |
Foreign currency translation adjustments | 0 | 0 | (4) | 0 |
Other comprehensive earnings | 2 | (3) | (1) | 2 |
Comprehensive earnings | 96 | 76 | 245 | 161 |
Comprehensive (earnings) loss attributable to noncontrolling interests | (1) | 3 | (2) | 5 |
Comprehensive earnings attributable to Centene Corporation | $ 95 | $ 79 | $ 243 | $ 166 |
Consolidated Statement Of Stock
Consolidated Statement Of Stockholders' Equity - 9 months ended Sep. 30, 2015 - USD ($) $ in Millions | Total | Centene Stockholders' Equity - Common Stock [Member] | Centene Stockholders' Equity - Additional Paid-In Capital [Member] | Centene Stockholders' Equity - Accumulated Other Comprehensive Income (Loss) [Member] | Centene Stockholders' Equity - Retained Earnings [Member] | Centene Stockholders' Equity - Treasury Stock [Member] | Centene Stockholders' Equity - Non Controlling Interest [Member] |
Balance at Dec. 31, 2014 | $ 1,743 | $ 0 | $ 840 | $ (1) | $ 1,003 | $ (98) | $ (1) |
Balance (in shares) at Dec. 31, 2014 | 118,433,416 | 124,274,864 | 5,841,448 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net earnings | $ 244 | 244 | 0 | ||||
Comprehensive Earnings: | |||||||
Change in unrealized gain on investments, net of $1 tax | 3 | 3 | |||||
Foreign currency translation | (4) | (4) | |||||
Total comprehensive earnings | 243 | ||||||
Common stock issued for acquisition | 12 | $ 0 | 8 | $ 4 | |||
Common stock issued for acquisition (in shares) | (247,580) | ||||||
Common stock issued for employee benefit plans | 6 | $ 0 | 6 | ||||
Common stock issued for employee benefit plans (in shares) | 665,239 | ||||||
Common stock repurchases | (9) | $ (9) | |||||
Common stock repurchases (in shares) | 144,675 | ||||||
Stock compensation expense | 48 | 48 | |||||
Excess tax benefits from stock compensation | 7 | 7 | |||||
Contribution from noncontrolling interest | 2 | 2 | |||||
Reclassification to redeemable noncontrolling interest | 1 | 1 | |||||
Balance at Sep. 30, 2015 | $ 2,053 | $ 0 | $ 909 | $ (2) | $ 1,247 | $ (103) | $ 2 |
Balance (in shares) at Sep. 30, 2015 | 119,201,560 | 124,940,103 | 5,738,543 |
Consolidated Statement Of Stoc8
Consolidated Statement Of Stockholders' Equity (Parenthetical) $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Change in unrealized gain on investments, tax | $ 1 |
Consolidated Statements Of Cash
Consolidated Statements Of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities: | ||
Net earnings | $ 246 | $ 159 |
Adjustments to reconcile net earnings to net cash provided by operating activities | ||
Depreciation and amortization | 82 | 65 |
Stock compensation expense | 48 | 35 |
Deferred income taxes | (14) | (65) |
Gain on settlement of contingent consideration | (37) | 0 |
Goodwill and intangible adjustment | 28 | 0 |
Changes in assets and liabilities | ||
Premium and related receivables | (360) | (243) |
Other current assets | (103) | (25) |
Other assets | (40) | (51) |
Medical claims liabilities | 394 | 476 |
Unearned revenue | (104) | 54 |
Accounts payable and accrued expenses | 209 | 427 |
Other long term liabilities | 101 | 17 |
Other operating activities | 7 | 4 |
Net cash provided by operating activities | 457 | 853 |
Cash flows from investing activities: | ||
Capital expenditures | (101) | (69) |
Purchases of investments | (1,077) | (738) |
Sales and maturities of investments | 418 | 320 |
Proceeds from asset sale | 7 | 0 |
Investments in acquisitions, net of cash acquired | (16) | (94) |
Net cash used in investing activities | (769) | (581) |
Cash flows from financing activities: | ||
Proceeds from exercise of stock options | 5 | 6 |
Proceeds from borrowings | 1,305 | 1,385 |
Payment of long term debt | (910) | (1,118) |
Excess tax benefits from stock compensation | 7 | 7 |
Common stock repurchases | (9) | (6) |
Contribution from noncontrolling interest | 2 | 5 |
Debt issue costs | (4) | (6) |
Payment of contingent consideration obligation | (29) | 0 |
Net cash provided by financing activities | 367 | 273 |
Net increase in cash and cash equivalents | 55 | 545 |
Cash and cash equivalents, beginning of period | 1,610 | 1,038 |
Cash and cash equivalents, end of period | 1,665 | 1,583 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 28 | 18 |
Health insurer fee paid | 213 | 126 |
Income taxes paid | 229 | 167 |
Equity issued in connection with acquisitions | $ 12 | $ 190 |
Basis Of Presentation
Basis Of Presentation | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Basis of Presentation The accompanying interim financial statements have been prepared under the presumption that users of the interim financial information have either read or have access to the audited financial statements included in the Form 10-K for the fiscal year ended December 31, 2014 . The unaudited interim financial statements herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, footnote disclosures which would substantially duplicate the disclosures contained in the December 31, 2014 audited financial statements have been omitted from these interim financial statements where appropriate. In the opinion of management, these financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of the interim periods presented. Certain 2014 amounts in the notes to the consolidated financial statements have been reclassified to conform to the 2015 presentation. These reclassifications have no effect on net earnings or stockholders’ equity as previously reported. On February 2, 2015, the Board of Directors declared a two-for-one split of Centene's common stock in the form of a 100% stock dividend distributed February 19, 2015 to stockholders of record on February 12, 2015. All share and per share information presented in this Form 10-Q has been adjusted for the two-for-one stock split. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) which supersedes existing revenue recognition standards with a single model unless those contracts are within the scope of other standards (e.g., an insurance entity's insurance contracts). Under the new standard, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued an ASU which deferred the effective date of the new revenue standard by one year. The new effective date is for annual and interim periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the effect of the new revenue recognition guidance. In April 2015, the FASB issued an ASU which changes the presentation of debt issuance costs in financial statements. Under the new standard, debt issuance costs are presented in the balance sheet as a direct deduction of the related debt liability rather than as an asset. Amortization of the cost is reported as interest expense. The new standard is effective for annual and interim periods beginning after December 15, 2015 and early adoption is permitted. The Company elected to adopt this guidance beginning in the first quarter of 2015 and has applied the new standard retrospectively to all prior periods. The reclassification of debt issuance costs impacted the Consolidated Balance Sheets by decreasing both Other Long Term Assets and Long Term Debt by $14 million at December 31, 2014 and $15 million at September 30, 2015 . These reclassifications have no effect on net earnings or stockholders' equity as previously reported. In May 2015, the FASB issued an ASU which expands the disclosure requirements for insurance companies that issue short-duration contracts. The new standard will increase the level of disclosure around the Company's Medical Claims Liability to include the following: claims development by year; claim frequency; a rollforward of the claims liability; and a description of methods and assumptions used for determining the liability. It is effective for annual periods beginning after December 15, 2015 and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the effect of the new disclosure requirements. In September 2015, the FASB issued an ASU which simplifies the accounting for measurement-period adjustments in business combinations. Under the new standard, an acquirer must recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. Additionally, the acquirer must present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in the current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. It is effective for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company elected to adopt this guidance in the current fiscal quarter. |
Health Net Merger
Health Net Merger | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Health Net Merger | Health Net, Inc. Merger On July 2, 2015, the Company announced that the Company and two direct, newly formed subsidiaries of the Company had entered into a definitive merger agreement with Health Net, Inc. (Health Net) under which the Company will acquire all of the issued and outstanding shares of Health Net. Under the terms of the agreement, at the closing of the transaction, Health Net stockholders (with limited exceptions) would receive 0.622 of a validly issued, fully paid, non-assessable share of Centene common stock and $28.25 in cash for each share of Health Net common stock. The transaction is valued at approximately $6.8 billion ( based on the Centene closing stock price on July 1, 2015 ), including the assumption of debt. The transaction is expected to close in early 2016 and is subject to approvals by relevant state insurance and healthcare regulators and other customary closing conditions. In August 2015, the Company announced the early termination of the waiting period required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. In October 2015, the Company and Health Net announced the transaction was approved by both the Centene and Health Net stockholders. The Company expects to fund the cash portion of the acquisition through a combination of existing cash on hand and debt financing. |
Acquisitions and Redeemable Non
Acquisitions and Redeemable Noncontrolling Interest | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Acquisitions and Redeemable Noncontrolling Interest | Acquisitions and Redeemable Noncontrolling Interest Acquisitions Community Health Solutions of America, Inc. In July 2014, the Company completed a transaction whereby Community Health Solutions of America, Inc. assigned its contract with the Louisiana Department of Health and Hospitals under the Bayou Health Shared Savings Program to the Company's subsidiary, Louisiana Healthcare Connections (LHC). The fair value of consideration transferred included the present value of the estimated contingent consideration, subject to membership retained by LHC in the first quarter of 2015. The fair value of contingent consideration was $18 million at December 31, 2014. During the first quarter of 2015, the Company determined the amount of the actual contingent consideration to be $8 million . A gain of $10 million related to the settlement of the obligation was recorded in General and Administrative expense. LiveHealthier, Inc. In January 2015, the Company acquired the remaining 79% of LiveHealthier, Inc. (LiveHealthier) for $28 million , bringing its total ownership to 100% . LiveHealthier is a provider of technology and service-based health management solutions. The fair value of consideration of $28 million consists of cash paid of $11 million , Centene common stock issued at closing of $13 million , and the fair value of estimated contingent consideration of $4 million to be paid in cash over a three year period. The contingent consideration will not exceed $9 million . The Company's allocation of fair value resulted in goodwill of $26 million and other identifiable intangible assets of $15 million . The goodwill is not deductible for income tax purposes. The acquisition is recorded in the Managed Care segment. Fidelis SecureCare of Michigan, Inc. In May 2015, the Company acquired 100% of Fidelis SecureCare of Michigan, Inc. (Fidelis) a subsidiary of Concerto Healthcare, for $57 million . Fidelis was previously 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. The fair value of consideration of $57 million consists of initial cash consideration of $7 million and the fair value of estimated contingent consideration of $50 million . The contingent consideration is based on duals membership and revenue per member during the first year of the contract (July 2015 - June 2016), including reconciliation payments settled over a two year period . The contingent consideration fair value is estimated based on expected membership during the first year of the contract as well as estimated revenue per member reflecting both member mix and risk adjustment. The Company's allocation of fair value resulted in goodwill of $29 million and other identifiable intangible assets of $23 million . 100% of the goodwill is deductible for income tax purposes. The acquisition is recorded in the Managed Care segment. During the third quarter of 2015, the Company experienced higher than anticipated opt-out rates and member attrition in the dual demonstration program, resulting in lower than expected membership and lower blended premium rates. As a result, the fair value of estimated contingent consideration was reduced to $23 million , and the Company recorded a gain of $27 million in general and administrative expenses. In connection with the lower membership and revenue outlook, the Company conducted an impairment analysis of the identifiable intangible assets and goodwill, resulting in a reduction of goodwill and intangible assets of $28 million which was recorded in general and administrative expenses. At September 30, 2015, the Company had goodwill of $15 million and other identifiable intangible assets of $7 million remaining on the balance sheet. Agate Resources, Inc. In September 2015, the Company completed the acquisition of Agate Resources, Inc. (Agate) for $120 million . Agate is a diversified holding company that offers primarily Medicaid and other healthcare products and services to Oregon residents. The fair value of consideration of $120 million consists of initial cash consideration of $93 million , the present value of future cash payments of $18 million to be paid out over a three year period, and the fair value of estimated contingent consideration of $9 million . A portion of the contingent consideration is based on the achievement of underwriting targets and will be paid in cash over a three year period; the remainder is based on the receipt of a retrospective rate adjustment and is expected to be settled in cash in the fourth quarter of 2015. The Company's preliminary allocation of fair value resulted in goodwill of $51 million and other identifiable intangible assets of $34 million . The Company has not finalized the allocation of the fair value of assets and liabilities. The goodwill is not deductible for income tax purposes. The acquisition is recorded in the Managed Care segment. Redeemable Noncontrolling Interest In January 2015, the Company sold 25% of its ownership in Celtic Insurance Company for $7 million . No gain or loss was recognized on the sale of the ownership interest. Celtic Insurance Company is included in the Managed Care segment. In connection with the sale of the ownership interest, the Company entered into a put agreement with the noncontrolling interest holder, allowing the noncontrolling interest holder to put its interest back to the Company beginning in 2022. As a result of put option agreements, the noncontrolling interest is considered redeemable and is classified in the Redeemable Noncontrolling Interest section of the consolidated balance sheets. A reconciliation of the changes in the Redeemable Noncontrolling Interests is as follows ($ in millions): Balance, December 31, 2014 $ 148 Fair value of redeemable noncontrolling interest sold 7 Reclassification to redeemable noncontrolling interest (1 ) Net earnings attributable to redeemable noncontrolling interests 2 Balance, September 30, 2015 $ 156 |
Short-Term And Long-Term Invest
Short-Term And Long-Term Investments And Restricted Deposits | 9 Months Ended |
Sep. 30, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |
Short term and Long term Investments, Restricted Deposits | Short term and Long term Investments, Restricted Deposits Short term and long term investments and restricted deposits by investment type consist of the following ($ in millions): September 30, 2015 December 31, 2014 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 468 $ 2 $ — $ 470 $ 393 $ 1 $ (2 ) $ 392 Corporate securities 837 4 (4 ) 837 556 2 (2 ) 556 Restricted certificates of deposit 9 — — 9 6 — — 6 Restricted cash equivalents 78 — — 78 79 — — 79 Municipal securities 489 2 (2 ) 489 174 1 — 175 Asset-backed securities 186 — — 186 180 — — 180 Residential mortgage-backed securities 75 2 — 77 84 1 — 85 Commercial mortgage-backed securities 26 — — 26 — — — — Cost and equity method investments 72 — — 72 68 — — 68 Life insurance contracts 16 — — 16 16 — — 16 Total $ 2,256 $ 10 $ (6 ) $ 2,260 $ 1,556 $ 5 $ (4 ) $ 1,557 The Company’s investments are classified as available-for-sale with the exception of life insurance contracts and certain cost and equity method investments. The Company’s investment policies are designed to provide liquidity, preserve capital and maximize total return on invested assets with the focus on high credit quality securities. The Company limits the size of investment in any single issuer other than U.S. treasury securities and obligations of U.S. government corporations and agencies. As of September 30, 2015 , 38% of the Company’s investments in securities recorded at fair value that carry a rating by S&P or Moody’s were rated AAA/Aaa, 62% were rated AA-/Aa3 or higher, and 88% were rated A-/A3 or higher. At September 30, 2015 , the Company held certificates of deposit, life insurance contracts and cost and equity method investments which did not carry a credit rating. The Company's residential mortgage-backed securities are all issued by the Federal National Mortgage Association, Government National Mortgage Association or Federal Home Loan Mortgage Corporation, which carry implicit or explicit guarantees of the U.S. government. The Company's commercial mortgage-backed securities are primarily senior tranches with a weighted average rating of AA+ and a weighted average duration of 2.0 years at September 30, 2015 . The fair value of available-for-sale investments with gross unrealized losses by investment type and length of time that individual securities have been in a continuous unrealized loss position were as follows ($ in millions): September 30, 2015 December 31, 2014 Less Than 12 Months 12 Months or More Less Than 12 Months 12 Months or More Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value U.S. Treasury securities and obligations of U.S. government corporations and agencies $ — $ 68 $ — $ 16 $ — $ 72 $ (2 ) $ 180 Corporate securities (3 ) 317 (1 ) 41 (2 ) 311 — 1 Municipal securities (1 ) 120 (1 ) 5 — 20 — 7 Asset-backed securities — 68 — 13 — 70 — 10 Residential mortgage-backed securities — — — — — 18 — — Total $ (4 ) $ 573 $ (2 ) $ 75 $ (2 ) $ 491 $ (2 ) $ 198 As of September 30, 2015 , the gross unrealized losses were generated from 202 positions out of a total of 680 positions. The change in fair value of fixed income securities is a result of movement in interest rates subsequent to the purchase of the security. For each security in an unrealized loss position, the Company assesses whether it intends to sell the security or if it is more likely than not the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes. If the security meets this criterion, the decline in fair value is other-than-temporary and is recorded in earnings. The Company does not intend to sell these securities prior to maturity and it is not likely that the Company will be required to sell these securities prior to maturity; therefore, there is no indication of other-than-temporary impairment for these securities. During the nine months ended September 30, 2015 , the Company recognized $8 million of income from equity method investments. The contractual maturities of short term and long term investments and restricted deposits are as follows ($ in millions): September 30, 2015 December 31, 2014 Investments Restricted Deposits Investments Restricted Deposits Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value One year or less $ 162 $ 162 $ 95 $ 95 $ 176 $ 177 $ 92 $ 92 One year through five years 1,613 1,616 11 11 1,121 1,121 8 8 Five years through ten years 268 268 — — 121 120 — — Greater than ten years 107 108 — — 38 39 — — Total $ 2,150 $ 2,154 $ 106 $ 106 $ 1,456 $ 1,457 $ 100 $ 100 Actual maturities may differ from contractual maturities due to call or prepayment options. Asset-backed and mortgage-backed securities are included in the one year through five years category, while cost and equity method investments and life insurance contracts are included in the five years through ten years category. The Company has an option to redeem at amortized cost substantially all of the securities included in the greater than ten years category listed above. The Company continuously monitors investments for other-than-temporary impairment. Certain investments have experienced a decline in fair value due to changes in credit quality, market interest rates and/or general economic conditions. The Company recognizes an impairment loss for cost and equity method investments when evidence demonstrates that it is other-than-temporarily impaired. Evidence of a loss in value that is other-than-temporary may include the absence of an ability to recover the carrying amount of the investment or the inability of the investee to sustain a level of earnings that would justify the carrying amount of the investment. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Assets and liabilities recorded at fair value in the consolidated balance sheets are categorized based upon observable or unobservable inputs used to estimate fair value. Level inputs are as follows: Level Input: Input Definition: Level I Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date. Level II Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date. Level III Unobservable inputs that reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. The following table summarizes fair value measurements by level at September 30, 2015 , for assets and liabilities measured at fair value on a recurring basis ($ in millions): Level I Level II Level III Total Assets Cash and cash equivalents $ 1,665 $ — $ — $ 1,665 Investments available for sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 437 $ 14 $ — $ 451 Corporate securities — 837 — 837 Municipal securities — 489 — 489 Asset-backed securities — 186 — 186 Residential mortgage-backed securities — 77 — 77 Commercial mortgage-backed securities — 26 — 26 Total investments $ 437 $ 1,629 $ — $ 2,066 Restricted deposits available for sale: Cash and cash equivalents $ 78 $ — $ — $ 78 Certificates of deposit 9 — — 9 U.S. Treasury securities and obligations of U.S. government corporations and agencies 19 — — 19 Total restricted deposits $ 106 $ — $ — $ 106 Other long term assets: Interest rate swap agreements $ — $ 18 $ — $ 18 Total assets at fair value $ 2,208 $ 1,647 $ — $ 3,855 The following table summarizes fair value measurements by level at December 31, 2014 , for assets and liabilities measured at fair value on a recurring basis ($ in millions): Level I Level II Level III Total Assets Cash and cash equivalents $ 1,610 $ — $ — $ 1,610 Investments available for sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 360 $ 17 $ — $ 377 Corporate securities — 556 — 556 Municipal securities — 175 — 175 Asset-backed securities — 180 — 180 Residential mortgage-backed securities — 85 — 85 Commercial mortgage-backed securities — — — — Total investments $ 360 $ 1,013 $ — $ 1,373 Restricted deposits available for sale: Cash and cash equivalents $ 79 $ — $ — $ 79 Certificates of deposit 6 — — 6 U.S. Treasury securities and obligations of U.S. government corporations and agencies 15 — — 15 Total restricted deposits $ 100 $ — $ — $ 100 Other long term assets: Interest rate swap agreements $ — $ 11 $ — $ 11 Total assets at fair value $ 2,070 $ 1,024 $ — $ 3,094 The Company periodically transfers U.S. Treasury securities and obligations of U.S. government corporations and agencies between Level I and Level II fair value measurements dependent upon the level of trading activity for the specific securities at the measurement date. The Company’s policy regarding the timing of transfers between Level I and Level II is to measure and record the transfers at the end of the reporting period. At September 30, 2015 , there were less than $1 million of transfers from Level I to Level II and $2 million of transfers from Level II to Level I. The Company utilizes matrix pricing services to estimate fair value for securities which are not actively traded on the measurement date. The Company designates these securities as Level II fair value measurements. The aggregate carrying amount of the Company’s life insurance contracts and other non-majority owned investments, which approximates fair value, was $88 million and $84 million as of September 30, 2015 and December 31, 2014 , respectively. |
Health Insurance Marketplace
Health Insurance Marketplace | 9 Months Ended |
Sep. 30, 2015 | |
Health Insurance Marketplace [Abstract] | |
Health Insurance Marketplace | Health Insurance Marketplace The Affordable Care Act (ACA) established risk spreading premium stabilization programs effective January 1, 2014 for the Health Insurance Marketplace product. These programs, commonly referred to as the “three Rs,” include a permanent risk adjustment program, a transitional reinsurance program, and a temporary risk corridor program. Additionally, the ACA established a minimum annual medical loss ratio for the Health Insurance Marketplace. Each of the three R programs are taken into consideration to determine if the Company’s estimated annual medical costs are less than the minimum loss ratio and require an adjustment to Premium revenue to meet the minimum medical loss ratio. In June 2015, CMS released final results on reinsurance and risk-adjustment for the 2014 plan year. These final results had an insignificant impact to the Company for the 2014 plan year. The Company's receivables (payables) for each of these programs are as follows ($ in millions): September 30, 2015 December 31, 2014 Risk adjustment $ (77 ) $ (44 ) Reinsurance 14 11 Risk corridor (31 ) (9 ) Minimum medical loss ratio (14 ) (6 ) |
Debt
Debt | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt consists of the following ($ in millions): September 30, 2015 December 31, 2014 $425 million 5.75% Senior notes, due June 1, 2017 $ 428 $ 429 $500 million 4.75% Senior notes, due May 15, 2022 500 300 Fair value of interest rate swap agreements 18 11 Senior notes 946 740 Revolving credit agreement 275 75 Mortgage notes payable 68 70 Capital leases 7 8 Debt issuance costs (15 ) (14 ) Total debt 1,281 879 Less current portion (5 ) (5 ) Long term debt $ 1,276 $ 874 Senior Notes In January 2015, the Company issued an additional $200 million of 4.75% Senior Notes ( $200 Million Add-on Notes) at par. The $200 Million Add-on Notes were offered as additional debt securities under the indenture governing the $300 million of 4.75% Senior Notes issued in April 2014. In connection with the January 2015 issuance, the Company entered into interest rate swap agreements for a notional amount of $200 million at a floating rate of interest based on the three month LIBOR plus 2.88% . Gains and losses due to changes in the fair value of the interest rate swap completely offset changes in the fair value of the hedged portion of the underlying debt and are recorded as an adjustment to the $200 Million Add-on Notes. The indentures governing both the $425 million notes due 2017 and the $500 million notes due 2022 contain non-financial and financial covenants, including requirements of a minimum fixed charge coverage ratio. Interest Rate Swaps The Company uses interest rate swap agreements to convert a portion of its interest rate exposure from fixed rates to floating rates to more closely align interest expense with interest income received on its cash equivalent and variable rate investment balances. The Company has $750 million of notional amount of interest rate swap agreements consisting of $250 million which are scheduled to expire on June 1, 2017 and $500 million that are scheduled to expire May 15, 2022 . Under the Swap Agreements, the Company receives a fixed rate of interest and pays an average variable rate of the three month LIBOR plus 2.85% adjusted quarterly. At September 30, 2015 , the weighted average rate was 3.16% . The Swap Agreements are formally designated and qualify as fair value hedges and are recorded at fair value in the Consolidated Balance Sheet in other assets or other liabilities. Gains and losses due to changes in fair value of the interest rate swap agreements completely offset changes in the fair value of the hedged portion of the underlying debt. Therefore, no gain or loss has been recognized due to hedge ineffectiveness. Offsetting changes in fair value of both the interest rate swaps and the hedged portion of the underlying debt both were recognized in interest expense in the Consolidated Statement of Operations. The Company does not hold or issue any derivative instrument for trading or speculative purposes. Revolving Credit Agreement The Company has an unsecured $500 million revolving credit facility. Borrowings under the agreement bear interest based upon LIBOR rates, the Federal Funds Rate or the Prime Rate. The agreement has a maturity date of June 1, 2018 , provided it will mature 90 days prior to the maturity date of the Company's 5.75% Senior Notes due 2017 if such notes are not refinanced (or extended), certain financial conditions are not met, or the Company does not carry $100 million of unrestricted cash. As of September 30, 2015 , the Company had $275 million of borrowings outstanding under the agreement with a weighted average interest rate of 3.01% . The agreement contains non-financial and financial covenants, including requirements of minimum fixed charge coverage ratios, maximum debt-to-EBITDA ratios and minimum tangible net worth. The Company is required to not exceed a maximum debt-to-EBITDA ratio of 3.0 to 1.0. As of September 30, 2015 , there were no limitations on the availability under the revolving credit agreement as a result of the debt-to-EBITDA ratio. Letters of Credit & Surety Bonds The Company had outstanding letters of credit of $46 million as of September 30, 2015 , which were not part of the revolving credit facility. The Company also had letters of credit for $52 million (valued at September 30, 2015 conversion rate), or €46 million , representing its proportional share of the letters of credit issued to support Ribera Salud’s outstanding debt, which are a part of the revolving credit facility. Collectively, the letters of credit bore interest at 1.55% as of September 30, 2015 . The Company had outstanding surety bonds of $304 million as of September 30, 2015 . |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following table sets forth the calculation of basic and diluted net earnings per common share ($ in millions, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Earnings attributable to Centene Corporation: Earnings from continuing operations, net of tax $ 92 $ 81 $ 244 $ 162 Discontinued operations, net of tax 1 1 — 2 Net earnings $ 93 $ 82 $ 244 $ 164 Shares used in computing per share amounts: Weighted average number of common shares outstanding 119,121,524 117,226,968 118,970,853 115,912,304 Common stock equivalents (as determined by applying the treasury stock method) 4,010,286 4,136,782 3,933,623 3,961,094 Weighted average number of common shares and potential dilutive common shares outstanding 123,131,810 121,363,750 122,904,476 119,873,398 Net earnings per common share attributable to Centene Corporation: Basic: Continuing operations $ 0.77 $ 0.69 $ 2.05 $ 1.40 Discontinued operations 0.01 0.01 — 0.01 Basic earnings per common share $ 0.78 $ 0.70 $ 2.05 $ 1.41 Diluted: Continuing operations $ 0.75 $ 0.67 $ 1.99 $ 1.35 Discontinued operations 0.01 0.01 — 0.02 Diluted earnings per common share $ 0.76 $ 0.68 $ 1.99 $ 1.37 The calculation of diluted earnings per common share for the three and nine months ended September 30, 2015 excludes the impact of 28,716 and 84,644 shares, respectively, related to anti-dilutive restricted stock and restricted stock units. The calculation of diluted earnings per common share for the three and nine months ended September 30, 2014 excludes the impact of 47,520 shares and 117,756 shares, respectively, related to anti-dilutive restricted stock and restricted stock units. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information Centene operates in two segments: Managed Care and Specialty Services. The Managed Care segment consists of Centene’s health plans including all of the functions needed to operate them. The Specialty Services segment consists of Centene’s specialty companies offering auxiliary healthcare services and products. Segment information for the three months ended September 30, 2015 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Premium and service revenues from external customers $ 4,922 $ 541 $ — $ 5,463 Premium and service revenues from internal customers 24 1,274 (1,298 ) — Total premium and service revenues $ 4,946 $ 1,815 $ (1,298 ) $ 5,463 Earnings from operations $ 138 $ 45 $ — $ 183 Segment information for the three months ended September 30, 2014 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Premium and service revenues from external customers $ 3,730 $ 429 $ — $ 4,159 Premium and service revenues from internal customers 16 806 (822 ) — Total premium and service revenues $ 3,746 $ 1,235 $ (822 ) $ 4,159 Earnings from operations $ 80 $ 28 $ — $ 108 Segment information for the nine months ended September 30, 2015 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Premium and service revenues from external customers $ 13,812 $ 1,596 $ — $ 15,408 Premium and service revenues from internal customers 73 3,525 (3,598 ) — Total premium and service revenues $ 13,885 $ 5,121 $ (3,598 ) $ 15,408 Earnings from operations $ 358 $ 127 $ — $ 485 Segment information for the nine months ended September 30, 2014 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Premium and service revenues from external customers $ 9,925 $ 1,327 $ — $ 11,252 Premium and service revenues from internal customers 42 2,121 (2,163 ) — Total premium and service revenues $ 9,967 $ 3,448 $ (2,163 ) $ 11,252 Earnings from operations $ 188 $ 83 $ — $ 271 |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies On July 5, 2013, the Company's subsidiary, Kentucky Spirit Health Plan, Inc. (Kentucky Spirit), terminated its contract with the Commonwealth of Kentucky (the Commonwealth). Kentucky Spirit believes it had a contractual right to terminate the contract and filed a lawsuit in Franklin Circuit Court seeking a declaration of this right. The Commonwealth has alleged that Kentucky Spirit's exit constitutes a material breach of contract. The Commonwealth seeks to recover substantial damages and to enforce its rights under Kentucky Spirit's $25 million performance bond. The Commonwealth's attorneys have asserted that the Commonwealth's expenditures due to Kentucky Spirit's departure range from $28 million to $40 million plus interest, and that the associated CMS expenditures range from $92 million to $134 million . Kentucky Spirit disputes the Commonwealth's alleged damages, and is pursuing its own litigation claims for damages against the Commonwealth. On February 6, 2015, the Kentucky Court of Appeals affirmed a Franklin Circuit Court ruling that Kentucky Spirit does not have a contractual right to terminate the contract early. The Court of Appeals also found that the contract’s liquidated damages provision “is applicable in the event of a premature termination of the Contract term.” On September 8, 2015, Kentucky Spirit filed a motion for discretionary review seeking Kentucky Supreme Court review of the finding that Kentucky Spirit's departure constituted a breach of contract. On October 9, 2015, the Commonwealth filed a response opposing discretionary review. Kentucky Spirit also filed a lawsuit in April 2013, amended in October 2014, in Franklin Circuit Court seeking damages against the Commonwealth for losses sustained due to the Commonwealth's alleged breaches. On December 9, 2014, the Franklin Circuit Court denied the Commonwealth's motion for partial summary judgment on Kentucky Spirit's damages claims. On March 15, 2015, the Franklin Circuit Court denied the Commonwealth's motion to stay discovery and ordered that discovery proceed on those claims. On May 26, 2015, the Commonwealth issued a demand for indemnification to its actuarial firm, for "all defense costs, and any resultant monetary awards in favor of Kentucky Spirit, arising from or related to Kentucky Spirit's claims which are predicated upon the alleged omissions and errors in the Data Book and the certified actuarially sound rates." On August 19, 2015, the actuarial firm moved to intervene in the litigation. The Franklin Circuit Court granted the actuarial firm's motion on September 8, 2015 and ordered a forty-five day stay of all pretrial proceedings in order for the firm to review the record. Also, on August 19, 2015, the actuarial firm filed a petition seeking a declaratory judgment that it is not liable to the Commonwealth for indemnification related to the claims asserted by Kentucky Spirit against the Commonwealth. On October 5, 2015, the Commonwealth filed an answer to the actuarial firm's petition and asserted counterclaims/cross-claims against the firm. On March 9, 2015, the Secretary of the Kentucky Cabinet for Health and Family Services (CHFS) issued a determination letter finding that Kentucky Spirit owed the Commonwealth $40 million in actual damages plus prejudgment interest at 8 percent. On March 18, 2015, in a letter to the Kentucky Finance and Administration Cabinet (FAC), Kentucky Spirit contested CHFS' jurisdiction to make such a determination. The FAC did not issue a decision within the required 120 days. On August 13, 2015, Kentucky Spirit filed a declaratory judgment action against the Commonwealth in Franklin Circuit Court seeking a declaration that the Commonwealth may not purport to issue a decision against Kentucky Spirit awarding damages to itself when the matter is already before the Kentucky courts, and that the Commonwealth has waived its claims against Kentucky Spirit for damages arising out of the contract. The resolution of the Kentucky litigation matters may result in a range of possible outcomes. If Kentucky Spirit prevails on its claims, it would be entitled to damages. If the Commonwealth prevails, a liability to the Commonwealth could be recorded. The Company is unable to estimate the ultimate outcome resulting from the Kentucky litigation. As a result, the Company has not recorded any receivable or any liability for potential damages under the contract as of September 30, 2015. While uncertain, the ultimate resolution of the pending litigation could have a material effect on the financial position, cash flow or results of operations of the Company in the period it is resolved or becomes known. Excluding the Kentucky matters discussed above, the Company is also routinely subjected to legal proceedings in the normal course of business. While the ultimate resolution of such matters in the normal course of business is uncertain, the Company does not expect the results of any of these matters individually, or in the aggregate, to have a material effect on its financial position, results of operations or cash flows. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Event In October 2015, the Company's stockholders approved a proposal to increase the Company's authorized shares of common stock from 200 million to 400 million . |
Basis of Presentation Basis of
Basis of Presentation Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recent Accounting Pronouncements, Policy | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) which supersedes existing revenue recognition standards with a single model unless those contracts are within the scope of other standards (e.g., an insurance entity's insurance contracts). Under the new standard, recognition of revenue occurs when a customer obtains control of promised goods or services in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. In August 2015, the FASB issued an ASU which deferred the effective date of the new revenue standard by one year. The new effective date is for annual and interim periods beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the effect of the new revenue recognition guidance. In April 2015, the FASB issued an ASU which changes the presentation of debt issuance costs in financial statements. Under the new standard, debt issuance costs are presented in the balance sheet as a direct deduction of the related debt liability rather than as an asset. Amortization of the cost is reported as interest expense. The new standard is effective for annual and interim periods beginning after December 15, 2015 and early adoption is permitted. The Company elected to adopt this guidance beginning in the first quarter of 2015 and has applied the new standard retrospectively to all prior periods. The reclassification of debt issuance costs impacted the Consolidated Balance Sheets by decreasing both Other Long Term Assets and Long Term Debt by $14 million at December 31, 2014 and $15 million at September 30, 2015 . These reclassifications have no effect on net earnings or stockholders' equity as previously reported. In May 2015, the FASB issued an ASU which expands the disclosure requirements for insurance companies that issue short-duration contracts. The new standard will increase the level of disclosure around the Company's Medical Claims Liability to include the following: claims development by year; claim frequency; a rollforward of the claims liability; and a description of methods and assumptions used for determining the liability. It is effective for annual periods beginning after December 15, 2015 and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the effect of the new disclosure requirements. In September 2015, the FASB issued an ASU which simplifies the accounting for measurement-period adjustments in business combinations. Under the new standard, an acquirer must recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. Additionally, the acquirer must present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in the current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. It is effective for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. The Company elected to adopt this guidance in the current fiscal quarter. |
Acquisitions and Redeemable N22
Acquisitions and Redeemable Noncontrolling Interest Acquisitions and Redeemable Noncontrolling Interest (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Redeemable Noncontrolling Interest | A reconciliation of the changes in the Redeemable Noncontrolling Interests is as follows ($ in millions): Balance, December 31, 2014 $ 148 Fair value of redeemable noncontrolling interest sold 7 Reclassification to redeemable noncontrolling interest (1 ) Net earnings attributable to redeemable noncontrolling interests 2 Balance, September 30, 2015 $ 156 |
Short-Term And Long-Term Inve23
Short-Term And Long-Term Investments And Restricted Deposits (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Investments, Debt and Equity Securities [Abstract] | |
Short-Term And Long-Term Investments And Restricted Deposits By Investment Type | Short term and long term investments and restricted deposits by investment type consist of the following ($ in millions): September 30, 2015 December 31, 2014 Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 468 $ 2 $ — $ 470 $ 393 $ 1 $ (2 ) $ 392 Corporate securities 837 4 (4 ) 837 556 2 (2 ) 556 Restricted certificates of deposit 9 — — 9 6 — — 6 Restricted cash equivalents 78 — — 78 79 — — 79 Municipal securities 489 2 (2 ) 489 174 1 — 175 Asset-backed securities 186 — — 186 180 — — 180 Residential mortgage-backed securities 75 2 — 77 84 1 — 85 Commercial mortgage-backed securities 26 — — 26 — — — — Cost and equity method investments 72 — — 72 68 — — 68 Life insurance contracts 16 — — 16 16 — — 16 Total $ 2,256 $ 10 $ (6 ) $ 2,260 $ 1,556 $ 5 $ (4 ) $ 1,557 |
Fair Value Of Available-For-Sale Investments With Gross Unrealized Losses By Investment Type And Length Of Time | The fair value of available-for-sale investments with gross unrealized losses by investment type and length of time that individual securities have been in a continuous unrealized loss position were as follows ($ in millions): September 30, 2015 December 31, 2014 Less Than 12 Months 12 Months or More Less Than 12 Months 12 Months or More Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value U.S. Treasury securities and obligations of U.S. government corporations and agencies $ — $ 68 $ — $ 16 $ — $ 72 $ (2 ) $ 180 Corporate securities (3 ) 317 (1 ) 41 (2 ) 311 — 1 Municipal securities (1 ) 120 (1 ) 5 — 20 — 7 Asset-backed securities — 68 — 13 — 70 — 10 Residential mortgage-backed securities — — — — — 18 — — Total $ (4 ) $ 573 $ (2 ) $ 75 $ (2 ) $ 491 $ (2 ) $ 198 |
Contractual Maturities Of Short-Term And Long-Term Investments And Restricted Deposits | The contractual maturities of short term and long term investments and restricted deposits are as follows ($ in millions): September 30, 2015 December 31, 2014 Investments Restricted Deposits Investments Restricted Deposits Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value Amortized Cost Fair Value One year or less $ 162 $ 162 $ 95 $ 95 $ 176 $ 177 $ 92 $ 92 One year through five years 1,613 1,616 11 11 1,121 1,121 8 8 Five years through ten years 268 268 — — 121 120 — — Greater than ten years 107 108 — — 38 39 — — Total $ 2,150 $ 2,154 $ 106 $ 106 $ 1,456 $ 1,457 $ 100 $ 100 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements By Level For Assets And Liabilities Measured At Fair Value On A Recurring Basis | The following table summarizes fair value measurements by level at September 30, 2015 , for assets and liabilities measured at fair value on a recurring basis ($ in millions): Level I Level II Level III Total Assets Cash and cash equivalents $ 1,665 $ — $ — $ 1,665 Investments available for sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 437 $ 14 $ — $ 451 Corporate securities — 837 — 837 Municipal securities — 489 — 489 Asset-backed securities — 186 — 186 Residential mortgage-backed securities — 77 — 77 Commercial mortgage-backed securities — 26 — 26 Total investments $ 437 $ 1,629 $ — $ 2,066 Restricted deposits available for sale: Cash and cash equivalents $ 78 $ — $ — $ 78 Certificates of deposit 9 — — 9 U.S. Treasury securities and obligations of U.S. government corporations and agencies 19 — — 19 Total restricted deposits $ 106 $ — $ — $ 106 Other long term assets: Interest rate swap agreements $ — $ 18 $ — $ 18 Total assets at fair value $ 2,208 $ 1,647 $ — $ 3,855 The following table summarizes fair value measurements by level at December 31, 2014 , for assets and liabilities measured at fair value on a recurring basis ($ in millions): Level I Level II Level III Total Assets Cash and cash equivalents $ 1,610 $ — $ — $ 1,610 Investments available for sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 360 $ 17 $ — $ 377 Corporate securities — 556 — 556 Municipal securities — 175 — 175 Asset-backed securities — 180 — 180 Residential mortgage-backed securities — 85 — 85 Commercial mortgage-backed securities — — — — Total investments $ 360 $ 1,013 $ — $ 1,373 Restricted deposits available for sale: Cash and cash equivalents $ 79 $ — $ — $ 79 Certificates of deposit 6 — — 6 U.S. Treasury securities and obligations of U.S. government corporations and agencies 15 — — 15 Total restricted deposits $ 100 $ — $ — $ 100 Other long term assets: Interest rate swap agreements $ — $ 11 $ — $ 11 Total assets at fair value $ 2,070 $ 1,024 $ — $ 3,094 |
Health Insurance Marketplace He
Health Insurance Marketplace Health Insurance Marketplace (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Health Insurance Marketplace [Abstract] | |
Schedule of receivables (payables) related to the Health Insurance Marketplace programs | The Company's receivables (payables) for each of these programs are as follows ($ in millions): September 30, 2015 December 31, 2014 Risk adjustment $ (77 ) $ (44 ) Reinsurance 14 11 Risk corridor (31 ) (9 ) Minimum medical loss ratio (14 ) (6 ) |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule Of Debt | Debt consists of the following ($ in millions): September 30, 2015 December 31, 2014 $425 million 5.75% Senior notes, due June 1, 2017 $ 428 $ 429 $500 million 4.75% Senior notes, due May 15, 2022 500 300 Fair value of interest rate swap agreements 18 11 Senior notes 946 740 Revolving credit agreement 275 75 Mortgage notes payable 68 70 Capital leases 7 8 Debt issuance costs (15 ) (14 ) Total debt 1,281 879 Less current portion (5 ) (5 ) Long term debt $ 1,276 $ 874 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Calculation Of Basic And Diluted Net Earnings Per Common Share | The following table sets forth the calculation of basic and diluted net earnings per common share ($ in millions, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Earnings attributable to Centene Corporation: Earnings from continuing operations, net of tax $ 92 $ 81 $ 244 $ 162 Discontinued operations, net of tax 1 1 — 2 Net earnings $ 93 $ 82 $ 244 $ 164 Shares used in computing per share amounts: Weighted average number of common shares outstanding 119,121,524 117,226,968 118,970,853 115,912,304 Common stock equivalents (as determined by applying the treasury stock method) 4,010,286 4,136,782 3,933,623 3,961,094 Weighted average number of common shares and potential dilutive common shares outstanding 123,131,810 121,363,750 122,904,476 119,873,398 Net earnings per common share attributable to Centene Corporation: Basic: Continuing operations $ 0.77 $ 0.69 $ 2.05 $ 1.40 Discontinued operations 0.01 0.01 — 0.01 Basic earnings per common share $ 0.78 $ 0.70 $ 2.05 $ 1.41 Diluted: Continuing operations $ 0.75 $ 0.67 $ 1.99 $ 1.35 Discontinued operations 0.01 0.01 — 0.02 Diluted earnings per common share $ 0.76 $ 0.68 $ 1.99 $ 1.37 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | Segment information for the three months ended September 30, 2015 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Premium and service revenues from external customers $ 4,922 $ 541 $ — $ 5,463 Premium and service revenues from internal customers 24 1,274 (1,298 ) — Total premium and service revenues $ 4,946 $ 1,815 $ (1,298 ) $ 5,463 Earnings from operations $ 138 $ 45 $ — $ 183 Segment information for the three months ended September 30, 2014 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Premium and service revenues from external customers $ 3,730 $ 429 $ — $ 4,159 Premium and service revenues from internal customers 16 806 (822 ) — Total premium and service revenues $ 3,746 $ 1,235 $ (822 ) $ 4,159 Earnings from operations $ 80 $ 28 $ — $ 108 Segment information for the nine months ended September 30, 2015 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Premium and service revenues from external customers $ 13,812 $ 1,596 $ — $ 15,408 Premium and service revenues from internal customers 73 3,525 (3,598 ) — Total premium and service revenues $ 13,885 $ 5,121 $ (3,598 ) $ 15,408 Earnings from operations $ 358 $ 127 $ — $ 485 Segment information for the nine months ended September 30, 2014 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Premium and service revenues from external customers $ 9,925 $ 1,327 $ — $ 11,252 Premium and service revenues from internal customers 42 2,121 (2,163 ) — Total premium and service revenues $ 9,967 $ 3,448 $ (2,163 ) $ 11,252 Earnings from operations $ 188 $ 83 $ — $ 271 |
Basis Of Presentation (Details)
Basis Of Presentation (Details) $ in Millions | Feb. 19, 2015 | Feb. 02, 2015 | Sep. 30, 2015USD ($) | Dec. 31, 2014USD ($) |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Stock split conversion ratio | 2 | |||
Percentage of common stock distributed as dividends | 100.00% | |||
New Accounting Pronouncement, Effect of adoption on balance sheet | $ 15 | $ 14 |
Health Net Merger (Details)
Health Net Merger (Details) - Health Net, Inc. [Member] $ / shares in Units, $ in Billions | Jul. 02, 2015USD ($)subsidiary$ / sharesshares |
Business Acquisition [Line Items] | |
Newly formed subsidiaries of Centene | subsidiary | 2 |
Share exchange, per share | 0.622 |
Cash to be paid, per share | $ / shares | $ 28.25 |
Consideration to be paid per agreement | $ | $ 6.8 |
Acquisitions and Redeemable N31
Acquisitions and Redeemable Noncontrolling Interest Acquisitions and Redeemable Noncontrolling Interest (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2015 | May. 31, 2015 | Jan. 31, 2015 | Sep. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Business Acquisition [Line Items] | ||||||||
Payment of contingent consideration obligation | $ 29 | $ 0 | ||||||
Gain on settlement of contingent consideration | 37 | 0 | ||||||
Goodwill | $ 849 | $ 849 | 849 | $ 754 | ||||
Goodwill and intangible adjustment | 28 | $ 0 | ||||||
LiveHealthier, Inc. [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Fair value of contingent consideration | $ 4 | |||||||
Percentage of acquisition | 79.00% | |||||||
Consideration transferred | $ 28 | |||||||
Total percentage of ownership after the acquisition | 100.00% | |||||||
Payments to acquire business | $ 11 | |||||||
Common stock issued for acquisition | $ 13 | |||||||
Contingent consideration, period of payout | 3 years | |||||||
Maximum contingent consideration | $ 9 | |||||||
Goodwill | 26 | |||||||
Intangibles acquired | $ 15 | |||||||
Celtic Insurance Company [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Ownership percentage sold by parent, percentage | 25.00% | |||||||
Proceeds from divestiture of businesses | $ 7 | |||||||
Fidelis SecureCare of Michigan, Inc. [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Fair value of contingent consideration | 23 | $ 50 | 23 | 23 | ||||
Gain on settlement of contingent consideration | 27 | |||||||
Percentage of acquisition | 100.00% | |||||||
Consideration transferred | $ 57 | |||||||
Payments to acquire business | $ 7 | |||||||
Contingent consideration, period of payout | 2 years | |||||||
Goodwill | 15 | $ 29 | 15 | 15 | ||||
Intangibles acquired | $ 23 | |||||||
Finite-Lived Intangible Assets, Net | 7 | 7 | 7 | |||||
Description of contingent consideration arrangement | duals membership and revenue per member during the first year of the contract (July 2015 - June 2016), including reconciliation payments settled over a two year period | |||||||
Goodwill deductible for income tax , percentage | 100.00% | |||||||
Community Health Solutions [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Fair value of contingent consideration | $ 18 | |||||||
Payment of contingent consideration obligation | $ 8 | |||||||
Gain on settlement of contingent consideration | $ 10 | |||||||
Agate Resources, Inc. [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Fair value of contingent consideration | 9 | 9 | 9 | |||||
Consideration transferred | 120 | |||||||
Payments to acquire business | 93 | |||||||
Goodwill | 51 | 51 | 51 | |||||
Intangibles acquired | $ 34 | 34 | 34 | |||||
Description of contingent consideration arrangement | A portion of the contingent consideration is based on the achievement of underwriting targets and will be paid in cash over a three year period; the remainder is based on the receipt of a retrospective rate adjustment and is expected to be settled in cash in the fourth quarter of 2015. | |||||||
Present value of future consideration | $ 18 | 18 | $ 18 | |||||
Business Combination, Deferred Payment, Period of Payments | 3 years | |||||||
Contingent consideration based on achievement of underwriting targets, duration of cash payment | 3 years | |||||||
General and Administrative Expense [Member] | Fidelis SecureCare of Michigan, Inc. [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Goodwill and intangible adjustment | $ 28 |
Acquisitions and Redeemable N32
Acquisitions and Redeemable Noncontrolling Interest Redeemable Noncontrolling Interest (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | |
Opening balance | $ 148 |
Fair value of redeemable noncontrolling interest sold | 7 |
Reclassification to redeemable noncontrolling interest | (1) |
Net earnings attributable to redeemable noncontrolling interests | 2 |
Closing balance | $ 156 |
Short-Term And Long-Term Inve33
Short-Term And Long-Term Investments And Restricted Deposits (Narrative) (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2015USD ($)position | |
Investments, Debt and Equity Securities [Abstract] | |
Percentage of investments in securities recorded at fair value that carry a rating by Moody's or S&P of AAA/Aaa | 38.00% |
Percentage of investments in securities recorded at fair value that carry a rating by Moody's or S&P of AA-/Aa3 or higher | 62.00% |
Percentage of investments in securities recorded at fair value that carry a rating by Moody's or S&P of A-/A3 or higher | 88.00% |
Positions from which gross unrealized losses were generated | 202 |
Total unrealized investment positions | 680 |
Income from equity method investments | $ | $ 8 |
Percentage of investments recorded at fair value that carry rating of AA, weighted average (in years) | 2 years |
Short-Term And Long-Term Inve34
Short-Term And Long-Term Investments And Restricted Deposits (By Investment Type) (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | $ 2,256 | $ 1,556 |
Gross Unrealized Gains | 10 | 5 |
Gross Unrealized Losses | (6) | (4) |
Fair Value | 2,260 | 1,557 |
U.S. Treasury Securities And Obligations Of U.S. Government Corporations And Agencies [Member] | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 468 | 393 |
Gross Unrealized Gains | 2 | 1 |
Gross Unrealized Losses | 0 | (2) |
Fair Value | 470 | 392 |
Corporate Securities [Member] | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 837 | 556 |
Gross Unrealized Gains | 4 | 2 |
Gross Unrealized Losses | (4) | (2) |
Fair Value | 837 | 556 |
Restricted Certificates Of Deposit [Member] | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 9 | 6 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 9 | 6 |
Restricted Cash Equivalents [Member] | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 78 | 79 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 78 | 79 |
Municipal Securities [Member] | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 489 | 174 |
Gross Unrealized Gains | 2 | 1 |
Gross Unrealized Losses | (2) | 0 |
Fair Value | 489 | 175 |
Asset Backed Securities [Member] | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 186 | 180 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 186 | 180 |
Residential Mortgage Backed Securities [Member] | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 75 | 84 |
Gross Unrealized Gains | 2 | 1 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 77 | 85 |
Commercial Mortgage Backed Securities [Member] | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 26 | 0 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 26 | 0 |
Cost And Equity Method Investments [Member] | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 72 | 68 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 72 | 68 |
Life Insurance Contracts [Member] | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 16 | 16 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 16 | $ 16 |
Short-Term And Long-Term Inve35
Short-Term And Long-Term Investments And Restricted Deposits (Fair Value Of Available-For-Sale Investments With Gross Unrealized Losses By Investment Type And Length Of Time) (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Schedule of Available-for-sale Securities [Line Items] | ||
Available For Sale Securities Continuous Unrealized Loss Position Less Than12 Months Aggregate Losses Accumulated In Investments | $ (4) | $ (2) |
Less Than 12 Months, Fair Value | 573 | 491 |
Available For Sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Aggregate Losses Accumulated In Investments | (2) | (2) |
12 Months or More, Fair Value | 75 | 198 |
U.S. Treasury Securities And Obligations Of U.S. Government Corporations And Agencies [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available For Sale Securities Continuous Unrealized Loss Position Less Than12 Months Aggregate Losses Accumulated In Investments | 0 | 0 |
Less Than 12 Months, Fair Value | 68 | 72 |
Available For Sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Aggregate Losses Accumulated In Investments | 0 | (2) |
12 Months or More, Fair Value | 16 | 180 |
Corporate Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available For Sale Securities Continuous Unrealized Loss Position Less Than12 Months Aggregate Losses Accumulated In Investments | (3) | (2) |
Less Than 12 Months, Fair Value | 317 | 311 |
Available For Sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Aggregate Losses Accumulated In Investments | (1) | 0 |
12 Months or More, Fair Value | 41 | 1 |
Municipal Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available For Sale Securities Continuous Unrealized Loss Position Less Than12 Months Aggregate Losses Accumulated In Investments | (1) | 0 |
Less Than 12 Months, Fair Value | 120 | 20 |
Available For Sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Aggregate Losses Accumulated In Investments | (1) | 0 |
12 Months or More, Fair Value | 5 | 7 |
Asset Backed Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available For Sale Securities Continuous Unrealized Loss Position Less Than12 Months Aggregate Losses Accumulated In Investments | 0 | 0 |
Less Than 12 Months, Fair Value | 68 | 70 |
Available For Sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Aggregate Losses Accumulated In Investments | 0 | 0 |
12 Months or More, Fair Value | 13 | 10 |
Residential Mortgage Backed Securities [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Available For Sale Securities Continuous Unrealized Loss Position Less Than12 Months Aggregate Losses Accumulated In Investments | 0 | 0 |
Less Than 12 Months, Fair Value | 0 | 18 |
Available For Sale Securities Continuous Unrealized Loss Position 12 Months Or Longer Aggregate Losses Accumulated In Investments | 0 | 0 |
12 Months or More, Fair Value | $ 0 | $ 0 |
Short-Term And Long-Term Inve36
Short-Term And Long-Term Investments And Restricted Deposits (Contractual Maturities Of Short-Term And Long-Term Investments And Restricted Deposits) (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Investments [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
One year or less, Amortized Cost | $ 162 | $ 176 |
One year through five years, Amortized Cost | 1,613 | 1,121 |
Five years through ten years, Amortized Cost | 268 | 121 |
Greater than ten years, Amortized Cost | 107 | 38 |
Total, Amortized Cost | 2,150 | 1,456 |
One year or less, Fair Value | 162 | 177 |
One year through five years, Fair Value | 1,616 | 1,121 |
Five years through ten years, Fair Value | 268 | 120 |
Greater than ten years, Fair Value | 108 | 39 |
Total, Fair Value | 2,154 | 1,457 |
Restricted Deposits [Member] | ||
Schedule of Available-for-sale Securities [Line Items] | ||
One year or less, Amortized Cost | 95 | 92 |
One year through five years, Amortized Cost | 11 | 8 |
Five years through ten years, Amortized Cost | 0 | 0 |
Greater than ten years, Amortized Cost | 0 | 0 |
Total, Amortized Cost | 106 | 100 |
One year or less, Fair Value | 95 | 92 |
One year through five years, Fair Value | 11 | 8 |
Five years through ten years, Fair Value | 0 | 0 |
Greater than ten years, Fair Value | 0 | 0 |
Total, Fair Value | $ 106 | $ 100 |
Fair Value Measurements (Fair V
Fair Value Measurements (Fair Value Measurements By Level For Assets And Liabilities Measured At Fair Value On A Recurring Basis) (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | $ 1,665 | $ 1,610 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 451 | 377 |
Corporate securities | 837 | 556 |
Municipal securities | 489 | 175 |
Asset-backed securities | 186 | 180 |
Total investments | 2,066 | 1,373 |
Cash and cash equivalents | 78 | 79 |
Certificates of deposit | 9 | 6 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 19 | 15 |
Total restricted deposits | 106 | 100 |
Interest rate swap agreements | 18 | 11 |
Total assets at fair value | 3,855 | 3,094 |
Level I [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 1,665 | 1,610 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 437 | 360 |
Corporate securities | 0 | 0 |
Municipal securities | 0 | 0 |
Asset-backed securities | 0 | 0 |
Total investments | 437 | 360 |
Cash and cash equivalents | 78 | 79 |
Certificates of deposit | 9 | 6 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 19 | 15 |
Total restricted deposits | 106 | 100 |
Interest rate swap agreements | 0 | 0 |
Total assets at fair value | 2,208 | 2,070 |
Level II [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 14 | 17 |
Corporate securities | 837 | 556 |
Municipal securities | 489 | 175 |
Asset-backed securities | 186 | 180 |
Total investments | 1,629 | 1,013 |
Cash and cash equivalents | 0 | 0 |
Certificates of deposit | 0 | 0 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 0 | 0 |
Total restricted deposits | 0 | 0 |
Interest rate swap agreements | 18 | 11 |
Total assets at fair value | 1,647 | 1,024 |
Level III [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 0 | 0 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 0 | 0 |
Corporate securities | 0 | 0 |
Municipal securities | 0 | 0 |
Asset-backed securities | 0 | 0 |
Total investments | 0 | 0 |
Cash and cash equivalents | 0 | 0 |
Certificates of deposit | 0 | 0 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 0 | 0 |
Total restricted deposits | 0 | 0 |
Interest rate swap agreements | 0 | 0 |
Total assets at fair value | 0 | 0 |
Residential Mortgage Backed Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Mortgage-backed securities | 77 | 85 |
Residential Mortgage Backed Securities [Member] | Level I [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Mortgage-backed securities | 0 | 0 |
Residential Mortgage Backed Securities [Member] | Level II [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Mortgage-backed securities | 77 | 85 |
Residential Mortgage Backed Securities [Member] | Level III [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Mortgage-backed securities | 0 | 0 |
Commercial Mortgage Backed Securities [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Mortgage-backed securities | 26 | 0 |
Commercial Mortgage Backed Securities [Member] | Level I [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Mortgage-backed securities | 0 | 0 |
Commercial Mortgage Backed Securities [Member] | Level II [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Mortgage-backed securities | 26 | 0 |
Commercial Mortgage Backed Securities [Member] | Level III [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Mortgage-backed securities | $ 0 | $ 0 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Fair Value Disclosures [Abstract] | ||
Transfers from Level I to Level II | $ 1 | |
Transfers from Level II to Level I | 2 | |
Life insurance contracts and other non-majority owned investments, fair value | $ 88 | $ 84 |
Health Insurance Marketplace (D
Health Insurance Marketplace (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Health Insurance Marketplace [Abstract] | ||
Risk adjustment | $ (77) | $ (44) |
Reinsurance | 14 | 11 |
Risk corridor | (31) | (9) |
Minimum medical loss ratio | $ (14) | $ (6) |
Debt (Schedule Of Debt) (Detail
Debt (Schedule Of Debt) (Details) - USD ($) $ in Millions | Sep. 30, 2015 | Dec. 31, 2014 |
Debt Instrument [Line Items] | ||
Fair value of interest rate swap agreements | $ 18 | $ 11 |
Senior notes | 946 | 740 |
Revolving credit agreement | 275 | 75 |
Mortgage notes payable | 68 | 70 |
Capital leases | 7 | 8 |
Debt issuance costs | (15) | (14) |
Total debt | 1,281 | 879 |
Less current portion | (5) | (5) |
Long term debt | 1,276 | 874 |
5.75% Senior Notes, Due June 1, 2017 [Member] | Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
$425 million 5.75% Senior notes, due June 1, 2017 | 428 | 429 |
Debt, face amount | $ 425 | $ 425 |
Interest rate, stated | 5.75% | 5.75% |
4.75% Senior Notes, Due on May 15, 2022 [Member] | Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
$500 million 4.75% Senior notes, due May 15, 2022 | $ 500 | $ 300 |
Debt, face amount | $ 500 | $ 500 |
Interest rate, stated | 4.75% | 4.75% |
Debt (Narrative) (Details)
Debt (Narrative) (Details) € in Millions, $ in Millions | 9 Months Ended | ||||
Sep. 30, 2015EUR (€) | Sep. 30, 2015USD ($) | Jan. 31, 2015USD ($) | Dec. 31, 2014 | Apr. 30, 2014USD ($) | |
Debt Instrument [Line Items] | |||||
Derivative, notional amount | $ 200 | ||||
Revolving credit facility, maximum borrowing capacity | $ 500 | ||||
Revolving credit facility, due date | Jun. 1, 2018 | ||||
Line of credit, minimum carrying amount of unrestricted cash | $ 100 | ||||
Line of credit facility, covenant terms | The agreement contains non-financial and financial covenants, including requirements of minimum fixed charge coverage ratios, maximum debt-to-EBITDA ratios and minimum tangible net worth. The Company is required to not exceed a maximum debt-to-EBITDA ratio of 3.0 to 1.0. | ||||
Ratio of debt to EBITDA | 3 | ||||
Weighted average interest rate | 3.01% | 3.01% | |||
Senior notes, effective yield | 1.55% | 1.55% | |||
Maximum exposure, undiscounted | $ 304 | ||||
4.75% Add-on Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Senior notes, at par | $ 200 | $ 300 | |||
Interest rate, stated | 4.75% | 4.75% | |||
5.75% Senior Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Senior notes, at par | 425 | ||||
4.75% Senior Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Senior notes, at par | 500 | ||||
Ribera Salud [Member] | |||||
Debt Instrument [Line Items] | |||||
Letters of credit outstanding, amount | € 46 | 52 | |||
Non Revolver Letter of Credit [Member] | |||||
Debt Instrument [Line Items] | |||||
Letters of credit outstanding, amount | $ 46 | ||||
$200 Million Interest Rate Swap [Member] | |||||
Debt Instrument [Line Items] | |||||
Variable rate of swap, percentage | 2.88% | 2.88% | |||
Interest Rate Swap [Member] | |||||
Debt Instrument [Line Items] | |||||
Derivative, notional amount | $ 750 | ||||
Variable rate of swap, percentage | 2.85% | 2.85% | |||
Weighted average interest rate, interest rate swap agreements | 3.16% | 3.16% | |||
June 1, 2017 Expiration [Member] | |||||
Debt Instrument [Line Items] | |||||
Derivative, notional amount | $ 250 | ||||
Interest rate swap agreements expire date | Jun. 1, 2017 | ||||
May 15, 2022 Expiration [Member] | |||||
Debt Instrument [Line Items] | |||||
Derivative, notional amount | $ 500 | ||||
Interest rate swap agreements expire date | May 15, 2022 | ||||
5.75% Senior Notes, Due June 1, 2017 [Member] | Senior Notes [Member] | |||||
Debt Instrument [Line Items] | |||||
Interest rate, stated | 5.75% | 5.75% | 5.75% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Earnings Per Share [Abstract] | ||||
Earnings from continuing operations, net of tax | $ 92 | $ 81 | $ 244 | $ 162 |
Discontinued operations, net of tax | 1 | 1 | 0 | 2 |
Net earnings attributable to Centene Corporation | $ 93 | $ 82 | $ 244 | $ 164 |
Weighted average number of common shares outstanding (in shares) | 119,121,524 | 117,226,968 | 118,970,853 | 115,912,304 |
Common stock equivalents (as determined by applying the treasury stock method) (in shares) | 4,010,286 | 4,136,782 | 3,933,623 | 3,961,094 |
Weighted average number of common shares and potential dilutive common shares outstanding (in shares) | 123,131,810 | 121,363,750 | 122,904,476 | 119,873,398 |
Basic: | ||||
Continuing operations (in dollar per share) | $ 0.77 | $ 0.69 | $ 2.05 | $ 1.40 |
Discontinued operations (in dollar per share) | 0.01 | 0.01 | 0 | 0.01 |
Basic earnings per common share (in dollar per share) | 0.78 | 0.70 | 2.05 | 1.41 |
Diluted: | ||||
Continuing operations (in dollar per share) | 0.75 | 0.67 | 1.99 | 1.35 |
Discontinued operations (in dollar per share) | 0.01 | 0.01 | 0 | 0.02 |
Diluted earnings per common share ( in dollar per share) | $ 0.76 | $ 0.68 | $ 1.99 | $ 1.37 |
Anti-dilutive restricted stock and restricted stock units excluded from the calculation of diluted earnings per common share ( in shares) | 28,716 | 47,520 | 84,644 | 117,756 |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)segment | Sep. 30, 2014USD ($) | |
Number of reportable segments | segment | 2 | |||
Revenues | $ 5,821 | $ 4,352 | $ 16,458 | $ 11,836 |
Premium and service revenues | 5,463 | 4,159 | 15,408 | 11,252 |
Earnings from operations | 183 | 108 | 485 | 271 |
Intersegment Eliminations [Member] | ||||
Premium and service revenues | (1,298) | (822) | (3,598) | (2,163) |
Earnings from operations | 0 | 0 | 0 | 0 |
Operating Segments [Member] | Medicaid Managed Care [Member] | ||||
Premium and service revenues | 4,946 | 3,746 | 13,885 | 9,967 |
Earnings from operations | 138 | 80 | 358 | 188 |
Operating Segments [Member] | Specialty Services [Member] | ||||
Premium and service revenues | 1,815 | 1,235 | 5,121 | 3,448 |
Earnings from operations | 45 | 28 | 127 | 83 |
Internal Customer [Member] | ||||
Revenues | 0 | 0 | 0 | 0 |
Internal Customer [Member] | Intersegment Eliminations [Member] | ||||
Revenues | (1,298) | (822) | (3,598) | (2,163) |
Internal Customer [Member] | Operating Segments [Member] | Medicaid Managed Care [Member] | ||||
Revenues | 24 | 16 | 73 | 42 |
Internal Customer [Member] | Operating Segments [Member] | Specialty Services [Member] | ||||
Revenues | 1,274 | 806 | 3,525 | 2,121 |
External Customer [Member] | ||||
Revenues | 5,463 | 4,159 | 15,408 | 11,252 |
External Customer [Member] | Intersegment Eliminations [Member] | ||||
Revenues | 0 | 0 | 0 | 0 |
External Customer [Member] | Operating Segments [Member] | Medicaid Managed Care [Member] | ||||
Revenues | 4,922 | 3,730 | 13,812 | 9,925 |
External Customer [Member] | Operating Segments [Member] | Specialty Services [Member] | ||||
Revenues | $ 541 | $ 429 | $ 1,596 | $ 1,327 |
Contingencies (Details)
Contingencies (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2015 | Mar. 09, 2015 | |
Loss Contingencies [Line Items] | ||
Kentucky Spirit performance bond | $ 25 | |
Commonwealth of Kentucky alleged increased program costs - low end of range | 28 | |
Commonwealth of Kentucky alleged increased program costs - high end of range | 40 | |
Commonwealth of Kentucky alleged associated CMS expenditures - low end of range | 92 | |
Commonwealth of Kentucky alleged associated CMS expenditures - high end of range | $ 134 | |
Secretary of the Kentucky Cabinet for Health and Family Services determination letter damages | $ 40 | |
Secretary of the Kentucky Cabinet for Health and Family Services determination letter damages prejudgment interest rate | 8.00% | |
Loss contingency, allegations | On July 5, 2013, the Company's subsidiary, Kentucky Spirit Health Plan, Inc. (Kentucky Spirit), terminated its contract with the Commonwealth of Kentucky (the Commonwealth). Kentucky Spirit believes it had a contractual right to terminate the contract and filed a lawsuit in Franklin Circuit Court seeking a declaration of this right. The Commonwealth has alleged that Kentucky Spirit's exit constitutes a material breach of contract. The Commonwealth seeks to recover substantial damages and to enforce its rights under Kentucky Spirit's $25 million performance bond. The Commonwealth's attorneys have asserted that the Commonwealth's expenditures due to Kentucky Spirit's departure range from $28 million to $40 million plus interest, and that the associated CMS expenditures range from $92 million to $134 million. Kentucky Spirit disputes the Commonwealth's alleged damages, and is pursuing its own litigation claims for damages against the Commonwealth. On February 6, 2015, the Kentucky Court of Appeals affirmed a Franklin Circuit Court ruling that Kentucky Spirit does not have a contractual right to terminate the contract early. The Court of Appeals also found that the contract’s liquidated damages provision “is applicable in the event of a premature termination of the Contract term.” On September 8, 2015, Kentucky Spirit filed a motion for discretionary review seeking Kentucky Supreme Court review of the finding that Kentucky Spirit's departure constituted a breach of contract. On October 9, 2015, the Commonwealth filed a response opposing discretionary review. Kentucky Spirit also filed a lawsuit in April 2013, amended in October 2014, in Franklin Circuit Court seeking damages against the Commonwealth for losses sustained due to the Commonwealth's alleged breaches. On December 9, 2014, the Franklin Circuit Court denied the Commonwealth's motion for partial summary judgment on Kentucky Spirit's damages claims. On March 15, 2015, the Franklin Circuit Court denied the Commonwealth's motion to stay discovery and ordered that discovery proceed on those claims. | |
Inestimable loss | The resolution of the Kentucky litigation matters may result in a range of possible outcomes. If Kentucky Spirit prevails on its claims, it would be entitled to damages. If the Commonwealth prevails, a liability to the Commonwealth could be recorded. The Company is unable to estimate the ultimate outcome resulting from the Kentucky litigation. As a result, the Company has not recorded any receivable or any liability for potential damages under the contract as of September 30, 2015. While uncertain, the ultimate resolution of the pending litigation could have a material effect on the financial position, cash flow or results of operations of the Company in the period it is resolved or becomes known. |
Subsequent Events (Details)
Subsequent Events (Details) - shares | Oct. 27, 2015 | Sep. 30, 2015 | Dec. 31, 2014 |
Subsequent Event [Line Items] | |||
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 | |
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Common stock, shares authorized (in shares) | 400,000,000 |