Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 13, 2018 | |
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 | Mar. 31, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 178,533,259 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 5,668 | $ 4,072 |
Premium and trade receivables | 3,648 | 3,413 |
Short-term investments | 507 | 531 |
Other current assets | 1,153 | 687 |
Total current assets | 10,976 | 8,703 |
Long-term investments | 5,535 | 5,312 |
Restricted deposits | 140 | 135 |
Property, software and equipment, net | 1,250 | 1,104 |
Goodwill | 5,295 | 4,749 |
Intangible assets, net | 1,519 | 1,398 |
Other long-term assets | 455 | 454 |
Total assets | 25,170 | 21,855 |
Current liabilities: | ||
Medical claims liability | 4,771 | 4,286 |
Accounts payable and accrued expenses | 4,962 | 4,165 |
Return of premium payable | 515 | 549 |
Unearned revenue | 638 | 328 |
Current portion of long-term debt | 4 | 4 |
Total current liabilities | 10,890 | 9,332 |
Long-term debt | 5,172 | 4,695 |
Other long-term liabilities | 1,520 | 952 |
Total liabilities | 17,582 | 14,979 |
Commitments and contingencies | ||
Redeemable noncontrolling interests | 8 | 12 |
Stockholders’ equity: | ||
Preferred stock, $0.001 par value; authorized 10,000 shares; no shares issued or outstanding at March 31, 2018 and December 31, 2017 | 0 | 0 |
Common stock, $0.001 par value; authorized 400,000 shares; 180,643 issued and 176,795 outstanding at March 31, 2018, and 180,379 issued and 173,437 outstanding at December 31, 2017 | 0 | 0 |
Additional paid-in capital | 4,592 | 4,349 |
Accumulated other comprehensive (loss) | (54) | (3) |
Retained earnings | 3,104 | 2,748 |
Treasury stock, at cost (3,848 and 6,942 shares, respectively) | (139) | (244) |
Total Centene stockholders’ equity | 7,503 | 6,850 |
Noncontrolling interest | 77 | 14 |
Total stockholders’ equity | 7,580 | 6,864 |
Total liabilities, redeemable noncontrolling interests and stockholders’ equity | $ 25,170 | $ 21,855 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Stockholders' equity | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 400,000,000 | 400,000,000 |
Common stock, shares issued | 180,643,000 | 180,379,000 |
Common stock, shares outstanding | 176,795,000 | 173,437,000 |
Treasury stock (in shares) | 3,848,000 | 6,942,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues: | ||
Premium | $ 11,903 | $ 10,638 |
Service | 653 | 527 |
Premium and service revenues | 12,556 | 11,165 |
Premium tax and health insurer fee | 638 | 559 |
Total revenues | 13,194 | 11,724 |
Expenses: | ||
Medical costs | 10,039 | 9,322 |
Cost of services | 543 | 441 |
Selling, general and administrative expenses | 1,316 | 1,091 |
Amortization of acquired intangible assets | 39 | 40 |
Premium tax expense | 546 | 590 |
Health insurer fee expense | 171 | 0 |
Total operating expenses | 12,654 | 11,484 |
Earnings from operations | 540 | 240 |
Other income (expense): | ||
Investment and other income | 41 | 41 |
Interest expense | (68) | (62) |
Earnings from operations, before income tax expense | 513 | 219 |
Income tax expense | 175 | 87 |
Net earnings | 338 | 132 |
Loss attributable to noncontrolling interests | 2 | 7 |
Net earnings attributable to Centene Corporation | $ 340 | $ 139 |
Net earnings per common share attributable to Centene Corporation: | ||
Basic earnings per common share (in dollars per share) | $ 1.95 | $ 0.81 |
Diluted earnings per common share (in dollars per share) | $ 1.91 | $ 0.79 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Earnings - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Net earnings | $ 338 | $ 132 |
Reclassification adjustment, net of tax | 0 | 0 |
Change in unrealized gain (loss) on investments, net of tax | (52) | 14 |
Foreign currency translation adjustments | 1 | 1 |
Other comprehensive earnings (loss) | (51) | 15 |
Comprehensive earnings | 287 | 147 |
Comprehensive loss attributable to noncontrolling interests | 2 | 7 |
Comprehensive earnings attributable to Centene Corporation | $ 289 | $ 154 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity - 3 months ended Mar. 31, 2018 - USD ($) $ in Millions | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock | Non- controlling Interest |
Balance at Dec. 31, 2017 | $ 6,864 | $ 0 | $ 4,349 | $ (3) | $ 2,748 | $ (244) | $ 14 |
Balance (in shares) at Dec. 31, 2017 | 173,437,000 | 180,379,000 | |||||
Treasury stock (in shares) at Dec. 31, 2017 | 6,942,000 | 6,942,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net earnings | $ 341 | 340 | 1 | ||||
Other comprehensive loss, net of ($16) tax | (51) | (51) | |||||
Common stock issued for acquisitions | 324 | $ 0 | 210 | $ 114 | |||
Common stock issued for acquisitions (in shares) | 0 | 3,176,000 | |||||
Common stock issued for employee benefit plans | 4 | $ 0 | 4 | ||||
Common stock issued for employee benefit plans (in shares) | 264,000 | ||||||
Common stock repurchases | (9) | $ (9) | |||||
Common stock repurchases (in shares) | 82,000 | ||||||
Stock compensation expense | 33 | 33 | |||||
Purchase of noncontrolling interest | (4) | (4) | |||||
Acquisition resulting in noncontrolling interest | 62 | 62 | |||||
Balance at Mar. 31, 2018 | $ 7,580 | $ 0 | $ 4,592 | $ (54) | 3,104 | $ (139) | $ 77 |
Balance (in shares) at Mar. 31, 2018 | 176,795,000 | 180,643,000 | |||||
Treasury stock (in shares) at Mar. 31, 2018 | 3,848,000 | 3,848,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Cumulative-effect of adopting new accounting guidance | Accounting Standards Codification Topic 606 | $ 16 | $ 16 |
Consolidated Statement of Stoc7
Consolidated Statement of Stockholders' Equity (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Other comprehensive earnings, tax | $ 16 | |
Common stock | ||
Common stock, par value (in dollars per share) | $ 0.001 | 0.001 |
Treasury Stock | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | ||
Net earnings | $ 338 | $ 132 |
Adjustments to reconcile net earnings to net cash provided by operating activities | ||
Depreciation and amortization | 104 | 86 |
Stock compensation expense | 33 | 32 |
Deferred income taxes | 30 | (51) |
Changes in assets and liabilities | ||
Premium and trade receivables | (176) | 59 |
Other assets | 51 | 89 |
Medical claims liabilities | 485 | 358 |
Unearned revenue | 317 | 320 |
Accounts payable and accrued expenses | 157 | (237) |
Other long-term liabilities | 477 | 459 |
Other operating activities, net | 30 | 1 |
Net cash provided by operating activities | 1,846 | 1,248 |
Cash flows from investing activities: | ||
Capital expenditures | (218) | (83) |
Purchases of investments | (765) | (582) |
Sales and maturities of investments | 445 | 343 |
Acquisitions, net of cash acquired | (226) | 0 |
Other investing activities, net | 0 | (1) |
Net cash used in investing activities | (764) | (323) |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 2,015 | 560 |
Payments of long-term debt | (1,491) | (560) |
Common stock repurchases | (9) | (13) |
Other financing activities, net | (2) | 3 |
Net cash provided by (used in) financing activities | 513 | (10) |
Net increase in cash, cash equivalents and restricted cash | 1,595 | 915 |
Cash, cash equivalents, and restricted cash and cash equivalents, beginning of period | 4,089 | 3,936 |
Cash, cash equivalents, and restricted cash and cash equivalents, end of period | 5,684 | 4,851 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 73 | 72 |
Income taxes paid | 1 | 2 |
Equity issued in connection with acquisitions | $ 324 | $ 0 |
Organization and Operations
Organization and Operations | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Operations | Organization and Operations 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, 2017 . 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, 2017 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 amounts in the consolidated financial statements and notes to the consolidated financial statements have been reclassified to conform to the 2018 presentation. These reclassifications have no effect on net earnings or stockholders' equity as previously reported. Recently Adopted Accounting Guidance In February 2018, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) which allows a reclassification from accumulated other comprehensive income (OCI) to retained earnings for stranded tax effects resulting from the Tax Cuts and Job Acts (TCJA). Consequently, the amendments eliminate the stranded tax effects resulting from the TCJA and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the TCJA, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. The amendments in this ASU also require certain disclosures about stranded tax effects. The Company adopted the new guidance in the first quarter of 2018 and elected to reclassify stranded tax effects as a result of the TCJA related to unrealized gains and losses on investments and defined benefit plan obligations. The Company uses the individual security approach to release income tax effects from accumulated OCI. The new guidance did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. In November 2016, the FASB issued an ASU clarifying the classification and presentation of changes in restricted cash on the statement of cash flows. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and restricted cash. Therefore, amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted the new guidance in the first quarter of 2018. The new guidance did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. Cash, cash equivalents, and restricted cash and cash equivalents reported on the Consolidated Statements of Cash Flows includes restricted cash and cash equivalents of $6 million , $12 million , $17 million , and $16 million as of December 31, 2016, March 31, 2017, December 31, 2017 and March 31, 2018, respectively, as well as previously reported cash and cash equivalents. In March 2016, the FASB issued an ASU which requires entities to measure equity investments at fair value and recognize any change in fair value in net income. The standard does not apply to accounting methods that result in consolidation of the investee and those accounted for under the equity method. The standard also requires entities to record changes in instrument-specific credit risk for financial liabilities measured under the fair value option in other comprehensive income. Companies are required to record a cumulative-effect adjustment to the statement of financial position as of the beginning of the fiscal year in which the guidance is adopted, with the exception of amendments related to equity investments without readily determinable fair values, which will be applied prospectively to all investments that exist as of the date of adoption. The Company adopted the new guidance in the first quarter of 2018. The new guidance did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. In May 2014, the FASB issued an 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. The Company adopted the new guidance in the first quarter of 2018 using the modified retrospective approach with a cumulative-effect increase to retained earnings of $16 million . The Company also elected the practical expedient of applying the new guidance only to contracts that are not completed as of the date of initial application. The majority of the Company's revenues are derived from insurance contracts and are excluded from the new standard. Accounting Guidance Not Yet Adopted In February 2018, the FASB issued an ASU which makes technical corrections and clarifications to certain aspects of the new guidance on recognizing and measuring financial instruments. The amendment clarifies, among other things, that entities will use a prospective transition approach only for equity securities they elect to measure using the new measurement alternative. The amendments are effective for annual periods beginning in 2018 and interim periods beginning in the third quarter of 2018. The new guidance is not expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows. In February 2016, the FASB issued an ASU which introduces a lessee model that requires the majority of leases to be recognized on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in Accounting Standards Codification 606, the FASB's new revenue recognition standard, and addresses other concerns related to the current lessee model. The standard also requires lessors to increase the transparency of their exposure to changes in value of their residual assets and how they manage that exposure. It is effective for annual and interim periods beginning after December 15, 2018. Early adoption is permitted. The initial standard required a modified retrospective transition approach, with application, including disclosures, in all comparative periods presented. In March 2018, the FASB tentatively approved an amendment to the new guidance that allows companies the option of using the effective date of the new standard as the date of initial application. The Company is currently evaluating the effect of the new lease guidance. |
Fidelis Care Transaction
Fidelis Care Transaction | 3 Months Ended |
Mar. 31, 2018 | |
Business Combinations [Abstract] | |
Fidelis Care Transaction | Fidelis Care Transaction In September 2017, the Company signed a definitive agreement under which Fidelis Care will become the Company's health plan in New York State. Under the terms of the agreement, the Company will acquire substantially all of the assets of Fidelis Care for $3.75 billion , subject to certain adjustments. |
Short-term and Long-term Invest
Short-term and Long-term Investments, Restricted Deposits | 3 Months Ended |
Mar. 31, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Short-term and Long-term Investments, Restricted Deposits | Short-term and Long-term Investments, Restricted Deposits Short-term and long-term investments and restricted deposits by investment type consist of the following ($ in millions): March 31, 2018 December 31, 2017 Amortized Cost Gross Gross Unrealized Losses Fair Value Amortized Cost Gross Unrealized Gains Gross Fair Value U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 260 $ — $ (3 ) $ 257 $ 311 $ — $ (2 ) $ 309 Corporate securities 2,242 5 (33 ) 2,214 2,208 12 (10 ) 2,210 Restricted certificates of deposit 4 — — 4 4 — — 4 Restricted cash equivalents 16 — — 16 17 — — 17 Municipal securities 2,187 3 (28 ) 2,162 2,085 12 (10 ) 2,087 Asset-backed securities 492 1 (3 ) 490 437 1 (1 ) 437 Residential mortgage-backed securities 345 — (10 ) 335 337 1 (6 ) 332 Commercial mortgage-backed securities 287 — (6 ) 281 272 1 (2 ) 271 Fair value and equity method investments 290 — — 290 176 — — 176 Life insurance contracts 133 — — 133 135 — — 135 Total $ 6,256 $ 9 $ (83 ) $ 6,182 $ 5,982 $ 27 $ (31 ) $ 5,978 The Company’s investments are debt securities classified as available-for-sale with the exception of life insurance contracts and certain 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 March 31, 2018 , 96% of the Company’s investments in rated securities carry an investment grade rating by nationally recognized statistical rating organizations. At March 31, 2018 , the Company held certificates of deposit, life insurance contracts and fair value and equity method investments which did not carry a credit rating. The Company's residential mortgage-backed securities are primarily 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 3.9 years at March 31, 2018 . In March 2018, the Company completed a 25% investment in RxAdvance, a full-service pharmacy benefit manager. The investment is accounted for using the equity method of accounting. The fair value of available-for-sale debt securities 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): March 31, 2018 December 31, 2017 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 $ (2 ) $ 171 $ (1 ) $ 85 $ (1 ) $ 222 $ (1 ) $ 79 Corporate securities (26 ) 1,598 (7 ) 185 (6 ) 1,044 (4 ) 185 Municipal securities (22 ) 1,467 (6 ) 171 (7 ) 943 (3 ) 175 Asset-backed securities (2 ) 310 (1 ) 27 (1 ) 228 — 28 Residential mortgage-backed securities (3 ) 159 (7 ) 161 (1 ) 109 (5 ) 171 Commercial mortgage-backed securities (4 ) 172 (2 ) 50 (1 ) 112 (1 ) 51 Total $ (59 ) $ 3,877 $ (24 ) $ 679 $ (17 ) $ 2,658 $ (14 ) $ 689 As of March 31, 2018 , the gross unrealized losses were generated from 2,714 positions out of a total of 3,564 positions. The change in fair value of fixed income securities is primarily 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. The contractual maturities of short-term and long-term investments and restricted deposits are as follows ($ in millions): March 31, 2018 December 31, 2017 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 $ 432 $ 430 $ 45 $ 45 $ 474 $ 474 $ 48 $ 47 One year through five years 2,439 2,411 96 95 2,424 2,420 88 88 Five years through ten years 1,920 1,894 — — 1,773 1,779 — — Greater than ten years 200 201 — — 129 130 — — Asset-backed securities 1,124 1,106 — — 1,046 1,040 — — Total $ 6,115 $ 6,042 $ 141 $ 140 $ 5,846 $ 5,843 $ 136 $ 135 Actual maturities may differ from contractual maturities due to call or prepayment options. Fair value 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 fair value 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 | 3 Months Ended |
Mar. 31, 2018 | |
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 March 31, 2018 , 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 $ 5,668 $ — $ — $ 5,668 Investments available for sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 137 $ — $ — $ 137 Corporate securities — 2,214 — 2,214 Municipal securities — 2,162 — 2,162 Asset-backed securities — 490 — 490 Residential mortgage-backed securities — 335 — 335 Commercial mortgage-backed securities — 281 — 281 Total investments $ 137 $ 5,482 $ — $ 5,619 Restricted deposits available for sale: Cash and cash equivalents $ 16 $ — $ — $ 16 Certificates of deposit 4 — — 4 U.S. Treasury securities and obligations of U.S. government corporations and agencies 120 — — 120 Total restricted deposits $ 140 $ — $ — $ 140 Other long-term assets: Interest rate swap agreements $ — $ — $ — $ — Total assets at fair value $ 5,945 $ 5,482 $ — $ 11,427 Liabilities Other long-term liabilities: Interest rate swap agreements $ — $ 120 $ — $ 120 Total liabilities at fair value $ — $ 120 $ — $ 120 The following table summarizes fair value measurements by level at December 31, 2017 , 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 $ 4,072 $ — $ — $ 4,072 Investments available for sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 195 $ — $ — $ 195 Corporate securities — 2,210 — 2,210 Municipal securities — 2,087 — 2,087 Asset-backed securities — 437 — 437 Residential mortgage-backed securities — 332 — 332 Commercial mortgage-backed securities — 271 — 271 Total investments $ 195 $ 5,337 $ — $ 5,532 Restricted deposits available for sale: Cash and cash equivalents $ 17 $ — $ — $ 17 Certificates of deposit 4 — — 4 U.S. Treasury securities and obligations of U.S. government corporations and agencies 114 — — 114 Total restricted deposits $ 135 $ — $ — $ 135 Other long-term assets: Interest rate swap agreements $ — $ 1 $ — $ 1 Total assets at fair value $ 4,402 $ 5,338 $ — $ 9,740 Liabilities Other long-term liabilities: Interest rate swap agreements $ — $ 72 $ — $ 72 Total liabilities at fair value $ — $ 72 $ — $ 72 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 March 31, 2018 , there were no transfers from Level I to Level II and no 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 $423 million and $311 million as of March 31, 2018 and December 31, 2017 , respectively. |
Medical Claims Liability
Medical Claims Liability | 3 Months Ended |
Mar. 31, 2018 | |
Insurance [Abstract] | |
Medical Claims Liability | Medical Claims Liability The following table summarizes the change in medical claims liability ($ in millions): Three Months Ended March 31, 2018 2017 Balance, January 1 $ 4,286 $ 3,929 Less: Reinsurance recoverable 18 5 Balance, January 1, net 4,268 3,924 Acquisitions — — Incurred related to: Current year 10,302 9,557 Prior years (263 ) (235 ) Total incurred 10,039 9,322 Paid related to: Current year 6,579 5,973 Prior years 2,970 2,991 Total paid 9,549 8,964 Balance at March 31, net 4,758 4,282 Plus: Reinsurance recoverable 13 8 Balance, March 31 $ 4,771 $ 4,290 Reinsurance recoverables related to medical claims are included in premium and related receivables. Changes in estimates of incurred claims for prior years are primarily attributable to reserving under moderately adverse conditions. Additionally, as a result of development within "Incurred related to: Prior years" due to minimum HBR and other return of premium programs, we recorded $13 million and $3 million as a reduction to premium revenues in the three months ended March 31, 2018 and 2017, respectively. Incurred but not reported (IBNR) plus expected development on reported claims as of March 31, 2018 was $3,688 million . Total IBNR plus expected development on reported claims represents estimates for claims incurred but not reported, development on reported claims, and estimates for the costs necessary to process unpaid claims at the end of each period. We estimate our liability using actuarial methods that are commonly used by health insurance actuaries and meet Actuarial Standards of Practice. These actuarial methods consider factors such as historical data for payment patterns, cost trends, product mix, seasonality, utilization of healthcare services and other relevant factors. |
Affordable Care Act
Affordable Care Act | 3 Months Ended |
Mar. 31, 2018 | |
Affordable Care Act [Abstract] | |
Affordable Care Act | Affordable Care Act The Affordable Care Act (ACA) established risk spreading premium stabilization programs effective January 1, 2014. These programs, commonly referred to as the “three Rs,” include a permanent risk adjustment program, a transitional reinsurance program, and a temporary risk corridor program. Additionally, the ACA established a minimum annual medical loss ratio (MLR) and cost sharing reductions. Each of the three R programs are taken into consideration to determine if the Company’s estimated annual medical costs are less than the minimum loss ratio and require an adjustment to Premium revenue to meet the minimum MLR. The Company's net receivables (payables) for each of these programs are as follows ($ in millions): March 31, 2018 December 31, 2017 Risk adjustment $ (1,131 ) $ (677 ) Reinsurance 1 15 Risk corridor 5 6 Minimum MLR (44 ) (22 ) Cost sharing reductions (71 ) (96 ) |
Debt
Debt | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt consists of the following ($ in millions): March 31, 2018 December 31, 2017 $1,400 million 5.625% Senior notes, due February 15, 2021 $ 1,400 $ 1,400 $1,000 million 4.75% Senior notes, due May 15, 2022 1,006 1,006 $1,000 million 6.125% Senior notes, due February 15, 2024 1,000 1,000 $1,200 million 4.75% Senior notes, due January 15, 2025 1,200 1,200 Fair value of interest rate swap agreements (120 ) (71 ) Total senior notes 4,486 4,535 Revolving credit agreement 675 150 Mortgage notes payable 60 61 Capital leases and other 17 18 Debt issuance costs (62 ) (65 ) Total debt 5,176 4,699 Less current portion (4 ) (4 ) Long-term debt $ 5,172 $ 4,695 Senior Notes The indentures governing the senior notes listed in the table above contain restrictive covenants of Centene Corporation. At March 31, 2018 , the Company was in compliance with all covenants. 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 following is a summary of the notional amounts of the Company's interest rate swap agreements as of March 31, 2018 : Expiration Date Notional Amount February 15, 2021 $ 600 May 15, 2022 500 February 15, 2024 1,000 January 15, 2025 600 Total $ 2,700 The fair value of the swap agreements shown above are recorded in other long-term assets and other long-term liabilities, respectively in the Consolidated Balance Sheets. Under the swap agreements, the Company receives a fixed rate of interest and pays an average variable rate of either the three or one month LIBOR plus 3.61% adjusted monthly or quarterly, based on the terms of the individual swap agreements. At March 31, 2018 , the weighted average rate was 5.44% . The swap agreements are formally designated and qualify as fair value hedges. 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 Statements 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 $1,500 million revolving credit facility. The agreement has a maturity date of December 14, 2022 . Borrowings under the agreement bear interest based upon LIBOR rates, the Federal Funds Rate or the Prime Rate. As of March 31, 2018 , the Company had $675 million of borrowings outstanding under the agreement with a weighted average interest rate of 5.00% , and the Company was in compliance with all covenants. The revolving credit facility contains non-financial and financial covenants, including requirements of minimum fixed charge coverage ratios and maximum debt-to-EBITDA ratios. The Company is required to not exceed a maximum debt-to-EBITDA ratio of 3.5 to 1.0 . As of March 31, 2018 , there were no limitations on the availability under the revolving credit agreement as a result of the debt-to-EBITDA ratio. Mortgage Notes Payable The Company has a non-recourse mortgage note of $60 million at March 31, 2018 collateralized by its corporate headquarters building. The mortgage note is due January 1, 2021 and bears a 5.14% interest rate. The collateralized property had a net book value of $170 million at March 31, 2018 . Letters of Credit & Surety Bonds The Company had outstanding letters of credit of $76 million as of March 31, 2018 , which were not part of the revolving credit facility. The Company also had letters of credit for $47 million (valued at March 31, 2018 conversion rate), or €38 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 1.31% as of March 31, 2018 . The Company had outstanding surety bonds of $404 million as of March 31, 2018 . Construction Loan The Company has a $200 million non-recourse construction loan to fund the expansion of the Company's corporate headquarters. The loan bears interest based on the one month LIBOR plus 2.70% and matures in April 2021 with an optional one-year extension. The agreement contains financial and non-financial covenants aligning with the Company's revolving credit agreement . The Company has guaranteed completion of the construction project associated with the loan. As of March 31, 2018 , the Company had no borrowings outstanding under the loan. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity In March 2018, the Company acquired CMG and issued 1,449 thousand shares of Centene common stock to the selling shareholders, with a fair value of $149 million . In March 2018, the Company acquired an additional 61% of Interpreta and issued 1,727 thousand shares of Centene common stock to the selling shareholders, with a fair value of $175 million . |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following table sets forth the calculation of basic and diluted net earnings per common share ($ in millions, except shares in thousands and per share data in dollars): Three Months Ended March 31, 2018 2017 Earnings attributable to Centene Corporation $ 340 $ 139 Shares used in computing per share amounts: Weighted average number of common shares outstanding 173,921 172,074 Common stock equivalents (as determined by applying the treasury stock method) 3,769 3,762 Weighted average number of common shares and potential dilutive common shares outstanding 177,690 175,836 Net earnings per common share attributable to Centene Corporation: Basic earnings per common share $ 1.95 $ 0.81 Diluted earnings per common share $ 1.91 $ 0.79 The calculation of diluted earnings per common share for the three months ended March 31, 2018 and 2017 excludes the impact of 5 thousand and 55 thousand shares, respectively, related to anti-dilutive stock options, restricted stock and restricted stock units. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2018 | |
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 March 31, 2018 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Total revenues from external customers $ 12,449 $ 745 $ — $ 13,194 Total revenues from internal customers 25 2,231 (2,256 ) — Total revenues $ 12,474 $ 2,976 $ (2,256 ) $ 13,194 Earnings from operations $ 470 $ 70 $ — $ 540 Segment information for the three months ended March 31, 2017 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Total revenues from external customers $ 11,115 $ 609 $ — $ 11,724 Total revenues from internal customers 11 2,333 (2,344 ) — Total revenues $ 11,126 $ 2,942 $ (2,344 ) $ 11,724 Earnings from operations $ 187 $ 53 $ — $ 240 |
Contingencies
Contingencies | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies Overview The Company records reserves and accrues costs for certain legal proceedings and regulatory matters to the extent that it determines an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. While such reserves and accrued costs reflect the Company's best estimate of the probable loss for such matters, the recorded amounts may differ materially from the actual amount of any such losses. In some cases, no estimate of the possible loss or range of loss in excess of amounts accrued, if any, can be made because of the inherently unpredictable nature of legal and regulatory proceedings, which may be exacerbated by various factors, including but not limited to, they may involve indeterminate claims for monetary damages or may involve fines, penalties or punitive damages; present novel legal theories or legal uncertainties; involve disputed facts; represent a shift in regulatory policy; involve a large number of parties, claimants or regulatory bodies; are in the early stages of the proceedings; involve a number of separate proceedings and/or a wide range of potential outcomes; or result in a change of business practices. As of the date of this report, amounts accrued for legal proceedings and regulatory matters were not material. However, it is possible that in a particular quarter or annual period the Company’s financial condition, results of operations, cash flow and/or liquidity could be materially adversely affected by an ultimate unfavorable resolution of or development in legal and/or regulatory proceedings, including as described below. Except for the proceedings discussed below, the Company believes that the ultimate outcome of any of the regulatory and legal proceedings that are currently pending against it should not have a material adverse effect on financial condition, results of operations, cash flow or liquidity. California On October 20, 2015, the Company's California subsidiary, Health Net of California, Inc. (Health Net California), was named as a defendant in a California taxpayer action filed in Los Angeles County Superior Court, captioned as Michael D. Myers v. State Board of Equalization, Dave Jones, Insurance Commissioner of the State of California, Betty T. Yee, Controller of the State of California, et al., Los Angeles Superior Court Case No. BS158655. This action is brought under a California statute that permits an individual taxpayer to sue a governmental agency when the taxpayer believes the agency has failed to enforce governing law. Plaintiff contends that Health Net California, a California licensed Health Care Service Plan (HCSP), is an “insurer” for purposes of taxation despite acknowledging it is not an “insurer” under regulatory law. Under California law, “insurers” must pay a gross premiums tax (GPT), calculated as 2.35% on gross premiums. As a licensed HCSP, Health Net California has paid the California Corporate Franchise Tax (CFT), the tax generally paid by California businesses. Plaintiff contends that Health Net California must pay the GPT rather than the CFT. Plaintiff seeks a writ of mandate directing the California taxing agencies to collect the GPT, and seeks an order requiring Health Net California to pay GPT, interest and penalties for a period dating to eight years prior to the October 2015 filing of the complaint. This lawsuit is being coordinated with similar lawsuits filed against other entities. In September 2017, the Company filed a demurrer seeking to dismiss the complaint, and a motion to strike the allegations seeking retroactive relief. In March 2018, the Court overruled the Company's demurrer, denied the motion to strike, and set a status conference for May 2018. The Company intends to vigorously defend itself against these claims; however, this matter is subject to many uncertainties, and an adverse outcome in this matter could potentially have a materially adverse impact on our financial position, results of operations and cash flows. Federal Securities Class Action On November 14, 2016, a putative federal securities class action, Israel Sanchez v. Centene Corp., et al., was filed against the Company and certain of its executives in the U.S. District Court for the Central District of California. In March 2017, the court entered an order transferring the matter to the U.S. District Court for the Eastern District of Missouri. The plaintiffs in the lawsuit allege that the Company's accounting and related disclosures for certain liabilities acquired in the acquisition of Health Net violated federal securities laws. In July 2017, the lead plaintiff filed a Consolidated Class Action Complaint. The Company filed a motion to dismiss this complaint in September 2017. In February 2018, the Court held a hearing on the motion to dismiss but has not yet issued a ruling. The Company denies any wrongdoing and is vigorously defending itself against these claims. Nevertheless, this matter is subject to many uncertainties and the Company cannot predict how long this litigation will last or what the ultimate outcome will be, and an adverse outcome in this matter could potentially have a materially adverse impact on our financial position and results of operations. Additionally, on January 24, 2018, a separate derivative action was filed by plaintiff Harkesh Parekh on behalf of Centene Corporation against the Company and certain of its officers and directors in the United States District Court for the Eastern District of Missouri. Plaintiff purports to bring suit derivatively on behalf of the Company against certain officers and directors for violation of securities laws, breach of fiduciary duty, waste of corporate assets and unjust enrichment. The derivative complaint repeats many of the allegations in the federal securities class action described above and asserts that defendants made inaccurate or misleading statements, and/or failed to correct the alleged misstatements. A second shareholder derivative action was filed on March 9, 2018, by plaintiffs Laura Wood and Peoria Police Pension Fund on behalf of Centene Corporation against the Company and certain of its officers and directors in the United States District Court for the Eastern District of Missouri. This second derivative complaint repeats many of the allegations in the securities class action and the first derivative suit. The derivative suits are expected to be consolidated and a lead plaintiff appointed for the litigation. Medicare Parts C and D Matter In December 2016, a Civil Investigative Demand (CID) was issued to Health Net by the United States Department of Justice regarding Health Net’s submission of risk adjustment claims to CMS under Parts C and D of Medicare. The CID may be related to a federal qui tam lawsuit filed under seal in 2011 naming more than a dozen health insurers including Health Net. The lawsuit was unsealed in February 2017 when the Department of Justice intervened in the case with respect to one of the insurers (not Health Net). In subsequent pleadings, both the Department of Justice and the Relator excluded Health Net from the lawsuit. The Company is complying with the CID and will vigorously defend any lawsuits. At this point, it is not possible to determine what level of liability, if any, the Company may face as a result of this matter. Veterans Administrative Matter In October 2017, a CID was issued to Health Net Federal Services, LLC (HNFS) by the United States Department of Justice. The CID seeks documents and interrogatory responses concerning whether HNFS submitted, or caused to be submitted, excessive, duplicative or otherwise improper claims to the U.S. Department of Veterans Affairs under a contract to arrange health care services for veterans. The contract began in late 2014. In 2016, modifications to the contract were made to allow for possible duplicate billings with a reconciliation period at the end of the contract term. The Company is complying with the CID and believes it has been meeting its contractual obligations. At this point, it is not possible to determine what level of liability, if any, the Company may face as a result of this matter. Ambetter Class Action On January 11, 2018, a putative class action lawsuit was filed by Cynthia Harvey and Steven A. Milman against the Company and certain subsidiaries in the U.S. District Court for the Eastern District of Washington. The complaint alleges that the Company failed to meet federal and state requirements for provider networks and directories with regard to its Ambetter policies, denied coverage and/or refused to pay for covered benefits, and failed to address grievances adequately, causing some members to incur unexpected costs. In March 2018, the Company filed separate motions to dismiss each defendant. The Company intends to vigorously defend itself against these claims. Nevertheless, this matter is subject to many uncertainties and the Company cannot predict how long this litigation will last or what the ultimate outcome will be, and an adverse outcome in this matter could potentially have a materially adverse impact on our financial position and results of operations. Miscellaneous Proceedings Excluding the matters discussed above, the Company is also routinely subjected to legal and regulatory proceedings in the normal course of business. These matters can include, without limitation: • periodic compliance and other reviews and investigations by various federal and state regulatory agencies with respect to requirements applicable to the Company's business, including, without limitation, those related to payment of out-of-network claims, submissions to CMS for risk adjustment payments or the False Claims Act, pre-authorization penalties, timely review of grievances and appeals, timely and accurate payment of claims, and the Health Insurance Portability and Accountability Act of 1996; • litigation arising out of general business activities, such as tax matters, disputes related to healthcare benefits coverage or reimbursement, putative securities class actions and medical malpractice, privacy, real estate, intellectual property and employment-related claims; • disputes regarding reinsurance arrangements, claims arising out of the acquisition or divestiture of various assets, class actions and claims relating to the performance of contractual and non-contractual obligations to providers, members, employer groups and others, including, but not limited to, the alleged failure to properly pay claims and challenges to the manner in which the Company processes claims, and claims alleging that the Company has engaged in unfair business practices. Among other things, these matters may result in awards of damages, fines or penalties, which could be substantial, and/or could require changes to the Company’s business. The Company intends to vigorously defend itself against the miscellaneous legal and regulatory proceedings to which it is currently a party; however, these proceedings are subject to many uncertainties. In some of the cases pending against the Company, substantial non-economic or punitive damages are being sought. |
Organization and Operations - (
Organization and Operations - (Recent Accounting Pronouncements) (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recent Accounting Pronouncements and Accounting Guidance Not Adopted | Recently Adopted Accounting Guidance In February 2018, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) which allows a reclassification from accumulated other comprehensive income (OCI) to retained earnings for stranded tax effects resulting from the Tax Cuts and Job Acts (TCJA). Consequently, the amendments eliminate the stranded tax effects resulting from the TCJA and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate to the reclassification of the income tax effects of the TCJA, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected. The amendments in this ASU also require certain disclosures about stranded tax effects. The Company adopted the new guidance in the first quarter of 2018 and elected to reclassify stranded tax effects as a result of the TCJA related to unrealized gains and losses on investments and defined benefit plan obligations. The Company uses the individual security approach to release income tax effects from accumulated OCI. The new guidance did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. In November 2016, the FASB issued an ASU clarifying the classification and presentation of changes in restricted cash on the statement of cash flows. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and restricted cash. Therefore, amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted the new guidance in the first quarter of 2018. The new guidance did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. Cash, cash equivalents, and restricted cash and cash equivalents reported on the Consolidated Statements of Cash Flows includes restricted cash and cash equivalents of $6 million , $12 million , $17 million , and $16 million as of December 31, 2016, March 31, 2017, December 31, 2017 and March 31, 2018, respectively, as well as previously reported cash and cash equivalents. In March 2016, the FASB issued an ASU which requires entities to measure equity investments at fair value and recognize any change in fair value in net income. The standard does not apply to accounting methods that result in consolidation of the investee and those accounted for under the equity method. The standard also requires entities to record changes in instrument-specific credit risk for financial liabilities measured under the fair value option in other comprehensive income. Companies are required to record a cumulative-effect adjustment to the statement of financial position as of the beginning of the fiscal year in which the guidance is adopted, with the exception of amendments related to equity investments without readily determinable fair values, which will be applied prospectively to all investments that exist as of the date of adoption. The Company adopted the new guidance in the first quarter of 2018. The new guidance did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. In May 2014, the FASB issued an 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. The Company adopted the new guidance in the first quarter of 2018 using the modified retrospective approach with a cumulative-effect increase to retained earnings of $16 million . The Company also elected the practical expedient of applying the new guidance only to contracts that are not completed as of the date of initial application. The majority of the Company's revenues are derived from insurance contracts and are excluded from the new standard. Accounting Guidance Not Yet Adopted In February 2018, the FASB issued an ASU which makes technical corrections and clarifications to certain aspects of the new guidance on recognizing and measuring financial instruments. The amendment clarifies, among other things, that entities will use a prospective transition approach only for equity securities they elect to measure using the new measurement alternative. The amendments are effective for annual periods beginning in 2018 and interim periods beginning in the third quarter of 2018. The new guidance is not expected to have a material impact on the Company's consolidated financial position, results of operations or cash flows. In February 2016, the FASB issued an ASU which introduces a lessee model that requires the majority of leases to be recognized on the balance sheet. The new standard also aligns many of the underlying principles of the new lessor model with those in Accounting Standards Codification 606, the FASB's new revenue recognition standard, and addresses other concerns related to the current lessee model. The standard also requires lessors to increase the transparency of their exposure to changes in value of their residual assets and how they manage that exposure. It is effective for annual and interim periods beginning after December 15, 2018. Early adoption is permitted. The initial standard required a modified retrospective transition approach, with application, including disclosures, in all comparative periods presented. In March 2018, the FASB tentatively approved an amendment to the new guidance that allows companies the option of using the effective date of the new standard as the date of initial application. The Company is currently evaluating the effect of the new lease guidance. |
Short-term and Long-term Inve21
Short-term and Long-term Investments, Restricted Deposits (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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): March 31, 2018 December 31, 2017 Amortized Cost Gross Gross Unrealized Losses Fair Value Amortized Cost Gross Unrealized Gains Gross Fair Value U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 260 $ — $ (3 ) $ 257 $ 311 $ — $ (2 ) $ 309 Corporate securities 2,242 5 (33 ) 2,214 2,208 12 (10 ) 2,210 Restricted certificates of deposit 4 — — 4 4 — — 4 Restricted cash equivalents 16 — — 16 17 — — 17 Municipal securities 2,187 3 (28 ) 2,162 2,085 12 (10 ) 2,087 Asset-backed securities 492 1 (3 ) 490 437 1 (1 ) 437 Residential mortgage-backed securities 345 — (10 ) 335 337 1 (6 ) 332 Commercial mortgage-backed securities 287 — (6 ) 281 272 1 (2 ) 271 Fair value and equity method investments 290 — — 290 176 — — 176 Life insurance contracts 133 — — 133 135 — — 135 Total $ 6,256 $ 9 $ (83 ) $ 6,182 $ 5,982 $ 27 $ (31 ) $ 5,978 |
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 debt securities 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): March 31, 2018 December 31, 2017 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 $ (2 ) $ 171 $ (1 ) $ 85 $ (1 ) $ 222 $ (1 ) $ 79 Corporate securities (26 ) 1,598 (7 ) 185 (6 ) 1,044 (4 ) 185 Municipal securities (22 ) 1,467 (6 ) 171 (7 ) 943 (3 ) 175 Asset-backed securities (2 ) 310 (1 ) 27 (1 ) 228 — 28 Residential mortgage-backed securities (3 ) 159 (7 ) 161 (1 ) 109 (5 ) 171 Commercial mortgage-backed securities (4 ) 172 (2 ) 50 (1 ) 112 (1 ) 51 Total $ (59 ) $ 3,877 $ (24 ) $ 679 $ (17 ) $ 2,658 $ (14 ) $ 689 |
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): March 31, 2018 December 31, 2017 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 $ 432 $ 430 $ 45 $ 45 $ 474 $ 474 $ 48 $ 47 One year through five years 2,439 2,411 96 95 2,424 2,420 88 88 Five years through ten years 1,920 1,894 — — 1,773 1,779 — — Greater than ten years 200 201 — — 129 130 — — Asset-backed securities 1,124 1,106 — — 1,046 1,040 — — Total $ 6,115 $ 6,042 $ 141 $ 140 $ 5,846 $ 5,843 $ 136 $ 135 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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 March 31, 2018 , 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 $ 5,668 $ — $ — $ 5,668 Investments available for sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 137 $ — $ — $ 137 Corporate securities — 2,214 — 2,214 Municipal securities — 2,162 — 2,162 Asset-backed securities — 490 — 490 Residential mortgage-backed securities — 335 — 335 Commercial mortgage-backed securities — 281 — 281 Total investments $ 137 $ 5,482 $ — $ 5,619 Restricted deposits available for sale: Cash and cash equivalents $ 16 $ — $ — $ 16 Certificates of deposit 4 — — 4 U.S. Treasury securities and obligations of U.S. government corporations and agencies 120 — — 120 Total restricted deposits $ 140 $ — $ — $ 140 Other long-term assets: Interest rate swap agreements $ — $ — $ — $ — Total assets at fair value $ 5,945 $ 5,482 $ — $ 11,427 Liabilities Other long-term liabilities: Interest rate swap agreements $ — $ 120 $ — $ 120 Total liabilities at fair value $ — $ 120 $ — $ 120 The following table summarizes fair value measurements by level at December 31, 2017 , 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 $ 4,072 $ — $ — $ 4,072 Investments available for sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 195 $ — $ — $ 195 Corporate securities — 2,210 — 2,210 Municipal securities — 2,087 — 2,087 Asset-backed securities — 437 — 437 Residential mortgage-backed securities — 332 — 332 Commercial mortgage-backed securities — 271 — 271 Total investments $ 195 $ 5,337 $ — $ 5,532 Restricted deposits available for sale: Cash and cash equivalents $ 17 $ — $ — $ 17 Certificates of deposit 4 — — 4 U.S. Treasury securities and obligations of U.S. government corporations and agencies 114 — — 114 Total restricted deposits $ 135 $ — $ — $ 135 Other long-term assets: Interest rate swap agreements $ — $ 1 $ — $ 1 Total assets at fair value $ 4,402 $ 5,338 $ — $ 9,740 Liabilities Other long-term liabilities: Interest rate swap agreements $ — $ 72 $ — $ 72 Total liabilities at fair value $ — $ 72 $ — $ 72 |
Medical Claims Liability (Table
Medical Claims Liability (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Insurance [Abstract] | |
Schedule of change in medical claims liability | The following table summarizes the change in medical claims liability ($ in millions): Three Months Ended March 31, 2018 2017 Balance, January 1 $ 4,286 $ 3,929 Less: Reinsurance recoverable 18 5 Balance, January 1, net 4,268 3,924 Acquisitions — — Incurred related to: Current year 10,302 9,557 Prior years (263 ) (235 ) Total incurred 10,039 9,322 Paid related to: Current year 6,579 5,973 Prior years 2,970 2,991 Total paid 9,549 8,964 Balance at March 31, net 4,758 4,282 Plus: Reinsurance recoverable 13 8 Balance, March 31 $ 4,771 $ 4,290 |
Affordable Care Act (Tables)
Affordable Care Act (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Affordable Care Act [Abstract] | |
Schedule of net receivables (payables) related to the Affordable Care Act Programs | The Company's net receivables (payables) for each of these programs are as follows ($ in millions): March 31, 2018 December 31, 2017 Risk adjustment $ (1,131 ) $ (677 ) Reinsurance 1 15 Risk corridor 5 6 Minimum MLR (44 ) (22 ) Cost sharing reductions (71 ) (96 ) |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Debt consists of the following ($ in millions): March 31, 2018 December 31, 2017 $1,400 million 5.625% Senior notes, due February 15, 2021 $ 1,400 $ 1,400 $1,000 million 4.75% Senior notes, due May 15, 2022 1,006 1,006 $1,000 million 6.125% Senior notes, due February 15, 2024 1,000 1,000 $1,200 million 4.75% Senior notes, due January 15, 2025 1,200 1,200 Fair value of interest rate swap agreements (120 ) (71 ) Total senior notes 4,486 4,535 Revolving credit agreement 675 150 Mortgage notes payable 60 61 Capital leases and other 17 18 Debt issuance costs (62 ) (65 ) Total debt 5,176 4,699 Less current portion (4 ) (4 ) Long-term debt $ 5,172 $ 4,695 |
Summary of Notional Amounts of Interest Rate Swap Agreements | The following is a summary of the notional amounts of the Company's interest rate swap agreements as of March 31, 2018 : Expiration Date Notional Amount February 15, 2021 $ 600 May 15, 2022 500 February 15, 2024 1,000 January 15, 2025 600 Total $ 2,700 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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 shares in thousands and per share data in dollars): Three Months Ended March 31, 2018 2017 Earnings attributable to Centene Corporation $ 340 $ 139 Shares used in computing per share amounts: Weighted average number of common shares outstanding 173,921 172,074 Common stock equivalents (as determined by applying the treasury stock method) 3,769 3,762 Weighted average number of common shares and potential dilutive common shares outstanding 177,690 175,836 Net earnings per common share attributable to Centene Corporation: Basic earnings per common share $ 1.95 $ 0.81 Diluted earnings per common share $ 1.91 $ 0.79 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | Segment information for the three months ended March 31, 2018 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Total revenues from external customers $ 12,449 $ 745 $ — $ 13,194 Total revenues from internal customers 25 2,231 (2,256 ) — Total revenues $ 12,474 $ 2,976 $ (2,256 ) $ 13,194 Earnings from operations $ 470 $ 70 $ — $ 540 Segment information for the three months ended March 31, 2017 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Total revenues from external customers $ 11,115 $ 609 $ — $ 11,724 Total revenues from internal customers 11 2,333 (2,344 ) — Total revenues $ 11,126 $ 2,942 $ (2,344 ) $ 11,724 Earnings from operations $ 187 $ 53 $ — $ 240 |
Organization and Operations (De
Organization and Operations (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Restricted cash and cash equivalents | $ 16 | $ 17 | $ 12 | $ 6 |
Accounting Standards Codification Topic 606 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect adjustment to retained earnings | 16 | |||
Retained Earnings | Accounting Standards Codification Topic 606 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cumulative effect adjustment to retained earnings | $ 16 |
Fidelis Care Transaction (Detai
Fidelis Care Transaction (Details) $ in Millions | Sep. 30, 2017USD ($) |
Fidelis Care | |
Business Acquisition [Line Items] | |
Definitive agreement to acquire amount | $ 3,750 |
Short-term and Long-term Inve30
Short-term and Long-term Investments, Restricted Deposits - (By Investment Type) (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | $ 6,256 | $ 5,982 |
Gross Unrealized Gains | 9 | 27 |
Gross Unrealized Losses | (83) | (31) |
Fair Value | 6,182 | 5,978 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 260 | 311 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (3) | (2) |
Fair Value | 257 | 309 |
Corporate securities | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 2,242 | 2,208 |
Gross Unrealized Gains | 5 | 12 |
Gross Unrealized Losses | (33) | (10) |
Fair Value | 2,214 | 2,210 |
Restricted certificates of deposit | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 4 | 4 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 4 | 4 |
Restricted cash equivalents | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 16 | 17 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 16 | 17 |
Municipal securities | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 2,187 | 2,085 |
Gross Unrealized Gains | 3 | 12 |
Gross Unrealized Losses | (28) | (10) |
Fair Value | 2,162 | 2,087 |
Asset-backed securities | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 492 | 437 |
Gross Unrealized Gains | 1 | 1 |
Gross Unrealized Losses | (3) | (1) |
Fair Value | 490 | 437 |
Residential mortgage-backed securities | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 345 | 337 |
Gross Unrealized Gains | 0 | 1 |
Gross Unrealized Losses | (10) | (6) |
Fair Value | 335 | 332 |
Commercial mortgage-backed securities | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 287 | 272 |
Gross Unrealized Gains | 0 | 1 |
Gross Unrealized Losses | (6) | (2) |
Fair Value | 281 | 271 |
Fair value and equity method investments | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 290 | 176 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 290 | 176 |
Life insurance contracts | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 133 | 135 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 133 | $ 135 |
Short-term and Long-term Inve31
Short-term and Long-term Investments, Restricted Deposits - (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2018position | |
Schedule Of Investments And Restricted Deposits By Type [Line Items] | |
Positions from which gross unrealized losses were generated | 2,714 |
Total unrealized investment positions | 3,564 |
RxAdvance | |
Schedule Of Investments And Restricted Deposits By Type [Line Items] | |
Equity method investment, percentage | 25.00% |
Commercial mortgage-backed securities | |
Schedule Of Investments And Restricted Deposits By Type [Line Items] | |
Investments recorded at fair value that carry rating of AA Plus, weighted average (in years) | 3 years 11 months |
Rated Securities | External Credit Rating, Investment Grade | |
Schedule Of Investments And Restricted Deposits By Type [Line Items] | |
Percentage of investments in rated securities carry an investment grade rating by nationally recognized statistical rating organizations | 96.00% |
Short-term and Long-term Inve32
Short-term and Long-term Investments, Restricted Deposits - (Fair Value of Available-For-Sale Investments with Gross Unrealized Losses by Investment Type and Length of Time) (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Unrealized Losses | ||
Less Than 12 Months | $ (59) | $ (17) |
12 Months or More | (24) | (14) |
Fair Value | ||
Less Than 12 Months | 3,877 | 2,658 |
12 Months or More | 679 | 689 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | ||
Unrealized Losses | ||
Less Than 12 Months | (2) | (1) |
12 Months or More | (1) | (1) |
Fair Value | ||
Less Than 12 Months | 171 | 222 |
12 Months or More | 85 | 79 |
Corporate securities | ||
Unrealized Losses | ||
Less Than 12 Months | (26) | (6) |
12 Months or More | (7) | (4) |
Fair Value | ||
Less Than 12 Months | 1,598 | 1,044 |
12 Months or More | 185 | 185 |
Municipal securities | ||
Unrealized Losses | ||
Less Than 12 Months | (22) | (7) |
12 Months or More | (6) | (3) |
Fair Value | ||
Less Than 12 Months | 1,467 | 943 |
12 Months or More | 171 | 175 |
Asset-backed securities | ||
Unrealized Losses | ||
Less Than 12 Months | (2) | (1) |
12 Months or More | (1) | 0 |
Fair Value | ||
Less Than 12 Months | 310 | 228 |
12 Months or More | 27 | 28 |
Residential mortgage-backed securities | ||
Unrealized Losses | ||
Less Than 12 Months | (3) | (1) |
12 Months or More | (7) | (5) |
Fair Value | ||
Less Than 12 Months | 159 | 109 |
12 Months or More | 161 | 171 |
Commercial mortgage-backed securities | ||
Unrealized Losses | ||
Less Than 12 Months | (4) | (1) |
12 Months or More | (2) | (1) |
Fair Value | ||
Less Than 12 Months | 172 | 112 |
12 Months or More | $ 50 | $ 51 |
Short-term and Long-term Inve33
Short-term and Long-term Investments, Restricted Deposits - (Contractual Maturities of Short-Term and Long-Term Investments and Restricted Deposits) (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Investments | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost, one year or less | $ 432 | $ 474 |
Amortized cost, one year through five years | 2,439 | 2,424 |
Amortized cost, five years through ten years | 1,920 | 1,773 |
Amortized cost, greater than ten years | 200 | 129 |
Amortized cost, asset-backed securities | 1,124 | 1,046 |
Amortized cost, total | 6,115 | 5,846 |
Fair value, one year or less | 430 | 474 |
Fair value, one year through five years | 2,411 | 2,420 |
Fair value, five years through ten years | 1,894 | 1,779 |
Fair value, greater than ten years | 201 | 130 |
Fair value, asset-backed securities | 1,106 | 1,040 |
Fair value, total | 6,042 | 5,843 |
Restricted Deposits | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Amortized cost, one year or less | 45 | 48 |
Amortized cost, one year through five years | 96 | 88 |
Amortized cost, five years through ten years | 0 | 0 |
Amortized cost, greater than ten years | 0 | 0 |
Amortized cost, asset-backed securities | 0 | 0 |
Amortized cost, total | 141 | 136 |
Fair value, one year or less | 45 | 47 |
Fair value, one year through five years | 95 | 88 |
Fair value, five years through ten years | 0 | 0 |
Fair value, greater than ten years | 0 | 0 |
Fair value, asset-backed securities | 0 | 0 |
Fair value, total | $ 140 | $ 135 |
Fair Value Measurements - (Fair
Fair Value Measurements - (Fair Value Measurements by Level for Assets and Liabilities Measured at Fair Value on a Recurring Basis) (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Cash and cash equivalents | $ 5,668 | $ 4,072 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 137 | 195 |
Corporate securities | 2,214 | 2,210 |
Municipal securities | 2,162 | 2,087 |
Asset-backed securities | 490 | 437 |
Total investments | 5,619 | 5,532 |
Cash and cash equivalents | 16 | 17 |
Certificates of deposit | 4 | 4 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 120 | 114 |
Total restricted deposits | 140 | 135 |
Interest rate swap agreements | 0 | 1 |
Total assets at fair value | 11,427 | 9,740 |
Liabilities | ||
Interest rate swap agreements | 120 | 72 |
Total liabilities at fair value | 120 | 72 |
Residential mortgage-backed securities | ||
Assets | ||
Mortgage-backed securities | 335 | 332 |
Commercial mortgage-backed securities | ||
Assets | ||
Mortgage-backed securities | 281 | 271 |
Level I | ||
Assets | ||
Cash and cash equivalents | 5,668 | 4,072 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 137 | 195 |
Corporate securities | 0 | 0 |
Municipal securities | 0 | 0 |
Asset-backed securities | 0 | 0 |
Total investments | 137 | 195 |
Cash and cash equivalents | 16 | 17 |
Certificates of deposit | 4 | 4 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 120 | 114 |
Total restricted deposits | 140 | 135 |
Interest rate swap agreements | 0 | 0 |
Total assets at fair value | 5,945 | 4,402 |
Liabilities | ||
Interest rate swap agreements | 0 | 0 |
Total liabilities at fair value | 0 | 0 |
Level I | Residential mortgage-backed securities | ||
Assets | ||
Mortgage-backed securities | 0 | 0 |
Level I | Commercial mortgage-backed securities | ||
Assets | ||
Mortgage-backed securities | 0 | 0 |
Level II | ||
Assets | ||
Cash and cash equivalents | 0 | 0 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 0 | 0 |
Corporate securities | 2,214 | 2,210 |
Municipal securities | 2,162 | 2,087 |
Asset-backed securities | 490 | 437 |
Total investments | 5,482 | 5,337 |
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 | 1 |
Total assets at fair value | 5,482 | 5,338 |
Liabilities | ||
Interest rate swap agreements | 120 | 72 |
Total liabilities at fair value | 120 | 72 |
Level II | Residential mortgage-backed securities | ||
Assets | ||
Mortgage-backed securities | 335 | 332 |
Level II | Commercial mortgage-backed securities | ||
Assets | ||
Mortgage-backed securities | 281 | 271 |
Level III | ||
Assets | ||
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 |
Liabilities | ||
Interest rate swap agreements | 0 | 0 |
Total liabilities at fair value | 0 | 0 |
Level III | Residential mortgage-backed securities | ||
Assets | ||
Mortgage-backed securities | 0 | 0 |
Level III | Commercial mortgage-backed securities | ||
Assets | ||
Mortgage-backed securities | $ 0 | $ 0 |
Fair Value Measurements - (Narr
Fair Value Measurements - (Narrative) (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Fair Value Disclosures [Abstract] | ||
Transfers from Level I to Level II | $ 0 | |
Transfers from Level II to Level I | 0 | |
Life insurance contracts and other non-majority owned investments, fair value | $ 423 | $ 311 |
Medical Claims Liability - (Sch
Medical Claims Liability - (Schedule of Change in Medical Claims Liability) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Balance, January 1 | $ 4,286 | $ 3,929 |
Less: Reinsurance recoverable | 18 | 5 |
Balance, January 1, net | 4,268 | 3,924 |
Acquisitions | 0 | 0 |
Incurred related to: | ||
Current year | 10,302 | 9,557 |
Prior years | (263) | (235) |
Total incurred | 10,039 | 9,322 |
Paid related to: | ||
Current year | 6,579 | 5,973 |
Prior years | 2,970 | 2,991 |
Total paid | 9,549 | 8,964 |
Balance at March 31, net | 4,758 | 4,282 |
Plus: Reinsurance recoverable | 13 | 8 |
Balance, March 31 | $ 4,771 | $ 4,290 |
Medical Claims Liability - (Nar
Medical Claims Liability - (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Insurance [Abstract] | ||
Amounts recorded as an adjustment to premium revenues related to minimum HBR and return of premium programs | $ 13 | $ 3 |
Short-duration insurance contracts, Incurred but not reported and expected development on reported claims | $ 3,688 |
Affordable Care Act (Details)
Affordable Care Act (Details) - USD ($) $ in Millions | Mar. 31, 2018 | Dec. 31, 2017 |
Affordable Care Act [Abstract] | ||
Risk adjustment | $ (1,131) | $ (677) |
Reinsurance | 1 | 15 |
Risk corridor | 5 | 6 |
Minimum MLR | (44) | (22) |
Cost sharing reductions | $ (71) | $ (96) |
Debt - (Schedule of Debt) (Deta
Debt - (Schedule of Debt) (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Fair value of interest rate swap agreements | $ (120,000,000) | $ (71,000,000) |
Total senior notes | 4,486,000,000 | 4,535,000,000 |
Mortgage notes payable | 60,000,000 | 61,000,000 |
Capital leases and other | 17,000,000 | 18,000,000 |
Debt issuance costs | (62,000,000) | (65,000,000) |
Total debt | 5,176,000,000 | 4,699,000,000 |
Less current portion | (4,000,000) | (4,000,000) |
Long-term debt | 5,172,000,000 | 4,695,000,000 |
Revolving credit agreement | ||
Debt Instrument [Line Items] | ||
Revolving credit agreement | 675,000,000 | 150,000,000 |
Senior Notes | $1,400 million 5.625% Senior notes, due February 15, 2021 | ||
Debt Instrument [Line Items] | ||
Debt, face amount | $ 1,400,000,000 | |
Interest rate, stated | 5.625% | |
Senior notes | $ 1,400,000,000 | 1,400,000,000 |
Senior Notes | $1,000 million 4.75% Senior notes, due May 15, 2022 | ||
Debt Instrument [Line Items] | ||
Debt, face amount | $ 1,000,000,000 | |
Interest rate, stated | 4.75% | |
Senior notes | $ 1,006,000,000 | 1,006,000,000 |
Senior Notes | $1,000 million 6.125% Senior notes, due February 15, 2024 | ||
Debt Instrument [Line Items] | ||
Debt, face amount | $ 1,000,000,000 | |
Interest rate, stated | 6.125% | |
Senior notes | $ 1,000,000,000 | 1,000,000,000 |
Senior Notes | $1,200 million 4.75% Senior notes, due January 15, 2025 | ||
Debt Instrument [Line Items] | ||
Debt, face amount | $ 1,200,000,000 | |
Interest rate, stated | 4.75% | |
Senior notes | $ 1,200,000,000 | $ 1,200,000,000 |
Debt - (Interest Rate Swaps) (D
Debt - (Interest Rate Swaps) (Details) | Mar. 31, 2018USD ($) |
February 15, 2021 | |
Debt Instrument [Line Items] | |
Notional amount of interest rate swap agreements | $ 600,000,000 |
May 15, 2022 | |
Debt Instrument [Line Items] | |
Notional amount of interest rate swap agreements | 500,000,000 |
February 15, 2024 | |
Debt Instrument [Line Items] | |
Notional amount of interest rate swap agreements | 1,000,000,000 |
January 15, 2025 | |
Debt Instrument [Line Items] | |
Notional amount of interest rate swap agreements | 600,000,000 |
Interest rate swap | |
Debt Instrument [Line Items] | |
Notional amount of interest rate swap agreements | $ 2,700,000,000 |
Average variable rate, interest rate swap agreements (percent) | 3.61% |
Weighted average rate, interest rate swap agreements (percent) | 5.44% |
Debt - (Revolving Credit Agreem
Debt - (Revolving Credit Agreement) (Details) - Revolving credit agreement | 3 Months Ended | |
Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | $ 1,500,000,000 | |
Borrowings outstanding | $ 675,000,000 | $ 150,000,000 |
Weighted average interest rate (percent) | 5.00% | |
Ratio of debt to EBITDA | 3.5 |
Debt - (Mortgage Note Payable)
Debt - (Mortgage Note Payable) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | ||
Mortgage notes payable | $ 60 | $ 61 |
Non-recourse Mortgage Note Due January 1, 2021 | ||
Debt Instrument [Line Items] | ||
Mortgage notes payable | $ 60 | |
Interest rate | 5.14% | |
Net book value of collateralized properties | $ 170 |
Debt - (Letters of Credit & Sur
Debt - (Letters of Credit & Surety Bonds) (Details) € in Millions, $ in Millions | Mar. 31, 2018USD ($) | Mar. 31, 2018EUR (€) |
Surety Bond | ||
Debt Instrument [Line Items] | ||
Surety bonds | $ 404 | |
Letter of Credit | ||
Debt Instrument [Line Items] | ||
Letters of credit outstanding | $ 76 | |
Letters of credit, effective yield (percent) | 1.31% | 1.31% |
Letter of Credit | Ribera Salud | ||
Debt Instrument [Line Items] | ||
Borrowings outstanding | $ 47 | € 38 |
Debt - (Construction Loan) (Det
Debt - (Construction Loan) (Details) - Construction Loan | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Debt Instrument [Line Items] | |
Debt, face amount | $ 200,000,000 |
Optional extension term | 1 year |
Borrowings outstanding | $ 0 |
LIBOR | |
Debt Instrument [Line Items] | |
Interest rate | 2.70% |
Stockholders' Equity (Details)
Stockholders' Equity (Details) shares in Thousands, $ in Millions | 1 Months Ended |
Mar. 31, 2018USD ($)shares | |
Community Medical Holdings Corp | |
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | |
Shares issued in acquisition (in shares) | shares | 1,449 |
Consideration transferred, common stock issued | $ | $ 149 |
Interpreta | |
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | |
Shares issued in acquisition (in shares) | shares | 1,727 |
Consideration transferred, common stock issued | $ | $ 175 |
Percentage of ownership interests acquired | 61.00% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings attributable to Centene Corporation | ||
Earnings attributable to Centene Corporation | $ 340 | $ 139 |
Shares used in computing per share amounts: | ||
Weighted average number of common shares outstanding (in shares) | 173,921 | 172,074 |
Common stock equivalents (as determined by applying the treasury stock method) (in shares) | 3,769 | 3,762 |
Weighted average number of common shares and potential dilutive common shares outstanding (in shares) | 177,690 | 175,836 |
Net earnings per common share attributable to Centene Corporation: | ||
Basic earnings per common share (in dollars per share) | $ 1.95 | $ 0.81 |
Diluted earnings per common share (in dollars per share) | $ 1.91 | $ 0.79 |
Anti-dilutive restricted stock and restricted stock units excluded from the calculation of diluted earnings per common share (in shares) | 5 | 55 |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2018USD ($)segment | Mar. 31, 2017USD ($) | |
Segment Reporting [Abstract] | ||
Number of operating segments | segment | 2 | |
Segment Reporting Information [Line Items] | ||
Total revenues | $ 13,194 | $ 11,724 |
Earnings from operations | 540 | 240 |
Eliminations | ||
Segment Reporting Information [Line Items] | ||
Total revenues | (2,256) | (2,344) |
Managed Care | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 12,449 | 11,115 |
Earnings from operations | 470 | 187 |
Managed Care | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 12,474 | 11,126 |
Managed Care | Eliminations | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 25 | 11 |
Specialty Services | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 745 | 609 |
Earnings from operations | 70 | 53 |
Specialty Services | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total revenues | 2,976 | 2,942 |
Specialty Services | Eliminations | ||
Segment Reporting Information [Line Items] | ||
Total revenues | $ 2,231 | $ 2,333 |