Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Oct. 12, 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 | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Common Stock, Shares Outstanding | 205,355,367 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 6,847 | $ 4,072 |
Premium and trade receivables | 4,647 | 3,413 |
Short-term investments | 594 | 531 |
Other current assets | 1,000 | 687 |
Total current assets | 13,088 | 8,703 |
Long-term investments | 6,272 | 5,312 |
Restricted deposits | 550 | 135 |
Property, software and equipment, net | 1,584 | 1,104 |
Goodwill | 6,803 | 4,749 |
Intangible assets, net | 2,423 | 1,398 |
Other long-term assets | 437 | 454 |
Total assets | 31,157 | 21,855 |
Current liabilities: | ||
Medical claims liability | 6,983 | 4,286 |
Accounts payable and accrued expenses | 4,550 | 4,165 |
Return of premium payable | 918 | 549 |
Unearned revenue | 286 | 328 |
Current portion of long-term debt | 4 | 4 |
Total current liabilities | 12,741 | 9,332 |
Long-term debt | 6,379 | 4,695 |
Other long-term liabilities | 1,276 | 952 |
Total liabilities | 20,396 | 14,979 |
Commitments and contingencies | ||
Redeemable noncontrolling interests | 11 | 12 |
Stockholders’ equity: | ||
Preferred stock, $0.001 par value; authorized 10,000 shares; no shares issued or outstanding at September 30, 2018 and December 31, 2017 | 0 | 0 |
Common stock, $0.001 par value; authorized 400,000 shares; 207,550 issued and 205,354 outstanding at September 30, 2018, and 180,379 issued and 173,437 outstanding at December 31, 2017 | 0 | 0 |
Additional paid-in capital | 7,395 | 4,349 |
Accumulated other comprehensive loss | (79) | (3) |
Retained earnings | 3,422 | 2,748 |
Treasury stock, at cost (2,196 and 6,942 shares, respectively) | (85) | (244) |
Total Centene stockholders’ equity | 10,653 | 6,850 |
Noncontrolling interest | 97 | 14 |
Total stockholders’ equity | 10,750 | 6,864 |
Total liabilities, redeemable noncontrolling interests and stockholders’ equity | $ 31,157 | $ 21,855 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 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 | 207,550,000 | 180,379,000 |
Common stock, shares outstanding | 205,354,000 | 173,437,000 |
Treasury stock (in shares) | 2,196,000 | 6,942,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenues: | ||||
Premium and service revenues | $ 15,355 | $ 11,421 | $ 40,786 | $ 34,027 |
Premium tax and health insurer fee | 827 | 477 | 2,771 | 1,549 |
Total revenues | 16,182 | 11,898 | 43,557 | 35,576 |
Expenses: | ||||
Medical costs | 12,626 | 9,543 | 33,045 | 28,278 |
Cost of services | 622 | 437 | 1,823 | 1,334 |
Selling, general and administrative expenses | 1,934 | 1,030 | 4,487 | 3,186 |
Amortization of acquired intangible assets | 65 | 38 | 149 | 117 |
Premium tax expense | 716 | 510 | 2,451 | 1,643 |
Health insurer fee expense | 178 | 0 | 532 | 0 |
Total operating expenses | 16,141 | 11,558 | 42,487 | 34,558 |
Earnings from operations | 41 | 340 | 1,070 | 1,018 |
Other income (expense): | ||||
Investment and other income | 80 | 51 | 186 | 137 |
Interest expense | (97) | (65) | (245) | (189) |
Earnings from operations, before income tax expense | 24 | 326 | 1,011 | 966 |
Income tax expense | 8 | 125 | 358 | 381 |
Net earnings | 16 | 201 | 653 | 585 |
Loss attributable to noncontrolling interests | 3 | 4 | 6 | 13 |
Net earnings attributable to Centene Corporation | $ 19 | $ 205 | $ 659 | $ 598 |
Net earnings per common share attributable to Centene Corporation: | ||||
Basic earnings per common share (in dollars per share) | $ 0.09 | $ 1.19 | $ 3.44 | $ 3.47 |
Diluted earnings per common share (in dollars per share) | $ 0.09 | $ 1.16 | $ 3.37 | $ 3.39 |
Premium | ||||
Revenues: | ||||
Premium and service revenues | $ 14,623 | $ 10,850 | $ 38,639 | $ 32,393 |
Service | ||||
Revenues: | ||||
Premium and service revenues | $ 732 | $ 571 | $ 2,147 | $ 1,634 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 16 | $ 201 | $ 653 | $ 585 |
Reclassification adjustment, net of tax | 1 | 0 | 1 | (1) |
Change in unrealized gain (loss) on investments, net of tax | (12) | 7 | (75) | 41 |
Foreign currency translation adjustments | (1) | 1 | (2) | 5 |
Other comprehensive earnings (loss) | (12) | 8 | (76) | 45 |
Comprehensive earnings | 4 | 209 | 577 | 630 |
Comprehensive loss attributable to noncontrolling interests | 3 | 4 | 6 | 13 |
Comprehensive earnings attributable to Centene Corporation | $ 7 | $ 213 | $ 583 | $ 643 |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 9 months ended Sep. 30, 2018 - USD ($) shares in Thousands, $ 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 | 180,379 | |||||
Treasury stock (in shares) at Dec. 31, 2017 | 6,942 | 6,942 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net earnings | $ 656 | 659 | (3) | ||||
Other comprehensive loss, net of ($23) tax | (76) | (76) | |||||
Common stock issued for acquisitions | 507 | $ 0 | 331 | $ 176 | |||
Common stock issued for acquisitions (in shares) | 0 | (4,894) | |||||
Common stock issued | 2,779 | $ 0 | 2,779 | ||||
Common stock issued (in shares) | 26,604 | ||||||
Common stock issued for employee benefit plans | 12 | $ 0 | 12 | ||||
Common stock issued for employee benefit plans (in shares) | 567 | ||||||
Common stock repurchases | (17) | $ (17) | |||||
Common stock repurchases (in shares) | 148 | ||||||
Stock compensation expense | 105 | 105 | |||||
Contribution from noncontrolling interest | 3 | 3 | |||||
Purchase of noncontrolling interest | (196) | (181) | (15) | ||||
Acquisition resulting in noncontrolling interest | 98 | 98 | |||||
Balance at Sep. 30, 2018 | $ 10,750 | $ 0 | $ 7,395 | $ (79) | $ 3,422 | $ (85) | $ 97 |
Balance (in shares) at Sep. 30, 2018 | 205,354 | 207,550 | |||||
Treasury stock (in shares) at Sep. 30, 2018 | 2,196 | 2,196 |
Consolidated Statement of Sto_2
Consolidated Statement of Stockholders' Equity (Parenthetical) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Other comprehensive loss, tax | $ (23) | |
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 | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net earnings | $ 653 | $ 585 |
Adjustments to reconcile net earnings to net cash provided by operating activities | ||
Depreciation and amortization | 354 | 264 |
Stock compensation expense | 105 | 99 |
Deferred income taxes | (103) | (32) |
Changes in assets and liabilities | ||
Premium and trade receivables | (696) | (749) |
Other assets | 65 | (39) |
Medical claims liabilities | 1,380 | 406 |
Unearned revenue | (150) | 255 |
Accounts payable and accrued expenses | 35 | 205 |
Other long-term liabilities | 199 | 45 |
Other operating activities, net | 26 | 0 |
Net cash provided by operating activities | 1,868 | 1,039 |
Cash flows from investing activities: | ||
Capital expenditures | (489) | (301) |
Purchases of investments | (2,691) | (1,693) |
Sales and maturities of investments | 1,575 | 1,308 |
Acquisitions, net of cash acquired | (1,958) | 0 |
Net cash used in investing activities | (3,563) | (686) |
Cash flows from financing activities: | ||
Proceeds from the issuance of common stock | 2,779 | 0 |
Proceeds from long-term debt | 5,480 | 1,170 |
Payments of long-term debt | (3,692) | (1,124) |
Common stock repurchases | (17) | (18) |
Purchase of noncontrolling interest | (63) | (33) |
Debt issuance costs | (25) | 0 |
Other financing activities, net | (2) | 2 |
Net cash provided by (used in) financing activities | 4,460 | (3) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 0 | 1 |
Net increase in cash, cash equivalents and restricted cash | 2,765 | 351 |
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 | 6,854 | 4,287 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 213 | 210 |
Income taxes paid | 340 | 358 |
Equity issued in connection with acquisitions | $ 507 | $ 0 |
Organization and Operations
Organization and Operations | 9 Months Ended |
Sep. 30, 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 2017 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. On July 1, 2018 , the Company acquired substantially all of the assets of New York State Catholic Health Plan, Inc. d/b/a Fidelis Care New York (Fidelis Care) for approximately $3.47 billion of cash consideration, which includes a working capital adjustment. The Fidelis Care acquisition expanded the Company's scale and presence to New York State. The acquisition was accounted for as a business combination, which requires that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. Those estimated amounts are reflected in the accompanying financial statements. As a result of the completion of the Fidelis Care acquisition, the Company's results of operations for the three and nine months ended September 30, 2018 include the results of operations of Fidelis Care from July 1, 2018 to September 30, 2018 . The Fidelis Care operations are included in the Managed Care segment. Recently Adopted Accounting Guidance In August 2018, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) which modifies the disclosure requirements on fair value measurements. The amendments in this ASU remove the requirements to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels and the valuation processes for Level 3 fair value measurements. The amendments require public entities to disclose the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements for instruments held at the end of the reporting period, and the range and weighted average used to develop significant inputs for Level 3 fair value measurements. For investments in certain entities that calculate net asset value, the standard requires the disclosure of the period of time over which the underlying assets might be liquidated if the investee has announced the timing publicly. The Company adopted the new guidance in the third quarter of 2018. The new guidance did not have any impact on the Company’s consolidated financial position, results of operations or cash flows. In June 2018, the FASB issued an ASU that simplifies the accounting for share-based payment arrangements with non-employees for goods and services. Under the ASU, the guidance on such payments to non-employees is aligned with the accounting for share-based payments granted to employees, including the measurement of equity-classified awards, which is fixed at the grant date under the new guidance. The Company adopted the new guidance in the second quarter of 2018 using the modified retrospective approach with an immaterial cumulative-effect adjustment to retained earnings. In February 2018, the FASB issued an 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 , $6 million , $17 million and $7 million as of December 31, 2016 , September 30, 2017 , December 31, 2017 and September 30, 2018 , respectively. 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 August 2018, the FASB issued an ASU which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The amendments in this ASU require an entity that is the customer in a hosting arrangement to follow the guidance on internal-use software to determine which implementation costs to capitalize and which costs to expense. The standard also requires an entity that is the customer to expense the capitalized implementation costs of a hosting arrangement over the term of the hosting arrangement. The new guidance requires an entity to present the expense related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element of the arrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. The entity is also required to present the capitalized implementation costs in the statement of financial position in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented. The guidance is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted. 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 July 2018, the FASB issued an ASU which gives all entities a transition option and provides lessors with a practical expedient. The transition option allows entities to not apply the new standard in the comparative periods they present in their financial statements in the year of adoption. Under the transition option, entities can continue to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative periods presented in the year of adoption of the lease standard. Entities that elect this option will adopt the standard using the modified retrospective transition method but recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. The practical expedient provides lessors the option to not separate the non-lease components from the associated lease components when certain criteria are met and requires them to account for the combined component in accordance with the new revenue standard if the associated non-lease components are the predominant components. The Company is currently evaluating the effect of the new lease guidance and plans to elect the transition option of using the effective date of the new standard as the date of initial application. |
Fidelis Care Acquisition
Fidelis Care Acquisition | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Fidelis Care Acquisition | Fidelis Care Acquisition On July 1, 2018 , the Company acquired substantially all of the assets of Fidelis Care for approximately $3.47 billion of cash consideration, which includes a working capital adjustment. The acquisition consideration was funded through the issuance of 26.6 million shares of Centene common stock as further discussed in Note 8. Stockholders Equity and the issuance of long-term debt as further discussed in Note 7. Debt. The Fidelis Care acquisition expanded the Company's scale and presence to New York State. The acquisition of Fidelis Care was accounted for as a business combination using the acquisition method of accounting which requires assets acquired and liabilities assumed to be recognized at fair value as of the acquisition date. The valuation of assets acquired and liabilities assumed has not yet been finalized. Any necessary adjustments from preliminary estimates will be finalized within one year from the date of acquisition. Measurement period adjustments will be recorded in the period in which they are determined, as if they had been completed at the acquisition date. Due to the timing of the acquisition, the Company has performed limited valuation procedures, and the valuation of all assets and liabilities assumed is not yet complete. The Company's preliminary allocation of the fair value of assets acquired and liabilities assumed as of the acquisition date of July 1, 2018 is as follows ($ in millions): Assets acquired and liabilities assumed Cash and cash equivalents $ 2,001 Premium and related receivables 535 Other current assets 32 Restricted deposits 495 Property, software and equipment, net 80 Intangible assets (a) 1,000 Other long-term assets 18 Total assets acquired 4,161 Medical claims liability 1,319 Accounts payable and accrued expenses 300 Return of premium payable 124 Unearned revenue 115 Other long-term liabilities 261 Total liabilities assumed 2,119 Total identifiable net assets 2,042 Goodwill (b) 1,428 Total assets acquired and liabilities assumed $ 3,470 The Company has made the following preliminary fair value adjustments based on information reviewed through September 30, 2018 . Significant fair value adjustments are noted as follows: (a) The identifiable intangible assets acquired are to be measured at fair value as of the completion of the acquisition. The fair value of intangible assets is determined primarily using variations of the "income approach," which is based on the present value of the future after tax cash flows attributable to each identified intangible asset. Other valuation methods, including the market approach and cost approach, were also considered in estimating the fair value. As discussed above, due to the timing of the acquisition date, the Company has only performed limited valuation procedures, and the intangible asset valuation is incomplete. The Company has estimated the preliminary fair value of intangible assets to be $1.0 billion with a weighted average life of 13 years. The Company expects the identifiable intangible assets to include customer relationships, provider contracts, trade names and developed technology. (b) The acquisition resulted in $1.4 billion of goodwill related primarily to synergies expected from the acquisition and the assembled workforce of Fidelis Care. All of the goodwill has been assigned to the Managed Care segment. The goodwill is deductible for income tax purposes. Statement of Operations From the acquisition date through September 30, 2018 , the Company's Consolidated Statements of Operations include total Fidelis Care revenues of $ 2,797 million . It is impracticable to determine the effect on net income resulting from the Fidelis Care acquisition for the three and nine months ended September 30, 2018 , as the Company began immediately integrating Fidelis Care into its ongoing operations. Unaudited Pro Forma Financial Information The unaudited pro forma total revenues for the nine months ended September 30, 2018 were $49,170 million . It is impracticable for the Company to determine the pro forma earnings information for the nine months ended September 30, 2018 due to the nature of obtaining that information as the Company began immediately integrating Fidelis Care into its ongoing operations. The following table presents supplemental pro forma information for the three and nine months ended September 30, 2017 ($ in millions, except per share data): Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017 Total revenues $ 14,387 $ 42,954 Net earnings attributable to Centene Corporation $ 248 $ 721 Diluted earnings per share $ 1.22 $ 3.55 The pro forma results do not reflect any anticipated synergies, efficiencies, or other cost savings of the acquisition. Accordingly, the unaudited pro forma financial information is not indicative of the results if the acquisition had been completed on January 1, 2017 and is not a projection of future results. The unaudited pro forma financial information reflects the historical results of Centene and Fidelis Care adjusted as if the acquisition had occurred on January 1, 2017, primarily for the following: • Additional premium tax expense related to Fidelis Care no longer being a not-for-profit entity. • Additional Health Insurer Fee revenue in 2018 related to Fidelis Care as some of those revenues will be subject to the Health Insurer Fee following the first year of the closing of the Fidelis Care acquisition, absent a Health Insurer Fee moratorium. • Reduced Fidelis Care investment income to reflect lower investment balances and mix of investments associated with the acquired assets. • Interest expense associated with debt incurred to finance the transaction. • An adjustment to basic and diluted shares outstanding to reflect the shares issued by Centene to finance the transaction. • An adjustment to income tax expense to reflect the tax impact of the acquisition and Fidelis Care becoming subject to income tax. • Elimination of acquisition related costs. Commitments As part of the regulatory approval process, the Company entered into certain undertakings with the New York State Department of Health. The undertakings contain various commitments by the Company effective upon completion of the Fidelis Care acquisition. One of the undertakings includes a $340 million contribution by the Company to the State of New York to be paid over a five -year period for initiatives consistent with our mission of providing high quality healthcare to vulnerable populations within New York State. As a result of the closing of the Fidelis Care acquisition, the present value of the $340 million contribution to the State of New York, approximately $324 million , was expensed in SG&A during the third quarter of 2018. |
Short-term and Long-term Invest
Short-term and Long-term Investments, Restricted Deposits | 9 Months Ended |
Sep. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Short-term and Long-term Investments, Restricted Deposits | Short-term and Long-term Investments, Restricted Deposits Short-term and long-term investments and restricted deposits by investment type consist of the following ($ in millions): September 30, 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 $ 259 $ — $ (3 ) $ 256 $ 311 $ — $ (2 ) $ 309 Corporate securities 2,774 4 (44 ) 2,734 2,208 12 (10 ) 2,210 Restricted certificates of deposit 430 — — 430 4 — — 4 Restricted cash equivalents 7 — — 7 17 — — 17 Municipal securities 2,231 2 (35 ) 2,198 2,085 12 (10 ) 2,087 Asset-backed securities 598 — (4 ) 594 437 1 (1 ) 437 Residential mortgage-backed securities 382 — (14 ) 368 337 1 (6 ) 332 Commercial mortgage-backed securities 317 — (8 ) 309 272 1 (2 ) 271 Private equity investments 382 — — 382 176 — — 176 Life insurance contracts 138 — — 138 135 — — 135 Total $ 7,518 $ 6 $ (108 ) $ 7,416 $ 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 private equity 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, 2018 , 96% of the Company’s investments in rated securities carry an investment grade rating by nationally recognized statistical rating organizations. At September 30, 2018 , the Company held certificates of deposit, life insurance contracts and private equity 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 3.8 years at September 30, 2018 . In March 2018, the Company completed a 25% investment in RxAdvance, a full-service pharmacy benefit manager. In May 2018, the Company made an additional investment, bringing the total ownership to 28% . The investment is accounted for using the equity method of accounting. In September 2018, the Company made an additional investment in RxAdvance in the form of convertible preferred stock. 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): September 30, 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 $ (1 ) $ 93 $ (2 ) $ 161 $ (1 ) $ 222 $ (1 ) $ 79 Corporate securities (31 ) 1,913 (13 ) 337 (6 ) 1,044 (4 ) 185 Municipal securities (25 ) 1,518 (10 ) 286 (7 ) 943 (3 ) 175 Asset-backed securities (3 ) 409 (1 ) 66 (1 ) 228 — 28 Residential mortgage-backed securities (4 ) 186 (10 ) 178 (1 ) 109 (5 ) 171 Commercial mortgage-backed securities (4 ) 174 (4 ) 90 (1 ) 112 (1 ) 51 Total $ (68 ) $ 4,293 $ (40 ) $ 1,118 $ (17 ) $ 2,658 $ (14 ) $ 689 As of September 30, 2018 , the gross unrealized losses were generated from 3,200 positions out of a total of 3,954 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): September 30, 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 $ 517 $ 515 $ 201 $ 201 $ 474 $ 474 $ 48 $ 47 One year through five years 2,674 2,636 350 349 2,424 2,420 88 88 Five years through ten years 2,277 2,242 — — 1,773 1,779 — — Greater than ten years 202 202 — — 129 130 — — Asset-backed securities 1,297 1,271 — — 1,046 1,040 — — Total $ 6,967 $ 6,866 $ 551 $ 550 $ 5,846 $ 5,843 $ 136 $ 135 Actual maturities may differ from contractual maturities due to call or prepayment options. Private equity 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 private equity 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, 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 September 30, 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 $ 6,847 $ — $ — $ 6,847 Investments available for sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 143 $ — $ — $ 143 Corporate securities — 2,734 — 2,734 Municipal securities — 2,198 — 2,198 Asset-backed securities — 594 — 594 Residential mortgage-backed securities — 368 — 368 Commercial mortgage-backed securities — 309 — 309 Total investments $ 143 $ 6,203 $ — $ 6,346 Restricted deposits available for sale: Cash and cash equivalents $ 7 $ — $ — $ 7 Certificates of deposit 430 — — 430 U.S. Treasury securities and obligations of U.S. government corporations and agencies 113 — — 113 Total restricted deposits $ 550 $ — $ — $ 550 Total assets at fair value $ 7,540 $ 6,203 $ — $ 13,743 Liabilities Other long-term liabilities: Interest rate swap agreements $ — $ 147 $ — $ 147 Total liabilities at fair value $ — $ 147 $ — $ 147 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 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. In addition, the aggregate carrying amount of the Company’s life insurance contracts and other private equity investments , which approximates fair value, was $520 million and $311 million as of September 30, 2018 and December 31, 2017 , respectively. |
Medical Claims Liability
Medical Claims Liability | 9 Months Ended |
Sep. 30, 2018 | |
Insurance [Abstract] | |
Medical Claims Liability | Medical Claims Liability The following table summarizes the change in medical claims liability ($ in millions): Nine Months Ended September 30, 2018 2017 Balance, January 1 $ 4,286 $ 3,929 Less: Reinsurance recoverable 18 5 Balance, January 1, net 4,268 3,924 Acquisitions 1,319 — Incurred related to: Current year 33,465 28,666 Prior years (420 ) (388 ) Total incurred 33,045 28,278 Paid related to: Current year 28,194 24,787 Prior years 3,485 3,099 Total paid 31,679 27,886 Balance at September 30, net 6,953 4,316 Plus: Reinsurance recoverable 30 17 Balance, September 30 $ 6,983 $ 4,333 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 health benefits ratio (HBR) and other return of premium programs, we recorded $23 million as a reduction to premium revenues and $4 million as an increase to premium revenues in the nine months ended September 30, 2018 and 2017, respectively. Incurred but not reported (IBNR) plus expected development on reported claims as of September 30, 2018 was $5,326 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 | 9 Months Ended |
Sep. 30, 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 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. During the second quarter of 2018, the Company recognized a $79 million net pre-tax benefit related to the reconciliation of the 2017 risk adjustment program compared to a $48 million net pre-tax benefit related to the reconciliation of the 2016 risk adjustment program during the second quarter of 2017. The Company's net receivables (payables) for each of these programs are as follows ($ in millions): September 30, 2018 December 31, 2017 Risk adjustment $ (784 ) $ (677 ) Reinsurance 1 15 Risk corridor 4 6 Minimum MLR (154 ) (22 ) Cost sharing reductions (61 ) (96 ) |
Debt
Debt | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt consists of the following ($ in millions): September 30, 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 1,005 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 $1,800 million 5.375% Senior notes, due June 1, 2026 1,800 — Fair value of interest rate swap agreements (147 ) (71 ) Total senior notes 6,258 4,535 Revolving credit agreement 100 150 Mortgage notes payable 59 61 Construction loan payable 40 — Capital leases and other 5 18 Debt issuance costs (79 ) (65 ) Total debt 6,383 4,699 Less current portion (4 ) (4 ) Long-term debt $ 6,379 $ 4,695 Senior Notes In May 2018, a wholly-owned unrestricted subsidiary of the Company (Escrow Issuer) issued $1,800 million in aggregate principal amount of 5.375% Senior Notes at par due 2026. In connection with the closing of the Fidelis Care acquisition, the Escrow Issuer merged with and into the Company and the Company assumed the obligations of the Escrow Issuer under the 5.375% Senior Notes due 2026. The Company used the net proceeds of the offering to finance a portion of the cash consideration for the Fidelis Care acquisition, which closed in July 2018, to pay related fees and expenses, and for general corporate purposes, including the repayment of outstanding indebtedness. The indentures governing the senior notes listed in the table above contain restrictive covenants of Centene Corporation. At September 30, 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 September 30, 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 liabilities 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 one or three month LIBOR plus 3.61% adjusted monthly or quarterly, based on the terms of the individual swap agreements. At September 30, 2018 , the weighted average rate was 5.89% . 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 September 30, 2018 , the Company had $100 million borrowings outstanding under the agreement 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 September 30, 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 $59 million at September 30, 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 $164 million at September 30, 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 September 30, 2018 , the Company had $40 million in borrowings outstanding under the loan. Letters of Credit & Surety Bonds The Company had outstanding letters of credit of $55 million as of September 30, 2018 , which were not part of the revolving credit facility. The Company also had letters of credit for $44 million (valued at September 30, 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 1.33% as of September 30, 2018 . The Company had outstanding surety bonds of $501 million as of September 30, 2018 . |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity In May 2018, the Company completed a registered offering of 26.6 million shares of Centene common stock with a fair value of $2,860 million . This included the 10% over allotment option to purchase additional shares from the Company which was exercised in full by the underwriters. Net proceeds after underwriting discounts and commissions was $2,779 million . The Company used the net proceeds of the offering to finance a portion of the cash consideration in connection with the Fidelis Care acquisition, to pay related fees and expenses, and for general corporate purposes, including the repayment of outstanding indebtedness. In April 2018, the Company acquired MHM Services Inc. (MHM) and issued 1.7 million shares of Centene common stock to the selling shareholders, with a fair value of $183 million . In March 2018, the Company acquired Community Medical Holdings Corp. , d/b/a Community Medical Group (CMG) and issued 1.4 million 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 Holdings, Inc. (Interpreta) and issued 1.7 million shares of Centene common stock to the selling shareholders, with a fair value of $175 million . |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following table sets forth the calculation of basic and diluted net earnings per common share ($ in millions, except shares in thousands and per share data in dollars): Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Earnings attributable to Centene Corporation $ 19 $ 205 $ 659 $ 598 Shares used in computing per share amounts: Weighted average number of common shares outstanding 205,295 172,508 191,628 172,314 Common stock equivalents (as determined by applying the treasury stock method) 4,227 4,407 4,005 4,100 Weighted average number of common shares and potential dilutive common shares outstanding 209,522 176,915 195,633 176,414 Net earnings per common share attributable to Centene Corporation: Basic earnings per common share $ 0.09 $ 1.19 $ 3.44 $ 3.47 Diluted earnings per common share $ 0.09 $ 1.16 $ 3.37 $ 3.39 The calculation of diluted earnings per common share for the three and nine months ended September 30, 2018 excludes the impact of 10 thousand and 27 thousand shares, respectively, related to anti-dilutive stock options, restricted stock and restricted stock units. The calculation of diluted earnings per common share for both the three and nine months ended September 30, 2017 excludes the impact of 4 thousand and 27 thousand shares, respectively, related to anti-dilutive stock options, restricted stock and restricted stock units. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 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 September 30, 2018 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Total revenues from external customers $ 15,420 $ 762 $ — $ 16,182 Total revenues from internal customers 26 2,350 (2,376 ) — Total revenues $ 15,446 $ 3,112 $ (2,376 ) $ 16,182 Earnings from operations $ 92 $ (51 ) $ — $ 41 Segment information for the three months ended September 30, 2017 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Total revenues from external customers $ 11,248 $ 650 $ — $ 11,898 Total revenues from internal customers 11 2,367 (2,378 ) — Total revenues $ 11,259 $ 3,017 $ (2,378 ) $ 11,898 Earnings from operations $ 238 $ 102 $ — $ 340 Segment information for the nine months ended September 30, 2018 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Total revenues from external customers $ 41,153 $ 2,404 $ — $ 43,557 Total revenues from internal customers 76 6,919 (6,995 ) — Total revenues $ 41,229 $ 9,323 $ (6,995 ) $ 43,557 Earnings from operations $ 983 $ 87 $ — $ 1,070 Segment information for the nine months ended September 30, 2017 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Total revenues from external customers $ 33,704 $ 1,872 $ — $ 35,576 Total revenues from internal customers 33 7,112 (7,145 ) — Total revenues $ 33,737 $ 8,984 $ (7,145 ) $ 35,576 Earnings from operations $ 799 $ 219 $ — $ 1,018 |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 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 (collectively, "Related Actions"). 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 and denied the motion to strike. In August 2018, the trial court stayed all the Related Actions pending determination of a writ of mandate by the California Court of Appeals in two of the Related Actions. 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 Administration 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 (VA) under a contract to provide health care coordination services for veterans. The contract began in late 2014 and ended September 30, 2018. 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. This matter is separate from the negotiated settlements with the VA in connection with the contract expiration on September 30, 2018. 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. In July 2018, the plaintiff voluntarily filed a First Amended Complaint that removed Steven Milman as a plaintiff, dropped Centene Corporation and Superior Health Plan as defendants, abandoned certain claims, narrowed the putative class to Washington State only, and added Centene Management Company as a defendant. In August 2018, the Company moved to dismiss the First Amended Complaint. In response, the plaintiff voluntarily filed a Second Amended Complaint. In September 2018, the Company filed a motion to dismiss the Second Amended Complaint. 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 (P
Organization and Operations (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recently Adopted Accounting Guidance and Accounting Guidance Not Yet Adopted | Recently Adopted Accounting Guidance In August 2018, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) which modifies the disclosure requirements on fair value measurements. The amendments in this ASU remove the requirements to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels and the valuation processes for Level 3 fair value measurements. The amendments require public entities to disclose the changes in unrealized gains and losses for the period included in other comprehensive income for recurring Level 3 fair value measurements for instruments held at the end of the reporting period, and the range and weighted average used to develop significant inputs for Level 3 fair value measurements. For investments in certain entities that calculate net asset value, the standard requires the disclosure of the period of time over which the underlying assets might be liquidated if the investee has announced the timing publicly. The Company adopted the new guidance in the third quarter of 2018. The new guidance did not have any impact on the Company’s consolidated financial position, results of operations or cash flows. In June 2018, the FASB issued an ASU that simplifies the accounting for share-based payment arrangements with non-employees for goods and services. Under the ASU, the guidance on such payments to non-employees is aligned with the accounting for share-based payments granted to employees, including the measurement of equity-classified awards, which is fixed at the grant date under the new guidance. The Company adopted the new guidance in the second quarter of 2018 using the modified retrospective approach with an immaterial cumulative-effect adjustment to retained earnings. In February 2018, the FASB issued an 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 , $6 million , $17 million and $7 million as of December 31, 2016 , September 30, 2017 , December 31, 2017 and September 30, 2018 , respectively. 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 August 2018, the FASB issued an ASU which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in this update. The amendments in this ASU require an entity that is the customer in a hosting arrangement to follow the guidance on internal-use software to determine which implementation costs to capitalize and which costs to expense. The standard also requires an entity that is the customer to expense the capitalized implementation costs of a hosting arrangement over the term of the hosting arrangement. The new guidance requires an entity to present the expense related to the capitalized implementation costs in the same line item in the statement of income as the fees associated with the hosting element of the arrangement and classify payments for capitalized implementation costs in the statement of cash flows in the same manner as payments made for fees associated with the hosting element. The entity is also required to present the capitalized implementation costs in the statement of financial position in the same line item that a prepayment for the fees of the associated hosting arrangement would be presented. The guidance is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted. 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 July 2018, the FASB issued an ASU which gives all entities a transition option and provides lessors with a practical expedient. The transition option allows entities to not apply the new standard in the comparative periods they present in their financial statements in the year of adoption. Under the transition option, entities can continue to apply the legacy guidance in ASC 840, including its disclosure requirements, in the comparative periods presented in the year of adoption of the lease standard. Entities that elect this option will adopt the standard using the modified retrospective transition method but recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. The practical expedient provides lessors the option to not separate the non-lease components from the associated lease components when certain criteria are met and requires them to account for the combined component in accordance with the new revenue standard if the associated non-lease components are the predominant components. The Company is currently evaluating the effect of the new lease guidance and plans to elect the transition option of using the effective date of the new standard as the date of initial application. |
Fidelis Care Acquisition (Table
Fidelis Care Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Business Combinations [Abstract] | |
Schedule of Preliminary Allocation of the Fair Value of Assets Acquired and Liabilities Assumed | The Company's preliminary allocation of the fair value of assets acquired and liabilities assumed as of the acquisition date of July 1, 2018 is as follows ($ in millions): Assets acquired and liabilities assumed Cash and cash equivalents $ 2,001 Premium and related receivables 535 Other current assets 32 Restricted deposits 495 Property, software and equipment, net 80 Intangible assets (a) 1,000 Other long-term assets 18 Total assets acquired 4,161 Medical claims liability 1,319 Accounts payable and accrued expenses 300 Return of premium payable 124 Unearned revenue 115 Other long-term liabilities 261 Total liabilities assumed 2,119 Total identifiable net assets 2,042 Goodwill (b) 1,428 Total assets acquired and liabilities assumed $ 3,470 The Company has made the following preliminary fair value adjustments based on information reviewed through September 30, 2018 . Significant fair value adjustments are noted as follows: (a) The identifiable intangible assets acquired are to be measured at fair value as of the completion of the acquisition. The fair value of intangible assets is determined primarily using variations of the "income approach," which is based on the present value of the future after tax cash flows attributable to each identified intangible asset. Other valuation methods, including the market approach and cost approach, were also considered in estimating the fair value. As discussed above, due to the timing of the acquisition date, the Company has only performed limited valuation procedures, and the intangible asset valuation is incomplete. The Company has estimated the preliminary fair value of intangible assets to be $1.0 billion with a weighted average life of 13 years. The Company expects the identifiable intangible assets to include customer relationships, provider contracts, trade names and developed technology. (b) The acquisition resulted in $1.4 billion of goodwill related primarily to synergies expected from the acquisition and the assembled workforce of Fidelis Care. All of the goodwill has been assigned to the Managed Care segment. The goodwill is deductible for income tax purposes. |
Pro Forma Financial Information (unaudtied) | The following table presents supplemental pro forma information for the three and nine months ended September 30, 2017 ($ in millions, except per share data): Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017 Total revenues $ 14,387 $ 42,954 Net earnings attributable to Centene Corporation $ 248 $ 721 Diluted earnings per share $ 1.22 $ 3.55 |
Short-term and Long-term Inve_2
Short-term and Long-term Investments, Restricted Deposits (Tables) | 9 Months Ended |
Sep. 30, 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): September 30, 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 $ 259 $ — $ (3 ) $ 256 $ 311 $ — $ (2 ) $ 309 Corporate securities 2,774 4 (44 ) 2,734 2,208 12 (10 ) 2,210 Restricted certificates of deposit 430 — — 430 4 — — 4 Restricted cash equivalents 7 — — 7 17 — — 17 Municipal securities 2,231 2 (35 ) 2,198 2,085 12 (10 ) 2,087 Asset-backed securities 598 — (4 ) 594 437 1 (1 ) 437 Residential mortgage-backed securities 382 — (14 ) 368 337 1 (6 ) 332 Commercial mortgage-backed securities 317 — (8 ) 309 272 1 (2 ) 271 Private equity investments 382 — — 382 176 — — 176 Life insurance contracts 138 — — 138 135 — — 135 Total $ 7,518 $ 6 $ (108 ) $ 7,416 $ 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): September 30, 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 $ (1 ) $ 93 $ (2 ) $ 161 $ (1 ) $ 222 $ (1 ) $ 79 Corporate securities (31 ) 1,913 (13 ) 337 (6 ) 1,044 (4 ) 185 Municipal securities (25 ) 1,518 (10 ) 286 (7 ) 943 (3 ) 175 Asset-backed securities (3 ) 409 (1 ) 66 (1 ) 228 — 28 Residential mortgage-backed securities (4 ) 186 (10 ) 178 (1 ) 109 (5 ) 171 Commercial mortgage-backed securities (4 ) 174 (4 ) 90 (1 ) 112 (1 ) 51 Total $ (68 ) $ 4,293 $ (40 ) $ 1,118 $ (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): September 30, 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 $ 517 $ 515 $ 201 $ 201 $ 474 $ 474 $ 48 $ 47 One year through five years 2,674 2,636 350 349 2,424 2,420 88 88 Five years through ten years 2,277 2,242 — — 1,773 1,779 — — Greater than ten years 202 202 — — 129 130 — — Asset-backed securities 1,297 1,271 — — 1,046 1,040 — — Total $ 6,967 $ 6,866 $ 551 $ 550 $ 5,846 $ 5,843 $ 136 $ 135 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 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 September 30, 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 $ 6,847 $ — $ — $ 6,847 Investments available for sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 143 $ — $ — $ 143 Corporate securities — 2,734 — 2,734 Municipal securities — 2,198 — 2,198 Asset-backed securities — 594 — 594 Residential mortgage-backed securities — 368 — 368 Commercial mortgage-backed securities — 309 — 309 Total investments $ 143 $ 6,203 $ — $ 6,346 Restricted deposits available for sale: Cash and cash equivalents $ 7 $ — $ — $ 7 Certificates of deposit 430 — — 430 U.S. Treasury securities and obligations of U.S. government corporations and agencies 113 — — 113 Total restricted deposits $ 550 $ — $ — $ 550 Total assets at fair value $ 7,540 $ 6,203 $ — $ 13,743 Liabilities Other long-term liabilities: Interest rate swap agreements $ — $ 147 $ — $ 147 Total liabilities at fair value $ — $ 147 $ — $ 147 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) | 9 Months Ended |
Sep. 30, 2018 | |
Insurance [Abstract] | |
Schedule of change in medical claims liability | The following table summarizes the change in medical claims liability ($ in millions): Nine Months Ended September 30, 2018 2017 Balance, January 1 $ 4,286 $ 3,929 Less: Reinsurance recoverable 18 5 Balance, January 1, net 4,268 3,924 Acquisitions 1,319 — Incurred related to: Current year 33,465 28,666 Prior years (420 ) (388 ) Total incurred 33,045 28,278 Paid related to: Current year 28,194 24,787 Prior years 3,485 3,099 Total paid 31,679 27,886 Balance at September 30, net 6,953 4,316 Plus: Reinsurance recoverable 30 17 Balance, September 30 $ 6,983 $ 4,333 |
Affordable Care Act (Tables)
Affordable Care Act (Tables) | 9 Months Ended |
Sep. 30, 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): September 30, 2018 December 31, 2017 Risk adjustment $ (784 ) $ (677 ) Reinsurance 1 15 Risk corridor 4 6 Minimum MLR (154 ) (22 ) Cost sharing reductions (61 ) (96 ) |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Debt consists of the following ($ in millions): September 30, 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 1,005 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 $1,800 million 5.375% Senior notes, due June 1, 2026 1,800 — Fair value of interest rate swap agreements (147 ) (71 ) Total senior notes 6,258 4,535 Revolving credit agreement 100 150 Mortgage notes payable 59 61 Construction loan payable 40 — Capital leases and other 5 18 Debt issuance costs (79 ) (65 ) Total debt 6,383 4,699 Less current portion (4 ) (4 ) Long-term debt $ 6,379 $ 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 September 30, 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) | 9 Months Ended |
Sep. 30, 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 September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Earnings attributable to Centene Corporation $ 19 $ 205 $ 659 $ 598 Shares used in computing per share amounts: Weighted average number of common shares outstanding 205,295 172,508 191,628 172,314 Common stock equivalents (as determined by applying the treasury stock method) 4,227 4,407 4,005 4,100 Weighted average number of common shares and potential dilutive common shares outstanding 209,522 176,915 195,633 176,414 Net earnings per common share attributable to Centene Corporation: Basic earnings per common share $ 0.09 $ 1.19 $ 3.44 $ 3.47 Diluted earnings per common share $ 0.09 $ 1.16 $ 3.37 $ 3.39 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | Segment information for the three months ended September 30, 2018 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Total revenues from external customers $ 15,420 $ 762 $ — $ 16,182 Total revenues from internal customers 26 2,350 (2,376 ) — Total revenues $ 15,446 $ 3,112 $ (2,376 ) $ 16,182 Earnings from operations $ 92 $ (51 ) $ — $ 41 Segment information for the three months ended September 30, 2017 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Total revenues from external customers $ 11,248 $ 650 $ — $ 11,898 Total revenues from internal customers 11 2,367 (2,378 ) — Total revenues $ 11,259 $ 3,017 $ (2,378 ) $ 11,898 Earnings from operations $ 238 $ 102 $ — $ 340 Segment information for the nine months ended September 30, 2018 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Total revenues from external customers $ 41,153 $ 2,404 $ — $ 43,557 Total revenues from internal customers 76 6,919 (6,995 ) — Total revenues $ 41,229 $ 9,323 $ (6,995 ) $ 43,557 Earnings from operations $ 983 $ 87 $ — $ 1,070 Segment information for the nine months ended September 30, 2017 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Total revenues from external customers $ 33,704 $ 1,872 $ — $ 35,576 Total revenues from internal customers 33 7,112 (7,145 ) — Total revenues $ 33,737 $ 8,984 $ (7,145 ) $ 35,576 Earnings from operations $ 799 $ 219 $ — $ 1,018 |
Organization and Operations (De
Organization and Operations (Details) - USD ($) $ in Millions | Jul. 01, 2018 | Sep. 30, 2018 | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Restricted cash and cash equivalents | $ 7 | $ 17 | $ 6 | $ 6 | |||
Cumulative effect adjustment to retained earnings | $ 15 | ||||||
Retained Earnings | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Cumulative effect adjustment to retained earnings | $ 15 | ||||||
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 | |||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||
Consideration transferred | $ 3,470 |
Fidelis Care Acquisition - Narr
Fidelis Care Acquisition - Narrative (Details) - USD ($) shares in Millions, $ in Millions | Jul. 01, 2018 | May 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Department of Health, State of New York | ||||||
Business Acquisition [Line Items] | ||||||
Undertakings to the State of New York | $ 340 | |||||
Period contribution to be made | 5 years | |||||
Department of Health, State of New York | Selling, General and Administrative Expenses | ||||||
Business Acquisition [Line Items] | ||||||
Undertakings to the State of New York | $ 324 | $ 324 | ||||
Registered Offering | ||||||
Business Acquisition [Line Items] | ||||||
Shares of stock sold in offering (in shares) | 26.6 | |||||
Fidelis Care | ||||||
Business Acquisition [Line Items] | ||||||
Consideration transferred | $ 3,470 | |||||
Revenues of acquiree since acquisition date | $ 2,797 | |||||
Total revenues | $ 14,387 | $ 49,170 | $ 42,954 |
Fidelis Care Acquisition - Sche
Fidelis Care Acquisition - Schedule of Preliminary Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Jul. 01, 2018 | Sep. 30, 2018 | Dec. 31, 2017 |
Assets acquired and liabilities assumed | |||
Goodwill | $ 6,803 | $ 4,749 | |
Acquired intangibles, weighted average useful life years | 13 years | ||
Fidelis Care | |||
Assets acquired and liabilities assumed | |||
Cash and cash equivalents | $ 2,001 | ||
Premium and related receivables | 535 | ||
Other current assets | 32 | ||
Restricted deposits | 495 | ||
Property, software and equipment, net | 80 | ||
Intangible assets | 1,000 | ||
Other long-term assets | 18 | ||
Total assets acquired | 4,161 | ||
Medical claims liability | 1,319 | ||
Accounts payable and accrued expenses | 300 | ||
Return of premium payable | 124 | ||
Unearned revenue | 115 | ||
Other long-term liabilities | 261 | ||
Total liabilities assumed | 2,119 | ||
Total identifiable net assets | 2,042 | ||
Goodwill | 1,428 | ||
Total assets acquired and liabilities assumed | $ 3,470 |
Fidelis Care Acquisition - Pro
Fidelis Care Acquisition - Pro Forma Information (unaudited) (Details) - Fidelis Care - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Business Acquisition [Line Items] | |||
Total revenues | $ 14,387 | $ 49,170 | $ 42,954 |
Net earnings attributable to Centene Corporation | $ 248 | $ 721 | |
Diluted earnings per share (in dollars per share) | $ 1.22 | $ 3.55 |
Short-term and Long-term Inve_3
Short-term and Long-term Investments, Restricted Deposits - By Investment Type (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | $ 7,518 | $ 5,982 |
Gross Unrealized Gains | 6 | 27 |
Gross Unrealized Losses | (108) | (31) |
Fair Value | 7,416 | 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 | 259 | 311 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (3) | (2) |
Fair Value | 256 | 309 |
Corporate securities | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 2,774 | 2,208 |
Gross Unrealized Gains | 4 | 12 |
Gross Unrealized Losses | (44) | (10) |
Fair Value | 2,734 | 2,210 |
Restricted certificates of deposit | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 430 | 4 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 430 | 4 |
Restricted cash equivalents | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 7 | 17 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 7 | 17 |
Municipal securities | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 2,231 | 2,085 |
Gross Unrealized Gains | 2 | 12 |
Gross Unrealized Losses | (35) | (10) |
Fair Value | 2,198 | 2,087 |
Asset-backed securities | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 598 | 437 |
Gross Unrealized Gains | 0 | 1 |
Gross Unrealized Losses | (4) | (1) |
Fair Value | 594 | 437 |
Residential mortgage-backed securities | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 382 | 337 |
Gross Unrealized Gains | 0 | 1 |
Gross Unrealized Losses | (14) | (6) |
Fair Value | 368 | 332 |
Commercial mortgage-backed securities | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 317 | 272 |
Gross Unrealized Gains | 0 | 1 |
Gross Unrealized Losses | (8) | (2) |
Fair Value | 309 | 271 |
Private equity investments | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 382 | 176 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 382 | 176 |
Life insurance contracts | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 138 | 135 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 138 | $ 135 |
Short-term and Long-term Inve_4
Short-term and Long-term Investments, Restricted Deposits - Narrative (Details) - position | 9 Months Ended | ||
Sep. 30, 2018 | May 31, 2018 | Mar. 31, 2018 | |
Schedule Of Investments And Restricted Deposits By Type [Line Items] | |||
Positions from which gross unrealized losses were generated | 3,200 | ||
Total unrealized investment positions | 3,954 | ||
RxAdvance | |||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | |||
Equity method investment, percentage | 28.00% | 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 10 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 Inve_5
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 | Sep. 30, 2018 | Dec. 31, 2017 |
Unrealized Losses | ||
Less Than 12 Months | $ (68) | $ (17) |
12 Months or More | (40) | (14) |
Fair Value | ||
Fair Value, Less Than 12 Months | 4,293 | 2,658 |
Fair Value, 12 Months or More | 1,118 | 689 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | ||
Unrealized Losses | ||
Less Than 12 Months | (1) | (1) |
12 Months or More | (2) | (1) |
Fair Value | ||
Fair Value, Less Than 12 Months | 93 | 222 |
Fair Value, 12 Months or More | 161 | 79 |
Corporate securities | ||
Unrealized Losses | ||
Less Than 12 Months | (31) | (6) |
12 Months or More | (13) | (4) |
Fair Value | ||
Fair Value, Less Than 12 Months | 1,913 | 1,044 |
Fair Value, 12 Months or More | 337 | 185 |
Municipal securities | ||
Unrealized Losses | ||
Less Than 12 Months | (25) | (7) |
12 Months or More | (10) | (3) |
Fair Value | ||
Fair Value, Less Than 12 Months | 1,518 | 943 |
Fair Value, 12 Months or More | 286 | 175 |
Asset-backed securities | ||
Unrealized Losses | ||
Less Than 12 Months | (3) | (1) |
12 Months or More | (1) | 0 |
Fair Value | ||
Fair Value, Less Than 12 Months | 409 | 228 |
Fair Value, 12 Months or More | 66 | 28 |
Residential mortgage-backed securities | ||
Unrealized Losses | ||
Less Than 12 Months | (4) | (1) |
12 Months or More | (10) | (5) |
Fair Value | ||
Fair Value, Less Than 12 Months | 186 | 109 |
Fair Value, 12 Months or More | 178 | 171 |
Commercial mortgage-backed securities | ||
Unrealized Losses | ||
Less Than 12 Months | (4) | (1) |
12 Months or More | (4) | (1) |
Fair Value | ||
Fair Value, Less Than 12 Months | 174 | 112 |
Fair Value, 12 Months or More | $ 90 | $ 51 |
Short-term and Long-term Inve_6
Short-term and Long-term Investments, Restricted Deposits - Contractual Maturities of Short-Term and Long-Term Investments and Restricted Deposits (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Investments | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost, one year or less | $ 517 | $ 474 |
Amortized cost, one year through five years | 2,674 | 2,424 |
Amortized cost, five years through ten years | 2,277 | 1,773 |
Amortized cost, greater than ten years | 202 | 129 |
Amortized cost, asset-backed securities | 1,297 | 1,046 |
Amortized cost, total | 6,967 | 5,846 |
Fair value, one year or less | 515 | 474 |
Fair value, one year through five years | 2,636 | 2,420 |
Fair value, five years through ten years | 2,242 | 1,779 |
Fair value, greater than ten years | 202 | 130 |
Fair value, asset-backed securities | 1,271 | 1,040 |
Fair value, total | 6,866 | 5,843 |
Restricted Deposits | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized cost, one year or less | 201 | 48 |
Amortized cost, one year through five years | 350 | 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 | 551 | 136 |
Fair value, one year or less | 201 | 47 |
Fair value, one year through five years | 349 | 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 | $ 550 | $ 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 | Sep. 30, 2018 | Dec. 31, 2017 |
Assets | ||
Cash and cash equivalents | $ 6,847 | $ 4,072 |
Investments available for sale: | ||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 143 | 195 |
Corporate securities | 2,734 | 2,210 |
Municipal securities | 2,198 | 2,087 |
Asset-backed securities | 594 | 437 |
Total investments | 6,346 | 5,532 |
Restricted deposits available for sale: | ||
Cash and cash equivalents | 7 | 17 |
Certificates of deposit | 430 | 4 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 113 | 114 |
Total restricted deposits | 550 | 135 |
Other long-term assets: | ||
Interest rate swap agreements | 1 | |
Total assets at fair value | 13,743 | 9,740 |
Liabilities | ||
Interest rate swap agreements | 147 | 72 |
Total liabilities at fair value | 147 | 72 |
Residential mortgage-backed securities | ||
Investments available for sale: | ||
Mortgage-backed securities | 368 | 332 |
Commercial mortgage-backed securities | ||
Investments available for sale: | ||
Mortgage-backed securities | 309 | 271 |
Level I | ||
Assets | ||
Cash and cash equivalents | 6,847 | 4,072 |
Investments available for sale: | ||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 143 | 195 |
Corporate securities | 0 | 0 |
Municipal securities | 0 | 0 |
Asset-backed securities | 0 | 0 |
Total investments | 143 | 195 |
Restricted deposits available for sale: | ||
Cash and cash equivalents | 7 | 17 |
Certificates of deposit | 430 | 4 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 113 | 114 |
Total restricted deposits | 550 | 135 |
Other long-term assets: | ||
Interest rate swap agreements | 0 | |
Total assets at fair value | 7,540 | 4,402 |
Liabilities | ||
Interest rate swap agreements | 0 | 0 |
Total liabilities at fair value | 0 | 0 |
Level I | Residential mortgage-backed securities | ||
Investments available for sale: | ||
Mortgage-backed securities | 0 | 0 |
Level I | Commercial mortgage-backed securities | ||
Investments available for sale: | ||
Mortgage-backed securities | 0 | 0 |
Level II | ||
Assets | ||
Cash and cash equivalents | 0 | 0 |
Investments available for sale: | ||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 0 | 0 |
Corporate securities | 2,734 | 2,210 |
Municipal securities | 2,198 | 2,087 |
Asset-backed securities | 594 | 437 |
Total investments | 6,203 | 5,337 |
Restricted deposits available for sale: | ||
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 |
Other long-term assets: | ||
Interest rate swap agreements | 1 | |
Total assets at fair value | 6,203 | 5,338 |
Liabilities | ||
Interest rate swap agreements | 147 | 72 |
Total liabilities at fair value | 147 | 72 |
Level II | Residential mortgage-backed securities | ||
Investments available for sale: | ||
Mortgage-backed securities | 368 | 332 |
Level II | Commercial mortgage-backed securities | ||
Investments available for sale: | ||
Mortgage-backed securities | 309 | 271 |
Level III | ||
Assets | ||
Cash and cash equivalents | 0 | 0 |
Investments available for sale: | ||
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 |
Restricted deposits available for sale: | ||
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 |
Other long-term assets: | ||
Interest rate swap agreements | 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 | ||
Investments available for sale: | ||
Mortgage-backed securities | 0 | 0 |
Level III | Commercial mortgage-backed securities | ||
Investments available for sale: | ||
Mortgage-backed securities | $ 0 | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Fair Value Disclosures [Abstract] | ||
Life insurance contracts and other private equity investments, which approximates fair value | $ 520 | $ 311 |
Medical Claims Liability - Sche
Medical Claims Liability - Schedule of Change in Medical Claims Liability (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 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 | 1,319 | 0 |
Incurred related to: | ||
Current year | 33,465 | 28,666 |
Prior years | (420) | (388) |
Total incurred | 33,045 | 28,278 |
Paid related to: | ||
Current year | 28,194 | 24,787 |
Prior years | 3,485 | 3,099 |
Total paid | 31,679 | 27,886 |
Balance at September 30, net | 6,953 | 4,316 |
Plus: Reinsurance recoverable | 30 | 17 |
Balance, September 30 | $ 6,983 | $ 4,333 |
Medical Claims Liability - Narr
Medical Claims Liability - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Insurance [Abstract] | ||
Amounts recorded as an adjustment to premium revenues related to minimum HBR and return of premium programs | $ 23 | $ (4) |
Short-duration insurance contracts, Incurred but not reported and expected development on reported claims | $ 5,326 |
Affordable Care Act (Details)
Affordable Care Act (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Sep. 30, 2018 | Dec. 31, 2017 | |
Affordable Care Act [Abstract] | ||||
Risk adjustment pre-tax benefit | $ 79 | $ 48 | ||
Risk adjustment | $ (784) | $ (677) | ||
Reinsurance | 1 | 15 | ||
Risk corridor | 4 | 6 | ||
Minimum MLR | (154) | (22) | ||
Cost sharing reductions | $ (61) | $ (96) |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) | Sep. 30, 2018 | May 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | |||
Fair value of interest rate swap agreements | $ (147,000,000) | $ (71,000,000) | |
Total senior notes | 6,258,000,000 | 4,535,000,000 | |
Mortgage notes payable | 59,000,000 | 61,000,000 | |
Construction loan payable | 40,000,000 | 0 | |
Capital leases and other | 5,000,000 | 18,000,000 | |
Debt issuance costs | (79,000,000) | (65,000,000) | |
Total debt | 6,383,000,000 | 4,699,000,000 | |
Less current portion | (4,000,000) | (4,000,000) | |
Long-term debt | 6,379,000,000 | 4,695,000,000 | |
Revolving credit agreement | |||
Debt Instrument [Line Items] | |||
Revolving credit agreement | 100,000,000 | 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 | 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 | 4.75% | ||
Senior notes | $ 1,005,000,000 | 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 | 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 | 4.75% | ||
Senior notes | $ 1,200,000,000 | 1,200,000,000 | |
Senior Notes | $1,800 million 5.375% Senior notes, due June 1, 2026 | |||
Debt Instrument [Line Items] | |||
Debt, face amount | $ 1,800,000,000 | $ 1,800,000,000 | |
Interest rate | 5.375% | 5.375% | |
Senior notes | $ 1,800,000,000 | $ 0 |
Debt - Senior Notes (Details)
Debt - Senior Notes (Details) - Senior Notes - $1,800 million 5.375% Senior notes, due 2026 - USD ($) | Sep. 30, 2018 | May 31, 2018 |
Debt Instrument [Line Items] | ||
Aggregate principal | $ 1,800,000,000 | $ 1,800,000,000 |
Interest rate | 5.375% | 5.375% |
Debt - Interest Rate Swaps (Det
Debt - Interest Rate Swaps (Details) | Sep. 30, 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) | 5.89% |
Debt - Revolving Credit Agreeme
Debt - Revolving Credit Agreement (Details) - Revolving credit agreement | 9 Months Ended | |
Sep. 30, 2018USD ($) | Dec. 31, 2017USD ($) | |
Debt Instrument [Line Items] | ||
Maximum borrowing capacity | $ 1,500,000,000 | |
Borrowings outstanding | $ 100,000,000 | $ 150,000,000 |
Ratio of debt to EBITDA | 3.5 |
Debt - Mortgage Note Payable (D
Debt - Mortgage Note Payable (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Mortgage notes payable | $ 59 | $ 61 |
Non-recourse Mortgage Note Due January 1, 2021 | ||
Debt Instrument [Line Items] | ||
Mortgage notes payable | $ 59 | |
Interest rate | 5.14% | |
Net book value of collateralized properties | $ 164 |
Debt - Construction Loan (Detai
Debt - Construction Loan (Details) - Construction Loan | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Debt Instrument [Line Items] | |
Debt, face amount | $ 200,000,000 |
Optional extension term | 1 year |
Borrowings outstanding | $ 40,000,000 |
LIBOR | |
Debt Instrument [Line Items] | |
Interest rate | 2.70% |
Debt - Letters of Credit & Sure
Debt - Letters of Credit & Surety Bonds (Details) € in Millions, $ in Millions | Sep. 30, 2018USD ($) | Sep. 30, 2018EUR (€) |
Surety Bond | ||
Debt Instrument [Line Items] | ||
Surety bonds | $ 501 | |
Letter of Credit | ||
Debt Instrument [Line Items] | ||
Letters of credit outstanding | $ 55 | |
Letters of credit, effective yield (percent) | 1.33% | 1.33% |
Letter of Credit | Ribera Salud | ||
Debt Instrument [Line Items] | ||
Borrowings outstanding | $ 44 | € 38 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) shares in Millions, $ in Millions | 1 Months Ended | 9 Months Ended | ||
May 31, 2018 | Apr. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2018 | |
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | ||||
Common stock issued | $ 2,779 | |||
MHM | ||||
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | ||||
Shares issued in acquisition (in shares) | 1.7 | |||
Consideration transferred, common stock issued | $ 183 | |||
Community Medical Holdings Corp | ||||
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | ||||
Shares issued in acquisition (in shares) | 1.4 | |||
Consideration transferred, common stock issued | $ 149 | |||
Interpreta | ||||
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | ||||
Shares issued in acquisition (in shares) | 1.7 | |||
Consideration transferred, common stock issued | $ 175 | |||
Percentage of ownership interests acquired | 61.00% | |||
Registered Offering | ||||
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | ||||
Shares of stock sold in offering (in shares) | 26.6 | |||
Common stock issued | $ 2,860 | |||
Net proceeds from the issuance of common stock | $ 2,779 | |||
Over-Allotment Option | ||||
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | ||||
Option to purchase additional shares, percent | 10.00% |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings attributable to Centene Corporation | ||||
Earnings attributable to Centene Corporation | $ 19 | $ 205 | $ 659 | $ 598 |
Shares used in computing per share amounts: | ||||
Weighted average number of common shares outstanding (in shares) | 205,295 | 172,508 | 191,628 | 172,314 |
Common stock equivalents (as determined by applying the treasury stock method) (in shares) | 4,227 | 4,407 | 4,005 | 4,100 |
Weighted average number of common shares and potential dilutive common shares outstanding (in shares) | 209,522 | 176,915 | 195,633 | 176,414 |
Net earnings per common share attributable to Centene Corporation: | ||||
Basic earnings per common share (in dollars per share) | $ 0.09 | $ 1.19 | $ 3.44 | $ 3.47 |
Diluted earnings per common share (in dollars per share) | $ 0.09 | $ 1.16 | $ 3.37 | $ 3.39 |
Anti-dilutive restricted stock and restricted stock units excluded from the calculation of diluted earnings per common share (in shares) | 10 | 4 | 27 | 27 |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018USD ($)segment | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | |
Segment Reporting [Abstract] | ||||
Number of operating segments | segment | 2 | |||
Segment Reporting Information [Line Items] | ||||
Total revenues | $ 16,182 | $ 11,898 | $ 43,557 | $ 35,576 |
Earnings from operations | 41 | 340 | 1,070 | 1,018 |
Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | (2,376) | (2,378) | (6,995) | (7,145) |
Managed Care | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 15,446 | 11,259 | 41,229 | 33,737 |
Earnings from operations | 92 | 238 | 983 | 799 |
Managed Care | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 15,420 | 11,248 | 41,153 | 33,704 |
Managed Care | Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 26 | 11 | 76 | 33 |
Specialty Services | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 3,112 | 3,017 | 9,323 | 8,984 |
Earnings from operations | (51) | 102 | 87 | 219 |
Specialty Services | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 762 | 650 | 2,404 | 1,872 |
Specialty Services | Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | $ 2,350 | $ 2,367 | $ 6,919 | $ 7,112 |