Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 11, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 001-31826 | |
Entity Registrant Name | CENTENE CORPORATION | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 42-1406317 | |
Entity Address, Address Line One | 7700 Forsyth Boulevard | |
Entity Address, City or Town | St. Louis, | |
Entity Address, State or Province | MO | |
Entity Address, Postal Zip Code | 63105 | |
City Area Code | 314 | |
Local Phone Number | 725-4477 | |
Title of 12(b) Security | Common Stock $0.001 Par Value | |
Trading Symbol | CNC | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 413,796,072 | |
Entity Central Index Key | 0001071739 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 6,215 | $ 5,342 |
Premium and trade receivables | 5,606 | 5,150 |
Short-term investments | 804 | 722 |
Other current assets | 832 | 784 |
Total current assets | 13,457 | 11,998 |
Long-term investments | 7,915 | 6,861 |
Restricted deposits | 655 | 555 |
Property, software and equipment, net | 1,993 | 1,706 |
Goodwill | 6,872 | 7,015 |
Intangible assets, net | 2,086 | 2,239 |
Other long-term assets | 1,274 | 527 |
Total assets | 34,252 | 30,901 |
Current liabilities: | ||
Medical claims liability | 7,975 | 6,831 |
Accounts payable and accrued expenses | 4,010 | 4,051 |
Return of premium payable | 848 | 666 |
Unearned revenue | 381 | 385 |
Current portion of long-term debt | 66 | 38 |
Total current liabilities | 13,280 | 11,971 |
Long-term debt | 6,975 | 6,648 |
Other long-term liabilities | 1,561 | 1,259 |
Total liabilities | 21,816 | 19,878 |
Commitments and contingencies | ||
Redeemable noncontrolling interests | 31 | 10 |
Stockholders’ equity: | ||
Preferred stock, $0.001 par value; authorized 10,000 shares; no shares issued or outstanding at September 30, 2019 and December 31, 2018 | 0 | 0 |
Common stock, $0.001 par value; authorized 800,000 shares; 419,667 issued and 413,793 outstanding at September 30, 2019, and 417,695 issued and 412,478 outstanding at December 31, 2018 | 0 | 0 |
Additional paid-in capital | 7,571 | 7,449 |
Accumulated other comprehensive earnings (loss) | 145 | (56) |
Retained earnings | 4,775 | 3,663 |
Treasury stock, at cost (5,874 and 5,217 shares, respectively) | (180) | (139) |
Total Centene stockholders’ equity | 12,311 | 10,917 |
Nonredeemable Noncontrolling interest | 94 | 96 |
Total stockholders’ equity | 12,405 | 11,013 |
Total liabilities, redeemable noncontrolling interests and stockholders’ equity | $ 34,252 | $ 30,901 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Stockholders' equity | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 800,000,000 | 800,000,000 |
Common stock, shares issued (in shares) | 419,667,000 | 417,695,000 |
Common stock, shares outstanding (in shares) | 413,793,000 | 412,478,000 |
Treasury stock (in shares) | 5,874,000 | 5,217,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Revenues: | ||||
Premium and service revenues | $ 18,215 | $ 15,355 | $ 52,352 | $ 40,786 |
Premium tax and health insurer fee | 761 | 827 | 3,424 | 2,771 |
Total revenues | 18,976 | 16,182 | 55,776 | 43,557 |
Expenses: | ||||
Medical costs | 15,406 | 12,626 | 43,642 | 33,045 |
Cost of services | 619 | 622 | 1,778 | 1,823 |
Selling, general and administrative expenses | 1,617 | 1,934 | 4,800 | 4,487 |
Amortization of acquired intangible assets | 65 | 65 | 194 | 149 |
Premium tax expense | 822 | 716 | 3,587 | 2,451 |
Health insurer fee expense | 0 | 178 | 0 | 532 |
Goodwill and intangible impairment | 271 | 0 | 271 | 0 |
Total operating expenses | 18,800 | 16,141 | 54,272 | 42,487 |
Earnings from operations | 176 | 41 | 1,504 | 1,070 |
Other income (expense): | ||||
Investment and other income | 98 | 80 | 317 | 186 |
Interest expense | (99) | (97) | (299) | (245) |
Earnings from operations, before income tax expense | 175 | 24 | 1,522 | 1,011 |
Income tax expense | 79 | 8 | 415 | 358 |
Net earnings | 96 | 16 | 1,107 | 653 |
(Earnings) loss attributable to noncontrolling interests | (1) | 3 | 5 | 6 |
Net earnings attributable to Centene Corporation | $ 95 | $ 19 | $ 1,112 | $ 659 |
Net earnings per common share attributable to Centene Corporation: | ||||
Basic earnings per common share (in dollars per share) | $ 0.23 | $ 0.05 | $ 2.69 | $ 1.72 |
Diluted earnings per common share (in dollars per share) | $ 0.23 | $ 0.05 | $ 2.65 | $ 1.68 |
Weighted average number of common shares outstanding: | ||||
Basic (in shares) | 413,616 | 410,591 | 413,302 | 383,257 |
Diluted (in shares) | 419,956 | 419,043 | 419,700 | 391,266 |
Premium | ||||
Revenues: | ||||
Premium and service revenues | $ 17,472 | $ 14,623 | $ 50,229 | $ 38,639 |
Service | ||||
Revenues: | ||||
Premium and service revenues | $ 743 | $ 732 | $ 2,123 | $ 2,147 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Statement of Comprehensive Income [Abstract] | ||||
Net earnings | $ 96 | $ 16 | $ 1,107 | $ 653 |
Reclassification adjustment, net of tax | (1) | 1 | 0 | 1 |
Change in unrealized gain (loss) on investments, net of tax | 34 | (12) | 208 | (75) |
Foreign currency translation adjustments | (7) | (1) | (7) | (2) |
Other comprehensive earnings (loss) | 26 | (12) | 201 | (76) |
Comprehensive earnings | 122 | 4 | 1,308 | 577 |
Comprehensive (earnings) loss attributable to noncontrolling interests | (1) | 3 | 5 | 6 |
Comprehensive earnings attributable to Centene Corporation | $ 121 | $ 7 | $ 1,313 | $ 583 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Millions | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Earnings (Loss) | Retained Earnings | Treasury Stock | Non-redeemable Non- controlling Interest |
Balance (in shares) at Dec. 31, 2017 | 360,758 | ||||||
Balance at Dec. 31, 2017 | $ 6,864 | $ 0 | $ 4,349 | $ (3) | $ 2,748 | $ (244) | $ 14 |
Treasury stock (in shares) at Dec. 31, 2017 | 13,884 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net earnings (loss) | 341 | 340 | 1 | ||||
Other comprehensive earnings (loss), net of tax | (51) | (51) | |||||
Common stock issued for acquisitions | 324 | 210 | $ 114 | ||||
Common stock issued for acquisitions (in shares) | (6,351) | ||||||
Common stock issued for employee benefit plans (in shares) | 529 | ||||||
Common stock issued for employee benefit plans | 4 | 4 | |||||
Common stock repurchases (in shares) | 165 | ||||||
Common stock repurchases | (9) | $ (9) | |||||
Stock compensation expense | 33 | 33 | |||||
Purchase of noncontrolling interests | (4) | (4) | |||||
Acquisition resulting in noncontrolling interests | 62 | 62 | |||||
Balance (in shares) at Mar. 31, 2018 | 361,287 | ||||||
Balance at Mar. 31, 2018 | 7,580 | $ 0 | 4,592 | (54) | 3,104 | $ (139) | 77 |
Treasury stock (in shares) at Mar. 31, 2018 | 7,698 | ||||||
Balance (in shares) at Dec. 31, 2017 | 360,758 | ||||||
Balance at Dec. 31, 2017 | 6,864 | $ 0 | 4,349 | (3) | 2,748 | $ (244) | 14 |
Treasury stock (in shares) at Dec. 31, 2017 | 13,884 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Other comprehensive earnings (loss), net of tax | (76) | ||||||
Balance (in shares) at Sep. 30, 2018 | 415,100 | ||||||
Balance at Sep. 30, 2018 | 10,750 | $ 0 | 7,395 | (79) | 3,422 | $ (85) | 97 |
Treasury stock (in shares) at Sep. 30, 2018 | 4,392 | ||||||
Balance (in shares) at Mar. 31, 2018 | 361,287 | ||||||
Balance at Mar. 31, 2018 | 7,580 | $ 0 | 4,592 | (54) | 3,104 | $ (139) | 77 |
Treasury stock (in shares) at Mar. 31, 2018 | 7,698 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net earnings (loss) | 300 | 300 | |||||
Other comprehensive earnings (loss), net of tax | (13) | (13) | |||||
Common stock issued for acquisitions | 183 | 121 | $ 62 | ||||
Common stock issued for acquisitions (in shares) | (3,437) | ||||||
Common stock issued for stock offering (in shares) | 53,209 | ||||||
Common stock issued for stock offering | 2,779 | 2,779 | |||||
Common stock issued for employee benefit plans (in shares) | 330 | ||||||
Common stock issued for employee benefit plans | 4 | 4 | |||||
Common stock repurchases (in shares) | 71 | ||||||
Common stock repurchases | (4) | $ (4) | |||||
Stock compensation expense | 35 | 35 | |||||
Purchase of noncontrolling interests | (177) | (177) | |||||
Acquisition resulting in noncontrolling interests | 10 | 10 | |||||
Balance (in shares) at Jun. 30, 2018 | 414,826 | ||||||
Balance at Jun. 30, 2018 | 10,696 | $ 0 | 7,354 | (67) | 3,403 | $ (81) | 87 |
Treasury stock (in shares) at Jun. 30, 2018 | 4,332 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net earnings (loss) | 15 | 19 | (4) | ||||
Other comprehensive earnings (loss), net of tax | (12) | (12) | |||||
Common stock issued for employee benefit plans (in shares) | 274 | ||||||
Common stock issued for employee benefit plans | 4 | 4 | |||||
Common stock repurchases (in shares) | 60 | ||||||
Common stock repurchases | (4) | $ (4) | |||||
Stock compensation expense | 37 | 37 | |||||
Contribution from noncontrolling interest | 3 | 3 | |||||
Purchase of noncontrolling interests | (15) | (15) | |||||
Acquisition resulting in noncontrolling interests | 26 | 26 | |||||
Balance (in shares) at Sep. 30, 2018 | 415,100 | ||||||
Balance at Sep. 30, 2018 | $ 10,750 | $ 0 | 7,395 | (79) | 3,422 | $ (85) | 97 |
Treasury stock (in shares) at Sep. 30, 2018 | 4,392 | ||||||
Balance (in shares) at Dec. 31, 2018 | 412,478 | 417,695 | |||||
Balance at Dec. 31, 2018 | $ 11,013 | $ 0 | 7,449 | (56) | 3,663 | $ (139) | 96 |
Treasury stock (in shares) at Dec. 31, 2018 | 5,217 | 5,217 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net earnings (loss) | $ 520 | 522 | (2) | ||||
Other comprehensive earnings (loss), net of tax | 94 | 94 | |||||
Common stock issued for employee benefit plans (in shares) | 1,363 | ||||||
Common stock issued for employee benefit plans | 4 | 4 | |||||
Common stock repurchases (in shares) | 536 | ||||||
Common stock repurchases | (35) | $ (35) | |||||
Stock compensation expense | 38 | 38 | |||||
Balance (in shares) at Mar. 31, 2019 | 419,058 | ||||||
Balance at Mar. 31, 2019 | $ 11,634 | $ 0 | 7,491 | 38 | 4,185 | $ (174) | 94 |
Treasury stock (in shares) at Mar. 31, 2019 | 5,753 | ||||||
Balance (in shares) at Dec. 31, 2018 | 412,478 | 417,695 | |||||
Balance at Dec. 31, 2018 | $ 11,013 | $ 0 | 7,449 | (56) | 3,663 | $ (139) | 96 |
Treasury stock (in shares) at Dec. 31, 2018 | 5,217 | 5,217 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Other comprehensive earnings (loss), net of tax | $ 201 | ||||||
Balance (in shares) at Sep. 30, 2019 | 413,793 | 419,667 | |||||
Balance at Sep. 30, 2019 | $ 12,405 | $ 0 | 7,571 | 145 | 4,775 | $ (180) | 94 |
Treasury stock (in shares) at Sep. 30, 2019 | 5,874 | 5,874 | |||||
Balance (in shares) at Mar. 31, 2019 | 419,058 | ||||||
Balance at Mar. 31, 2019 | $ 11,634 | $ 0 | 7,491 | 38 | 4,185 | $ (174) | 94 |
Treasury stock (in shares) at Mar. 31, 2019 | 5,753 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net earnings (loss) | 495 | 495 | 0 | ||||
Other comprehensive earnings (loss), net of tax | 81 | 81 | |||||
Common stock issued for employee benefit plans (in shares) | 261 | ||||||
Common stock issued for employee benefit plans | 6 | 6 | |||||
Common stock repurchases (in shares) | 39 | ||||||
Common stock repurchases | (2) | $ (2) | |||||
Stock compensation expense | 34 | 34 | |||||
Balance (in shares) at Jun. 30, 2019 | 419,319 | ||||||
Balance at Jun. 30, 2019 | 12,248 | $ 0 | 7,531 | 119 | 4,680 | $ (176) | 94 |
Treasury stock (in shares) at Jun. 30, 2019 | 5,792 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net earnings (loss) | 95 | 95 | 0 | ||||
Other comprehensive earnings (loss), net of tax | 26 | 26 | |||||
Common stock issued for employee benefit plans (in shares) | 348 | ||||||
Common stock issued for employee benefit plans | 6 | 6 | |||||
Common stock repurchases (in shares) | 82 | ||||||
Common stock repurchases | (4) | $ (4) | |||||
Stock compensation expense | $ 34 | 34 | |||||
Balance (in shares) at Sep. 30, 2019 | 413,793 | 419,667 | |||||
Balance at Sep. 30, 2019 | $ 12,405 | $ 0 | $ 7,571 | $ 145 | $ 4,775 | $ (180) | $ 94 |
Treasury stock (in shares) at Sep. 30, 2019 | 5,874 | 5,874 |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | |||||||
Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | |
Par value (in dollars per share) | $ 0.001 | $ 0.001 | ||||||
Other comprehensive earning (loss), tax (benefit) | $ 11 | $ 25 | $ 30 | $ (4) | $ (3) | $ (16) | ||
Common Stock | ||||||||
Par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | 0.001 | $ 0.001 |
Treasury Stock | ||||||||
Par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 | $ 0.001 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities: | ||
Net earnings | $ 1,107 | $ 653 |
Adjustments to reconcile net earnings to net cash provided by operating activities | ||
Depreciation and amortization | 475 | 354 |
Stock compensation expense | 106 | 105 |
Goodwill and intangible impairment | 271 | 0 |
Deferred income taxes | (75) | (103) |
Changes in assets and liabilities | ||
Premium and trade receivables | (319) | (696) |
Other assets | (14) | 65 |
Medical claims liabilities | 1,091 | 1,380 |
Unearned revenue | (10) | (150) |
Accounts payable and accrued expenses | (552) | 35 |
Other long-term liabilities | 68 | 199 |
Other operating activities, net | (14) | 26 |
Net cash provided by operating activities | 2,134 | 1,868 |
Cash flows from investing activities: | ||
Capital expenditures | (530) | (489) |
Purchases of investments | (2,074) | (2,691) |
Sales and maturities of investments | 1,247 | 1,575 |
Acquisitions, net of cash acquired | (31) | (1,958) |
Net cash used in investing activities | (1,388) | (3,563) |
Cash flows from financing activities: | ||
Proceeds from the issuance of common stock | 0 | 2,779 |
Proceeds from long-term debt | 12,456 | 5,480 |
Payments of long-term debt | (12,293) | (3,692) |
Common stock repurchases | (41) | (17) |
Purchase of noncontrolling interest | 0 | (63) |
Debt issuance costs | (6) | (25) |
Other financing activities, net | 12 | (2) |
Net cash provided by financing activities | 128 | 4,460 |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 4 | 0 |
Net increase in cash, cash equivalents and restricted cash and cash equivalents | 878 | 2,765 |
Cash, cash equivalents, and restricted cash and cash equivalents, beginning of period | 5,350 | 4,089 |
Cash, cash equivalents, and restricted cash and cash equivalents, end of period | 6,228 | 6,854 |
Supplemental disclosures of cash flow information: | ||
Interest paid | 213 | 213 |
Income taxes paid | 511 | 340 |
Equity issued in connection with acquisitions | 0 | 507 |
The following table provides a reconciliation of cash, cash equivalents, and restricted cash and cash equivalents reported within the Consolidated Balance Sheets to the totals above: | ||
Cash and cash equivalents | 6,215 | 6,847 |
Restricted cash and cash equivalents, included in restricted deposits | 13 | 7 |
Total cash, cash equivalents, and restricted cash and cash equivalents | $ 5,350 | $ 4,089 |
Organization and Operations
Organization and Operations | 9 Months Ended |
Sep. 30, 2019 | |
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, 2018 . The unaudited interim financial statements herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, footnote disclosures that would substantially duplicate the disclosures contained in the December 31, 2018 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 2018 amounts in the consolidated financial statements and notes to the consolidated financial statements have been reclassified to conform to the 2019 presentation. These reclassifications have no effect on net earnings or stockholders' equity as previously reported. On December 12, 2018, our Board of Directors declared a two -for-one split of our common stock in the form of a 100% stock dividend distributed on February 6, 2019 to stockholders of record as of December 24, 2018. All historical share and per share information presented in this Form 10-Q has been adjusted for the two-for-one stock split. Recently Adopted Accounting Guidance In February 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that 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. The Company adopted the new guidance in the first quarter of 2019 using the modified retrospective transition approach. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allows an entity to not reassess lease classification for existing leases. The impact of the new guidance is further discussed in Note 8 . Leases . In January 2017, the FASB issued an ASU simplifying the test for goodwill impairment. The amendments in this ASU eliminate Step 2 from the goodwill impairment test. Thus, an entity will no longer be required to compare the implied fair value of a reporting unit’s goodwill to its carrying amount. Instead, under the new guidance, an entity should perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the fair value. The impairment charge should be limited to the total amount of goodwill allocated to that reporting unit. Under the new guidance, an entity still has the option to first perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The new standard is effective for an entity’s annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company adopted the new guidance in the third quarter of 2019. The Company has an immaterial amount of goodwill at reporting units with negative carrying value. In March 2017, the FASB issued an ASU that changes the period over which premiums on callable debt securities are amortized. The new standard requires the premiums on callable debt securities to be amortized to the earliest call date rather than to the contractual maturity date of the instrument. The new guidance more closely aligns the amortization period of premiums to expectations incorporated in the market pricing on the underlying securities. The Company adopted the new guidance in the first quarter of 2019. The new guidance did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. In August 2017, the FASB issued an ASU that amends the hedge accounting model to enable entities to better align the economics of risk management activities and financial reporting. In addition, the new standard enhances the understandability of hedge results and simplifies the application of hedge accounting in certain situations. The Company adopted the new guidance in the first quarter of 2019. The new guidance did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows. Accounting Guidance Not Yet Adopted In June 2016, the FASB issued an ASU which changes how entities will measure credit losses for most financial assets and certain other investments that are not measured at fair value through net income. The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The amended guidance requires the measurement of all expected credit losses for financial assets (or groups of financial assets) and available for sale debt securities held at the reporting date over the remaining life based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance is effective for annual and interim periods beginning after December 15, 2019. The Company is evaluating its portfolio of financial instruments for compliance with the amended guidance. The new guidance is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Acquisitions | Acquisitions WellCare Transaction On March 26, 2019, the Company entered into an Agreement and Plan of Merger (the Merger Agreement) with Wellington Merger Sub I, Inc., a direct, wholly owned subsidiary of the Company (Merger Sub I), Wellington Merger Sub II, Inc., a direct, wholly owned subsidiary of the Company (Merger Sub II), and WellCare, providing for (i) the merger of Merger Sub I with and into WellCare (the First Merger), with WellCare continuing as the surviving corporation of the First Merger and a direct, wholly owned subsidiary of the Company (the Surviving Corporation), and (ii) immediately after the effective time of the First Merger (the First Effective Time), the merger of the Surviving Corporation with and into Merger Sub II (the Second Merger), with Merger Sub II continuing as the surviving corporation of the Second Merger and a direct, wholly owned subsidiary of the Company. At the First Effective Time, each share of common stock of WellCare issued and outstanding immediately prior to the First Effective Time will be automatically canceled and converted into the right to receive 3.38 of validly issued, fully paid and nonassessable shares of Centene common stock and $120.00 in cash, without interest. The WellCare transaction is valued at approximately $17.3 billion , including existing WellCare debt (based on the Centene closing stock price of $57.05 on March 25, 2019). In June 2019, the Company and WellCare announced the transaction was approved by both the Centene and WellCare shareholders. The WellCare Transaction has recently received approvals from insurance and healthcare departments in Arizona, Connecticut, Georgia, New York, Ohio and Texas, bringing the total number of approvals to 25 states. Completion of the WellCare transaction remains subject to clearance under the Hart-Scott-Rodino Act, receipt of required state regulatory approvals and other customary closing conditions. The transaction is expected to close by the first half of 2020. In September 2019, the Company and WellCare announced a subsidiary of WellCare had entered into a definitive agreement under which Anthem, Inc. (Anthem) will acquire WellCare's Missouri and Nebraska Medicaid plans. The closing of the transaction with Anthem is subject to U.S. federal antitrust clearance, receipt of Missouri and Nebraska state regulatory approvals and other customary closing conditions, as well as the closing of the WellCare Transaction. Fidelis Care Acquisition On July 1, 2018 , the Company acquired substantially all of the assets of Fidelis Care for approximately $3.6 billion of cash consideration, including a working capital adjustment. The Fidelis Care acquisition expanded the Company's scale and presence to New York State. The acquisition of Fidelis Care was accounted for as a business combination using the acquisition method of accounting that requires assets acquired and liabilities assumed to be recognized at fair value as of the acquisition date. The valuation of all assets acquired and liabilities assumed was finalized in the second quarter of 2019. The Company's allocation of the fair value of assets acquired and liabilities assumed as of the acquisition date of July 1, 2018 is as follows ($ in millions): Assets acquired and liabilities assumed Cash and cash equivalents $ 2,001 Premium and related receivables 442 Other current assets 32 Restricted deposits 495 Property, software and equipment, net 48 Intangible assets (a) 956 Other long-term assets 2 Total assets acquired 3,976 Medical claims liability 1,218 Accounts payable and accrued expenses 238 Return of premium payable 123 Unearned revenue 115 Other long-term liabilities 324 Total liabilities assumed 2,018 Total identifiable net assets 1,958 Goodwill (b) 1,663 Total assets acquired and liabilities assumed $ 3,621 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. The Company has estimated the fair value of intangible assets to be $956 million with a weighted average life of 13 years. The identifiable intangible assets include customer relationships, trade names, provider contracts and developed technologies. The fair values and weighted average useful lives for identifiable intangible assets acquired are as follows: Fair Value Weighted Average Useful Life (in years) Customer relationships $ 711 11 Trade name 196 20 Provider contracts 33 15 Developed technologies 16 2 Total intangible assets acquired $ 956 13 (b) The acquisition resulted in $1.7 billion of goodwill related primarily to synergies expected from the acquisition and the assembled workforce of Fidelis Care. All of the goodwill has been assigned to the Managed Care segment. The goodwill is deductible for income tax purposes. |
Short-term and Long-term Invest
Short-term and Long-term Investments, Restricted Deposits | 9 Months Ended |
Sep. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Short-term and Long-term Investments, Restricted Deposits | Short-term and Long-term Investments, Restricted Deposits Short-term and long-term investments and restricted deposits by investment type consist of the following ($ in millions): September 30, 2019 December 31, 2018 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 $ 221 $ 1 $ — $ 222 $ 362 $ 1 $ (2 ) $ 361 Corporate securities 3,705 110 (5 ) 3,810 3,190 8 (52 ) 3,146 Restricted certificates of deposit 479 — — 479 433 — — 433 Restricted cash equivalents 13 — — 13 8 — — 8 Municipal securities 2,342 73 (1 ) 2,414 2,196 9 (18 ) 2,187 Asset-backed securities 724 6 — 730 686 1 (4 ) 683 Residential mortgage-backed securities 486 9 (2 ) 493 452 1 (9 ) 444 Commercial mortgage-backed securities 416 13 — 429 366 1 (6 ) 361 Private equity investments 643 — — 643 387 — — 387 Life insurance contracts 141 — — 141 128 — — 128 Total $ 9,170 $ 212 $ (8 ) $ 9,374 $ 8,208 $ 21 $ (91 ) $ 8,138 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, 2019 , 97% of the Company’s investments in rated securities carry an investment grade rating by nationally recognized statistical rating organizations. At September 30, 2019 , the Company held certificates of deposit, life insurance contracts and private equity investments that 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 4 years at September 30, 2019 . 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, 2019 December 31, 2018 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 $ — $ 39 $ — $ 56 $ — $ 59 $ (2 ) $ 202 Corporate securities (3 ) 249 (2 ) 110 (27 ) 1,389 (25 ) 871 Municipal securities (1 ) 120 — 18 (4 ) 591 (14 ) 806 Asset-backed securities — 123 — 125 (2 ) 318 (2 ) 168 Residential mortgage-backed securities — 42 (2 ) 103 (1 ) 61 (8 ) 233 Commercial mortgage-backed securities — 56 — 43 (2 ) 137 (4 ) 140 Total $ (4 ) $ 629 $ (4 ) $ 455 $ (36 ) $ 2,555 $ (55 ) $ 2,420 As of September 30, 2019 , the gross unrealized losses were generated from 765 positions out of a total of 4,503 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, 2019 December 31, 2018 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 $ 710 $ 711 $ 545 $ 545 $ 647 $ 646 $ 205 $ 205 One year through five years 3,137 3,205 109 110 3,026 2,998 351 350 Five years through ten years 2,962 3,068 — — 2,387 2,362 — — Greater than ten years 81 83 — — 88 89 — — Asset-backed securities 1,626 1,652 — — 1,504 1,488 — — Total $ 8,516 $ 8,719 $ 654 $ 655 $ 7,652 $ 7,583 $ 556 $ 555 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. Residential mortgage-backed securities and commercial mortgage-backed securities are included in the asset-backed securities 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 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, 2019 | |
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, 2019 , 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 $ 6,215 $ — $ — $ 6,215 Investments available for sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 85 $ — $ — $ 85 Corporate securities — 3,792 — 3,792 Municipal securities — 2,406 — 2,406 Asset-backed securities — 730 — 730 Residential mortgage-backed securities — 493 — 493 Commercial mortgage-backed securities — 429 — 429 Total investments $ 85 $ 7,850 $ — $ 7,935 Restricted deposits available for sale: Cash and cash equivalents $ 13 $ — $ — $ 13 Certificates of deposit — 479 — 479 Corporate securities — 18 — $ 18 Municipal securities — 8 — 8 U.S. Treasury securities and obligations of U.S. government corporations and agencies 137 — — 137 Total restricted deposits $ 150 $ 505 $ — $ 655 Other long-term assets: Interest rate swap agreements $ — $ 13 $ — $ 13 Total assets at fair value $ 6,450 $ 8,368 $ — $ 14,818 Liabilities Other long-term liabilities: Interest rate swap agreements $ — $ 11 $ — $ 11 Total liabilities at fair value $ — $ 11 $ — $ 11 The following table summarizes fair value measurements by level at December 31, 2018 , for assets and liabilities measured at fair value on a recurring basis ($ in millions): Level I Level II Level III Total Assets Cash and cash equivalents $ 5,342 $ — $ — $ 5,342 Investments available for sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 247 $ — $ — $ 247 Corporate securities — 3,146 — 3,146 Municipal securities — 2,187 — 2,187 Asset-backed securities — 683 — 683 Residential mortgage-backed securities — 444 — 444 Commercial mortgage-backed securities — 361 — 361 Total investments $ 247 $ 6,821 $ — $ 7,068 Restricted deposits available for sale: Cash and cash equivalents $ 8 $ — $ — $ 8 Certificates of deposit — 433 — 433 U.S. Treasury securities and obligations of U.S. government corporations and agencies 114 — — 114 Total restricted deposits $ 122 $ 433 $ — $ 555 Total assets at fair value $ 5,711 $ 7,254 $ — $ 12,965 Liabilities Other long-term liabilities: Interest rate swap agreements $ — $ 95 $ — $ 95 Total liabilities at fair value $ — $ 95 $ — $ 95 The Company utilizes matrix-pricing services to estimate fair value for securities that 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 $784 million and $515 million as of September 30, 2019 and December 31, 2018 , respectively. |
Medical Claims Liability
Medical Claims Liability | 9 Months Ended |
Sep. 30, 2019 | |
Insurance [Abstract] | |
Medical Claims Liability | Medical Claims Liability The following table summarizes the change in medical claims liability ($ in millions): Nine Months Ended September 30, 2019 2018 Balance, January 1 $ 6,831 $ 4,286 Less: Reinsurance recoverable 27 18 Balance, January 1, net 6,804 4,268 Acquisitions and purchase accounting adjustments 57 1,319 Incurred related to: Current year 44,283 33,465 Prior years (641 ) (420 ) Total incurred 43,642 33,045 Paid related to: Current year 36,972 28,194 Prior years 5,577 3,485 Total paid 42,549 31,679 Balance at September 30, net 7,954 6,953 Plus: Reinsurance recoverable 21 30 Balance, September 30 $ 7,975 $ 6,983 Reinsurance recoverables related to medical claims are included in premium and trade 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 $64 million and $23 million as a reduction from premium revenues in the nine months ended September 30, 2019 and 2018, respectively. Incurred but not reported (IBNR) plus expected development on reported claims as of September 30, 2019 was $5,769 million . Total IBNR plus expected development on reported claims represents estimates for claims incurred but not reported, development on reported claims, and estimates for the costs necessary to process unpaid claims at the end of each period. We estimate our liability using actuarial methods that are commonly used by health insurance actuaries and meet Actuarial Standards of Practice. These actuarial methods consider factors such as historical data for payment patterns, cost trends, product mix, seasonality, utilization of healthcare services and other relevant factors. |
Affordable Care Act
Affordable Care Act | 9 Months Ended |
Sep. 30, 2019 | |
Affordable Care Act [Abstract] | |
Affordable Care Act | Affordable Care Act The Affordable Care Act contains risk spreading premium stabilization programs as well as a minimum annual MLR and cost sharing reductions. The Company's net receivables (payables) for each of the ongoing programs are as follows ($ in millions): September 30, 2019 December 31, 2018 Risk adjustment $ (727 ) $ (928 ) Minimum MLR (301 ) (265 ) Cost sharing reductions 73 (50 ) On June 28, 2019, the Centers for Medicare and Medicaid Services (CMS) announced the final risk adjustment transfers for the 2018 benefit year. As a result of the announcement, the Company reduced its risk adjustment net payables by $238 million from December 31, 2018. After consideration of minimum MLR, Risk Adjustment Data Validation (RADV) audit results, and other related impacts, the net pre-tax benefit recognized was approximately $131 million |
Debt
Debt | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt Debt consists of the following ($ in millions): September 30, 2019 December 31, 2018 $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 1,004 1,005 $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 1,800 Fair value of interest rate swap agreements 2 (95 ) Total senior notes 6,406 6,310 Revolving credit agreement 415 284 Mortgage notes payable 55 57 Construction loan payable 119 63 Finance leases and other 112 47 Debt issuance costs (66 ) (75 ) Total debt 7,041 6,686 Less current portion (66 ) (38 ) Long-term debt $ 6,975 $ 6,648 Revolving Credit Agreement and Term Loan Credit Facility In May 2019, the Company amended and restated its existing credit agreement (Revolving Credit Facility) to, among other things, increase the revolving commitments thereunder from $1,500 million to $2,000 million . The agreement has a maturity date of May 7, 2024. At the Company’s option, borrowings under the credit agreement will bear interest at LIBOR, EURIBOR, CDOR, BBR or base rates plus, in each case, an applicable margin. In September 2019, the Company amended and restated its existing credit agreement to provide a new $1,450 million unsecured delayed-draw term loan facility (Term Loan Facility) in addition to the existing $2,000 million Revolving Credit Facility. At the Company's option, borrowings under the Term Loan Facility bears interest at LIBOR or base rates plus, in each case, an applicable margin. The Term Loan Facility will mature on September 11, 2022. In October 2019, t he Company borrowed $1,450 million under the Term Loan Facility. The proceeds of the Term Loan Facility were used to fund the redemption of senior notes discussed below and pay fees and expenses in connection therewith, with any remaining proceeds to be used for general corporate purposes. Senior Note Redemption In October 2019, the Company redeemed the outstanding principal balance on the $1,400 million 5.625% Senior Notes due February 15, 2021, plus applicable premium for early redemption and accrued and unpaid interest through the redemption date. The Company recognized a pre-tax loss on extinguishment of $30 million on the redemption of the $1,400 million 5.625% Senior Notes in the fourth quarter of 2019, including the call premium, the write-off of unamortized debt issuance costs and a loss on the termination of the $600 million |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | Leases In February 2016, the FASB issued ASU No. 2016-02, Leases, which introduced a lessee model that requires the majority of leases to be recognized on the balance sheet. On January 1, 2019, the Company adopted the ASU using the modified retrospective transition approach and elected the transition option to recognize the adjustment in the period of adoption rather than in the earliest period presented. Adoption of the new guidance resulted in the initial recognition of right-of-use (ROU) assets of $661 million , ROU lease liabilities of $774 million and the elimination of $113 million of straight-line lease liabilities. The Company records ROU assets and liabilities for non-cancelable operating leases primarily for real estate and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Expense related to leases is recorded on a straight-line basis over the lease term, including rent holidays. During the three and nine months ended September 30, 2019 , the Company recognized operating lease expense of $50 million and $150 million , respectively. The following table sets forth the ROU assets and liabilities as of September 30, 2019 ($ in millions): September 30, 2019 Assets ROU assets (recorded within other long-term assets) $ 656 Liabilities Short-term (recorded within accounts payable and accrued expenses) $ 157 Long-term (recorded within other long-term liabilities) 620 Total ROU liabilities $ 777 During the three and nine months ended September 30, 2019 , the Company reduced its ROU liabilities by $54 million and $171 million , respectively, for cash paid. In addition, during the three and nine months ended September 30, 2019 , new operating leases commenced resulting in the recognition of ROU assets and liabilities of $63 million and $114 million , respectively. As of September 30, 2019 , the Company had additional operating leases that have not yet commenced of $287 million , which included three significant leases executed during the third quarter. These operating leases will commence in 2019 and 2020 with lease terms of 1 year to 16 years. As of September 30, 2019 , the weighted average remaining lease term of the Company's operating leases was 6.7 years. The ROU liabilities as of September 30, 2019 reflect a weighted average discount rate of 4.5% . Lease payments over the next five years and thereafter are as follows ($ in millions): September 30, 2019 2019 $ 40 2020 199 2021 161 2022 121 2023 92 2024 71 Thereafter 211 Total lease payments 895 Less: imputed interest (118 ) Total ROU liabilities $ 777 The following discussion relates to the Company's lease accounting policy under ASC Topic 840 for the year ended December 31, 2018. Annual noncancellable minimum lease payments over the next five years and thereafter were as follows ($ in millions): December 31, 2018 2019 $ 174 2020 176 2021 145 2022 101 2023 71 Thereafter 200 Total lease payments $ 867 |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share The following table sets forth the calculation of basic and diluted net earnings per common share ($ in millions, except per share data in dollars and shares in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Earnings attributable to Centene Corporation $ 95 $ 19 $ 1,112 $ 659 Shares used in computing per share amounts: Weighted average number of common shares outstanding 413,616 410,591 413,302 383,257 Common stock equivalents (as determined by applying the treasury stock method) 6,340 8,452 6,398 8,009 Weighted average number of common shares and potential dilutive common shares outstanding 419,956 419,043 419,700 391,266 Net earnings per common share attributable to Centene Corporation: Basic earnings per common share $ 0.23 $ 0.05 $ 2.69 $ 1.72 Diluted earnings per common share $ 0.23 $ 0.05 $ 2.65 $ 1.68 The calculation of diluted earnings per common share for the three and nine months ended September 30, 2019 excludes the impact of 1.5 million and 1.4 million shares, respectively, related to anti-dilutive stock options, restricted stock and restricted stock units. The calculation of diluted earnings per common share for the three and nine months ended September 30, 2018 excludes the impact of 20 thousand and 53 thousand shares, respectively, related to anti-dilutive stock options, restricted stock and restricted stock units. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2019 | |
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, 2019 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Total revenues from external customers $ 18,087 $ 889 $ — $ 18,976 Total revenues from internal customers 44 2,675 (2,719 ) — Total revenues $ 18,131 $ 3,564 $ (2,719 ) $ 18,976 Earnings from operations $ 385 $ (209 ) $ — $ 176 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 nine months ended September 30, 2019 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Total revenues from external customers $ 53,283 $ 2,493 $ — $ 55,776 Total revenues from internal customers 116 7,681 (7,797 ) — Total revenues $ 53,399 $ 10,174 $ (7,797 ) $ 55,776 Earnings from operations $ 1,587 $ (83 ) $ — $ 1,504 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 |
Contingencies
Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
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 March 2018, the Court overruled the Company's demurrer seeking to dismiss the complaint and denied the Company's motion to strike allegations seeking retroactive relief. 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. In March 2019, the California Court of Appeals denied the writ of mandate. The defendants in those Related Actions sought review by the California Supreme Court, which declined to review the matter. The case is back before the trial court which has scheduled a hearing in February 2020 to consider a motion for summary judgment by Health Net California. In the meantime, discovery will proceed. No trial date has been set. 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 complaint in September 2017. In August 2019, the Court granted the Company's motion to dismiss in part and denied it in part, dismissing allegations regarding certain statements and thereby narrowing the time period to which the allegations will be subject. The case will now move into the discovery phase. 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. A third shareholder derivative action was filed on December 14, 2018, by plaintiffs Carpenters Pension Fund of Illinois and Iron Workers Local 11 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 third derivative action repeats many of the allegations in the securities class action and the other derivative suits and adds additional allegations asserting violations of securities laws, breach of fiduciary duty, insider trading and unjust enrichment. The three derivative suits have been consolidated. Lead plaintiffs and counsel have been appointed. On July 11, 2019, the Court entered an order staying the consolidated derivative action, pending resolution of the motion to dismiss that is under submission in the Sanchez matter. As a result of the August 2019 ruling in the Sanchez matter described above, the parties filed a joint status report and a motion to lift the stay in the consolidated derivative action. The court entered an order lifting the stay and set a briefing schedule on a motion to dismiss. Pursuant to that schedule, defendants are to file a motion to dismiss on October 31, 2019. 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 healthcare 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 met 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. On November 21, 2018, the Court granted in part and denied in part the Company's motion to dismiss. Plaintiff Cynthia Harvey filed a Third Amended Complaint, on November 28, 2018, against Centene Management Company and Coordinated Care Corporation ("Defendants"), both subsidiaries of the Company. Defendants filed an answer on December 12, 2018. Class certification discovery is occurring. 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. |
Goodwill and Intangible Impairm
Goodwill and Intangible Impairment | 9 Months Ended |
Sep. 30, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Impairment | Goodwill and Intangible Impairment During the third quarter of 2019, the Company recorded $271 million of non-cash goodwill ( $259 million ) and intangible asset ( $12 million ) impairment, substantially all associated with the Company's U.S. Medical Management (USMM) physician home health business in the Specialty Services segment. The impairment was identified as part of the Company's quarterly review procedures, which included an analysis of new information related to its shared savings demonstration programs, slower than expected penetration of the physician home health business model into its Medicaid population, and the related impact to revised forecasts. The Company conducted an impairment analysis of the identifiable intangible assets and goodwill of the reporting unit using the income approach, in which fair value is derived based on the present value of discounted expected cash flows. |
Organization and Operations (Po
Organization and Operations (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying interim financial statements have been prepared under the presumption that users of the interim financial information have either read or have access to the audited financial statements included in the Form 10-K for the fiscal year ended December 31, 2018 . The unaudited interim financial statements herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, footnote disclosures that would substantially duplicate the disclosures contained in the December 31, 2018 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 2018 amounts in the consolidated financial statements and notes to the consolidated financial statements have been reclassified to conform to the 2019 presentation. These reclassifications have no effect on net earnings or stockholders' equity as previously reported. On December 12, 2018, our Board of Directors declared a two -for-one split of our common stock in the form of a 100% stock dividend distributed on February 6, 2019 to stockholders of record as of December 24, 2018. All historical share and per share information presented in this Form 10-Q has been adjusted for the two-for-one stock split. |
Recently Adopted Accounting Guidance and Accounting Guidance Not Yet Adopted | Recently Adopted Accounting Guidance In February 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) that 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. The Company adopted the new guidance in the first quarter of 2019 using the modified retrospective transition approach. In addition, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allows an entity to not reassess lease classification for existing leases. The impact of the new guidance is further discussed in Note 8 . Leases . In January 2017, the FASB issued an ASU simplifying the test for goodwill impairment. The amendments in this ASU eliminate Step 2 from the goodwill impairment test. Thus, an entity will no longer be required to compare the implied fair value of a reporting unit’s goodwill to its carrying amount. Instead, under the new guidance, an entity should perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and should recognize an impairment charge for the amount by which the carrying amount exceeds the fair value. The impairment charge should be limited to the total amount of goodwill allocated to that reporting unit. Under the new guidance, an entity still has the option to first perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The new standard is effective for an entity’s annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period. The Company adopted the new guidance in the third quarter of 2019. The Company has an immaterial amount of goodwill at reporting units with negative carrying value. In March 2017, the FASB issued an ASU that changes the period over which premiums on callable debt securities are amortized. The new standard requires the premiums on callable debt securities to be amortized to the earliest call date rather than to the contractual maturity date of the instrument. The new guidance more closely aligns the amortization period of premiums to expectations incorporated in the market pricing on the underlying securities. The Company adopted the new guidance in the first quarter of 2019. The new guidance did not have a material impact on the Company's consolidated financial position, results of operations or cash flows. In August 2017, the FASB issued an ASU that amends the hedge accounting model to enable entities to better align the economics of risk management activities and financial reporting. In addition, the new standard enhances the understandability of hedge results and simplifies the application of hedge accounting in certain situations. The Company adopted the new guidance in the first quarter of 2019. The new guidance did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows. Accounting Guidance Not Yet Adopted In June 2016, the FASB issued an ASU which changes how entities will measure credit losses for most financial assets and certain other investments that are not measured at fair value through net income. The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. The amended guidance requires the measurement of all expected credit losses for financial assets (or groups of financial assets) and available for sale debt securities held at the reporting date over the remaining life based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance is effective for annual and interim periods beginning after December 15, 2019. The Company is evaluating its portfolio of financial instruments for compliance with the amended guidance. The new guidance is not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows. |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Business Combinations [Abstract] | |
Schedule of Allocation of the Fair Value of Assets Acquired and Liabilities Assumed | The Company's 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 442 Other current assets 32 Restricted deposits 495 Property, software and equipment, net 48 Intangible assets (a) 956 Other long-term assets 2 Total assets acquired 3,976 Medical claims liability 1,218 Accounts payable and accrued expenses 238 Return of premium payable 123 Unearned revenue 115 Other long-term liabilities 324 Total liabilities assumed 2,018 Total identifiable net assets 1,958 Goodwill (b) 1,663 Total assets acquired and liabilities assumed $ 3,621 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. The Company has estimated the fair value of intangible assets to be $956 million with a weighted average life of 13 years. The identifiable intangible assets include customer relationships, trade names, provider contracts and developed technologies. The fair values and weighted average useful lives for identifiable intangible assets acquired are as follows: Fair Value Weighted Average Useful Life (in years) Customer relationships $ 711 11 Trade name 196 20 Provider contracts 33 15 Developed technologies 16 2 Total intangible assets acquired $ 956 13 (b) The acquisition resulted in $1.7 billion of goodwill related primarily to synergies expected from the acquisition and the assembled workforce of Fidelis Care. All of the goodwill has been assigned to the Managed Care segment. The goodwill is deductible for income tax purposes. |
Short-term and Long-term Inve_2
Short-term and Long-term Investments, Restricted Deposits (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Investments, Debt and Equity Securities [Abstract] | |
Short-term and long-term investments and restricted deposits by investment type | Short-term and long-term investments and restricted deposits by investment type consist of the following ($ in millions): September 30, 2019 December 31, 2018 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 $ 221 $ 1 $ — $ 222 $ 362 $ 1 $ (2 ) $ 361 Corporate securities 3,705 110 (5 ) 3,810 3,190 8 (52 ) 3,146 Restricted certificates of deposit 479 — — 479 433 — — 433 Restricted cash equivalents 13 — — 13 8 — — 8 Municipal securities 2,342 73 (1 ) 2,414 2,196 9 (18 ) 2,187 Asset-backed securities 724 6 — 730 686 1 (4 ) 683 Residential mortgage-backed securities 486 9 (2 ) 493 452 1 (9 ) 444 Commercial mortgage-backed securities 416 13 — 429 366 1 (6 ) 361 Private equity investments 643 — — 643 387 — — 387 Life insurance contracts 141 — — 141 128 — — 128 Total $ 9,170 $ 212 $ (8 ) $ 9,374 $ 8,208 $ 21 $ (91 ) $ 8,138 |
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, 2019 December 31, 2018 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 $ — $ 39 $ — $ 56 $ — $ 59 $ (2 ) $ 202 Corporate securities (3 ) 249 (2 ) 110 (27 ) 1,389 (25 ) 871 Municipal securities (1 ) 120 — 18 (4 ) 591 (14 ) 806 Asset-backed securities — 123 — 125 (2 ) 318 (2 ) 168 Residential mortgage-backed securities — 42 (2 ) 103 (1 ) 61 (8 ) 233 Commercial mortgage-backed securities — 56 — 43 (2 ) 137 (4 ) 140 Total $ (4 ) $ 629 $ (4 ) $ 455 $ (36 ) $ 2,555 $ (55 ) $ 2,420 |
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, 2019 December 31, 2018 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 $ 710 $ 711 $ 545 $ 545 $ 647 $ 646 $ 205 $ 205 One year through five years 3,137 3,205 109 110 3,026 2,998 351 350 Five years through ten years 2,962 3,068 — — 2,387 2,362 — — Greater than ten years 81 83 — — 88 89 — — Asset-backed securities 1,626 1,652 — — 1,504 1,488 — — Total $ 8,516 $ 8,719 $ 654 $ 655 $ 7,652 $ 7,583 $ 556 $ 555 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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, 2019 , 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 $ 6,215 $ — $ — $ 6,215 Investments available for sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 85 $ — $ — $ 85 Corporate securities — 3,792 — 3,792 Municipal securities — 2,406 — 2,406 Asset-backed securities — 730 — 730 Residential mortgage-backed securities — 493 — 493 Commercial mortgage-backed securities — 429 — 429 Total investments $ 85 $ 7,850 $ — $ 7,935 Restricted deposits available for sale: Cash and cash equivalents $ 13 $ — $ — $ 13 Certificates of deposit — 479 — 479 Corporate securities — 18 — $ 18 Municipal securities — 8 — 8 U.S. Treasury securities and obligations of U.S. government corporations and agencies 137 — — 137 Total restricted deposits $ 150 $ 505 $ — $ 655 Other long-term assets: Interest rate swap agreements $ — $ 13 $ — $ 13 Total assets at fair value $ 6,450 $ 8,368 $ — $ 14,818 Liabilities Other long-term liabilities: Interest rate swap agreements $ — $ 11 $ — $ 11 Total liabilities at fair value $ — $ 11 $ — $ 11 The following table summarizes fair value measurements by level at December 31, 2018 , for assets and liabilities measured at fair value on a recurring basis ($ in millions): Level I Level II Level III Total Assets Cash and cash equivalents $ 5,342 $ — $ — $ 5,342 Investments available for sale: U.S. Treasury securities and obligations of U.S. government corporations and agencies $ 247 $ — $ — $ 247 Corporate securities — 3,146 — 3,146 Municipal securities — 2,187 — 2,187 Asset-backed securities — 683 — 683 Residential mortgage-backed securities — 444 — 444 Commercial mortgage-backed securities — 361 — 361 Total investments $ 247 $ 6,821 $ — $ 7,068 Restricted deposits available for sale: Cash and cash equivalents $ 8 $ — $ — $ 8 Certificates of deposit — 433 — 433 U.S. Treasury securities and obligations of U.S. government corporations and agencies 114 — — 114 Total restricted deposits $ 122 $ 433 $ — $ 555 Total assets at fair value $ 5,711 $ 7,254 $ — $ 12,965 Liabilities Other long-term liabilities: Interest rate swap agreements $ — $ 95 $ — $ 95 Total liabilities at fair value $ — $ 95 $ — $ 95 |
Medical Claims Liability (Table
Medical Claims Liability (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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, 2019 2018 Balance, January 1 $ 6,831 $ 4,286 Less: Reinsurance recoverable 27 18 Balance, January 1, net 6,804 4,268 Acquisitions and purchase accounting adjustments 57 1,319 Incurred related to: Current year 44,283 33,465 Prior years (641 ) (420 ) Total incurred 43,642 33,045 Paid related to: Current year 36,972 28,194 Prior years 5,577 3,485 Total paid 42,549 31,679 Balance at September 30, net 7,954 6,953 Plus: Reinsurance recoverable 21 30 Balance, September 30 $ 7,975 $ 6,983 |
Affordable Care Act (Tables)
Affordable Care Act (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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 the ongoing programs are as follows ($ in millions): September 30, 2019 December 31, 2018 Risk adjustment $ (727 ) $ (928 ) Minimum MLR (301 ) (265 ) Cost sharing reductions 73 (50 ) |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Debt consists of the following ($ in millions): September 30, 2019 December 31, 2018 $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 1,004 1,005 $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 1,800 Fair value of interest rate swap agreements 2 (95 ) Total senior notes 6,406 6,310 Revolving credit agreement 415 284 Mortgage notes payable 55 57 Construction loan payable 119 63 Finance leases and other 112 47 Debt issuance costs (66 ) (75 ) Total debt 7,041 6,686 Less current portion (66 ) (38 ) Long-term debt $ 6,975 $ 6,648 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases [Abstract] | |
ROU Assets and Liabilities | The following table sets forth the ROU assets and liabilities as of September 30, 2019 ($ in millions): September 30, 2019 Assets ROU assets (recorded within other long-term assets) $ 656 Liabilities Short-term (recorded within accounts payable and accrued expenses) $ 157 Long-term (recorded within other long-term liabilities) 620 Total ROU liabilities $ 777 |
Maturity of Operating Lease Liabilities | Lease payments over the next five years and thereafter are as follows ($ in millions): September 30, 2019 2019 $ 40 2020 199 2021 161 2022 121 2023 92 2024 71 Thereafter 211 Total lease payments 895 Less: imputed interest (118 ) Total ROU liabilities $ 777 |
Schedule of Annual Noncancellable Minimum Lease Payments | The following discussion relates to the Company's lease accounting policy under ASC Topic 840 for the year ended December 31, 2018. Annual noncancellable minimum lease payments over the next five years and thereafter were as follows ($ in millions): December 31, 2018 2019 $ 174 2020 176 2021 145 2022 101 2023 71 Thereafter 200 Total lease payments $ 867 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Earnings Per Share [Abstract] | |
Calculation of Basic and Diluted Net Earnings Per Common Share | The following table sets forth the calculation of basic and diluted net earnings per common share ($ in millions, except per share data in dollars and shares in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2019 2018 2019 2018 Earnings attributable to Centene Corporation $ 95 $ 19 $ 1,112 $ 659 Shares used in computing per share amounts: Weighted average number of common shares outstanding 413,616 410,591 413,302 383,257 Common stock equivalents (as determined by applying the treasury stock method) 6,340 8,452 6,398 8,009 Weighted average number of common shares and potential dilutive common shares outstanding 419,956 419,043 419,700 391,266 Net earnings per common share attributable to Centene Corporation: Basic earnings per common share $ 0.23 $ 0.05 $ 2.69 $ 1.72 Diluted earnings per common share $ 0.23 $ 0.05 $ 2.65 $ 1.68 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Segment Reporting [Abstract] | |
Segment Information | Segment information for the three months ended September 30, 2019 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Total revenues from external customers $ 18,087 $ 889 $ — $ 18,976 Total revenues from internal customers 44 2,675 (2,719 ) — Total revenues $ 18,131 $ 3,564 $ (2,719 ) $ 18,976 Earnings from operations $ 385 $ (209 ) $ — $ 176 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 nine months ended September 30, 2019 , follows ($ in millions): Managed Care Specialty Services Eliminations Consolidated Total Total revenues from external customers $ 53,283 $ 2,493 $ — $ 55,776 Total revenues from internal customers 116 7,681 (7,797 ) — Total revenues $ 53,399 $ 10,174 $ (7,797 ) $ 55,776 Earnings from operations $ 1,587 $ (83 ) $ — $ 1,504 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 |
Organization and Operations (De
Organization and Operations (Details) | Dec. 12, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Stock split, conversion ratio | 2 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) $ / shares in Units, $ in Billions | Mar. 26, 2019USD ($)$ / shares | Jul. 01, 2018USD ($) | Sep. 30, 2019states | Mar. 25, 2019$ / shares |
Business Acquisition [Line Items] | ||||
Centene stock price | $ / shares | $ 57.05 | |||
WellCare Health Plans, Inc. | ||||
Business Acquisition [Line Items] | ||||
Common stock cancelled and converted into right to Centene common stock | 3.38 | |||
Cash paid per acquiree share, without interest (in usd per share) | $ / shares | $ 120 | |||
Transaction value | $ | $ 17.3 | |||
Number of states, merger approved by insurance and healthcare departments | states | 25 | |||
Fidelis Care | ||||
Business Acquisition [Line Items] | ||||
Consideration transferred | $ | $ 3.6 |
Acquisitions - Schedule of Fair
Acquisitions - Schedule of Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Jul. 01, 2018 | Sep. 30, 2019 | Dec. 31, 2018 |
Assets acquired and liabilities assumed | |||
Goodwill | $ 6,872 | $ 7,015 | |
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 | 442 | ||
Other current assets | 32 | ||
Restricted deposits | 495 | ||
Property, software and equipment, net | 48 | ||
Intangible assets | 956 | ||
Other long-term assets | 2 | ||
Total assets acquired | 3,976 | ||
Medical claims liability | 1,218 | ||
Accounts payable and accrued expenses | 238 | ||
Return of premium payable | 123 | ||
Unearned revenue | 115 | ||
Other long-term liabilities | 324 | ||
Total liabilities assumed | 2,018 | ||
Total identifiable net assets | 1,958 | ||
Goodwill | 1,663 | ||
Total assets acquired and liabilities assumed | $ 3,621 | ||
Acquired intangibles, weighted average useful life years | 13 years | ||
Fidelis Care | Customer relationships | |||
Assets acquired and liabilities assumed | |||
Intangible assets | $ 711 | ||
Acquired intangibles, weighted average useful life years | 11 years | ||
Fidelis Care | Trade name | |||
Assets acquired and liabilities assumed | |||
Intangible assets | $ 196 | ||
Acquired intangibles, weighted average useful life years | 20 years | ||
Fidelis Care | Provider contracts | |||
Assets acquired and liabilities assumed | |||
Intangible assets | $ 33 | ||
Acquired intangibles, weighted average useful life years | 15 years | ||
Fidelis Care | Developed technologies | |||
Assets acquired and liabilities assumed | |||
Intangible assets | $ 16 | ||
Acquired intangibles, weighted average useful life years | 2 years |
Short-term and Long-term Inve_3
Short-term and Long-term Investments, Restricted Deposits - By Investment Type (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | $ 9,170 | $ 8,208 |
Gross Unrealized Gains | 212 | 21 |
Gross Unrealized Losses | (8) | (91) |
Fair Value | 9,374 | 8,138 |
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 | 221 | 362 |
Gross Unrealized Gains | 1 | 1 |
Gross Unrealized Losses | 0 | (2) |
Fair Value | 222 | 361 |
Corporate securities | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 3,705 | 3,190 |
Gross Unrealized Gains | 110 | 8 |
Gross Unrealized Losses | (5) | (52) |
Fair Value | 3,810 | 3,146 |
Restricted certificates of deposit | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 479 | 433 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 479 | 433 |
Restricted cash equivalents | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 13 | 8 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 13 | 8 |
Municipal securities | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 2,342 | 2,196 |
Gross Unrealized Gains | 73 | 9 |
Gross Unrealized Losses | (1) | (18) |
Fair Value | 2,414 | 2,187 |
Asset-backed securities | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 724 | 686 |
Gross Unrealized Gains | 6 | 1 |
Gross Unrealized Losses | 0 | (4) |
Fair Value | 730 | 683 |
Residential mortgage-backed securities | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 486 | 452 |
Gross Unrealized Gains | 9 | 1 |
Gross Unrealized Losses | (2) | (9) |
Fair Value | 493 | 444 |
Commercial mortgage-backed securities | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 416 | 366 |
Gross Unrealized Gains | 13 | 1 |
Gross Unrealized Losses | 0 | (6) |
Fair Value | 429 | 361 |
Private equity investments | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 643 | 387 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 643 | 387 |
Life insurance contracts | ||
Schedule Of Investments And Restricted Deposits By Type [Line Items] | ||
Amortized Cost | 141 | 128 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 141 | $ 128 |
Short-term and Long-term Inve_4
Short-term and Long-term Investments, Restricted Deposits - Narrative (Details) | 9 Months Ended |
Sep. 30, 2019position | |
Schedule Of Investments And Restricted Deposits By Type [Line Items] | |
Positions from which gross unrealized losses were generated | 765 |
Total unrealized investment positions | 4,503 |
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) | 4 years |
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 | 97.00% |
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, 2019 | Dec. 31, 2018 |
Unrealized Losses | ||
Less Than 12 Months | $ (4) | $ (36) |
12 Months or More | (4) | (55) |
Fair Value | ||
Fair Value, Less Than 12 Months | 629 | 2,555 |
Fair Value, 12 Months or More | 455 | 2,420 |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | ||
Unrealized Losses | ||
Less Than 12 Months | 0 | 0 |
12 Months or More | 0 | (2) |
Fair Value | ||
Fair Value, Less Than 12 Months | 39 | 59 |
Fair Value, 12 Months or More | 56 | 202 |
Corporate securities | ||
Unrealized Losses | ||
Less Than 12 Months | (3) | (27) |
12 Months or More | (2) | (25) |
Fair Value | ||
Fair Value, Less Than 12 Months | 249 | 1,389 |
Fair Value, 12 Months or More | 110 | 871 |
Municipal securities | ||
Unrealized Losses | ||
Less Than 12 Months | (1) | (4) |
12 Months or More | 0 | (14) |
Fair Value | ||
Fair Value, Less Than 12 Months | 120 | 591 |
Fair Value, 12 Months or More | 18 | 806 |
Asset-backed securities | ||
Unrealized Losses | ||
Less Than 12 Months | 0 | (2) |
12 Months or More | 0 | (2) |
Fair Value | ||
Fair Value, Less Than 12 Months | 123 | 318 |
Fair Value, 12 Months or More | 125 | 168 |
Residential mortgage-backed securities | ||
Unrealized Losses | ||
Less Than 12 Months | 0 | (1) |
12 Months or More | (2) | (8) |
Fair Value | ||
Fair Value, Less Than 12 Months | 42 | 61 |
Fair Value, 12 Months or More | 103 | 233 |
Commercial mortgage-backed securities | ||
Unrealized Losses | ||
Less Than 12 Months | 0 | (2) |
12 Months or More | 0 | (4) |
Fair Value | ||
Fair Value, Less Than 12 Months | 56 | 137 |
Fair Value, 12 Months or More | $ 43 | $ 140 |
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, 2019 | Dec. 31, 2018 |
Investments | ||
Investments, Amortized Cost | ||
One year or less | $ 710 | $ 647 |
One year through five years | 3,137 | 3,026 |
Five years through ten years | 2,962 | 2,387 |
Greater than ten years | 81 | 88 |
Asset-backed securities | 1,626 | 1,504 |
Total Investments, Amortized Cost | 8,516 | 7,652 |
Investments, Fair Value | ||
One year or less | 711 | 646 |
One year through five years | 3,205 | 2,998 |
Five years through ten years | 3,068 | 2,362 |
Greater than ten years | 83 | 89 |
Asset-backed securities | 1,652 | 1,488 |
Total Investments, Fair Value | 8,719 | 7,583 |
Restricted Deposits | ||
Restricted Deposits, Amortized Cost | ||
One year or less | 545 | 205 |
One year through five years | 109 | 351 |
Five years through ten years | 0 | 0 |
Greater than ten years | 0 | 0 |
Asset-backed securities | 0 | 0 |
Total Restricted Deposits, Amortized Cost | 654 | 556 |
Restricted Deposits, Fair Value | ||
One year or less | 545 | 205 |
One year through five years | 110 | 350 |
Five years through ten years | 0 | 0 |
Greater than ten years | 0 | 0 |
Asset-backed securities | 0 | 0 |
Total Restricted Deposits, Fair Value | $ 655 | $ 555 |
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, 2019 | Dec. 31, 2018 |
Assets | ||
Cash and cash equivalents | $ 6,215 | $ 5,342 |
Investments available for sale: | ||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 85 | 247 |
Corporate securities | 3,792 | 3,146 |
Municipal securities | 2,406 | 2,187 |
Asset-backed securities | 730 | 683 |
Total investments | 7,935 | 7,068 |
Restricted deposits available for sale: | ||
Cash and cash equivalents | 13 | 8 |
Certificates of deposit | 479 | 433 |
Corporate securities | 18 | |
Municipal securities | 8 | |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 137 | 114 |
Total restricted deposits | 655 | 555 |
Other Assets, Noncurrent [Abstract] | ||
Total assets at fair value | 14,818 | 12,965 |
Liabilities | ||
Interest rate swap agreements | 11 | |
Total liabilities at fair value | 11 | 95 |
Residential mortgage-backed securities | ||
Investments available for sale: | ||
Mortgage-backed securities | 493 | 444 |
Commercial mortgage-backed securities | ||
Investments available for sale: | ||
Mortgage-backed securities | 429 | 361 |
Interest rate swap agreements | ||
Other Assets, Noncurrent [Abstract] | ||
Interest rate swap agreements | 13 | |
Liabilities | ||
Interest rate swap agreements | 95 | |
Level I | ||
Assets | ||
Cash and cash equivalents | 6,215 | 5,342 |
Investments available for sale: | ||
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 85 | 247 |
Corporate securities | 0 | 0 |
Municipal securities | 0 | 0 |
Asset-backed securities | 0 | 0 |
Total investments | 85 | 247 |
Restricted deposits available for sale: | ||
Cash and cash equivalents | 13 | 8 |
Certificates of deposit | 0 | 0 |
Corporate securities | 0 | |
Municipal securities | 0 | |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 137 | 114 |
Total restricted deposits | 150 | 122 |
Other Assets, Noncurrent [Abstract] | ||
Total assets at fair value | 6,450 | 5,711 |
Liabilities | ||
Interest rate swap agreements | 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 I | Interest rate swap agreements | ||
Other Assets, Noncurrent [Abstract] | ||
Interest rate swap agreements | 0 | |
Liabilities | ||
Interest rate swap agreements | 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 | 3,792 | 3,146 |
Municipal securities | 2,406 | 2,187 |
Asset-backed securities | 730 | 683 |
Total investments | 7,850 | 6,821 |
Restricted deposits available for sale: | ||
Cash and cash equivalents | 0 | 0 |
Certificates of deposit | 479 | 433 |
Corporate securities | 18 | |
Municipal securities | 8 | |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 0 | 0 |
Total restricted deposits | 505 | 433 |
Other Assets, Noncurrent [Abstract] | ||
Total assets at fair value | 8,368 | 7,254 |
Liabilities | ||
Interest rate swap agreements | 11 | |
Total liabilities at fair value | 11 | 95 |
Level II | Residential mortgage-backed securities | ||
Investments available for sale: | ||
Mortgage-backed securities | 493 | 444 |
Level II | Commercial mortgage-backed securities | ||
Investments available for sale: | ||
Mortgage-backed securities | 429 | 361 |
Level II | Interest rate swap agreements | ||
Other Assets, Noncurrent [Abstract] | ||
Interest rate swap agreements | 13 | |
Liabilities | ||
Interest rate swap agreements | 95 | |
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 |
Corporate securities | 0 | |
Municipal securities | 0 | |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | 0 | 0 |
Total restricted deposits | 0 | 0 |
Other Assets, Noncurrent [Abstract] | ||
Total assets at fair value | 0 | 0 |
Liabilities | ||
Interest rate swap agreements | 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 |
Level III | Interest rate swap agreements | ||
Other Assets, Noncurrent [Abstract] | ||
Interest rate swap agreements | $ 0 | |
Liabilities | ||
Interest rate swap agreements | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Fair Value Disclosures [Abstract] | ||
Life insurance contracts and other private equity investments, which approximates fair value | $ 784 | $ 515 |
Medical Claims Liability - Sche
Medical Claims Liability - Schedule of Change in Medical Claims Liability (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Liability for Unpaid Claims and Claims Adjustment Expense [Roll Forward] | ||
Balance, January 1 | $ 6,831 | $ 4,286 |
Less: Reinsurance recoverable | 27 | 18 |
Balance, January 1, net | 6,804 | 4,268 |
Acquisitions and purchase accounting adjustments | 57 | 1,319 |
Incurred related to: | ||
Current year | 44,283 | 33,465 |
Prior years | (641) | (420) |
Total incurred | 43,642 | 33,045 |
Paid related to: | ||
Current year | 36,972 | 28,194 |
Prior years | 5,577 | 3,485 |
Total paid | 42,549 | 31,679 |
Balance at September 30, net | 7,954 | 6,953 |
Plus: Reinsurance recoverable | 21 | 30 |
Balance, September 30 | $ 7,975 | $ 6,983 |
Medical Claims Liability - Narr
Medical Claims Liability - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Insurance [Abstract] | ||
Amounts recorded as an adjustment to premium revenues related to minimum HBR and return of premium programs | $ 64 | $ 23 |
Short-duration insurance contracts, Incurred but not reported and expected development on reported claims | $ 5,769 |
Affordable Care Act - Net Recei
Affordable Care Act - Net Receivables (Payables) For Each Of The Ongoing Programs (Details) - USD ($) $ in Millions | Sep. 30, 2019 | Dec. 31, 2018 |
Affordable Care Act [Abstract] | ||
Risk adjustment | $ (727) | $ (928) |
Minimum MLR | (301) | (265) |
Cost sharing reductions | $ 73 | $ 50 |
Affordable Care Act - Narrative
Affordable Care Act - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Jun. 30, 2019 | Sep. 30, 2019 | |
Affordable Care Act [Abstract] | ||
Risk adjustment and reinsurance pre-tax benefit related to reconciliation | $ 131 | $ 238 |
Debt - Schedule of Debt (Detail
Debt - Schedule of Debt (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Debt Instrument [Line Items] | ||
Fair value of interest rate swap agreements | $ 2,000,000 | $ (95,000,000) |
Total senior notes | 6,406,000,000 | 6,310,000,000 |
Mortgage notes payable | 55,000,000 | 57,000,000 |
Construction loan payable | 119,000,000 | 63,000,000 |
Finance leases and other | 112,000,000 | 47,000,000 |
Debt issuance costs | (66,000,000) | (75,000,000) |
Total debt | 7,041,000,000 | 6,686,000,000 |
Less current portion | (66,000,000) | (38,000,000) |
Long-term debt | 6,975,000,000 | 6,648,000,000 |
Revolving credit agreement | ||
Debt Instrument [Line Items] | ||
Revolving credit agreement | 415,000,000 | 284,000,000 |
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 | $ 1,004,000,000 | 1,005,000,000 |
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 | |
Interest rate | 5.375% | |
Senior notes | $ 1,800,000,000 | $ 1,800,000,000 |
Debt - Revolving Credit Agreeme
Debt - Revolving Credit Agreement and Term Loan Credit Facility (Details) - USD ($) | 1 Months Ended | |||
Oct. 31, 2019 | Sep. 30, 2019 | May 31, 2019 | Dec. 31, 2018 | |
Revolving credit agreement | ||||
Line of Credit Facility [Line Items] | ||||
Unsecured revolving credit facility, maximum borrowing capacity | $ 2,000,000,000 | $ 1,500,000,000 | ||
Unsecured Debt | Term Loan Facility | ||||
Line of Credit Facility [Line Items] | ||||
Unsecured revolving credit facility, maximum borrowing capacity | $ 1,450,000,000 | |||
Unsecured Debt | Term Loan Facility | Subsequent Event | ||||
Line of Credit Facility [Line Items] | ||||
Borrowing under Term Loan | $ 1,450,000,000 |
Debt - Senior Note Redemption (
Debt - Senior Note Redemption (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Dec. 31, 2019 | Oct. 31, 2019 | Sep. 30, 2019 | |
$1,400 million 5.625% Senior notes, due February 15, 2021 | Senior Notes | |||
Debt Instrument [Line Items] | |||
Interest rate | 5.625% | ||
Subsequent Event | Interest rate swap agreement | |||
Debt Instrument [Line Items] | |||
Derivative agreement that was terminated | $ 600 | ||
Subsequent Event | $1,400 million 5.625% Senior notes, due February 15, 2021 | Senior Notes | |||
Debt Instrument [Line Items] | |||
Debt redemption amount | $ 1,400 | ||
Interest rate | 5.625% | ||
Loss on extinguishment of debt | $ 30 |
Leases - Additional (Details)
Leases - Additional (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($)leases | Sep. 30, 2019USD ($) | Jan. 01, 2019USD ($) | Dec. 31, 2018USD ($) | |
Lessee, Lease, Description [Line Items] | ||||
Operating lease, right-of-use asset | $ 656 | $ 656 | ||
Lease liability | 777 | 777 | ||
Straight-line lease liabilities | $ (1,561) | $ (1,561) | $ (1,259) | |
Lease terms | 12 months | 12 months | ||
Operating lease expense | $ 50 | $ 150 | ||
Lease liabilities reduced by cash paid | 54 | 171 | ||
Right-of-use assets obtained in exchange for operating lease obligations | $ 63 | 114 | ||
Operating leases not yet commenced | $ 287 | |||
Operating leases not yet commenced, number of significant leases executed | leases | 3 | |||
Weighted average remaining lease term | 6 years 8 months 12 days | 6 years 8 months 12 days | ||
Weighted-average discount rate for operating leases | 4.50% | 4.50% | ||
Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Lease terms | 1 year | 1 year | ||
Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Lease terms | 16 years | 16 years | ||
ASU 2016-02 | ||||
Lessee, Lease, Description [Line Items] | ||||
Operating lease, right-of-use asset | $ 661 | |||
Lease liability | 774 | |||
Straight-line lease liabilities | $ 113 |
Leases - ROU Assets and Liabili
Leases - ROU Assets and Liabilities (Details) $ in Millions | Sep. 30, 2019USD ($) |
Assets | |
ROU assets (recorded within other long-term assets) | $ 656 |
Liabilities | |
Short-term (recorded within accounts payable and accrued expenses) | 157 |
Long-term (recorded within other long-term liabilities) | 620 |
Total ROU liabilities | $ 777 |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities After Adoption of 842 (Details) $ in Millions | Sep. 30, 2019USD ($) |
Leases [Abstract] | |
2019 | $ 40 |
2020 | 199 |
2021 | 161 |
2022 | 121 |
2023 | 92 |
2024 | 71 |
Thereafter | 211 |
Total lease payments | 895 |
Less: imputed interest | (118) |
Total ROU liabilities | $ 777 |
Leases - Maturities of Operat_2
Leases - Maturities of Operating Lease Liabilities Before Adoption of 842 (Details) $ in Millions | Dec. 31, 2018USD ($) |
Leases [Abstract] | |
2019 | $ 174 |
2020 | 176 |
2021 | 145 |
2022 | 101 |
2023 | 71 |
Thereafter | 200 |
Total lease payments | $ 867 |
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, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Earnings attributable to Centene Corporation | ||||
Earnings attributable to Centene Corporation | $ 95 | $ 19 | $ 1,112 | $ 659 |
Shares used in computing per share amounts: | ||||
Weighted average number of common shares outstanding (in shares) | 413,616 | 410,591 | 413,302 | 383,257 |
Common stock equivalents (as determined by applying the treasury stock method) (in shares) | 6,340 | 8,452 | 6,398 | 8,009 |
Weighted average number of common shares and potential dilutive common shares outstanding (in shares) | 419,956 | 419,043 | 419,700 | 391,266 |
Net earnings per common share attributable to Centene Corporation: | ||||
Basic earnings per common share (in dollars per share) | $ 0.23 | $ 0.05 | $ 2.69 | $ 1.72 |
Diluted earnings per common share (in dollars per share) | $ 0.23 | $ 0.05 | $ 2.65 | $ 1.68 |
Anti-dilutive restricted stock and restricted stock units excluded from the calculation of diluted earnings per common share (in shares) | 1,500 | 20 | 1,400 | 53 |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($)segment | Sep. 30, 2018USD ($) | |
Segment Reporting [Abstract] | ||||
Number of operating segments | segment | 2 | |||
Segment Reporting Information [Line Items] | ||||
Total revenues | $ 18,976 | $ 16,182 | $ 55,776 | $ 43,557 |
Earnings from operations | 176 | 41 | 1,504 | 1,070 |
Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | (2,719) | (2,376) | (7,797) | (6,995) |
Managed Care | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 18,131 | 15,446 | 53,399 | 41,229 |
Earnings from operations | 385 | 92 | 1,587 | 983 |
Managed Care | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 18,087 | 15,420 | 53,283 | 41,153 |
Managed Care | Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 44 | 26 | 116 | 76 |
Specialty Services | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 3,564 | 3,112 | 10,174 | 9,323 |
Earnings from operations | (209) | (51) | (83) | 87 |
Specialty Services | Operating Segments | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | 889 | 762 | 2,493 | 2,404 |
Specialty Services | Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Total revenues | $ 2,675 | $ 2,350 | $ 7,681 | $ 6,919 |
Goodwill and Intangible Impai_2
Goodwill and Intangible Impairment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Goodwill and intangible asset impairment | $ 271 | $ 0 | $ 271 | $ 0 |
Write-down of goodwill | (259) | |||
Write-down of intangible assets | $ (12) |
Uncategorized Items - form10-q.
Label | Element | Value |
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ (1,000,000) |
Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (1,000,000) |
Accounting Standards Update 2014-09 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 16,000,000 |
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 16,000,000 |