| | | | |
| N E W S R E L E A S E | | | |  |
Contact:
Karey L. Witty
Chief Financial Officer
(314) 725-4477
Lisa M. Wilson
Senior Vice President, Investor Relations
(212) 759-3929
FOR IMMEDIATE RELEASE
CENTENE CORPORATION REPORTS TWENTY-SECOND CONSECUTIVE
QUARTER OF INCREASED PROFITABILITY
- Company achieves $1 billion in full-year revenue -
ST. LOUIS, MISSOURI (February 7, 2005) — Centene Corporation (NYSE: CNC) today announced its financial results for the fourth quarter and year ended December 31, 2004.
| | | | |
| Fourth Quarter Highlights | | | | Full Year Highlights |
· Revenues increased 39% to $288.1 million | | | | · Revenues increased 30% to $1 billion |
· Operating earnings increased 26% to $17.4 million | | | | · Operating earnings increased 38% to $64.5 million |
· EPS increased 17% to $0.27, post-split | | | | · EPS increased 17% to $1.02, post-split |
· Operating cash flows of $41.9 million | | | | · Operating cash flows of $99.4 million |
Additional Highlights
| | - | Completed 2:1 stock split, increasing outstanding shares to 41.3 million. |
| | - | Fourth quarter 2004 earnings per diluted share prior to the effect of the 2:1 stock split of $0.54, ahead of prior guidance. |
| | - | Membership growth of 58% over the fourth quarter of 2003; organic membership growth of 25% over the same prior year period. |
| | - | Closed FirstGuard acquisition marking Centene’s entry into Kansas and Missouri, two additional Medicaid-mandated states. |
| | - | Days in claims payable of 66.5, primarily reflecting the FirstGuard acquisition. |
PAGE 2: CENTENE CORPORATION REPORTS TWENTY-SECOND CONSECUTIVE QUARTER OF INCREASED PROFITABILITY
Michael F. Neidorff, Centene’s Chairman and Chief Executive Officer, said, “We concluded 2004 with strong financial results, marking our 22nd quarter of consecutive earnings growth. This consistent performance enabled Centene to continue to execute its strategy of becoming a multi-line Medicaid company.
“Despite the strengthening economy, there will be tighter budgets at the state and federal levels. This provides an opportunity for Centene to work with the states to maintain eligibility for recipients while offering quality, cost-effective healthcare. Our Margin Protection ProgramTM, which we began implementing over three years ago, is specifically designed to help the states address their respective budget challenges. We continue to work with the states by focusing on a combination of minimal rate increases and administrative policy changes.
“We completed the acquisition of two health plan entities known collectively as FirstGuard, which brought us into two additional Medicaid mandated markets — Kansas and our home state of Missouri. Additionally, our efforts in Kansas and Ohio are consistent with our strategy to offer both core Medicaid and specialty services. It further confirms our belief that we can partner with our states to move more members into managed behavioral health programs and demonstrate cost savings through a more comprehensive coordination of care.
“In addition to entering new markets, we experienced strong membership growth in Indiana and Texas. As a result of the SCHIP Exclusive Provider Organization contract, we are now virtually statewide in Texas and look forward to continuing to provide cost-effective healthcare to these recipients and building our relationship with the State. As we previously discussed, we anticipate that the SCHIP membership will continue to decline over the next few quarters and then stabilize. We believe that state regulators will be working to identify funding to expand eligibility, which ultimately will result in a positive impact for the Texas SCHIP population.
“As part of our strategic efforts to expand our footprint in Ohio, we recently announced a definitive agreement to acquire the Medicaid-related assets of SummaCare, Inc. based in Akron.
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PAGE 3: CENTENE CORPORATION REPORTS TWENTY-SECOND CONSECUTIVE QUARTER OF INCREASED PROFITABILITY
This transaction will add approximately 39,000 members to our subsidiary, Buckeye Community Health Plan, and make us one of the leading providers in the State. In New Jersey, we are working to further expand our membership in the SSI population and are comfortable with our progress.
“The year ahead offers significant opportunities for Centene, and we are confident that we have the systems, people and financial resources to meet them,” concluded Neidorff.
The following table depicts membership in Centene’s managed care organizations by state at December 31, 2004 and 2003:
| | | | |
| | | 2004
| | 2003
|
Indiana | | 150,600 | | 119,400 |
Kansas | | 94,200 | | — |
Missouri | | 41,200 | | — |
New Jersey | | 52,800 | | 54,000 |
Ohio | | 23,800 | | — |
Texas | | 244,300 | | 158,400 |
Wisconsin | | 165,800 | | 157,800 |
| | |
| |
|
TOTAL | | 772,700 | | 489,600 |
| | |
| |
|
The following table depicts membership in Centene’s managed care organizations by member category at December 31, 2004 and 2003:
| | | | | | |
| | | 2004
| | | 2003
| |
Medicaid (excluding SSI) | | 580,200 | | | 411,800 | |
SCHIP | | 182,100 | | | 68,400 | |
SSI | | 10,400 | (a) | | 9,400 | (b) |
| | |
|
| |
|
|
TOTAL | | 772,700 | | | 489,600 | |
| | |
|
| |
|
|
| | (a) | 4,600 at-risk, 5,800 ASO |
| | (b) | 4,400 at-risk, 5,000 ASO |
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PAGE 4: CENTENE CORPORATION REPORTS TWENTY-SECOND CONSECUTIVE QUARTER OF INCREASED PROFITABILITY
Statement of Earnings Highlights
| | - | For the fourth quarter of 2004, revenues increased 39.0% to $288.1 million from $207.3 million in the fourth quarter of 2003. |
| | - | The health benefits ratio (HBR), which reflects medical costs as a percent of premium revenues, was 80.3% in the fourth quarter of 2004 compared to 81.2% for the same period in 2003. The effect of the premium taxes imposed by the State of Texas beginning September 1, 2003 and the State of New Jersey beginning July 1, 2004 decreased Centene’s HBR by 50 basis points for the fourth quarter of 2004, and 40 basis points in the prior year quarter. The HBR for the SSI category normalized to 84.7%, but is still expected to be volatile given the small member base. This further demonstrates our ability to manage this population. |
| | - | Consolidated general and administrative (G&A) expenses as a percent of revenues were 13.5% in the fourth quarter of 2004 compared to 12.2% in the fourth quarter of 2003. The effect of the premium taxes increased Centene’s G&A ratio by 50 basis points for the fourth quarter of 2004 and 40 basis points in the prior year quarter. The results for the fourth quarter of 2004 include approximately $1.4 million in start-up costs associated with FirstGuard and Centene’s Montana claims processing facility, and severance costs related to job eliminations. Moreover, those results also include an additional $1.3 million of compensation costs related to Centene’s performance bonuses. |
| | - | Earnings from operations increased 26.4% to $17.4 million in the fourth quarter of 2004 from $13.8 million in the fourth quarter of 2003. |
| | - | Net earnings were $12.0 million, or $0.27 per diluted share, for the fourth quarter of 2004 compared to $9.7 million, or $0.23 per diluted share, for the fourth quarter of 2003. |
| | - | For the year ended December 31, 2004, revenues increased 30.0% to $1.0 billion from $769.7 million in 2003. The health benefits ratio was 80.7% in 2004 compared to 82.4% in 2003. G&A expenses as a percent of revenues were 12.8% in 2004 compared to 11.5% in 2003. Earnings from operations increased 37.5% to $64.5 million in 2004 from $46.9 million in 2003. Net earnings improved to $44.3 million, or $1.02 per diluted share, in 2004 compared to $33.3 million or $0.87 per diluted share, in 2003. |
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PAGE 5: CENTENE CORPORATION REPORTS TWENTY-SECOND CONSECUTIVE QUARTER OF INCREASED PROFITABILITY
Balance Sheet Highlights
At December 31, 2004, the Company had cash and investments of $317.4 million, $271.4 million of which was held by our regulated entities. Medical claims liabilities totaled $166.0 million, representing 66.5 days in claims payable. Excluding FirstGuard, the Company’s days in claims payable was 60.7. A reconciliation of the Company’s change in days in claims payable from the immediately preceding quarter is highlighted below:
| | | |
| | |
Days in claims payable, September 30, 2004 | | 57.3 | |
December 1, 2004 close of FirstGuard | | 5.8 | |
Increase in claims inventory, primarily EPO | | 3.0 | |
Increase in physician bonus and settlement | | 0.6 | |
Decrease in pharmacy accrual | | (0.2 | ) |
| | |
|
|
Days in claims payable, December 31, 2004 | | 66.5 | |
| | |
|
|
Outlook
Karey L. Witty, Centene’s Chief Financial Officer, commented, “Our first quarter 2005 revenue guidance is in the range of $332 million to $335 million, and we anticipate net earnings of $0.30 to $0.31 per diluted share, based on 44.7 million fully diluted shares outstanding. For full-year 2005, we anticipate revenue in the range of $1.47 billion to $1.50 billion, and net earnings per diluted share of $1.36 to $1.42.” A review of the results for the fourth quarter and additional details on management’s outlook for the first quarter of 2005 will take place during the Company’s scheduled fourth quarter earnings call.
Guidance for 2005 does not include either our pending acquisition of SummaCare, Inc. or the effect of new accounting rules requiring the expensing of stock options. The Financial Accounting Standards Board (FASB) has recently issued FASB Statement No. 123R, “Share-Based Payment,” which covers a wide range of share-based compensation arrangements, including stock options. The Statement is effective for quarters beginning after June 15, 2005. Centene plans to begin the expensing of stock options effective July 1, 2005, in accordance with the requirements of FASB Statement No. 123 and expects to provide the estimated impact of this change during the second quarter earnings conference call.
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PAGE 6: CENTENE CORPORATION REPORTS TWENTY-SECOND CONSECUTIVE QUARTER OF INCREASED PROFITABILITY
Conference Call
As previously announced, the Company will host a conference call tomorrow, February 8, 2005, at 8:30 a.m. (Eastern Time) to review the financial results for the quarter and year-ended December 31, 2004, and to discuss its business outlook. Michael F. Neidorff and Karey L. Witty will host the conference call. Investors are invited to participate in the conference call by dialing 800-273-1254 in the U.S. and Canada, 706-679-8592 from abroad, or via a live Internet broadcast on the Company’s website at www.centene.com, under the Investor Relations section. A replay will be available for on demand listening shortly after the completion of the call until 11:59 p.m. (Eastern Time) on February 22, 2005 at the aforementioned URL, or by dialing 800-642-1687 in the U.S. and Canada, or 706-645-9291 from abroad, and entering access code 3279480.
About Centene Corporation
Centene Corporation provides multi-line managed care programs and related services to individuals receiving benefits under Medicaid, including Supplemental Security Income (SSI), and the State Children’s Health Insurance Program (SCHIP). The Company operates health plans in Indiana, Kansas, Missouri, New Jersey, Ohio, Texas and Wisconsin. In addition, the Company contracts with other healthcare organizations to provide specialty services including behavioral health, nurse triage and treatment compliance. Information regarding Centene is available via the Internet at www.centene.com.
The information provided in the second through sixth paragraphs immediately following the listings under “Additional Highlights” and the paragraphs under “Outlook” above contain forward-looking statements that relate to future events and future financial performance of Centene. These forward-looking statements represent the Company’s estimates as of February 7, 2005. Subsequent events and developments may cause the Company’s estimates to change. The Company disclaims any obligation to update this forward-looking financial information in the future. Readers are cautioned that matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, regulatory, competitive and other factors that may cause Centene’s or its industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Actual results may differ from projections or estimates due to a variety of important factors, including Centene’s ability to accurately predict and effectively manage health benefits and other operating expenses,
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PAGE 7: CENTENE CORPORATION REPORTS TWENTY-SECOND CONSECUTIVE QUARTER OF INCREASED PROFITABILITY
competition, changes in healthcare practices, changes in federal or state laws or regulations, inflation, provider contract changes, new technologies, reduction in provider payments by governmental payors, major epidemics, disasters and numerous other factors affecting the delivery and cost of healthcare. The expiration, cancellation or suspension of Centene’s Medicaid managed care contracts by state governments would also negatively affect Centene.
[Tables Follow]
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PAGE 8: CENTENE CORPORATION REPORTS TWENTY-SECOND CONSECUTIVE QUARTER OF INCREASED PROFITABILITY
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| | | | | | | |
| | | December 31,
|
| | | 2004
| | | 2003
|
ASSETS | | | | | | | |
Current assets: | | | | | | | |
Cash and cash equivalents | | $ | 84,105 | | | $ | 64,346 |
Premium and related receivables, net of allowances of $462 and $607, respectively | | | 31,475 | | | | 20,308 |
Short-term investments, at fair value (amortized cost $94,442 and $15,192, respectively) | | | 94,283 | | | | 15,160 |
Other current assets | | | 14,429 | | | | 10,487 |
| | |
|
|
| |
|
|
Total current assets | | | 224,292 | | | | 110,301 |
Long-term investments, at fair value (amortized cost $117,177 and $183,749, respectively) | | | 116,787 | | | | 184,811 |
Restricted deposits, at fair value (amortized cost $22,295 and $20,201, respectively) | | | 22,187 | | | | 20,364 |
Property, software and equipment | | | 43,248 | | | | 23,106 |
Goodwill | | | 101,631 | | | | 13,066 |
Other intangible assets | | | 14,439 | | | | 6,294 |
Other assets | | | 5,350 | | | | 4,750 |
| | |
|
|
| |
|
|
Total assets | | $ | 527,934 | | | $ | 362,692 |
| | |
|
|
| |
|
|
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
Current liabilities: | | | | | | | |
Medical claims liabilities | | $ | 165,980 | | | $ | 106,569 |
Accounts payable and accrued expenses | | | 31,737 | | | | 17,965 |
Unearned revenue | | | 3,956 | | | | 3,673 |
Current portion of long-term debt and notes payable | | | 486 | | | | 579 |
| | |
|
|
| |
|
|
Total current liabilities | | | 202,159 | | | | 128,786 |
Long-term debt | | | 46,973 | | | | 7,616 |
Other liabilities | | | 7,490 | | | | 6,175 |
| | |
|
|
| |
|
|
Total liabilities | | | 256,622 | | | | 142,577 |
Stockholders’ equity: | | | | | | | |
Common stock, $.001 par value; authorized 100,000,000 shares; issued and outstanding 41,316,122 and 40,263,848 shares, respectively | | | 41 | | | | 40 |
Additional paid-in capital | | | 165,391 | | | | 157,360 |
Accumulated other comprehensive income: | | | | | | | |
Unrealized (loss) gain on investments, net of tax | | | (407 | ) | | | 740 |
Retained earnings | | | 106,287 | | | | 61,975 |
| | |
|
|
| |
|
|
Total stockholders’ equity | | | 271,312 | | | | 220,115 |
| | |
|
|
| |
|
|
Total liabilities and stockholders’ equity | | $ | 527,934 | | | $ | 362,692 |
| | |
|
|
| |
|
|
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PAGE 9: CENTENE CORPORATION REPORTS TWENTY-SECOND CONSECUTIVE QUARTER OF INCREASED PROFITABILITY
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except share data)
| | | | | | | | | | | | | | | | |
| | | THREE MONTHS ENDED DECEMBER 31,
| | | YEAR ENDED DECEMBER 31,
| |
| | | 2004
| | | 2003
| | | 2004
| | | 2003
| |
| | | (Unaudited) | | | | |
Revenues: | | | | | | | | | | | | | | | | |
Premiums | | $ | 286,117 | | | $ | 204,478 | | | $ | 991,673 | | | $ | 759,763 | |
Services | | | 1,947 | | | | 2,833 | | | | 9,267 | | | | 9,967 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total revenues | | | 288,064 | | | | 207,311 | | | | 1,000,940 | | | | 769,730 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Expenses: | | | | | | | | | | | | | | | | |
Medical costs | | | 229,756 | | | | 166,069 | | | | 800,476 | | | | 626,192 | |
Cost of services | | | 1,916 | | | | 2,054 | | | | 8,065 | | | | 8,323 | |
General and administrative expenses | | | 38,948 | | | | 25,384 | | | | 127,863 | | | | 88,288 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total operating expenses | | | 270,620 | | | | 193,507 | | | | 936,404 | | | | 722,803 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Earnings from operations | | | 17,444 | | | | 13,804 | | | | 64,536 | | | | 46,927 | |
Other income (expense): | | | | | | | | | | | | | | | | |
Investment and other income | | | 1,902 | | | | 1,684 | | | | 6,431 | | | | 5,160 | |
Interest expense | | | (363 | ) | | | (92 | ) | | | (680 | ) | | | (194 | ) |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Earnings before income taxes | | | 18,983 | | | | 15,396 | | | | 70,287 | | | | 51,893 | |
Income tax expense | | | 6,973 | | | | 5,699 | | | | 25,975 | | | | 19,504 | |
Minority interest | | | — | | | | — | | | | — | | | | 881 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Net earnings | | $ | 12,010 | | | $ | 9,697 | | | $ | 44,312 | | | $ | 33,270 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Earnings per share: | | | | | | | | | | | | | | | | |
Basic earnings per common share | | $ | 0.29 | | | $ | 0.24 | | | $ | 1.09 | | | $ | 0.93 | |
Diluted earnings per common share | | $ | 0.27 | | | $ | 0.23 | | | $ | 1.02 | | | $ | 0.87 | |
Weighted average number of shares outstanding: | | | | | | | | | | | | | | | | |
Basic | | | 41,199,463 | | | | 40,200,570 | | | | 40,820,909 | | | | 35,704,426 | |
Diluted | | | 44,309,636 | | | | 43,083,836 | | | | 43,616,445 | | | | 38,422,152 | |
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PAGE 10: CENTENE CORPORATION REPORTS TWENTY-SECOND CONSECUTIVE QUARTER OF INCREASED PROFITABILITY
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| | | | | | | | |
| | | Year Ended December 31,
| |
| | | 2004
| | | 2003
| |
Cash flows from operating activities: | | | | | | | | |
Net earnings | | $ | 44,312 | | | $ | 33,270 | |
Adjustments to reconcile net earnings to net cash provided by operating activities— | | | | | | | | |
Depreciation and amortization | | | 10,014 | | | | 6,448 | |
Stock compensation expense | | | 650 | | | | 188 | |
Minority interest | | | — | | | | (881 | ) |
Gain on sale of investments | | | (138 | ) | | | (1,646 | ) |
Changes in assets and liabilities— | | | | | | | | |
Premium and related receivables | | | (425 | ) | | | (2,364 | ) |
Other current assets | | | (786 | ) | | | (3,180 | ) |
Deferred income taxes | | | (1,638 | ) | | | 772 | |
Other assets | | | (728 | ) | | | 223 | |
Medical claims liabilities | | | 34,501 | | | | 15,053 | |
Unearned revenue | | | 283 | | | | 3,673 | |
Accounts payable and accrued expenses | | | 6,483 | | | | 3,897 | |
Other operating activities | | | 6,877 | | | | 546 | |
| | |
|
|
| |
|
|
|
Net cash provided by operating activities | | | 99,405 | | | | 55,999 | |
| | |
|
|
| |
|
|
|
Cash flows from investing activities: | | | | | | | | |
Purchase of property, software and equipment | | | (25,009 | ) | | | (19,162 | ) |
Purchase of investments | | | (254,358 | ) | | | (435,282 | ) |
Sales and maturities of investments | | | 243,623 | | | | 319,564 | |
Acquisitions, net of cash acquired | | | (86,739 | ) | | | (5,861 | ) |
| | |
|
|
| |
|
|
|
Net cash used in investing activities | | | (122,483 | ) | | | (140,741 | ) |
| | |
|
|
| |
|
|
|
Cash flows from financing activities: | | | | | | | | |
Proceeds from issuance of common stock | | | — | | | | 81,313 | |
Proceeds from exercise of stock options | | | 4,066 | | | | 1,145 | |
Proceeds from borrowings | | | 45,860 | | | | 8,581 | |
Reduction of long-term debt and notes payable | | | (6,596 | ) | | | (386 | ) |
Other financing activities | | | (493 | ) | | | (1,221 | ) |
| | |
|
|
| |
|
|
|
Net cash provided by financing activities | | | 42,837 | | | | 89,432 | |
| | |
|
|
| |
|
|
|
Net increase (decrease) in cash and cash equivalents | | | 19,759 | | | | 4,690 | |
| | |
|
|
| |
|
|
|
Cash and cash equivalents, beginning of period | | | 64,346 | | | | 59,656 | |
| | |
|
|
| |
|
|
|
Cash and cash equivalents, end of period | | $ | 84,105 | | | $ | 64,346 | |
| | |
|
|
| |
|
|
|
Interest paid | | $ | 494 | | | $ | 176 | |
Income taxes paid | | $ | 20,518 | | | $ | 19,935 | |
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PAGE 11: CENTENE CORPORATION REPORTS TWENTY-SECOND CONSECUTIVE QUARTER OF INCREASED PROFITABILITY
CENTENE CORPORATION
SUPPLEMENTAL FINANCIAL DATA
| | | | | | | | | | | | |
| | | Q4 | | | Q3 | | | Q2 | | | Q1 | |
| | | 2004
| | | 2004
| | | 2004
| | | 2004
| |
MEMBERSHIP | | | | | | | | | | | | |
Indiana | | 150,600 | | | 150,000 | | | 132,900 | | | 125,400 | |
Kansas | | 94,200 | | | — | | | — | | | — | |
Missouri | | 41,200 | | | — | | | — | | | — | |
New Jersey | | 52,800 | | | 53,200 | | | 54,000 | | | 54,000 | |
Ohio | | 23,800 | | | 23,500 | | | 23,800 | | | 23,800 | |
Texas | | 244,300 | | | 250,200 | | | 155,300 | | | 154,000 | |
Wisconsin | | 165,800 | | | 164,700 | | | 167,300 | | | 165,200 | |
| | |
|
| |
|
| |
|
| |
|
|
TOTAL | | 772,700 | | | 641,600 | | | 533,300 | | | 522,400 | |
| | |
|
| |
|
| |
|
| |
|
|
| | | | |
Medicaid | | 580,200 | | | 479,500 | | | 460,300 | | | 446,900 | |
SCHIP | | 182,100 | | | 152,100 | | | 63,200 | | | 65,900 | |
SSI | | 10,400 | | | 10,000 | | | 9,800 | | | 9,600 | |
| | |
|
| |
|
| |
|
| |
|
|
TOTAL | | 772,700 | | | 641,600 | | | 533,300 | | | 522,400 | |
| | |
|
| |
|
| |
|
| |
|
|
| | | | |
REVENUE PER MEMBER | | $139.38 | | | $144.70 | | | $145.31 | | | $145.19 | |
| | | | |
CLAIMS | | | | | | | | | | | | |
Period-end inventory | | 150,300 | | | 141,200 | | | 89,700 | | | 102,300 | |
| | | | |
Average inventory | | 128,300 | | | 96,800 | | | 98,800 | | | 107,400 | |
| | | | |
Period-end inventory per member | | 0.19 | | | 0.22 | | | 0.17 | | | 0.20 | |
| | | | |
DAYS IN CLAIMS PAYABLE(a) | | 66.5 | | | 57.3 | | | 53.5 | | | 55.4 | |
|
(a) Days in Claims Payable is a calculation of Medical Claims Liabilities at the end of the period divided by average claims expense per calendar day for such period. | |
| | | | |
ANNUALIZED RETURN ON EQUITY(b) | | 18.2 | % | | 18.2 | % | | 18.2 | % | | 17.9 | % |
| (b) | Annualized Return on Equity is calculated as follows: (net income for quarter x 4) divided by ((beginning of period equity + end of period equity) divided by 2). |
HEALTH BENEFITS RATIO BY CATEGORY:
| | | | | | | | | | | | | | | | |
| | | Three Months
Ended December 31,
| | | Year Ended
December 31,
| |
| | | 2004
| | | | | 2003
| | | 2004
| | | | | 2003
| |
Medicaid and SCHIP | | 80.2 | % | | | | 80.7 | % | | 80.4 | % | | | | 81.7 | % |
SSI | | 84.7 | | | | | 98.9 | | | 93.8 | | | | | 102.5 | |
Total | | 80.3 | | | | | 81.2 | | | 80.7 | | | | | 82.4 | |
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PAGE 12: CENTENE CORPORATION REPORTS TWENTY-SECOND CONSECUTIVE QUARTER OF INCREASED PROFITABILITY
GENERAL AND ADMINISTRATIVE EXPENSE RATIO BY BUSINESS SEGMENT:
| | | | | | | | | | | | |
| | | Three Months Ended
December 31,
| | | Year Ended December 31,
| |
| | | 2004
| | | 2003
| | | 2004
| | | 2003
| |
Medicaid Managed Care | | 11.4 | % | | 10.2 | % | | 10.7 | % | | 10.3 | % |
Specialty Services | | 53.7 | | | 53.5 | | | 52.3 | | | 38.2 | |
Total | | 13.5 | | | 12.2 | | | 12.8 | | | 11.5 | |
MEDICAL CLAIMS LIABILITIES
(In thousands)
The changes in medical claims liabilities for 2004 are summarized as follows:
| | | | |
Balance, December 31, 2003 | | $ | 106,569 | |
Acquisitions | | | 24,909 | |
Incurred related to: | | | | |
Current period | | | 816,448 | |
Prior period | | | (15,972 | ) |
| | |
|
|
|
Total incurred | | | 800,476 | |
| | |
|
|
|
Paid related to: | | | | |
Current period | | | 681,810 | |
Prior period | | | 84,164 | |
| | |
|
|
|
Total paid | | | 765,974 | |
| | |
|
|
|
Balance, December 31, 2004 | | $ | 165,980 | |
| | |
|
|
|
Centene’s claims reserving process utilizes a consistent actuarial methodology to estimate Centene’s ultimate liability. Any reduction in the “Incurred related to: Prior period” claims may be offset as Centene actuarially determines “Incurred related to: Current period.” As such, only in the absence of a consistent reserving methodology would favorable development of prior period claims liability estimates reduce medical costs. Centene believes it has consistently applied its claims reserving methodology in each of the periods presented.
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