LONDON, UK / ACCESSWIRE / November 1, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Centene Corp. (NYSE: CNC), which can be viewed by registering at http://protraderdaily.com/optin/'symbol=CNC, following the Company's reporting of its third quarter fiscal 2017 operating results on October 24, 2017. The Health Insurer surpassed top- and bottom-line expectations and also updated its guidance for FY17. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:
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Earnings Reviewed
For the third quarter of 2017, Centene's total revenues increased 10% to $11.90 billion compared to $10.85 billion in Q3 2016, primarily attributed to a growth in the Health Insurance Marketplace business in 2017, and expansions and new programs in many of the Company's states in 2016 and 2017. The revenue growth was partially offset by the moratorium of the Health Insurer Fee in 2017, lower membership in the commercial business in California as a result of margin improvement actions taken in 2016, and the addition of a competitor in Georgia. Centene's reported revenue numbers beat analysts' estimates of $11.8 billion.
During Q3 2017, Centene's selling, general, and administrative expenses (SG&A) ratio totaled 9.0% compared to 9.2% for Q3 2016. The y-o-y drop in the SG&A ratio reflected the leveraging of expenses over higher revenues in 2017. The Company's adjusted SG&A ratio was 8.9% for the reported quarter compared to 9.1% for the prior year's same quarter.
For Q3 2017, Centene reported a net income of $205 million, or $1.16 per diluted share, compared to earnings of $147 million, or $0.84 per diluted share, in Q3 2016. The Company's adjusted earnings totaled $1.35 per share for the reported quarter compared to $1.12 for the year-earlier comparable quarter. Centene's earnings topped Wall Street's expectations of $1.24 per share.
Operating Results
As of September 30, 2017, Centene had managed care membership of 12.3 million, reflecting an increase of 874,900 members, or 8%, compared to Q3 2016.
During Q3 2017, Centene's Health Benefits Ratio (HBR) totaled 88.0% compared to 87.0% in Q3 2016. The y-o-y growth was primarily a result of new or expanded health plans, which initially operate at a higher HBR, an increase in higher acuity members, and a premium rate reduction for California Medicaid Expansion effective July 01, 2017.
Balance Sheet and Cash Flow
At September 30, 2017, Centene had cash, investments, and restricted deposits of $9.9 billion, including $308 million held by unregulated entities. The Company's medical claims liabilities totaled $4.3 billion at September 30, 2017, and represented 42 days in claims payable compared to 40 days in Q2 2017. The increase in days in claims payable was due to the timing of payments at quarter end and the impact of new business.
At the end of Q3 2017, Centene's total debt was $4.7 billion, which included $150 million of borrowings on the $1 billion revolving credit facility. The Company's debt to capitalization ratio was 41.2% at September 30, 2017, excluding the $62 million non-recourse mortgage note.
Centene's cash flow provided by operations was $97 million for Q3 2017, which included the impact of a $437 million payment of the 2016 risk adjustment payable.
Outlook
For FY17, Centene is forecasting revenue in the range of $47.4 billion to $48.2 billion. The Company expects GAAP EPS in the band of $4.04 billion to $4.18 billion and adjusted EPS between $4.86 billion and $5.04 billion. Centene is estimating HBR to be in the range of 87.0% to 87.4%.
Stock Performance
On Tuesday, October 31, 2017, the stock closed the trading session at $93.67, slightly down 0.15% from its previous closing price of $93.81. A total volume of 1.41 million shares have exchanged hands. Centene's stock price soared 14.52% in the last three months, 23.19% in the past six months, and 49.92% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have skyrocketed 65.76%. The stock is trading at a PE ratio of 19.37. At Tuesday's closing price, the stock's net capitalization stands at $16.16 billion.
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