ST. LOUIS, Dec. 13, 2018
/PRNewswire/ -- Centene Corporation (NYSE: CNC) announced
today its 2019 financial guidance. Total revenues are expected to
be $69.7 billion to $70.5 billion, representing growth of
approximately 17% compared to the midpoint of the 2018 guidance
range. Diluted earnings per share for 2019 are expected to be
$7.23 to $7.59 (pre-split). Adjusted diluted earnings per
share for 2019 are expected to be $8.15 to $8.55
(pre-split), representing an increase of 19% compared to the
midpoint of the 2018 guidance range.
On December 12, 2018, the Board of
Directors declared a two-for-one split of Centene's common stock in
the form of a 100% stock dividend that is expected to be effective
in the first quarter of 2019. The split is subject to stockholder
approval of an amendment to Centene's certificate of incorporation
to increase the number of authorized shares of common stock.
For its 2019 fiscal year, the Company expects the following:
- Total revenues in the range of $69.7
billion to $70.5 billion.
- Health benefits ratio of approximately 86.6% to 87.1%.
- Selling, general and administrative (SG&A) and Adjusted
SG&A expense ratio of approximately 9.2% to 9.7%.
- Effective tax rate of approximately 24.5% to 26.5%.
- Diluted shares outstanding of approximately 210.4 million to
211.4 million (420.8 million to 422.8 million post-split).
- Diluted earnings per share of approximately $7.23 to $7.59
($3.62 to $3.80 post-split).
- Adjusted diluted earnings per share of approximately
$8.15 to $8.55 ($4.08 to
$4.28 post-split).
The Company affirms its 2018 revenue guidance in the previously
announced range for total revenues of $59.8
billion to $60.3 billion,
diluted earnings per share of approximately $4.34 to $4.50
(pre-split), and adjusted diluted earnings per share of
approximately $6.90 to $7.10 (pre-split). Full year 2018 earnings will
be reported on February 5, 2019, at 6:00 AM, with a conference call at 8:30 AM (Eastern Time).
Investor Meeting
Centene Corporation will host an investor meeting tomorrow at
the Pierre Hotel in New York City,
including a question-and-answer session, to discuss the details of
its guidance. The meeting will begin promptly at 8:30 AM (Eastern Time) and end at approximately
1:15 PM (Eastern Time). Investors and
other interested parties who are unable to attend in person are
invited to listen to the investor meeting via a live, audio webcast
on the Company's website and view a copy of the investor
presentation at www.centene.com, under the Investors section.
Non-GAAP Financial Presentation
The Company is providing certain non-GAAP financial measures in
this release as the Company believes that these figures are helpful
in allowing investors to more accurately assess the ongoing nature
of the Company's operations and measure the Company's performance
more consistently across periods. The Company uses the presented
non-GAAP financial measures internally to allow management to focus
on period-to-period changes in the Company's core business
operations. Therefore, the Company believes that this information
is meaningful in addition to the information contained in the GAAP
presentation of financial information. The presentation of this
additional non-GAAP financial information is not intended to be
considered in isolation or as a substitute for the financial
information prepared and presented in accordance with GAAP. The
Company references Adjusted SG&A Expense Ratio, however the
Company cannot provide a reconciliation of Adjusted SG&A
Expense Ratio guidance without unreasonable efforts. As such,
it has been excluded from the reconciliation below.
Specifically, the Company believes the presentation of non-GAAP
financial information that excludes amortization of acquired
intangible assets, acquisition related expenses, as well as other
items, allows investors to develop a more meaningful understanding
of the Company's performance over time. The table below provides
reconciliations of non-GAAP items per share:
|
Pre-Split
|
|
Pre-Split
|
|
Post-Split(4)
|
|
Annual
Guidance
December 31,
2018
|
|
Annual
Guidance
December 31,
2019
|
|
Annual
Guidance
December 31,
2019
|
|
|
|
GAAP diluted
EPS
|
$4.34 -
$4.50
|
|
$7.23 -
$7.59
|
|
$3.62 -
$3.80
|
Amortization of
acquired intangible assets (1)
|
$0.81 -
$0.83
|
|
$0.90 -
$0.92
|
|
$0.45 -
$0.46
|
Acquisition related
expenses (2)
|
$1.63 -
$1.65
|
|
$0.02 -
$0.04
|
|
$0.01 -
$0.02
|
California minimum
MLR change (3)
|
$0.12
|
|
—
|
|
—
|
Adjusted diluted
EPS
|
$6.90 -
$7.10
|
|
$8.15 -
$8.55
|
|
$4.08 -
$4.28
|
|
|
(1)
|
The amortization of
acquired intangible assets per diluted share presented above are
net of the income tax benefit of an estimated $0.24 to $0.25
pre-split for the year ended December 31, 2018 and an
estimated and $0.30 to $0.31 pre-split and approximately $0.15
post-split for the year ended December 31, 2019.
|
(2)
|
The acquisition
related expenses per diluted share presented above are net of the
income tax benefit of an estimated $0.50 to $0.51 pre-split for the
year ended December 31, 2018 and approximately $0.01 pre-split
and approximately $0.00 post-split for the year ended
December 31, 2019.
|
(3)
|
The California
minimum MLR change per diluted share presented above is net of the
income tax benefit of an estimated $0.03 pre-split for the year
ended December 31, 2018.
|
(4)
|
Gives effect to the
proposed two-for-one stock split, which is subject to a stockholder
vote.
|
About Centene Corporation
Centene Corporation, a Fortune 100 company, is a diversified,
multi-national healthcare enterprise that provides a portfolio of
services to government sponsored and commercial healthcare
programs, focusing on under-insured and uninsured individuals. Many
receive benefits provided under Medicaid, including the State
Children's Health Insurance Program (CHIP), as well as Aged, Blind
or Disabled (ABD), Foster Care and
Long-Term Services and Supports (LTSS), in addition to other
state-sponsored programs, Medicare (including the Medicare
prescription drug benefit commonly known as "Part D"), dual
eligible programs and programs with the U.S. Department of Defense.
Centene also provides healthcare services to groups and individuals
delivered through commercial health plans. Centene operates local
health plans and offers a range of health insurance solutions. It
also contracts with other healthcare and commercial organizations
to provide specialty services including behavioral health
management, care management software, correctional healthcare
services, dental benefits management, commercial programs,
home-based primary care services, life and health management,
vision benefits management, pharmacy benefits management, specialty
pharmacy and telehealth services.
Centene uses its investor relations website to publish important
information about the Company, including information that may be
deemed material to investors. Financial and other information about
Centene is routinely posted and is accessible on Centene's investor
relations website, http://www.centene.com/investors.
Forward-Looking Statements
The company and its representatives may from time to time
make written and oral forward-looking statements within the meaning
of the Private Securities Litigation Reform Act (PSLRA) of 1995,
including statements in this and other press releases, in
presentations, filings with the Securities and Exchange
Commission (SEC), reports to stockholders and in meetings with
investors and analysts. In particular, the information provided in
this press release may contain certain forward-looking statements
with respect to the financial condition, results of operations and
business of Centene and certain plans and objectives
of Centene with respect thereto, including but not
limited to the expected benefits of the acquisition of Health
Net, Inc. (Health Net) (Health Net Acquisition) and the
acquisition of New York State Catholic Health Plan, Inc.,
d/b/a Fidelis Care New York (Fidelis
Care) (Fidelis Care Acquisition). These forward-looking
statements can be identified by the fact that they do not relate
only to historical or current facts. Without limiting the
foregoing, forward-looking statements often use words such as
"believe", "anticipate", "plan", "expect", "estimate", "intend",
"seek", "target", "goal", "may", "will", "would", "could",
"should", "can", "continue" and other similar words and expressions
(and the negative thereof). We intend such forward-looking
statements to be covered by the safe-harbor provisions for
forward-looking statements contained in PSLRA. A number of factors,
variables or events could cause actual plans and results to differ
materially from those expressed or implied in forward-looking
statements. Such factors include, but are not limited
to, Centene's ability to accurately predict and
effectively manage health benefits and other operating expenses and
reserves; competition; membership and revenue declines or
unexpected trends; changes in healthcare practices, new
technologies and advances in medicine; increased healthcare costs;
changes in economic, political or market conditions; changes in
federal or state laws or regulations, including changes with
respect to income tax reform or government healthcare programs as
well as changes with respect to the Patient Protection and
Affordable Care Act and the Health Care and Education Affordability
Reconciliation Act and any regulations enacted thereunder that may
result from changing political conditions; rate cuts or other
payment reductions or delays by governmental payors and other risks
and uncertainties affecting Centene's government
businesses; Centene's ability to adequately price
products on federally facilitated and state-based Health Insurance
Marketplaces; tax matters; disasters or major epidemics; the
outcome of legal and regulatory proceedings; changes in expected
contract start dates; provider, state, federal and other contract
changes and timing of regulatory approval of contracts; the
expiration, suspension or termination of Centene's contracts
with federal or state governments (including but not limited
to Medicaid, Medicare, TRICARE or other customers); the
difficulty of predicting the timing or outcome of pending or future
litigation or government investigations; challenges
to Centene's contract awards; cyber-attacks or other
privacy or data security incidents; the possibility that the
expected synergies and value creation from acquired businesses,
including, without limitation, the Health Net Acquisition and the
Fidelis Care Acquisition, will not be realized, or will not be
realized within the expected time period; the exertion of
management's time and Centene's resources, and other
expenses incurred and business changes required in connection with
complying with the undertakings in connection with any regulatory,
governmental or third party consents or approvals for the Health
Net Acquisition or the Fidelis Care Acquisition; disruption caused
by significant completed and pending acquisitions, including the
Health Net Acquisition and the Fidelis Care Acquisition, making it
more difficult to maintain business and operational relationships;
the risk that unexpected costs will be incurred in connection with
the completion and/or integration of acquisition transactions,
including among others, the Health Net Acquisition and the Fidelis
Care Acquisition; changes in expected closing dates, estimated
purchase price and accretion for acquisitions; the risk that
acquired businesses, including Health Net and Fidelis Care, will not be integrated
successfully; the risk that, following the Fidelis Care
Acquisition, Centene may not be able to effectively
manage its expanded operations; restrictions and limitations in
connection with Centene's
indebtedness; Centene's ability to achieve improvement in
the Centers for Medicare and Medicaid Services (CMS) Star
ratings and maintain or achieve improvement in other quality scores
in each case that can impact revenue and future growth;
availability of debt and equity financing, on terms that are
favorable to Centene; inflation; foreign currency
fluctuations; the stock split and the required stockholders
approval to increase Centene's authorized common stock; and risks
and uncertainties discussed in the reports
that Centene has filed with the SEC. These
forward-looking statements reflect Centene's current
views with respect to future events and are based on numerous
assumptions and assessments made by Centene in light of
its experience and perception of historical trends, current
conditions, business strategies, operating environments, future
developments and other factors it believes appropriate. By their
nature, forward-looking statements involve known and unknown risks
and uncertainties and are subject to change because they relate to
events and depend on circumstances that will occur in the future.
The factors described in the context of such forward-looking
statements in this press release could
cause Centene's plans with respect to the Health Net
Acquisition, the Fidelis Care Acquisition, actual results,
performance or achievements, industry results and developments to
differ materially from those expressed in or implied by such
forward-looking statements. Although it is currently believed that
the expectations reflected in such forward-looking statements are
reasonable, no assurance can be given that such expectations will
prove to have been correct and persons reading this press release
are therefore cautioned not to place undue reliance on these
forward-looking statements which speak only as of the date of this
press release. Centene does not assume any obligation to
update the information contained in this press release (whether as
a result of new information, future events or otherwise), except as
required by applicable law. This list of important factors is not
intended to be exhaustive. We discuss certain of these matters more
fully, as well as certain other risk factors that may
affect Centene's business operations, financial condition
and results of operations, in Centene's filings with
the SEC, including the annual report on Form 10-K, quarterly
reports on Form 10-Q and current reports on Form 8-K.
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SOURCE Centene Corporation