ST. LOUIS, Dec. 14, 2017
/PRNewswire/ -- Centene Corporation (NYSE: CNC) announced
today its 2018 financial guidance. Total revenue is expected to be
$60.0 billion to $60.8 billion, representing growth of
approximately 26% compared to the midpoint of the 2017 guidance
range. Diluted earnings per share are expected to be $4.63 to $4.97,
representing an increase of 17% compared to the 2017 guidance range
of $4.04 to $4.18. Adjusted diluted earnings per share are
expected to be $5.47 to $5.87.
For 2018 guidance purposes and consistent with past practice,
the Company is providing combined guidance and has assumed the
Fidelis acquisition closes on April 1,
2018; however, the acquisition remains subject to regulatory
approval. Additionally, for 2018 guidance purposes, the Company has
assumed $2.3 billion of new equity
financing becomes outstanding on February 1,
2018 and $1.6 billion of new
debt financing becomes outstanding on March
1, 2018. Timing and composition of the financing
transactions will be subject to market conditions. If the Fidelis
acquisition closing date and related financing would have been
assumed to be January 1, 2018, both
the top and bottom end of the GAAP and adjusted diluted earnings
per share guidance ranges would increase by $0.18 per diluted share and $0.23 per diluted share, respectively.
Additionally, the top and bottom end of the total revenue guidance
range would increase by approximately $2.8
billion.
For its 2018 fiscal year, the Company expects the following
results from continuing operations:
- Total revenues in the range of $60.0
billion to $60.8 billion.
- Health benefits ratio of approximately 86.3% to 86.8%.
- Selling, general and administrative (SG&A) expense ratio of
approximately 9.1% to 9.6%.
- Adjusted SG&A expense ratio of approximately 9.0% to 9.5%,
excluding Fidelis acquisition related expenses of $70 million to $75
million.
- Effective tax rate of approximately 49.5% to 51.5%.
- Diluted shares outstanding of approximately 201.1 million to
202.1 million.
- Diluted earnings per share of approximately $4.63 to $4.97.
- Adjusted diluted earnings per share of approximately
$5.47 to $5.87.
Adjusted diluted earnings per share excludes approximately
$0.20 to $0.24 per diluted share of acquisition related
expenses and approximately $0.64 to
$0.66 per diluted share of
amortization of acquired intangible assets.
The Company affirms its 2017 revenue guidance in the previously
announced range for total revenues of $47.4
billion to $48.2 billion,
diluted earnings per share of approximately $4.04 to $4.18 and
adjusted diluted earnings per share of approximately $4.86 to $5.04,
which excludes amortization of acquired intangible assets of
$0.55 to $0.57 per diluted share, acquisition related
expenses of $0.07 to $0.09 per diluted share, and Penn Treaty
assessment expense of $0.20 per
diluted share. Full year 2017 earnings will be reported on
February 6, 2018, at 6:00 AM,
with a conference call at 8:30 AM (Eastern
Time).
Investor Meeting
Centene Corporation will host an investor meeting tomorrow,
including a question-and-answer session, to discuss the details of
its guidance at the Pierre Hotel in New
York City. The meeting will begin promptly at 8:30 AM (Eastern Time) and end approximately at
12:30 PM (Eastern Time). Investors
and other interested parties who are unable to attend in person are
invited to listen to the investor meeting via a live, audio webcast
on the Company's website and view a copy of the investor
presentation at www.centene.com, under the Investors section.
Non-GAAP Financial Presentation
The Company is providing certain non-GAAP financial measures in
this release as the Company believes that these figures are helpful
in allowing investors to more accurately assess the ongoing nature
of the Company's operations and measure the Company's performance
more consistently across periods. The Company uses the presented
non-GAAP financial measures internally to allow management to focus
on period-to-period changes in the Company's core business
operations. Therefore, the Company believes that this information
is meaningful in addition to the information contained in the GAAP
presentation of financial information. The presentation of this
additional non-GAAP financial information is not intended to be
considered in isolation or as a substitute for the financial
information prepared and presented in accordance with GAAP.
Specifically, the Company believes the presentation of non-GAAP
financial information that excludes amortization of acquired
intangible assets, acquisition related expenses, as well as other
items, allows investors to develop a more meaningful understanding
of the Company's performance over time. The table below provides
reconciliations of non-GAAP items ($ in millions, except per share
data):
|
Annual
Guidance
December 31,
2017
|
|
Annual
Guidance
December 31,
2018
|
|
|
GAAP diluted
EPS
|
$4.04 -
$4.18
|
|
$4.63 -
$4.97
|
Amortization of
acquired intangible assets (1)
|
$0.55 -
$0.57
|
|
$0.64 -
$0.66
|
Acquisition related
expenses (2)
|
$0.07 -
$0.09
|
|
$0.20 -
$0.24
|
Penn Treaty
assessment expense (3)
|
$0.20
|
|
—
|
Adjusted diluted
EPS
|
$4.86 -
$5.04
|
|
$5.47 -
$5.87
|
|
|
(1)
|
The amortization of
acquired intangible assets per diluted share presented above are
net of the income tax benefit of an estimated $0.31 to $0.35 for
the year ended December 31, 2017 and an estimated $0.37 to
$0.39 for the year ended December 31, 2018.
|
|
|
(2)
|
The acquisition
related expenses per diluted share presented above are net of the
income tax benefit of an estimated $0.04 to $0.06 for the year
ended December 31, 2017 and an estimated $0.12 to $0.16 for
the year ended December 31, 2018.
|
|
|
(3)
|
The Penn Treaty
assessment expense per diluted share presented above is net of the
income tax benefit of an estimated $0.12 for the year ended
December 31, 2017.
|
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 Care (LTC), 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 and U.S. Department of
Veterans Affairs. 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,
in-home health services, life and health management, managed
vision, 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. or Fidelis Care. 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
"anticipate", "seek", "target", "expect", "estimate", "intend",
"plan", "goal", "believe", "hope", "aim", "continue", "will",
"may", "can", "would", "could" or "should" or other words of
similar meaning or 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 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, and TRICARE); 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, including,
but not limited to, as a result of conditions, terms, obligations
or restrictions imposed by regulators in connection with their
approval of, or consent to, the acquisition; 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 certain regulatory
approvals for the Health Net acquisition and the Fidelis Care
acquisition; disruption from 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,
among other things, the Health Net acquisition, the Fidelis Care
acquisition and/or the successful integration of acquisitions;
changes in expected closing dates, estimated purchase price and
accretion for acquisitions; the risk that acquired businesses will
not be integrated successfully, including the Health Net
acquisition and the Fidelis Care acquisition; the risk that the
conditions of the Fidelis Care acquisition may not be satisfied or
completed on a timely basis, or at all; inability to pursue
alternatives to the Fidelis Care acquisition, or the risk that
potential competing acquirers of Centene may be discouraged from
making favorable alternative transaction proposals due to certain
provisions in the Fidelis Care asset purchase agreement; failure to
obtain expiration or termination of applicable waiting periods or
to receive any required regulatory approvals, consents or
clearances for the Fidelis Care acquisition, and the risk that,
even if so obtained or received, regulatory authorities impose
conditions on the completion of the transaction that could require
the exertion of management's time and Centene's resources or
otherwise have an adverse effect on Centene or the combined
company; business uncertainties and contractual restrictions while
the Fidelis Care acquisition is pending, which could adversely
affect Centene's business and operations; change of control
provisions or other provisions in certain agreements to which
Fidelis Care is a party, which may be triggered by the completion
of the Fidelis Care acquisition; loss of management personnel and
other key employees due to uncertainties associated with the
Fidelis Care acquisition; the risk that, following completion of
the Fidelis Care acquisition, the combined company may not be able
to effectively manage its expanded operations; restrictions and
limitations that may stem from the financing arrangements that the
combined company will enter into in connection with the Fidelis
Care acquisition; Centene's ability to achieve improvement in the
Centers for Medicare and Medicaid Services Star ratings and
maintain or achieve improvement in other quality scores in each
case that can impact revenue and future growth; additional
indebtedness incurred or equity issued to finance the Fidelis Care
acquisition; availability of debt and equity financing, on terms
that are favorable to Centene; inflation; foreign currency
fluctuations; 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 and 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