Centene Corporation (NYSE: CNC) today announced its financial
results for the quarter and year ended December 31, 2007. The
results exclude the benefit of the July 1 through December 31, 2007
period rate increase for Georgia which was in our previous guidance
and will now be recognized in the first quarter of 2008. Our
updated guidance disclosed later in this press release reflects
this change. As previously announced, premium taxes are now
separately disclosed as a component of both revenues and operating
expenses on our statement of operations. Related financial ratios
included in this release exclude premium taxes. Additionally, we
have reclassified and reported our Kansas and Missouri health
plans, collectively FirstGuard, as discontinued operations. Unless
specifically noted, the discussions below are in the context of
continuing operations, and therefore, exclude the FirstGuard
operations. � � � � 2007 Highlights � � Q4 � � Full Year Total
Revenues (in millions) $ 777.4 $ 2,919.3 Medicaid/SCHIP HBR 84.0 %
83.2 % Diluted EPS (as reported) $ 0.07 $ 0.92 Diluted EPS
(excluding restructuring charges) $ 0.20 $ 1.09 � � � � Fourth
Quarter Summary 2007 fourth quarter earnings impacted by the
inability to recognize the July 1, 2007 Georgia rate increase until
the 2008 first quarter. Quarter-end Medicaid Managed Care
membership of 1.1 million. Revenues of $777.4 million, a 25.8%
increase over the 2006 fourth quarter. Earnings per diluted share
of $0.20 (excluding restructuring charges), compared to $0.21 in
the 2006 fourth quarter. Health Benefits Ratio (HBR) for Centene�s
Medicaid and SCHIP populations, which reflects medical costs as a
percent of premium revenues, of 84.0%. Medicaid Managed Care
G&A expense ratio of 11.8% and Specialty Services G&A ratio
of 15.4%. Total operating cash flows of $37.5 million. Days in
claims payable of 49.1. Other Events Recognized previously
announced restructuring charge totaling $9.4 million pre-tax. Began
participating in the state of South Carolina�s conversion to
managed care. Michael F. Neidorff, Centene�s Chairman and Chief
Executive Officer, stated, �We concluded the fourth quarter of 2007
with solid revenue, membership and earnings results. Additionally,
our cash flows were strong, our Medicaid HBR improved to 84.0%, a
decrease of 140 basis points from the 2006 fourth quarter, and our
G&A was consistent with our expectations. �In Ohio, our core
Medicaid program growth was in line. Medical costs in the ABD
population, not unexpectedly, continue to be challenging as we work
to manage the integration of these members into our network. Over
time, we believe that targeted margins are achievable as we reach
critical mass and are able to more effectively manage their care.
�In Texas, we experienced growing membership in both SCHIP and the
Texas STAR Plus (SSI) program. We are on track for the launch of
the state�s Foster Care program on April 1, 2008. �As we commence
2008, we will focus on growing our revenue stream to external third
party vendors through our specialty company products and PBM. We
are optimistic about the prospects for growth in both new and
existing markets in Medicaid managed care and in our specialty
businesses,� concluded Neidorff. The following table depicts
membership in Centene�s managed care organizations, by state, at
December 31, 2007 and 2006: � � � � � � � � � � � � 2007 � � 2006
Georgia 287,900 308,800 Indiana 154,600 183,100 New Jersey 57,300
58,900 Ohio 128,700 109,200 South Carolina 31,800 � Texas 354,400
298,500 Wisconsin 131,900 164,800 Total 1,146,600 1,123,300 � � � �
� � � � � � The following table depicts membership in Centene�s
managed care organizations, by member category, at December 31,
2007 and 2006: � � � � � � 2007 � � 2006 Medicaid 848,100 887,300
SCHIP 224,400 216,200 SSI 74,100 19,800 Total 1,146,600 (a)
1,123,300 (b) � (a) 1,111,500 at-risk; 35,100 ASO � (b) 1,112,700
at-risk; 10,600 ASO � � Statement of Operations For the 2007 fourth
quarter, revenues from continuing operations increased 25.8% to
$777.4 million from $617.8 million in the 2006 fourth quarter. The
increase was mainly driven by membership growth in Texas and Ohio,
which are the two markets that added SSI products in 2007. The
fourth quarter included an approximate $4.2 million reduction of
premium revenue and pre-tax earnings due to a prior period true-up
with the State of Indiana. The HBR for Centene�s Medicaid and SCHIP
populations, which reflects medical costs as a percent of premium
revenues, was 84.0%, an increase from 81.3% in the 2007 third
quarter. The increase resulted from pharmacy and other general
seasonality and the previously mentioned premium true-up in
Indiana. G&A expense as a percent of premium and service
revenues for the Medicaid Managed Care segment was 11.8% in the
fourth quarter of 2007 compared to 10.4% in the fourth quarter of
2006. The increase in the Medicaid Managed Care G&A expense
ratio for the three months ended December 31, 2007 primarily
reflects our previously announced restructuring charge recorded in
the fourth quarter. The pre-tax restructuring charge for asset
impairment and severance totaled $9.4 million and increased our
G&A ratio by 1.3%. Operating earnings were $0.3 million,
including the restructuring charge. Excluding the restructuring
charge, operating earnings were $9.7 million compared to $9.8
million in the 2006 fourth quarter. Reported GAAP earnings per
diluted share from continuing operations were $0.07, or $0.20
excluding restructuring charges, compared to $0.21 in the 2006
fourth quarter. Net earnings per diluted share (including
discontinued operations) were $0.03. For the year ended December
31, 2007, revenues from continuing operations increased 48.8% to
$2.9 billion from $2.0 billion for the same period in the prior
year. Medicaid Managed Care G&A expenses as a percent of
premium and service revenues decreased to 11.1% in the year ended
December 31, 2007, compared to 11.4% in the year ended December 31,
2006. Excluding the $12.4 million of restructuring charges,
earnings from operations increased to $66.5 million in the year
ended December 31, 2007 from $27.8 million in the year ended
December 31, 2006. Net earnings from continuing operations,
excluding the restructuring charges, were $49.0 million or $1.09
per diluted share in 2007. Balance Sheet and Cash Flow At December
31, 2007, the Company had cash and investments of $659.2 million,
including $626.2 million held by its regulated entities and $33.0
million held by its unregulated entities. Medical claims
liabilities totaled $335.9 million, representing 49.1 days in
claims payable, unchanged from September 30, 2007. Total debt was
$207.4 million and debt to capitalization was 33.3%. Outlook The
table below depicts the Company�s guidance for the 2008 first
quarter and full year. � � � � � � Q1 2008 � � 2008 Low � � High
Low � � High Revenue (in millions) (1) $ 785 $ 795 $ 3,370 $ 3,470
Earnings per diluted share $ 0.59 $ 0.64 $ 2.04 $ 2.14 � � (1)
Revenue net of premium tax � � Eric R. Slusser, Centene�s Chief
Financial Officer, stated, �This guidance reflects normal
seasonality, previously mentioned start-up costs in Texas, South
Carolina and Florida of approximately $0.09, and the state of
Wisconsin�s decision to carve-out pharmacy benefits from our
premium, effective February 1, 2008. This guidance also includes
premium rate increases of 1.5% in Ohio, effective January 1, 6.3%
in Indiana, effective January 1, 3.5% in Wisconsin, effective
February 1, and a 3.8% rate increase in Georgia retroactive to July
1, 2007.� Conference Call As previously announced, the Company will
host a conference call Friday, February 8, 2008, at 7:30 A.M.
(Eastern Time) to review the financial results for the fourth
quarter ended December 31, 2007, and to discuss its business
outlook. Michael F. Neidorff and Eric R. Slusser 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, 2008 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 34562229. Non-GAAP Financial Presentation
The Company is providing certain non-GAAP financial measures in
this release as the Company believes these figures are helpful in
allowing individuals to more accurately assess the ongoing nature
of the Company's operations and measure the Company's performance
more consistently. The 2007 non-GAAP information presented above in
the �highlights� table, third bullet under "Fourth Quarter Summary"
and fourth, fifth and seventh bullets under "Statement of
Operations" excludes the second quarter contribution to our
charitable foundation with a portion of the proceeds from the sale
of FirstGuard Missouri as well as the fourth quarter charges for
fixed asset impairment and severance for an organizational
realignment, collectively, restructuring charges. This exclusion
has been made in the non-GAAP financial measures as management
believes these 2007 restructuring charges are not indicative of
future company operations. The Company uses the presented non-GAAP
financial measures internally to focus management on
period-to-period changes in the Company's core business operations.
Therefore, the Company believes 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 following tables reconcile
the Company�s Statement of Operations for the three months and year
ended December 31, 2007 on a GAAP basis to a non-GAAP basis. The
2007 non-GAAP basis excludes the restructuring charges mentioned
above (in thousands, except share data). � Three Months Ended
December 31, 2007 GAAP � Restructuring Charges � Non-GAAP � Total
revenues $ 777,439 $ � $ 777,439 Expenses: Medical costs 629,437 �
629,437 Cost of services 15,532 � 15,532 General and administrative
expenses 110,978 9,392 101,586 Premium tax expense � 21,145 � � � �
� 21,145 � Total operating expenses � 777,092 � � 9,392 � � 767,700
� Earnings (loss) from operations 347 (9,392 ) 9,739 Investment and
other income, net � 2,102 � � � � � 2,102 � Earnings (loss) before
income taxes 2,449 (9,392 ) 11,841 Income tax expense (benefit) �
(584 ) � (3,523 ) � 2,939 � Net earnings from continuing operations
3,033 (5,869 ) 8,902 Discontinued operations, net of income tax �
(1,560 ) � � � � (1,560 ) Net earnings (loss) $ 1,473 � $ (5,869 )
$ 7,342 � � Diluted earnings per common share from continuing
operations $ 0.07 $ 0.20 � Year Ended December 31, 2007 GAAP �
Restructuring Charges (1) � Non-GAAP � Total revenues $ 2,919,292 $
� $ 2,919,292 Expenses: Medical costs 2,324,486 � 2,324,486 Cost of
services 61,454 � 61,454 General and administrative expenses
399,687 12,392 387,295 Premium tax expense � 79,572 � � � � 79,572
Total operating expenses � 2,865,199 � 12,392 � � 2,852,807
Earnings (loss) from operations 54,093 (12,392 ) 66,485 Investment
and other income, net � 9,543 � � � � 9,543 Earnings (loss) before
income taxes 63,636 (12,392 ) 76,028 Income tax expense (benefit) �
22,367 � (4,663 ) � 27,030 Net earnings from continuing operations
41,269 (7,729 ) 48,998 Discontinued operations, net of income tax �
32,133 � � � � 32,133 Net earnings (loss) $ 73,402 $ (7,729 ) $
81,131 � Diluted earnings per common share from continuing
operations $ 0.92 $ 1.09 � (1) For the year ended December 31,
2007, restructuring charges include a $3,000 pre-tax contribution
of a portion of the FirstGuard sale proceeds to the Company�s
charitable foundation. Premium Tax Presentation The following table
shows the Company�s Medicaid/SCHIP HBR and the Medicaid Managed
Care G&A ratio on a net basis as reported as well as on a gross
basis for analytical purposes. On a net basis, the HBR is
calculated as Medical costs divided by Premium revenues and the
G&A ratio is recorded as G&A expense divided by the sum of
Premium revenue and Service revenue. On a gross basis, the HBR is
calculated as Medical costs divided by the sum of Premium revenues
and Premium tax and the G&A ratio is recorded as G&A
expense plus Premium tax expense, divided by Total revenues. � � �
� � � Premium Taxes (in thousands) Medicaid/SCHIP HBR Medicaid
Managed Care G&A Ratio Current (Net) � � Gross Current (Net) �
� Gross 2007 Q1 $ 17,816 84.5 % 82.0 % 10.2 % 12.7 % Q2 19,874 82.8
80.3 11.4 13.9 Q3 20,737 81.3 78.9 11.0 13.5 Q4 � 21,145 84.0 81.2
11.8 14.3 Total Year $ 79,572 83.2 80.6 11.1 13.6 � 2006 Q1 $ 3,250
81.8 % 80.9 % 12.6 % 13.4 % Q2 5,806 84.8 83.5 12.5 13.8 Q3 12,590
84.4 82.2 11.0 13.2 Q4 � 16,315 85.4 82.9 10.4 12.8 Total Year $
37,961 84.3 82.5 11.4 13.2 About Centene Corporation Centene
Corporation is a leading multi-line healthcare enterprise that
provides programs and related services to individuals receiving
benefits under Medicaid, including the State Children�s Health
Insurance Program (SCHIP) and Supplemental Security Income (SSI).
The Company operates health plans in Georgia, Indiana, New Jersey,
Ohio, South Carolina, Texas and Wisconsin. In addition, the Company
contracts with other healthcare and commercial organizations to
provide specialty services including behavioral health, life and
health management, long-term care, managed vision, nurse triage,
pharmacy benefits management and treatment compliance. Information
regarding Centene is available via the Internet at www.centene.com.
The information provided in this press release contains
forward-looking statements that relate to future events and future
financial performance of Centene. 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,
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) � CENTENE CORPORATION AND SUBSIDIARIES �
CONSOLIDATED BALANCE SHEETS (In thousands, except share data) �
December 31, 2007 � 2006 (Unaudited) ASSETS Current assets: Cash
and cash equivalents of continuing operations $ 268,584 $ 253,370
Cash and cash equivalents of discontinued operations � � � 17,677 �
Total cash and cash equivalents 268,584 271,047 Premium and related
receivables 90,072 74,379 Short-term investments, at fair value
(amortized cost $46,392 and $57,031, respectively) 46,269 56,790
Other current assets 41,414 17,279 Current assets of discontinued
operations, other than cash � � � 32,327 � Total current assets
446,339 451,822 Long-term investments, at fair value (amortized
cost $314,681 and $117,620, respectively) 317,041 116,052
Restricted deposits, at fair value (amortized cost $27,056 and
$24,512, respectively) 27,301 24,355 Property, software and
equipment, net 138,139 110,688 Goodwill 141,030 129,881 Other
intangible assets, net 13,205 15,555 Other assets 36,067 9,209
Long-term assets of discontinued operations � � � 37,418 � Total
assets $ 1,119,122 $ 894,980 � LIABILITIES AND STOCKHOLDERS� EQUITY
Current liabilities: Medical claims liabilities $ 335,856 $ 249,864
Accounts payable and accrued expenses 105,096 63,893 Unearned
revenue 44,016 33,816 Current portion of long-term debt and notes
payable 971 971 Current liabilities of discontinued operations �
861 � 39,407 � Total current liabilities 486,800 387,951 Long-term
debt 206,406 174,646 Other liabilities 10,869 5,853 Long-term
liabilities of discontinued operations � � � 107 � Total
liabilities 704,075 568,557 Stockholders� equity: Common stock,
$.001 par value; authorized 100,000,000 shares; issued and
outstanding 43,667,837 and 43,369,918 shares, respectively 44 44
Additional paid-in capital 221,693 209,340 Accumulated other
comprehensive income: Unrealized gain (loss) on investments, net of
tax 1,571 (1,251 ) Retained earnings � 191,739 � 118,290 � Total
stockholders� equity � 415,047 � 326,423 � Total liabilities and
stockholders� equity $ 1,119,122 $ 894,980 � � CENTENE CORPORATION
AND SUBSIDIARIES � CONSOLIDATED STATEMENTS OF OPERATIONS (In
thousands, except share data) � � Three Months Ended December 31, �
Year Ended December 31, 2007 � 2006 2007 � 2006 (Unaudited)
(Unaudited) Revenues: Premium $ 736,895 $ 581,217 $ 2,759,018 $
1,844,452 Premium tax 21,145 16,315 79,572 37,961 Service � 19,399
� � 20,263 � � 80,702 � � 79,581 � Total revenues � 777,439 � �
617,795 � � 2,919,292 � � 1,961,994 � Expenses: Medical costs
629,437 495,712 2,324,486 1,555,658 Cost of services 15,532 15,396
61,454 60,506 General and administrative expenses 110,978 80,527
399,687 280,067 Premium tax expense � 21,145 � � 16,315 � � 79,572
� � 37,961 � Total operating expenses � 777,092 � � 607,950 � �
2,865,199 � � 1,934,192 � Earnings from operations 347 9,845 54,093
27,802 Other income (expense): Investment and other income 6,212
6,251 25,169 16,416 Interest expense � (4,110 ) � (3,100 ) �
(15,626 ) � (10,636 ) Earnings before income taxes 2,449 12,996
63,636 33,582 Income tax expense � (584 ) � 3,745 � � 22,367 � �
12,642 � Net earnings from continuing operations 3,033 9,251 41,269
20,940 Discontinued operations, net of income tax (benefit) expense
of $1,621, $3,904, $(30,899) and $9,335 respectively � (1,560 ) �
4,582 � � 32,133 � � (64,569 ) Net earnings (loss) $ 1,473 � $
13,833 � $ 73,402 � $ (43,629 ) � Net earnings (loss) per common
share: Basic: Continuing operations $ 0.07 $ 0.21 $ 0.95 $ 0.49
Discontinued operations � (0.04 ) � 0.11 � � 0.74 � � (1.50 ) Basic
earnings (loss) per common share $ 0.03 � $ 0.32 � $ 1.69 � $ (1.01
) Diluted: Continuing operations $ 0.07 $ 0.21 $ 0.92 $ 0.47
Discontinued operations � (0.04 ) � 0.10 � � 0.72 � � (1.45 )
Diluted earnings (loss) per common share $ 0.03 � $ 0.31 � $ 1.64 �
$ (0.98 ) � Weighted average number of common shares outstanding:
Basic 43,574,811 43,263,237 43,539,950 43,160,860 Diluted
44,951,016 44,631,117 44,823,082 44,613,622 � CENTENE CORPORATION
AND SUBSIDIARIES � CONSOLIDATED STATEMENTS OF CASH FLOWS (In
thousands) � Year Ended December 31, 2007 � 2006 (Unaudited) Cash
flows from operating activities: Net earnings (loss) $ 73,402 $
(43,629 ) Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities� Depreciation and amortization
27,807 20,600 Stock compensation expense 15,781 14,904 Gain on sale
of FirstGuard Missouri (7,472 ) � Impairment loss 7,207 88,268
Deferred income taxes (10,223 ) (6,692 ) Changes in assets and
liabilities� Premium and related receivables 1,663 (39,765 ) Other
current assets (6,253 ) 5,352 Other assets (348 ) 91 Medical claims
liabilities 56,287 108,003 Unearned revenue 10,085 20,035 Accounts
payable and accrued expenses 31,234 28,136 Other operating
activities � 3,070 � � (271 ) Net cash provided by operating
activities � 202,240 � � 195,032 � Cash flows from investing
activities: Purchase of property, software and equipment (53,937 )
(50,318 ) Purchase of investments (606,366 ) (319,322 ) Sales and
maturities of investments 456,738 286,155 Proceeds from asset sales
14,102 � Investments in acquisitions and equity method investee,
net of cash acquired � (36,001 ) � (66,772 ) Net cash used in
investing activities � (225,464 ) � (150,257 ) Cash flows from
financing activities: Proceeds from exercise of stock options 5,464
6,953 Proceeds from borrowings 212,000 94,359 Payment of long-term
debt and notes payable (181,981 ) (17,355 ) Excess tax benefits
from stock compensation � 3,043 Common stock repurchases (9,541 )
(7,833 ) Debt issue costs � (5,181 ) � (253 ) Net cash provided by
financing activities � 20,761 � � 78,914 � Net (decrease) increase
in cash and cash equivalents � (2,463 ) � 123,689 � Cash and cash
equivalents, beginning of period � 271,047 � � 147,358 � Cash and
cash equivalents, end of period $ 268,584 � $ 271,047 � � Interest
paid $ 11,945 $ 10,680 Income taxes paid $ 7,348 $ 16,418 �
Supplemental schedule of non-cash investing and financing
activities: Property acquired under capital leases $ 1,736 $ 366 �
CENTENE CORPORATION � CONTINUING OPERATIONS SUPPLEMENTAL FINANCIAL
DATA � � Q4 � Q3 � Q2 � Q1 2007 2007 2007 2007 MEMBERSHIP Medicaid
Managed Care: Georgia 287,900 286,200 281,400 291,300 Indiana
154,600 156,300 161,700 176,700 New Jersey 57,300 58,300 59,100
59,100 Ohio 128,700 127,500 128,200 118,300 South Carolina 31,800
29,300 31,100 � Texas 354,400 347,000 333,900 318,500 Wisconsin
131,900 132,700 136,100 139,400 TOTAL 1,146,600 1,137,300 1,131,500
1,103,300 � Medicaid 848,100 841,600 846,900 839,600 SCHIP 224,400
223,500 216,500 211,200 SSI 74,100 72,200 68,100 52,500 TOTAL
1,146,600 1,137,300 1,131,500 1,103,300 � Specialty Services(a):
Arizona 99,900 99,000 95,200 93,600 Kansas 39,000 35,600 37,500
36,600 TOTAL 138,900 134,600 132,700 130,200 � (a) Includes
behavioral health contracts only. � REVENUE PER MEMBER(b) $ 210.34
$ 201.05 $ 193.09 $ 178.55 � CLAIMS(b) Period-end inventory 312,700
265,400 281,000 317,600 Average inventory 288,700 319,900 248,200
228,600 Period-end inventory per member 0.28 0.24 0.26 0.29 � (b)
Revenue per member and claims information are presented for the
Medicaid Managed Care segment. � � Q4 � � Q3 � � Q2 � � Q1 2007
2007 2007 2007 � DAYS IN CLAIMS PAYABLE (c) 49.1 49.1 46.2 45.6 (c)
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. � CASH AND INVESTMENTS
(in millions) Regulated $ 626.2 $ 593.6 $ 527.9 $ 491.0 Unregulated
� 33.0 � � 45.9 � � 65.8 � � 71.8 � TOTAL $ 659.2 � $ 639.5 � $
593.7 � $ 562.8 � � DEBT TO CAPITALIZATION (d) 33.3 % 33.1 % 34.0 %
35.3 % (d) Debt to Capitalization is calculated as follows: total
debt divided by (total debt + equity). HEALTH BENEFITS RATIO BY
CATEGORY: � � Three Months Ended December 31, � � Year Ended
December 31, 2007 � 2006 2007 � 2006 Medicaid and SCHIP 84.0 % 85.4
% 83.2 % 84.3 % SSI 94.5 92.2 92.0 88.0 Specialty Services 74.9
80.5 78.2 82.6 GENERAL AND ADMINISTRATIVE EXPENSE RATIO BY BUSINESS
SEGMENT: � � Three Months Ended December 31, � � Year Ended
December 31, 2007 � 2006 2007 � 2006 Medicaid Managed Care 11.8 %
10.4 % 11.1 % 11.4 % Specialty Services 15.4 14.5 15.4 17.1 MEDICAL
CLAIMS LIABILITIES (In thousands) � Four rolling quarters of the
changes in medical claims liabilities are summarized as follows: �
Balance, December 31, 2006 $ 249,864 Incurred related to: Current
period 2,340,716 Prior period � (16,230 ) Total incurred �
2,324,486 � Paid related to: Current period 2,009,881 Prior period
� 228,613 � Total paid � 2,238,494 � Balance, December 31, 2007 $
335,856 � 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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