CNC Centene Corp

Centene Corporation (NYSE: CNC) today announced its net earnings from continuing operations for the quarter ended March 31, 2009 were $18.9 million, or $0.43 per diluted share, compared to $24.9 million, or $0.56 per diluted share in the 2008 first quarter. The prior year first quarter results include the benefit of the July 1 through December 31, 2007 rate increase for Georgia, amounting to $12.6 million of earnings from continuing operations or $0.28 per diluted share. The results of operations for University Health Plans, or UHP, our New Jersey health plan, are classified as discontinued operations. Unless specifically noted, the discussions below are in the context of continuing operations and all financial ratios are calculated using revenues excluding premium taxes and investment income.

First Quarter Highlights

• Quarter-end managed care at-risk membership of 1.25 million.
• Revenues of $932.4 million, or $908.9 million net of premium taxes.
• Health Benefits Ratio (HBR), which reflects medical costs as a percent of premium revenues, of 83.5%.
• General and administrative (G&A) expense ratio of 13.5%.
• Cash flow from operations of $23.4 million.
• Days in claims payable of 45.3.
• Diluted earnings per share from continuing operations of $0.43.

Other Events

• In February 2009, we began converting�non-risk managed care membership in Florida from Access Health Solutions, LLC, or Access, to our wholly owned subsidiary, Sunshine State Health Plan on an at-risk basis. We previously accounted for our Florida investment using the equity method of accounting. Beginning with the first quarter of 2009, we have reported our investment in Access as a consolidated subsidiary in our financial statements.
• In March 2009, we completed the previously announced acquisition of certain assets of Amerigroup Community Care of South Carolina.
• In March 2009, our�Celtic�unit�was awarded�a contract in Massachusetts to�serve�uninsured�individuals through a joint venture with�a leading, local provider, Caritas Christi Health Care.�Effective July 1, 2009, the joint venture will serve the Central, Northern, Boston and Southern regions operating as CeltiCare Health Plan of Massachusetts.
• We were awarded Silver Honors for Best Practices in Health Management by URAC, a leading healthcare accreditation organization, for Connections PLUS, a free, pre-programmed cell phone program developed for high-risk members who do not have steady access to a telephone.

Michael F. Neidorff, Centene�s Chairman and Chief Executive Officer, stated, �Our first quarter results reflect favorably on our�focus on fundamentals and teamwork. We will continue to work to maintain this momentum going forward.�

The following table depicts membership in Centene�s managed care organizations, by state, at March 31, 2009 and 2008:

� � March 31, 2009 � � 2008 Arizona 15,500 � Florida 29,100 � Georgia 289,300 282,700 Indiana 179,100 161,300 Ohio 137,000 131,100 South Carolina 48,500 2,200 Texas 421,100 365,500 Wisconsin 127,700 126,900 Total at-risk membership 1,247,300 1,069,700 Non-risk membership 96,000 30,600 Total 1,343,300 1,100,300

The following table depicts membership in Centene�s managed care organizations, by member category, at March 31, 2009 and 2008:

� � March 31, 2009 � � 2008 Medicaid 921,100 802,400 CHIP & Foster Care 256,900 206,300 ABD & Medicare 69,300 61,000

Total at-risk membership

1,247,300 1,069,700 Non-risk membership 96,000 30,600 Total 1,343,300 1,100,300

Statement of Operations

• For the 2009 first quarter, revenues, net of premium taxes, increased 20.0% to $908.9 million from $757.3 million in the 2008 first quarter. The increase was primarily driven by membership growth, especially related to the Foster Care contract in Texas, the commencement of our Arizona acute care contract in October 2008, the consolidation of Access and conversion of members to at-risk, premium rate increases and the recent acquisition of Celtic in July 2008.
• The consolidated HBR, which reflects medical costs as a percent of premium revenues, was 83.5%, an increase from 82.7% in the 2008 first quarter. The retroactive Georgia premium rate increase in the first quarter of 2008 had the effect of decreasing the HBR for this period by 2.4%. Adjusting for the impact due to the Georgia rate increase, our HBR decreased from 85.1% in 2008 to 83.5% in 2009. This is due to a decrease in respiratory illness as a result of a lighter cold and flu season. Sequentially, our consolidated HBR increased from 82.3% in the 2008 fourth quarter to 83.5% as a result of normal seasonality and the addition of a new state and acquired members.
• Consolidated G&A expense as a percent of premium and service revenues was 13.5% in the first quarter of 2009, an increase from 12.6% in the first quarter of 2008. The retroactive Georgia premium rate increase in the first quarter of 2008 had the effect of decreasing the G&A ratio for this period by 0.4%. Adjusting for the impact due to the Georgia rate increase, our G&A expense ratio increased from 13.0% in 2008 to 13.5% in 2009. G&A increased in the quarter ended March 31, 2009 compared to 2008 primarily due to the acquisition of Celtic. Sequentially, our G&A ratio decreased from 13.8% in the fourth quarter of 2008 to 13.5% in the first quarter of 2009.

Balance Sheet and Cash Flow

At March 31, 2009, the Company had cash and investments of $845.7 million, including $816.8 million held by its regulated entities and $28.9 million held by its unregulated entities. Medical claims liabilities totaled $372.5 million, representing 45.3 days in claims payable, a decrease of 3.2 days from December 31, 2008. Total debt was $290.3 million and debt to capitalization was 34.6%. Year to date cash flow from operations was $23.4 million.

A reconciliation of the Company�s change in days in claims payable from the immediately preceding quarter-end is presented below:

Days in claims payable, December 31, 2008 � � 48.5 Timing of claims payments (1.4 ) Change in medical cost mix (1.0 ) High dollar claims inventory reduction (0.7 ) Other (0.1 ) Days in claims payable, March 31, 2009 * 45.3 �

* The Company has used a consistent and conservative actuarial reserving methodology and the decline in days in claims payable was not the result of a reserve release.

Outlook

The table below depicts the Company�s annual guidance for 2009:

� � Full Year 2009 Low � � High Revenue (in millions)1 $ 3,650 $ 3,775 Earnings per diluted share $ 1.84 $ 1.94

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1 Revenue net of premium tax

The Company is adjusting the lower end of its earnings guidance to reflect a lower effective tax rate which is partially offset by the startup costs associated with the new Massachusetts CeltiCare contract that commences July 1, 2009.

Conference Call

As previously announced, the Company will host a conference call Tuesday, April 28, 2009, at 8:30 A.M. (Eastern Time) to review the financial results for the first quarter ended March 31, 2009, 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, 973-638-3440 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 May 12, 2009 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 93132567.

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 Children�s Health Insurance Program (CHIP), as well as Aged, Blind, or Disabled (ABD), Foster Care, Long-Term Care and Medicare (Special Needs Plans). The Company operates local health plans and offers a wide range of health insurance solutions to individuals and the rising number of uninsured Americans. It also contracts with other healthcare and commercial organizations to provide specialty services including behavioral health, life and health management, managed vision, telehealth services, pharmacy benefits management and medication adherence. 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.

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CENTENE CORPORATION AND SUBSIDIARIES

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CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

� � �

March 31,

2009

� �

December 31,

2008

(Unaudited) ASSETS Current assets: Cash and cash equivalents of continuing operations $ 334,623 $ 370,999 Cash and cash equivalents of discontinued operations � 7,606 � 8,100 Total cash and cash equivalents 342,229 379,099 Premium and related receivables, net of allowance for uncollectible accounts of $138 and $595, respectively 147,899 92,531 Short-term investments, at fair value (amortized cost $74,780 and $108,469, respectively) 75,400 109,393 Other current assets 63,497 75,333 Current assets of discontinued operations other than cash � 8,226 � 9,987 Total current assets 637,251 666,343 Long-term investments, at fair value (amortized cost $416,265 and $329,330, respectively) 422,873 332,411 Restricted deposits, at fair value (amortized cost $12,660 and $9,124, respectively) 12,774 9,254 Property, software and equipment, net of accumulated depreciation of $80,742 and $74,194, respectively 176,719 175,858 Goodwill 218,216 163,380 Intangible assets, net 23,603 17,575 Other long-term assets 34,077 59,083 Long-term assets of discontinued operations � 27,317 � 27,248 Total assets $ 1,552,830 $ 1,451,152 LIABILITIES AND STOCKHOLDERS� EQUITY Current liabilities: Medical claims liability $ 372,522 $ 373,037 Accounts payable and accrued expenses 194,132 219,566 Unearned revenue 63,336 17,107 Current portion of long-term debt 20,608 255 Current liabilities of discontinued operations � 30,865 � 31,013 Total current liabilities 681,463 640,978 Long-term debt 269,711 264,637 Other long-term liabilities 51,434 43,539 Long-term liabilities of discontinued operations � 700 � 726 Total liabilities 1,003,308 949,880 � Commitments and contingencies � Stockholders� equity: Common stock, $.001 par value; authorized 100,000,000 shares; issued and outstanding 43,159,131 and 42,987,764 shares, respectively 43 43 Additional paid-in capital 227,327 222,841 Accumulated other comprehensive income: Unrealized gain on investments, net of tax 5,136 3,152 Retained earnings � 293,694 � 275,236 Total Centene stockholder�s equity 526,200 501,272 Non-controlling interest � 23,322 � � Total stockholders� equity � 549,522 � 501,272 Total liabilities and stockholders� equity $ 1,552,830 $ 1,451,152 �

CENTENE CORPORATION AND SUBSIDIARIES

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CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

� � � Three Months Ended

March 31,

2009 � � 2008 (Unaudited) Revenues: Premium $ 885,006 $ 736,814 Premium tax 23,580 21,884 Service � 23,849 � � 20,530 � Total revenues � 932,435 � � 779,228 � Expenses: Medical costs 739,340 609,374 Cost of services 15,962 16,176 General and administrative expenses 122,279 95,493 Premium tax � 23,942 � � 21,884 � Total operating expenses � 901,523 � � 742,927 � Earnings from operations 30,912 36,301 Other income (expense): Investment and other income 3,613 7,582 Interest expense � (3,986 ) � (3,994 ) Earnings from continuing operations, before income tax expense 30,539 39,889 Income tax expense � 10,845 � � 14,956 � Earnings from continuing operations, net of income tax expense 19,694 24,933 Discontinued operations, net of income tax (benefit) expense of $(160) and $264 � (449 ) � 690 � Net earnings 19,245 25,623 Less: Non-controlling interest � 787 � ? Net earnings attributable to Centene Corporation $ 18,458 � $ 25,623 � � Amounts attributable to Centene Corporation common shareholders: Earnings from continuing operations, net of income tax expense 18,907 24,933 Discontinued operations, net of income tax (benefit) expense � (449 ) � 690 � Net earnings $ 18,458 � $ 25,623 � � Net earnings (loss) per share attributable to Centene Corporation: Basic: Continuing operations $ 0.44 $ 0.57 Discontinued operations � (0.01 ) � 0.02 � Earnings per common share $ 0.43 � $ 0.59 � Diluted: Continuing operations $ 0.43 $ 0.56 Discontinued operations � (0.01 ) � 0.01 � Earnings per common share $ 0.42 � $ 0.57 � � Weighted average number of shares outstanding: Basic 43,067,992 43,538,207 Diluted 44,238,863 44,742,893 �

CENTENE CORPORATION AND SUBSIDIARIES

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

� � � Three Months Ended March 31, 2009 � � 2008 (Unaudited) � Cash flows from operating activities: Net earnings $ 19,245 $ 25,623 Adjustments to reconcile net earnings to net cash provided by operating activities Depreciation and amortization 10,233 7,798 Stock compensation expense 3,789 4,013 Loss on sale of investments, net 439 28 Deferred income taxes 2,282 9,472 Changes in assets and liabilities � Premium and related receivables (39,396 ) 8,612 Other current assets (1,397 ) (2,634 ) Other assets (497 ) (1,031 ) Medical claims liabilities (1,232 ) 11,608 Unearned revenue 44,507 (41,788 ) Accounts payable and accrued expenses (15,277 ) 4,489 Other operating activities � 722 � � 526 � Net cash provided by operating activities � 23,418 � � 26,716 � Cash flows from investing activities: Capital expenditures (11,157 ) (19,879 ) Purchases of investments (292,964 ) (86,025 ) Sales and maturities of investments 224,312 70,888 Investments in acquisitions, net of cash acquired, and investment in equity method investee � (5,191 ) � (2,194 ) Net cash used in investing activities � (85,000 ) � (37,210 ) Cash flows from financing activities: Proceeds from exercise of stock options 890 1,148 Proceeds from borrowings 108,000 26,005 Payment of long-term debt (82,573 ) (17,148 ) Dividend to non-controlling interest (1,181 ) ? Excess tax benefits from stock compensation (17 ) 2,638 Common stock repurchases � (407 ) � (6,953 ) Net cash provided by financing activities � 24,712 � � 5,690 � Net decrease in cash and cash equivalents � (36,870 ) � (4,804 ) Cash and cash equivalents, beginning of period � 379,099 � � 268,584 � Cash and cash equivalents, end of period $ 342,229 � $ 263,780 � � Supplemental disclosures of cash flow information: Interest paid $ 724 $ 463 Income taxes paid $ 18,602 $ 792 �

CENTENE CORPORATION

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CONTINUING OPERATIONS SUPPLEMENTAL FINANCIAL DATA

� � � Q1 � � Q4 � � Q3 � � Q2 � � Q1 2009 2008 2008 2008 2008 MEMBERSHIP Managed Care: Arizona 15,500 14,900 � � � Florida 29,100 � � � � Georgia 289,300 288,300 283,900 278,800 282,700 Indiana 179,100 175,300 172,400 161,700 161,300 Ohio 137,000 133,400 132,500 137,300 131,100 South Carolina 48,500 31,300 26,600 22,500 2,200 Texas 421,100 428,000 433,200 423,700 365,500 Wisconsin � 127,700 � � 124,800 � � 122,500 � � 124,800 � � 126,900 � Total at-risk membership � 1,247,300 � � 1,196,000 � � 1,171,100 � � 1,148,800 � � 1,069,700 � Non-risk membership � 96,000 � � 3,700 � � 3,700 � � 3,500 � � 30,600 � TOTAL � 1,343,300 � � 1,199,700 � � 1,174,800 � � 1,152,300 � � 1,100,300 � � Medicaid 921,100 877,400 850,500 828,700 802,400 SCHIP & Foster Care 256,900 257,300 261,800 256,900 206,300 ABD & Medicare � 69,300 � � 61,300 � � 58,800 � � 63,200 � � 61,000 � Total at-risk membership � 1,247,300 � � 1,196,000 � � 1,171,100 � � 1,148,800 � � 1,069,700 � Non-risk membership � 96,000 � � 3,700 � � 3,700 � � 3,500 � � 30,600 � TOTAL � 1,343,300 � � 1,199,700 � � 1,174,800 � � 1,152,300 � � 1,100,300 � � Specialty Services(a): Cenpatico Behavioral Health Arizona 104,700 105,000 102,400 99,400 97,900 Kansas 40,600 41,100 40,100 40,000 39,400 Bridgeway Health Solutions Long-term Care � 2,300 � � 2,100 � � 1,900 � � 1,800 � � 1,700 � TOTAL � 147,600 � � 148,200 � � 144,400 � � 141,200 � � 139,000 � �

(a) Includes external Specialty Service membership only.

� REVENUE PER MEMBER(b) $ 220.29 $ 218.52 $ 213.28 $ 214.76 $ 215.39 � CLAIMS(b) Period-end inventory

325,000

�

269,300

�

323,200

�

389,100

�

411,700

�

Average inventory 267,600 288,600 298,400 235,300 285,700 Period-end inventory per member 0.26 0.23 0.28 0.34 0.37 �

(b) Revenue per member and claims information are presented for the Medicaid Managed Care segment for at-risk members.

� � Q1 � � Q4 � � Q3 � � Q2 � � Q1 2009 2008 2008 2008 2008 �

DAYS IN CLAIMS PAYABLE(c)

45.3 48.5 47.9 47.8 48.3 � (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 $ 816.8 $ 798.0 $ 692.6 $ 653.1 $ 627.1 Unregulated � 28.9 � � 24.1 � � 26.8 � � 29.0 � � 25.8 � TOTAL $ 845.7 � $ 822.1 � $ 719.4 � $ 682.1 � $ 652.9 � �

DEBT TO CAPITALIZATION(d)

34.6 % 34.6 % 34.4 % 32.6 % 32.8 % � (d) Debt to Capitalization is calculated as follows: total debt divided by (total debt + total equity). �

OPERATING RATIOS:

� � � Three Months Ended

March 31,

2009 � � 2008 Health Benefits Ratios Medicaid and SCHIP 84.8 % 79.2 % ABD and Medicare 81.4 97.5 Specialty Services 78.3 84.1 Total 83.5 82.7 � General & Administrative Expense Ratios Medicaid Managed Care 10.3 % 9.9 % Specialty Services 15.7 14.9 Total 13.5 12.6 � MEDICAL CLAIMS LIABILITIES (In thousands) Four rolling quarters of the changes in medical claims liabilities are summarized as follows: � Balance, March 31, 2008 � � $ 323,302 Acquisitions 15,398 Incurred related to: Current period 2,793,935 Prior period � (23,634 ) Total incurred � 2,770,301 � Paid related to: Current period 2,448,657 Prior period � 287,822 � Total paid � 2,736,479 � Balance, March 31, 2009 $ 372,522 �

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.