ST. LOUIS, March 3, 2020
/PRNewswire/ -- Centene Corporation (NYSE: CNC) announced today its
updated 2020 financial guidance, incorporating the effect of the
closing of the WellCare acquisition on January 23, 2020. Total revenues are expected to
be $104.8 billion to $105.6 billion, and diluted earnings per share
are expected to be $3.00 to
$3.14. Adjusted diluted earnings per
share for 2020 are expected to be $4.56 to $4.76.
"The Company is well positioned to maintain its momentum in
2020," said Michael Neidorff,
Chairman, President and CEO of Centene.
For its 2020 fiscal year, the Company's guidance is as
follows:
- Total revenues in the range of approximately $104.8 billion to $105.6
billion.
- Diluted earnings per share of approximately $3.00 to $3.14.
- Adjusted diluted earnings per share of approximately
$4.56 to $4.76.
- Health benefits ratio of approximately 85.9% to 86.3%.
- Selling, general and administrative (SG&A) expense ratio of
approximately 9.3% to 9.7%.
- Adjusted SG&A expense ratio of approximately 8.9% to 9.3%,
which excludes approximately $385
million of acquisition related expenses.
- Effective tax rate of approximately 38.0% to 40.0%, including
the effect of the Health Insurer fee.
- Diluted shares outstanding of approximately 584.5 million to
587.5 million.
The Company's guidance includes the following:
- A benefit of $0.09 per diluted
share as a result of the timing of the WellCare transaction, which
closed on January 23, 2020. This
includes the effect of the pro-ration of January's results,
substantially offset by the lack of a full year of synergy capture,
and the lower share count due to the timing of the acquisition
closure.
- We received a potential rate decrease from the State of New York on February 6, 2020, which would result in an
overall pre-tax net rate reduction of approximately $200 million. While not final, we have begun to
develop initiatives to mitigate a portion of the potential rates
for 2020. We currently expect $150
million of the adjustment to potentially lower our pre-tax
earnings for the year, resulting in a $0.17 reduction to our GAAP and adjusted diluted
earnings per share guidance.
Conference Call & Presentation
As previously announced, the Company will host a conference call
Wednesday, March 4, 2020, at approximately 8:30 AM (Eastern Time) to review the 2020
financial guidance. Michael Neidorff and Jeffrey Schwaneke will host the conference
call.
The Company has also posted slides to its website under the
investor relations section as a supplement for the conference
call.
Investors and other interested parties are invited to listen to
the conference call by dialing 1-877-883-0383 in the U.S.
and Canada; +1-412-902-6506 from abroad, including the
following Elite Entry Number: 0997408, to expedite caller
registration; or via a live, audio webcast on the Company's website
at www.centene.com, under the Investors section.
A webcast replay will be available for on-demand listening
shortly after the completion of the call for the next 12 months or
until 11:59 p.m. (Eastern Time) on Wednesday, March
3, 2021, at the aforementioned URL. In addition, a digital audio
playback will be available until 9 a.m. (Eastern
Time) on Thursday, March 12, 2020, by dialing
1-877-344-7529 in the U.S. and Canada, or +1-412-317-0088 from
abroad, and entering access code 10139468.
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 guidance,
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:
|
|
Annual
Guidance
December 31, 2020
|
|
|
GAAP diluted
EPS
|
|
$3.00 -
$3.14
|
Amortization of
acquired intangible assets (1)
|
|
$0.97 -
$0.99
|
Acquisition related
expenses (2)
|
|
$0.58 -
$0.62
|
Other adjustments
(3)
|
|
$0.01
|
Adjusted diluted
EPS
|
|
$4.56 -
$4.76
|
|
|
(1)
|
The amortization of
acquired intangible assets per diluted share presented above are
net of the income tax benefit of an estimated $0.30 to $0.32 for
the year ended December 31, 2020.
|
|
|
(2)
|
The acquisition
related expenses per diluted share presented above are net of the
income tax benefit of an estimated $0.09 to $0.10 for the year
ended December 31, 2020.
|
|
|
(3)
|
Other adjustments for
2020 include the gain on the sale of the Illinois health plan of
approximately $0.08 per diluted share (presented net of income tax
expense of $0.07) and debt extinguishment costs of approximately
$0.09 per diluted share (presented net of an income tax benefit of
approximately $0.03).
|
About Centene Corporation
Centene Corporation, a Fortune 100 company, is a leading
multi-national healthcare enterprise that is committed to helping
people live healthier lives. The Company takes a local approach -
with local brands and local teams - to provide fully integrated,
high-quality, and cost-effective services to government-sponsored
and commercial healthcare programs, focusing on under-insured and
uninsured individuals. Centene offers affordable and high-quality
products to nearly 1 in 15 individuals across all 50 U.S. states,
including Medicaid and Medicare members (including the Medicare
Prescription Drug Plan) as well as individuals served by the Health
Insurance Marketplace and the TRICARE program. The Company also
serves several international markets. Centene emphasizes long-term
growth by prioritizing its people, systems and capabilities so that
it can better serve its members, providers, local communities and
government partners.
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
All statements, other than statements of current or
historical fact, contained in this press release are
forward-looking statements. 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 or expressions (and the negative
thereof). Centene (the Company, our, or we) intends such
forward-looking statements to be covered by the safe-harbor
provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, and we are including this
statement for purposes of complying with these safe-harbor
provisions. In particular, these statements include, without
limitation, statements about our future operating or financial
performance, market opportunity, growth strategy, competition,
expected activities in completed and future acquisitions, including
statements about the impact of our recently completed acquisition
(the WellCare Acquisition) of WellCare Health Plans, Inc.
(WellCare), other recent and future acquisitions, investments and
the adequacy of our available cash resources. These
forward-looking statements reflect our current views with respect
to future events and are based on numerous assumptions and
assessments made by us in light of our experience and perception of
historical trends, current conditions, business strategies,
operating environments, future developments and other factors we
believe 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, including economic, regulatory,
competitive and other factors that may cause our or our 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. These statements are not
guarantees of future performance and are subject to risks,
uncertainties and assumptions. All forward-looking statements
included in this press release are based on information available
to us on the date hereof. Except as may be otherwise required by
law, we undertake no obligation to update or revise the
forward-looking statements included in this press release, whether
as a result of new information, future events or otherwise,
after the date hereof. You should not place undue reliance on
any forward-looking statements, as actual results may differ
materially from projections, estimates, or other forward-looking
statements due to a variety of important factors, variables and
events including but not limited to: uncertainty as to our expected
financial performance following completion of the WellCare
Acquisition; the possibility that the expected synergies and value
creation from the WellCare Acquisition will not be realized, or
will not be realized within the expected time period; the risk that
unexpected costs will be incurred in connection with the
integration of the WellCare Acquisition or that the integration of
WellCare will be more difficult or time consuming than expected;
unexpected costs, charges or expenses resulting from the WellCare
Acquisition; the inability to retain key personnel; disruption from
the completion of the WellCare Acquisition, including potential
adverse reactions or changes to business relationships with
customers, employees, suppliers or regulators, making it more
difficult to maintain business and operational relationships; the
risk that, following the WellCare Acquisition, we may not be able
to effectively manage our expanded operations; our 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, collectively referred
to as the Affordable Care Act (ACA) and any regulations enacted
thereunder that may result from changing political conditions or
judicial actions, including the ultimate outcome in "Texas v.
United States of America"
regarding the constitutionality of the ACA; rate cuts or other
payment reductions or delays by governmental payors and other risks
and uncertainties affecting our government businesses; our ability
to adequately price products on the Health Insurance Marketplaces
and other commercial and Medicare products; 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 our 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 our 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 WellCare Acquisition, will not be realized, or will not be
realized within the expected time period; the exertion of
management's time and our 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 acquisitions; disruption
caused by significant completed and pending acquisitions,
including, among others, the WellCare 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; changes
in expected closing dates, estimated purchase price and accretion
for acquisitions; the risk that acquired businesses, including
WellCare, will not be integrated successfully; the risk that we may
not be able to effectively manage our operations as they have
expanded as a result of the WellCare Acquisition; restrictions and
limitations in connection with our indebtedness; our ability to
maintain or 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 us; inflation; foreign
currency fluctuations; and risks and uncertainties discussed in the
reports that Centene has filed with the Securities and Exchange
Commission. This list of important factors is not intended to be
exhaustive. We discuss certain of these matters more fully, as well
as certain other factors that may affect our business operations,
financial condition and results of operations, in our filings with
the Securities and Exchange Commission (SEC), including our annual
report on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K. Due to these important factors and risks, we
cannot give assurances with respect to our future performance,
including without limitation our ability to maintain adequate
premium levels or our ability to control our future medical and
selling, general and administrative costs.
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SOURCE Centene Corporation