- 2023 Adjusted Diluted EPS of $6.25 to $6.40
- Announces Long-Term Adjusted Diluted EPS CAGR Target of 12%
- 15%
- Board Authorizes $2 Billion
Increase to Stock Repurchase Program
ST.
LOUIS, Dec. 16, 2022 /PRNewswire/ -- Centene
Corporation (NYSE: CNC) today will host its investor day to
outline its 2023 financial guidance as well as provide updates on
its long-term strategic plan, designed to deliver
long-term shareholder value.
"We are pleased with the progress we have made on our Value
Creation Plan in 2022. The momentum we have built will propel us
into 2023 and beyond," said Sarah M.
London, Chief Executive Officer of Centene. "We look forward
to sharing more about Centene's long-term strategy and our plan to
deliver profitable growth and increasing value to shareholders into
the future during our investor day."
For its 2023 fiscal year, the Company's guidance is as
follows:
- Total revenues of $137.4 billion
to $139.4 billion.
- Premium and service revenues of $129.5
billion to $131.5
billion.
- Diluted earnings per share (EPS) of $5.25 to $5.40.
- Adjusted diluted EPS of $6.25 to
$6.40.
- Health benefits ratio of 87.2% to 87.8%.
- Selling, general and administrative (SG&A) expense ratio of
8.2% to 8.7%.
- Adjusted SG&A expense ratio of 8.2% to 8.7%.
- Effective tax rate of 22.8% to 23.8%.
- Adjusted effective tax rate of 24.4% to 25.4%.
- Diluted shares outstanding of 557.5 million to 560.5
million.
In addition, in preparation for the Magellan Specialty
divestiture, as well as planning for the future, the Company also
announced today that its Board of Directors has authorized a
$2.0 billion increase to the
Company's existing stock repurchase program. The increase is in
addition to the approximately $950 million remaining under the
previously authorized program.
The Company reaffirms its 2022 total revenues guidance in the
previously announced range of $142.7
billion to $144.7 billion and
adjusted diluted EPS guidance in the previously announced range of
$5.65 to $5.75. Full year 2022 earnings will be reported
on February 7, 2023, at 6:00 a.m.
(Eastern Time), with a conference call at 8:30 a.m. (Eastern Time).
Investor Meeting
Centene Corporation will host an investor meeting today live
from the New York Stock Exchange, including a question-and-answer
session. The event will begin promptly at 8:30 a.m. (Eastern Time) and end at approximately
12:00 p.m. (Eastern Time).
In-person attendance to the event is by invitation only. All
other investors and interested parties are invited to participate
via live webcast on the Company's website at www.centene.com, under
the Investors section, or directly via the following link at:
https://event.webcasts.com/starthere.jsp?ei=1584203&tp_key=4237d69e19.
Investors can also access the investor presentation online at
https://investors.centene.com/news-events/events-presentations
beginning at approximately 8:15 a.m.
(Eastern Time).
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 in evaluating the Company's
performance and for planning purposes, by allowing management to
focus on period-to-period changes in the Company's core business
operations, and in determining employee incentive compensation.
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 and acquisition and divestiture related expenses,
as well as other items, allows investors to develop a more
meaningful understanding of the Company's core performance over
time.
The Company references adjusted effective tax rate guidance,
which excludes acquisition related expenses and amortization of
acquired intangible assets, as well as other items. The Company
also references a long-term adjusted diluted EPS CAGR target. These
items cannot be reconciled without unreasonable effort. The
Company references adjusted SG&A expense ratio guidance, which
excludes estimated acquisition related expenses of approximately
$36 million and estimated real estate
rationalization costs of approximately $14
million. The Company is unable to provide a reconciliation
of its 2022 Adjusted Diluted EPS guidance range to the
corresponding GAAP measure without unreasonable effort. The 2022
adjusted diluted EPS guidance excludes the items we typically
adjust on a non-GAAP basis.
The tables below provide reconciliations of non-GAAP items ($ in
millions, except per share data):
|
Annual Guidance
December 31, 2023
|
|
GAAP diluted
EPS
|
$5.25 -
$5.40
|
Amortization of
acquired intangible assets
|
~$1.31
|
Acquisition related
expenses
|
~$0.07
|
Other adjustments
(1)
|
~$0.10
|
Income tax effects of
adjustments (2)
|
~$(0.48)
|
Adjusted diluted
EPS
|
$6.25 -
$6.40
|
(1)
|
Other adjustments
include an estimated $0.10 ($0.07 after-tax) of real estate
rationalization costs.
|
(2)
|
The income tax effects
of adjustments are based on the effective income tax rates
applicable to each adjustment. The twelve months ended December 31,
2023 also includes a one-time income tax benefit of $0.12 resulting
from the vesting of long-term stock awards distributable to the
estate of Mr. Neidorff during Q1 2023.
|
About Centene Corporation
Centene Corporation, a Fortune 500 company, is a leading
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 the nation, including
Medicaid and Medicare members (including Medicare Prescription Drug
Plans) as well as individuals and families served by
the Health Insurance Marketplace, the TRICARE program, and
individuals in correctional facilities. The Company also contracts
with other healthcare and commercial organizations to provide a
variety of specialty services focused on treating the whole
person. Centene focuses on long-term growth and value
creation as well as the development of 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, https://investors.centene.com/.
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, value creation strategy,
competition, expected activities in connection with completed and
future acquisitions and dispositions, our 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: our ability to accurately predict and effectively manage health
benefits and other operating expenses and reserves, including
fluctuations in medical utilization rates due to the ongoing impact
of COVID-19; 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; the risk that the
election of new directors, changes in senior management, and any
inability to retain key personnel may create uncertainty or
negatively impact our ability to execute quickly and effectively;
uncertainty as to the expected financial performance of the
combined company following the recent completion of the acquisition
of Magellan Health, Inc. (the Magellan Acquisition); the
possibility that the expected synergies and value creation from the
Magellan Acquisition or the acquisition of WellCare Health Plans,
Inc. (the WellCare Acquisition) (or other acquired businesses) will
not be realized, or will not be realized within the respective
expected time periods; disruption from the integration of the
Magellan Acquisition or from the integration of the WellCare
Acquisition; unexpected costs, or similar risks, from other
acquisitions or dispositions we may announce or complete from time
to time, 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 the closing conditions,
including applicable regulatory approvals, for the pending
disposition of Magellan Specialty Health may be delayed or not
obtained; impairments to real estate, investments, goodwill and
intangible assets; a downgrade of the credit rating of our
indebtedness; 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 ACA) and any
regulations enacted thereunder that may result from changing
political conditions, the current administration or judicial
actions; 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;
tax matters; disasters or major epidemics; changes in expected
contract start dates; provider, state, federal, foreign 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 legal or regulatory proceedings
or matters, including, but not limited to, our ability to resolve
claims and/or allegations made by states with regard to past
practices, including at Envolve Pharmacy Solutions, Inc. (Envolve),
as our pharmacy benefits manager (PBM) subsidiary, within the
reserve estimate we previously recorded and on other acceptable
terms, or at all, or whether additional claims, reviews or
investigations relating to our PBM business will be brought by
states, the federal government or shareholder litigants, or
government investigations; the timing and extent of benefits from
our value creation strategy, including the possibility that the
benefits received may be lower than expected, may not occur, or
will not be realized within the expected time periods; challenges
to our contract awards; cyber-attacks or other privacy or data
security incidents; 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 or dispositions; any changes
in expected closing dates, estimated purchase price and accretion
for acquisitions or dispositions; restrictions and limitations in
connection with our indebtedness; the 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