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Centene profits from Affordable Care Act business, Health Net acquisition

Fourth quarter challenges included an increase in flu-related costs and additional expense due to the lack of cost sharing reduction payments.

Susan Morse, Senior Editor

Centene Corporation on Tuesday reported net profit from operations of $889 million, compared to $727 million in 2016.

The company benefited from tax reform and additional business in the Affordable Care Act market, as well as improved performance in Medicaid, including positive rate adjustments, it said.

[Also: Centene's profits tied to exchange business rise]

As other insurers have exited the ACA market due to financial losses and market instability, Centene last month expanded its health insurance marketplace business by entering three additional states: Kansas, Missouri and Nevada. It also extended its footprint in  Florida, Georgia, Indiana, Ohio, Texas, and Washington.

Centene specializes in Medicare, Medicaid and the ACA market.

[Also: Centene hit with federal lawsuit claiming inadequate provider access]

As of Dec. 31, 2017, the company reported managed care membership of 12.2 million, an increase of 765,300 members, or 7 percent over 2016.

For the fourth quarter, Centene showed a profit of $173 million, down from $210 million during the same period last year.

Fourth quarter challenges included an increase in flu-related costs over the third quarter of 2017, and additional expense due to the lack of federal funding for cost sharing reduction payments, the company said.

But total revenues increased by 8 percent during the fourth quarter to $12.8 billion, from $11.9 billion in the comparable period in 2016. 

For the full year, revenues were $48.4 billion, representing 19 percent growth year-over-year. The increase was primarily a result of a full year of Health Net's results, Centene said.

Centene acquired insurance provider Health Net in 2016. The merger helped to expand Centene's government products.

In January, Health Net Federal Services began operating under the Tricare West Region contract to provide administrative services to military beneficiaries.

For 2018, Centene said it projects an increase in total revenues and earnings associated with higher membership expectations for its ACA business.

Centene has also expanded its Medicare offerings in Arkansas, Indiana, Kansas, Louisiana, Missouri, Pennsylvania, South Carolina, and Washington, and has extended its footprint in Ohio.

"The strong fourth quarter and full year results for 2017 provide positive momentum heading into 2018 as we continue to focus on revenue growth and margin expansion," CEO Michael Neidorff said.

Twitter: @SusanJMorse
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