雅虎香港財經 Centene (CNC) Q1 Earnings Beat on Premiums, '24 EPS View Hiked
Centene Corporation CNC reported first-quarter 2023 adjusted earnings per share (EPS) of $2.26, which outpaced the Zacks Consensus Estimate by 8.1%. The bottom line improved 7.1% year over year.
Revenues advanced 3.9% year over year to $40.4 billion. The top line beat the consensus mark by 11%.
The quarterly results benefited on the back of solid Marketplace membership growth and contract wins, which fetched improved premiums to the health insurer. Steady growth of the Medicare business also contributed to the upside. However, the positives were partly offset by elevated operating costs and a fall in Medicaid membership.
Centene Corporation Price, Consensus and EPS Surprise
Centene Corporation price-consensus-eps-surprise-chart | Centene Corporation Quote
Quarterly Operational Update
Revenues from Medicaid amounted to $21.5 billion, which slipped 3% year over year in the quarter under review, while Medicare revenues inched up 1% year over year to $5.9 billion. Additionally, commercial revenues of $7.8 billion climbed 48% year over year.
Premiums of Centene rose 5% year over year to $35.5 billion, higher than the Zacks Consensus Estimate of $33 billion. The improvement came on the back of a growing customer base in the Marketplace business as a result of solid product positioning and growth in the overall market, partly offset by a decline in Medicaid membership stemming from redeterminations.
Service revenues of $808 million dropped 28.3% year over year and also missed the consensus mark of $993 million. Investment and other income soared 54.4% year over year to $545 million, higher than the consensus mark of $383 million.
As of Mar 31, 2024, total membership was 28.4 million, which dipped marginally year over year but surpassed the Zacks Consensus Estimate of 25.5 million and our estimate of 27.1 million. Membership in the Commercial business witnessed a significant year-over-year increase in the first quarter, offsetting the decline in Medicaid and Medicare memberships.
The Health Benefits Ratio (HBR) of CNC deteriorated 10 basis points year over year to 87.1% but reflected an improvement from our estimate of 87.3%.
Adjusted net earnings grew 4.1% year over year to $1.22 billion, higher than our estimate of $1.17 billion.
Total operating expenses of $39.3 billion increased 4.3% year over year in the quarter under review, higher than our estimate of $34.9 billion. The increase was due to elevated medical costs, selling, general and administrative (SG&A) expenses, and premium tax expenses. The three expense components escalated 5.1%, 6.9% and 3.7%, respectively, on a year-over-year basis.
Adjusted SG&A expense ratio deteriorated 20 basis points year over year to 8.7% due to an expanding Marketplace business and Medicare distribution costs.
Financial Update (as of Mar 31, 2024)
Centene exited the first quarter with cash and cash equivalents of $17.6 billion, which advanced 2.3% from the 2023-end level. Total assets of $82.6 billion slipped 2.4% from the figure at 2023 end.
Long-term debt amounted to $17.9 billion, which inched up 1% from the figure as of Dec 31, 2023. The current portion of long-term debt totaled $113 million.
Total stockholders’ equity of $27 billion decreased 4.3% from the 2023-end figure.
Net cash used in operating activities was $456 million in the quarter under review against net cash generated from operations of $4.3 billion in the year-ago quarter.
Share Repurchase Update
Centene bought back common shares worth $51 million in the first quarter. It pursued additional share buybacks of $200 million in April 2024. A leftover capacity of $5 billion remained under the company’s share repurchase authorization as of Apr 26, 2024.
2024 Guidance Revised
Management anticipates premium and service revenues within $135.5-$138.5 billion, up from the prior guidance of $134.5-$137.5 billion. The midpoint of the updated outlook indicates a decline of 2.2% from the 2023 reported figure.
Revenues are estimated to be between $147.5 billion and $150.5 billion in 2024, higher than the prior outlook of $142.5-$145.5 billion. The midpoint of the revised guidance suggests a 3.2% fall from the 2023 figure.
Adjusted EPS is forecasted to be greater than $6.80, up from the earlier view of greater than $6.70. The figure reflects an increase of 1.8% from the 2023 figure. GAAP EPS is expected to remain greater than $5.94 in 2024.
HBR is reaffirmed to be in the range of 87.3-87.9%. The company continues to expect an adjusted SG&A expense ratio within 8.4-9%. Adjusted effective tax rate is anticipated within 24.1-25.1%.
Shares outstanding continue to be anticipated between 522.2 million and 525.2 million.
Zacks Rank
Centene currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Medical Sector Releases
Of the Medical sector players that have reported first-quarter 2024 results so far, the bottom-line results of Universal Health Services, Inc. UHS, Molina Healthcare, Inc. MOH and Humana Inc. HUM beat the respective Zacks Consensus Estimate.
Universal Health reported first-quarter 2024 adjusted EPS of $3.70, which beat the Zacks Consensus Estimate by 17.8%. The bottom line rose 58.1% year over year from the year-ago period. Net revenues amounted to $3.8 billion in the quarter under review, which rose from $3.5 billion a year ago. The top line outpaced the consensus mark by 2%. Adjusted EBITDA net of NCI rose 24.9% year over year to $525.8 million.
In the Acute Care Hospital Services segment, adjusted admissions (adjusted for outpatient activity) advanced 4.5% year over year on a same-facility basis. Adjusted patient days rose 3.4% year over year. Net revenues stemming from UHS’ acute care services improved 9.6% year over year on a same-facility basis. Adjusted admissions in the Behavioral Health Care Services unit declined 0.8% year over year on a same-facility basis, while adjusted patient days increased 2% year over year. On a same-facility basis, net revenues derived from Behavioral Healthcare Services increased 10.4% year over year.
Molina Healthcare’s first-quarter 2024 adjusted EPS of $5.73 beat the Zacks Consensus Estimate by 5%. However, the bottom line dipped 1.4% year over year. Total revenues amounted to $9.9 billion, which improved 21.9% year over year. Also, the top line outpaced the consensus mark by 4.3%. Premium revenues of $9.5 billion climbed 21% year over year.
Investment income soared 52.1% year over year to $108 million. Adjusted general and administrative expense ratio deteriorated 10 basis points year over year to 7.1% in the first quarter. MOH’s adjusted net income dipped 0.9% year over year to $334 million. The consolidated medical care ratio (medical costs as a percentage of premium revenues), or MCR, was 88.5% in the quarter under review. As of Dec 31, 2023, total membership advanced 9% year over year to around 5.7 million.
Humana delivered first-quarter 2024 earnings of $7.23 per share, which beat the Zacks Consensus Estimate by 20.1%. However, the figure declined from earnings of $9.38 per share in the year-ago period. Adjusted revenues rose 14.3% from the previous year, reaching $29.3 billion. Also, the top line exceeded the consensus estimate by 2.6%.
Total premiums amounted to $28.3 billion, which improved 10.6% year over year in the first quarter. Services revenues increased 6.3% year over year to almost $1.1 billion. Investment income of $288 million increased 49.2% year over year in the quarter under review. HUM reported an operating income of $1.2 billion in the first quarter, down from the year-ago income of $1.7 billion. The Insurance segment’s adjusted revenues rose 10.8% year over year to $28.7 billion while adjusted operating income came in at $903 million. As of Mar 31, 2024, the total medical membership of the segment was 16.17 million.
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