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Centene's (CNC) Q4 Earnings Miss Estimates, Improve Y/Y

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Centene Corporation (CNC - Free Report) reported fourth-quarter 2019 adjusted earnings per share of 73 cents, missing the Zacks Consensus Estimate by 1.4%. However, the bottom line improved 5.8% year over year on the back of higher revenues.  

For the fourth quarter, total revenues rose 14% to $18.9 billion from the year-ago period, primarily aided by growth in the Health Insurance Marketplace business, expansions and new programs across many states in 2019 as well as the company’s recent buyouts in Spain. Moreover, the top line surpassed the Zacks Consensus Estimate by 2.2%. However, this upside was offset by the health insurer fee moratorium to some extent. 

Centene Corporation Price, Consensus and EPS Surprise

Centene Corporation Price, Consensus and EPS Surprise

Centene Corporation price-consensus-eps-surprise-chart | Centene Corporation Quote

Quarterly Operational Update

As of Dec 31, 2019, managed care membership came in at 15.2 million, up 8% year over year.

Health Benefit Ratio (HBR) for the reported quarter was 88.4% compared with 86.8% in the prior-year period. This increase can be attributable to the Health Insurance Marketplace business as well as the health insurer fee moratorium.

Adjusted Selling, General & Administrative (SG&A) expense ratio was 9.5% for the fourth quarter of 2019 compared with 9.9% for the same period last year. This contraction of 40 basis points year over year can be attributed to higher revenues and lower variable compensation costs in 2019.

Financial Update

As of Dec 31, 2019, the company's cash and cash equivalents totaled $12.1 billion, up 127% from the figure at 2018 end.

As of Dec 31, 2019, total assets were up 32.7% year over year to $40.9 billion.

Centene’s long-term debt summed $13.6 billion, up 105% year over year.
Net cashflow provided by operating activities as of Dec 31, 2019 was $1.5 billion, up 20.2% year over year.

Highlights

In January 2019, Centene acquired WellCare Health for a total value of $19.6 billion.

Full Update

For 2019, the company came up with adjusted EPS of $4.42, up 25% year over year. Total revenues for the year grew 24% year over year to $74.6 billion.

Zacks Rank

Centene carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases From Medical Sector

Some stocks worth considering from the medical sector with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:

Encompass Health Corporation (EHC - Free Report) is slated to announce fourth-quarter earnings on Feb 6. The stock has an Earnings ESP of +3.40% and is Zacks #3 Ranked.

Molina Healthcare, Inc (MOH - Free Report) has an Earnings ESP of +0.48% and a Zacks Rank of 3. The company is scheduled to release fourth-quarter earnings on Feb 10.

Teladoc Health, Inc. (TDOC - Free Report) is set to report fourth-quarter earnings on Feb 26. The stock is #3 Ranked and has an Earnings ESP of +11.17%.

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