Centene (CNC) Issue 2017 Guidance In-Line with Views

Centene Corporation (NYSE: CNC) announced today its 2017 financial guidance. Total revenue is expected to be $46.0 billion to $46.8 billion (*** consensus is $46 billion), representing growth of approximately 17% compared to the midpoint of the 2016 guidance range. Earnings per diluted share are expected to be $3.78 to $4.22, representing an increase of 44% compared to the 2016 guidance range of $2.73 to $2.83. Adjusted diluted earnings per share are expected to be $4.40 to $4.85 (**** consensus is $4.83). The Company’s 2017 guidance reflects lower margins on the Health Insurance Marketplace business as a result of the uncertainty created by the outcome of the presidential election. This additional conservatism in the Marketplace margins reduced the Company's GAAP and adjusted diluted earnings per share by approximately $0.20 per diluted share for 2017. If the Health Insurance Marketplace business performance is consistent with 2016, the Company's earnings are expected to be at the high end of the guidance range.
For its 2017 fiscal year, the Company expects the following results from continuing operations:

• Total revenues in the range of $46.0 billion to $46.8 billion.

• Consolidated health benefits ratio of approximately 87.0% to 87.5%.

• Consolidated selling, general and administrative (SG&A) expense ratio in the range of 9.0% to 9.5%.

• Consolidated SG&A expense ratio, excluding Health Net acquisition related expenses, of approximately 9.0% to 9.5%.

• Effective tax rate of approximately 39.0% to 41.0%.

• Diluted shares outstanding of approximately 176.9 million to 177.9 million.

• Earnings per diluted share of approximately $3.78 to $4.22.

• Adjusted earnings per diluted share of approximately $4.40 to $4.85.

Adjusted diluted earnings per share excludes approximately $0.01 to $0.03 per diluted share of Health Net acquisition related expenses and approximately $0.57 to $0.62 per diluted share of amortization of acquired intangible assets.

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