Centene (CNC) Reports 2018 EPS Guidance; Confirms 2017 Guidance

Centene Corporation (NYSE: CNC) announced today its 2018 financial guidance. Total revenue is expected to be $60.0 billion to $60.8 billion, representing growth of approximately 26% compared to the midpoint of the 2017 guidance range. Diluted earnings per share are expected to be $4.63 to $4.97, representing an increase of 17% compared to the 2017 guidance range of $4.04 to $4.18. Adjusted diluted earnings per share are expected to be $5.47 to $5.87.

For 2018 guidance purposes and consistent with past practice, the Company is providing combined guidance and has assumed the Fidelis acquisition closes on April 1, 2018; however, the acquisition remains subject to regulatory approval. Additionally, for 2018 guidance purposes, the Company has assumed $2.3 billion of new equity financing becomes outstanding on February 1, 2018 and $1.6 billion of new debt financing becomes outstanding on March 1, 2018. Timing and composition of the financing transactions will be subject to market conditions. If the Fidelis acquisition closing date and related financing would have been assumed to be January 1, 2018, both the top and bottom end of the GAAP and adjusted diluted earnings per share guidance ranges would increase by $0.18 per diluted share and $0.23 per diluted share, respectively. Additionally, the top and bottom end of the total revenue guidance range would increase by approximately $2.8 billion.

For its 2018 fiscal year, the Company expects the following results from continuing operations:

• Total revenues in the range of $60.0 billion to $60.8 billion.
• Health benefits ratio of approximately 86.3% to 86.8%.
• Selling, general and administrative (SG&A) expense ratio of approximately 9.1% to 9.6%.
• Adjusted SG&A expense ratio of approximately 9.0% to 9.5%, excluding Fidelis acquisition related expenses of $70 million to $75 million.
• Effective tax rate of approximately 49.5% to 51.5%.
• Diluted shares outstanding of approximately 201.1 million to 202.1 million.
• Diluted earnings per share of approximately $4.63 to $4.97.
• Adjusted diluted earnings per share of approximately $5.47 to $5.87.

Adjusted diluted earnings per share excludes approximately $0.20 to $0.24 per diluted share of acquisition related expenses and approximately $0.64 to $0.66 per diluted share of amortization of acquired intangible assets.

The Company affirms its 2017 revenue guidance in the previously announced range for total revenues of $47.4 billion to $48.2 billion, diluted earnings per share of approximately $4.04 to $4.18 and adjusted diluted earnings per share of approximately $4.86 to $5.04, which excludes amortization of acquired intangible assets of $0.55 to $0.57 per diluted share, acquisition related expenses of $0.07 to $0.09 per diluted share, and Penn Treaty assessment expense of $0.20 per diluted share. Full year 2017 earnings will be reported on February 6, 2018, at 6:00 AM, with a conference call at 8:30 AM (Eastern Time).

Investor Meeting

Centene Corporation will host an investor meeting tomorrow, including a question-and-answer session, to discuss the details of its guidance at the Pierre Hotel in New York City. The meeting will begin promptly at 8:30 AM (Eastern Time) and end approximately at 12:30 PM (Eastern Time). Investors and other interested parties who are unable to attend in person are invited to listen to the investor meeting via a live, audio webcast on the Company's website and view a copy of the investor presentation at www.centene.com, under the Investors section.

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 to allow management to focus on period-to-period changes in the Company's core business operations. 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, acquisition related expenses, as well as other items, allows investors to develop a more meaningful understanding of the Company's performance over time. The table below provides reconciliations of non-GAAP items ($ in millions, except per share data):

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