Centene (CNC) Misses Q4 EPS by 1c, Revenues Miss; Offers FY21 Revenue Outlook Above Consensus, FY21 EPS Mid-Point Outlook Below Consensus

Centene (NYSE: CNC) reported Q4 EPS of $0.46, $0.01 worse than the analyst estimate of $0.47. Revenue for the quarter came in at $28.29 billion versus the consensus estimate of $28.36 billion.

Fourth Quarter:

• December 31, 2020 managed care membership of 25.5 million, an increase of 10.3 million members, or 67%, over December 31, 2019.
• Total revenues of $28.3 billion for the fourth quarter of 2020, representing 50% growth compared to the fourth quarter of 2019, and $111.1 billion for the full year 2020, representing 49% growth year-over-year.
• Health benefits ratio (HBR) of 88.4% for the fourth quarter of 2020, compared to 88.4% in the fourth quarter of 2019, and 86.2% for the full year 2020, compared to 87.3% for the full year 2019.
• Selling, general and administrative (SG&A) expense ratio of 10.3% for the fourth quarter of 2020, compared to 9.6% for the fourth quarter of 2019. SG&A expense ratio of 9.5% for the full year 2020, compared to 9.3% for the full year 2019.
• Adjusted SG&A expense ratio of 9.7% for the fourth quarter of 2020, compared to 9.5% for the fourth quarter of 2019. Adjusted SG&A expense ratio of 8.9% for the full year 2020, compared to 9.2% for the full year 2019.
• Diluted loss per share for the fourth quarter of 2020 of $(0.02), compared to diluted EPS of $0.49 for the fourth quarter of 2019. Diluted EPS for the full year 2020 of $3.12, compared to $3.14 for the full year 2019.
• Adjusted diluted EPS for the fourth quarter of 2020 of $0.46, compared to $0.73 for the fourth quarter of 2019. Adjusted diluted EPS for the full year 2020 of $5.00, compared to $4.42 for the full year 2019.
• Operating cash flow of $3.0 billion and $5.5 billion for the fourth quarter and full year 2020, respectively, representing 3.1x net earnings for the full year 2020. Operating cash flow for the fourth quarter of 2020 benefited from payments received earlier than expected.

"2020 was a year when Centene demonstrated the strength of our diversified enterprise and our operational excellence as we delivered strong top- and bottom line growth while supporting all our stakeholders." said Michael F. Neidorff, Chairman, President and Chief Executive Officer of Centene.

"Building on our leadership position in government-sponsored healthcare, we are focused on delivering the next phase of growth through product and geographic expansion, advancing our technology strategy and further integrating our diverse capabilities. We are pleased to have been selected for two statewide managed care contracts in Oklahoma, and through the recently announced acquisition of Magellan, our goal is to enhance our ability to provide comprehensive care to the most vulnerable populations. Looking ahead, we have great confidence in our ability to pursue our growth strategy in 2021 and beyond."

GUIDANCE:

Centene sees FY2021 EPS of $5.00-$5.30, versus the consensus of $5.24. Centene sees FY2021 revenue of $116.1-118.1 billion, versus the consensus of $115.49 billion.

The Company's annual guidance for 2021 has been adjusted to include PANTHERx, which was acquired in December 2020 and is expected to be break-even in the initial year, in line with our previous comments. In addition, our GAAP diluted EPS has decreased from our investor day guidance due to incremental amortization expense related to PANTHERx and a one-time charge related to a corporate restructuring creating additional capacity for investment in our continued growth. These items will be discussed further on our conference call.

For earnings history and earnings-related data on Centene (CNC) click here.

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