Centene’s Medicaid redeterminations align with forecasts despite losing 263,000 members in Q2 due to eligibility checks. CEO Sarah London remains positive, emphasizing support for state partners, Medicare Advantage realignment, and long-term growth. The company exceeded Wall Street expectations, reporting $37.6B in Q2 revenue. Medicare revenue in 2024 may decrease due to lower star ratings. Centene aims for 85% of members in three-and-a-half-star plans by 2025. It raised EPS guidance and expanded premium revenue projections. The company sold the AI platform Apixio, added physicians, and streamlined operations.
Centene’s CEO affirms that the insurer’s Medicaid redeterminations are proceeding as projected, despite a loss of nearly 263,000 Medicaid members in the second quarter due to ongoing eligibility checks.
During a call with investors, CEO Sarah London and CFO Drew Asher assured that the redeterminations are on track with previous forecasts, based on member data analysis at the state and sub-population levels.
London expressed enthusiasm about leveraging their positive momentum to support state partners during the redetermination process while maintaining their market leadership and strategically realigning their Medicare Advantage business for long-term growth and profitability.
Despite the slight overall decrease in membership from the previous quarter, the company has experienced a 7% increase in membership compared to the previous year.
Asher noted that early results are in line with their assumptions, and states understand the necessity of acuity adjustments for actuarial soundness.
During the pandemic, Centene witnessed a growth of 3.6 million Medicaid members. The company anticipates rolling off 2.3 to 2.4 million members, which will account for cumulative revenue ranging from $9.5 billion to $10 billion.
In the second quarter, Centene posted total revenue of $37.6 billion, a 5% increase year over year. Premium and service revenues accounted for $34.8 billion, with total Medicaid revenues rising by 10% compared to the previous year. The company exceeded Wall Street’s expectations for earnings and revenue, reporting a profit of $1.1 billion for the quarter, a significant improvement from the net loss of $172 million a year ago.
However, it is expected that Medicare revenue in 2024 will decrease due to poor star quality ratings from the Centers for Medicare & Medicaid Services (CMS) in 2023. The company has been working on a multi-year plan to enhance quality across the enterprise and improve patient experience and access to care.
While Centene anticipates overall contract progression, some contracts are at risk of not achieving a four-star rating. Nonetheless, they expect to see meaningful movement in three- and three-and-a-half-star plans in October, with about two-thirds of their members being in plans showing year-over-year improvement. Centene has set a revised goal to reach 85% of members in three-and-a-half-star plans by October 2025.
The company raised its growth expectations, adjusting its full-year EPS guidance to at least $6.45 in earnings per share, and London expressed confidence in achieving greater than $6.60 of adjusted EPS per share in 2024.
Centene also increased its guidance range for premium and services revenues to $147.3 billion to $149.3 billion by the end of the year.
Despite a decrease in the number of employees, Centene has added 24,000 new physicians across the Medicare network year-to-date.
In recent developments, Centene completed the $91 million sale of the artificial intelligence platform Apixio, retaining a minority stake and a long-term contract in the company. The insurer was also selected by the Oklahoma Health Care Authority for statewide contracts and entered into a contract to provide healthcare coverage to the aged, blind, or disabled population in Texas through its subsidiary Superior HealthPlan.
Throughout the year, Centene implemented measures to streamline call center management and launched a cloud-based, next-gen clinical population health platform, leading to a 27% decrease in year-over-year call volume.