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Centene Once Again Cuts Full-year 2012 Earnings View

12/14/2012 8:25 AM ET

Centene Corp. (CNC: Quote), a multi-line healthcare enterprise, Friday slashed its earnings per share forecast for full year 2012 once again, citing higher medical costs. The company also issued earnings and revenue outlook for full year 2013.

For full year 2012, the company now expects earnings to be in the range of $0.10 to $0.20 per share, significantly down from the prior guidance of $0.56 to $0.66 per share.

Premium and Service Revenues are expected to be between $8.10 billion and $8.30 billion. On average, 14 analysts polled by Thomson Reuters currently expect the company to report 2012 earnings of $1.47 per share, on revenue of $8.60 billion. Analysts' estimates typically exclude special items.

Centene estimates 2012 consolidated Health Benefits Ratio of 91.0 percent to 92.0 percent.

In June this year, Centene had cut its 2012 earnings forecast sharply below Wall Street consensus, citing negative financial results in May for its various health plans and had projected earnings between $1.45 and $1.65 per share compared with the previously announced range of $2.64 to $2.84 per share.

The company noted today that lowering of the 2012 earnings outlook was due to higher medical costs associated with an earlier and more intensive flu season in its largest markets and an increase in its earlier announced premium deficiency reserve for its Kentucky Health Plan.

In Texas, off-cycle transfer of higher acuity members from another health plan and higher than anticipated utilization in its Hidalgo Star and Medicaid Rural Service Areas business also resulted in an increase in medical costs.

"We received a written confirmation acknowledging the issues including the impact "of the negative effects of one Health Plan's efforts to shift higher acuity membership to its competitors. The State also confirmed their commitment to rectify the matter as soon as possible. We anticipate any such adjustments will be made in the first quarter of 2013," the company said.

For full year 2013, the company anticipates earnings per share to be in the range of about $2.60 to $2.90. It sees premium and service revenues of $9.7 billion to $10.0 billion and consolidated Health Benefits Ratio of nearly 88.0 to 89.0 percent.

Analysts are looking for 2013 earnings of $2.85 per share, on revenue of $10.27 billion. Centene is scheduled to report its full-year 2012 earnings on February 5, 2013.

CNC closed Thursday's regular trading at $44.97 on the NYSE.

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by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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