Centene Corp.(CNC), a multi-line health care enterprise reported Tuesday an increase in second-quarter net earnings, with an 18.2% revenue growth. The results came in above consensus estimates. In addition, the company raised its revenue guidance for fiscal 2008, while maintaining earnings outlook.
The St. Louis, Missouri-based company's net earnings increased to $18.2 million or $0.41 per share from $17.8 million or $0.40 per share in the comparable quarter of last year.
Net earnings from continuing operations rose to $18.03 million or $0.41 per share from $10.2 million or $0.23 per share in the year-ago quarter. The year-ago quarter results included a gain of approximately $0.28 per share, related to the rate increase in Centene's managed care organization at Georgia.
On average, 9 analysts surveyed by First Call/Thomson Financial expected earnings per share of $0.38.
Total revenues for the quarter increased to $860.1 million from $727.8 million in the previous year, benefited by rate increases in Georgia, membership growth in Texas and Ohio and growth from the company's new Foster Care contract in Texas.
Six Street analysts had a consensus revenue estimate of $847.31 million.
Health Benefits Ratio or HBR, which reflects medical costs, as a percent of premium revenues was 83.3%, compared to 83.6% in the year-ago quarter.
Total operating expenses increased to $832.4 million from $713.7 million last year. Medical costs rose to $682.6 million from $575.1 million, while General and administrative expenses grew to $113.2 million from $102.0 million in the previous year.
During the quarter, the company repurchased 347,432 shares for about $6.4 million. Centene commenced operations under the Texas Foster Care contract effective April 2008 and also concluded operations for SSI recipients in the Northwest region of Ohio.
Further, the company completed the acquisition of Celtic Insurance Company, a health care insurance carrier specializing in the individual health insurance market.
For the first-half net earnings declined to $43.8 million or $0.98 per share from $56.0 million or $1.25 per share in the same period of last year.
Net earnings from continuing operations for the six-month period increased to $43.6 million or $0.98 per share from $21.7 million or $0.49 per share in the previous year.
Total revenues grew to $1.7 billion from $1.4 billion in the comparable period of the preceding year.
Looking ahead, for the full year 2008, Centene reiterated its earnings per share guidance in the range of $1.87 to $1.97. The company raised its revenue guidance and currently expects revenues in the range of $3.36 billion to $3.41 billion.
Analysts expect earnings per share of $1.88, on revenues of $3.41 billion.
Cenetene's chief financial officer, Eric Slusser, said, "With the acquisition of Celtic and our new Arizona contract, our revenue expectations have increased for the second half of the year. However, we do not expect either of these to have a material contribution to earnings in 2008."
Shares of CNC closed Monday's regular trading session at $16.97. For the past 52 weeks, the stock has been trading in the range of $13.10 to $28.49.
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