Centene (CNC) Q3 2024 earnings summary

Executive summary

• Q3 2024 adjusted diluted EPS was $1.62, with GAAP diluted EPS at $1.36, exceeding expectations due to timing of tax benefits and strong operational execution.

• Managed care membership reached 28.6 million, up 2% year-over-year, driven by 22% Marketplace growth and 49% Medicare PDP growth, despite Medicaid redeterminations.

• Total Q3 revenues were $42.0 billion, a 10% increase year-over-year, with premium and service revenues at $36.9 billion, up 6%.

• Medicaid, Medicare, and Marketplace segments performed in line or better than expectations, with Medicaid showing improvement in rate alignment.

• Strategic wins in Medicaid RFPs in Pennsylvania, Iowa, Michigan, and improved Medicare Advantage Star Ratings.

Financial highlights

• Q3 2024 net earnings attributable were $713 million, up 52% from $469 million in Q3 2023.

• Health benefits ratio (HBR) was 89.2% for Q3, up from 87.0% year-over-year, mainly due to higher Medicaid acuity and Medicare Star rating impacts.

• SG&A expense ratio improved to 8.3% from 8.7% in Q3 2023, driven by divestitures and expense leverage.

• Marketplace membership grew 22% year-over-year to 4.5 million.

• Investment and other income rose 102% to $432 million in Q3 2024, driven by higher interest income.

Outlook and guidance

• 2024 adjusted diluted EPS guidance reaffirmed at greater than $6.80; GAAP diluted EPS guidance floor updated to greater than $5.92.

• Full-year 2024 revenue guidance is $159.0–$161.0 billion; premium and service revenues expected at $143.5–$144.5 billion.

• HBR guidance for 2024 is 88.3%–88.5%; SG&A expense ratio expected at 8.5%–8.7%.

• Medicaid redeterminations are largely complete, with limited further membership reductions expected.

• 2025 Medicare Advantage revenue targeted at $14–$16 billion, with PDP margin targeted at 1% on a higher revenue base.