2019 Annual Review
At Centene, we are leading the way in
shaping a better world of healthcare.
Through our innovative whole-health solutions and
strategic partnerships, we continue to lead the way as a
premier government-sponsored healthcare enterprise.
CENTENE CORPORATION
Centene Corporation, a FORTUNE 100 company, is a leading multi-national
healthcare enterprise that is committed to helping people live healthier lives.
The company takes a local approach – with local brands and local teams –
to provide fully integrated, high-quality, and cost-effective services to
government-sponsored and commercial healthcare programs, focusing on
under-insured and uninsured individuals. Centene offers affordable and
high-quality products to nearly 1 in 15 individuals across the nation,
including Medicaid and Medicare members (covering Medicare Prescription
Drug Plans) as well as individuals and families served by the Health Insurance
Marketplace, the TRICARE program, and individuals in correctional facilities.
The Company also serves several international markets, and contracts with
other healthcare and commercial organizations to provide a variety of specialty
services focused on treating the whole person. Centene focuses on long-term
growth and the development of its people, systems, and capabilities so that
it can better serve its members, providers, local communities, and
government partners.
Table of Contents
1
2
6
7
8
10
17
18
20
2019 at a Glance
Letter from the Chairman
Company and Financial Summary
Board of Directors
Products and Presence
Shaping a Better World of Healthcare
Awards and Recognition
Quarterly and Selected Financial Information
Corporate Information
2019 AT A GLANCE
15.2M
MEMBERS
Largest
Medicaid managed care
organization in the country
No.11
carrier in the nation on the
Health Insurance Marketplace
National Leader
in managed long-term
services and supports
$74.6B
IN TOTAL REVENUES
24%
growth year-over-year
$3.14
DILUTED EARNINGS PER SHARE
39%
increase year-over-year
$4.42
ADJUSTED DILUTED
EARNINGS PER SHARE
25%
increase year-over-year
$1.5B
TOTAL OPERATING
CASH FLOW
CENTENE CORPORATION
1
MICHAEL F. NEIDORFF
Chairman, President, & Chief Executive Officer
LETTER FROM THE CHAIRMAN
For more than three decades, Centene has gone beyond traditional healthcare, offering
programs and services that address the health and social needs of the most vulnerable
populations in the U.S. With our members’ diverse needs at the forefront of everything we do,
we continued on our growth trajectory in 2019 by diversifying capabilities, enhancing
opportunities, driving significant revenue, and expanding margins.
Building on our well-established, multi-line portfolio, we achieved significant organic growth in
2019, including the addition of new markets in Iowa and New Mexico, as well as the expansion
of our Ambetter product in new and existing markets. In addition, in March 2019, we announced
the acquisition of WellCare Health Plans, Inc. to bring together two top-performing companies.
Having grown from a healthcare company to a premier healthcare enterprise, Centene was
well-positioned for a major acquisition to further solidify our standing among industry leaders.
Through this transaction, which was completed in January of this year, Centene will provide
coverage to approximately 1 in 15 individuals across the nation.
Our board and management team are driven by the belief that the need and demand for high-quality,
affordable healthcare will remain a constant in the U.S. We are proud to leverage the best of
our systems and expertise to move to a more sophisticated management of healthcare costs,
as we expand our U.S. footprint and grow internationally. This positions us to continue
delivering results for our members, customers, communities, and shareholders.
We further established Centene as an industry leader in government-sponsored healthcare
by building on our disciplined growth model and clear strategic plan. In 2019, FORTUNE
magazine recognized our rapidly increasing size and scale on several corporate lists. Centene was
ranked No. 51 on the FORTUNE 500® list, No. 168 on the FORTUNE Global 500, and No. 78 on the
FORTUNE Fastest-Growing Companies list, where we were specifically recognized as part of an
elite club of repeat growers. We are proud that our Provider Accessibility Initiative was
recognized with a No. 7 ranking on the 2019 FORTUNE Change the World list, a collection of
companies meeting unmet needs around the globe. For the second consecutive year, Centene
was selected as one of FORTUNE magazine’s World’s Most Admired Companies as a reflection
of our highly regarded corporate reputation.
Centene is a premier healthcare enterprise that continues to create value for all of our
stakeholders. As an established growth company and demonstrated industry leader, Centene’s
success continues to be driven by results across business segments and reflects the strength
of our diversified strategy. The business products and service lines within our portfolio
continue to be a central part of Centene’s growth. Our continued operational optimization is
reflected in the value we deliver to our stakeholders.
CLEAR GROWTH DRIVERS
Centene continues to be a high-growth industry leader, and we believe tremendous
opportunities exist across our platforms. Centene delivered strong top and bottom line
growth in 2019, enabled by operational and commercial successes across our enterprise. We
increased revenues by 24 percent to $74.6 billion, grew adjusted earnings per diluted share by
25 percent to $4.42, and delivered an annual stockholder return of 9.1 percent. Throughout the
enterprise, we are well-positioned to drive growth and expand margins. We have identified
core growth drivers and remain strategically positioned to continue to capture larger shares of
the $2 trillion addressable healthcare market.
In 2019, we delivered organic revenue growth of $6.7 billion. The successful execution of our
All Products, All Markets strategy has created an attractive set of opportunities that continue
our focus on essential growth by way of product expansion across our entire multi-line portfolio.
Centene’s Medicaid product continues to win contracts in new and existing markets, further
strengthening our Medicaid performance while focusing on organic growth, through margin,
product, and geographic expansion. At year-end, we served approximately 1.8 million
exchange members in 20 states, representing growth of approximately 20 percent year-over-
year and ensuring our position as the nation’s number one insurer on the Health Insurance
Marketplace. We expect continued membership growth in 2020 and beyond.
Our Medicare Advantage and D-SNP lines of business underpin our long-term growth. While we
did not meet our expectations in this sector, our recent acquisition will serve as an important
catalyst to accelerate our growth and performance. We have built and maintained a leadership
position in long-term services and supports, the fastest-growing segment of the industry.
The scale of our enterprise enables further international expansion without compromising our
ability to pursue growth opportunities in the U.S. Our strategic investments are introducing
integrated care models and modernizing international healthcare infrastructure.
Accretive M&A continued to supplement our organic growth in 2019. We have a successful
track record of acquiring and integrating both large and small acquisitions, including Spain’s
2
2
Letter from the Chairman
Letter from the Chairman
3
CENTENE CORPORATION
Ribera Salud Group and domestic health plans Health Net and Fidelis. Each transaction has added
expertise across the enterprise to better combine our assets and improve our competitive position.
Centene is positioned to:
•
•
•
Continue building organic growth
Adv
international markets
ance strategic M&A in the U.S. and
Continue our successful tr
integrating large acquisitions
ack record of
CONTINUOUS OPERATIONAL ENHANCEMENTS
For years, operational and technological advancements have been a differentiator and catalyst
for Centene’s growth. We are focused on enabling and accelerating margin expansion through
key operational investments, efficiency initiatives – including Centene Forward – and
strengthening our internal team. Centene Forward is not confined to a single short-term
program or initiative, but is a continual refinement across people, processes, and systems.
Harnessing the latest tools, including data analytics and machine learning, enables us to
collaborate across the enterprise to improve clinical outcomes.
As an operational enhancement, Centene University is a tangible example of our commitment
to our people. We challenge ourselves to increase our capabilities through professional
development, virtual learning, and continuous improvement programs. Centene’s corporate
learning center, Centene University, provides multiple avenues for employees to explore
learning opportunities and career development options. In its first six months, Centene
University had nearly 1.4 million visitors, and in 2019, our director-level employees and
above participated in our Centene University Leadership Development Program. Additionally,
enterprise-wide career development is active and ongoing, helping to build, broaden, and
accelerate the development of our human capital.
SOCIAL RESPONSIBILITY AND REPUTATIONAL CAPITAL
Our local model approach goes beyond healthcare as we work to improve the lives and
health of our members while developing strong and vibrant communities. As a company that
believes in transforming the health of communities, we are proud of the positive contributions
we have made to the areas we serve, and where our employees live, work, and play.
At Centene, corporate social responsibility is not a single program or initiative, but a set
of pillars that guide our interactions with friends and neighbors. A key pillar of our
value-based program is corporate governance, the ability to conduct business in an ethical
and responsible manner. The strongest board of directors is one that reflects diverse
backgrounds, perspectives, and experience. As part of our ongoing efforts, we refreshed
our board this year with the addition of retired four-star Air Force General Lori J. Robinson.
With the close of the recent transaction, we also welcomed James Dallas and William
Trubeck to Centene’s Board of Directors. Dallas has more than 30 years of experience with
information technology, while Trubeck brings strong financial audit and compliance expertise.
LOOKING AHEAD
As we look ahead to 2020 and beyond, we will continue to leverage our competitive
advantages, build on our momentum, and transform the health of our communities, one
person at a time. Centene has proven that we are successful managers of an ever-evolving
industry and political landscape. As such, we will continue to advocate for strong public
policy and are confident that we will continue to achieve our objectives.
Finally, our success is a testament to the commitment and tireless efforts of our people.
I want to thank the more than 64,000 talented individuals at Centene whose commitment
to hard work enables us to deliver better health outcomes at lower costs.
The tremendous growth we saw this year would not be possible without shareholder support
of our strategy, mission, and values, and we thank you for choosing to invest in Centene.
We are proud to have earned your trust in our company and look forward to working with
our shareholders, and all of our stakeholders, as we enter the next decade.
MICHAEL F. NEIDORFF
Chairman, President, & Chief Executive Officer
4
Letter from the Chairman
CENTENE CORPORATION
5
FINANCIAL HIGHLIGHTS
(in millions)
2019
2018
2017
2016
2015
Total Revenues
$ 74,639
$ 60,116
$ 48,382
$ 40,607
$ 22,760
Net Earnings(1)
1,321
Adjusted Net Earnings(1)
1,857
900
1,411
828
889
562
730
355
386
Total Assets
40,994
30,901
21,855
20,197
7,339
TOTAL REVENUES
(in millions)
NET EARNINGS(1)
(in millions)
MEMBERSHIP
(in thousands)
1,321
90 0
828
74,639
60,116
48,382
40,607
22,760
15,242
14,171
12,207
11,442
5,108
562
355
9
1
0
2
8
1
0
2
7
1
0
2
6
1
0
2
5
1
0
2
9
1
0
2
8
1
0
2
7
1
0
2
6
1
0
2
5
1
0
2
9
1
0
2
8
1
0
2
7
1
0
2
6
1
0
2
5
1
0
2
(1) Attributable to Centene Corporation
BOARD OF DIRECTORS
Centene’s Board of Directors
provides exceptional business
Centene’s Board of Directors
and healthcare insight that has
provides exceptional
helped shape our corporate
business and healthcare
culture of accountability,
insight that has helped
ethics, and integrity.
shape our corporate culture
of accountability, ethics,
and integrity.
Back row:
Frederick H. Eppinger, David L. Steward,
John R. Roberts, Lori J. Robinson,
Tommy G. Thompson
Front row:
Orlando Ayala, Jessica L. Blume,
Michael F. Neidorff, Richard A. Gephardt,
Robert K. Ditmore
James Dallas
William Trubeck
Following the successful
acquisition of WellCare,
Centene is pleased to
add new members
James Dallas and William
Trubeck to our
Board of Directors.
Michael F. Neidorff
Chairman, President, and Chief Executive
Officer of Centene Corporation
John R. Roberts
Retired Regional Managing Partner of
Arthur Andersen LLP
Orlando Ayala
Retired Chairman and Corporate Vice
President of Emerging Businesses for
Microsoft Corporation
Jessica L. Blume
Retired Vice Chairman of Deloitte LLP
James Dallas
Retired Senior Vice President and Chief
Information Officer of Medtronic
Robert K. Ditmore
Retired Director, President and Chief
Operating Officer of United Healthcare
Corporation
Frederick H. Eppinger
President and Chief Executive Officer
of Stewart Title Guaranty Company
Richard A. Gephardt
Chief Executive Officer and President of
Gephardt Group, LLC; Former Majority
Leader of the U.S. House of
Representatives
Lori J. Robinson
Retired United States Air Force General
David L. Steward
Founder and Chairman of World Wide
Technology, Inc.
Tommy G. Thompson
Chairman and Chief Executive Officer of
Thompson Holdings; Retired Partner of
Akin Gump Strauss Hauer & Feld LLP;
Former Governor of the State of
Wisconsin; Former Health and Human
Services Secretary
William Trubeck
Retired Chief Financial Officer, Director,
and Executive Vice President of YRC
Worldwide; Retired Executive Vice
President and Chief Financial Officer of
H&R Block
6
Company and Financial Summary
CENTENE CORPORATION
7
PRODUCTS AND PRESENCE
ALASKA
HAWAII
ALASKA
HAWAII
ALASKA
HAWAII
LONG-TERM SERVICES & SUPPORTS/IDD
California, Florida, Hawaii, Illinois, Iowa, Kansas, New Jersey,
New Mexico, New York, North Carolina*, Pennsylvania, Texas
MEDICARE
Alabama, Arizona, Arkansas, California, Connecticut, Florida,
Georgia, Hawaii, Illinois, Indiana, Kansas, Kentucky, Louisiana,
Maine, Michigan, Mississippi, Missouri, New Jersey, New Mexico,
New York, North Carolina*, Ohio, Oregon, Pennsylvania,
South Carolina, Tennessee, Texas, Washington, Wisconsin
TRICARE
Alaska, Arizona, California, Colorado, Hawaii, Idaho, Iowa
(except the Rock Island Arsenal area), Kansas, Minnesota,
Missouri (except the St. Louis area), Montana, Nebraska, Nevada,
New Mexico, North Dakota, Oregon, South Dakota, Texas
(areas of Western Texas only), Utah, Washington, Wyoming
ALASKA
HAWAII
ALASKA
HAWAII
MEDICAID/CHIP
Arizona, Arkansas (private option), California, Florida, Georgia,
Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana,
Maryland, Michigan, Mississippi, Missouri, Nebraska, Nevada, New
Hampshire, New Jersey, New Mexico, New York, North Carolina*,
Ohio, Oregon, South Carolina, Texas, Washington, Wisconsin
ABD (NON-DUAL)
Arizona, California, Florida, Hawaii, Illinois, Indiana, Iowa,
Kansas, Kentucky, Louisiana, Maryland, Michigan, Mississippi,
Nebraska, New Hampshire, New Jersey, New Mexico, New York,
North Carolina*, Ohio, Oregon, South Carolina, Texas,
Washington, Wisconsin
ABD (MEDICAID ONLY DUAL-ELIGIBLE)
Arizona, California, Florida, Iowa, Kansas, Nebraska, New
Hampshire, New Mexico, New York, Ohio, Oregon, Pennsylvania,
Texas, Wisconsin
MEDICAID-MEDICARE PLANS
California, Illinois, Michigan, New York, Ohio, South Carolina,
Texas
FOSTER CARE
California, Florida, Illinois*, Indiana, Kansas, Louisiana,
Mississippi, Missouri, Nebraska, New Hampshire, New Mexico,
New York, Oregon, Texas, Washington
ALASKA
HAWAII
HEALTH INSURANCE MARKETPLACE
Arizona, Arkansas, California, Florida, Georgia, Illinois, Indiana,
Kansas, Michigan, Mississippi, Missouri, Nevada, New Hampshire,
New York, North Carolina, Ohio, Pennsylvania, South Carolina,
Tennessee, Texas, Washington
COMMERCIAL INSURANCE
Arizona, California, Oregon, Washington
ALASKA
HAWAII
CORRECTIONAL HEALTHCARE
Arizona, California, Connecticut, Florida, Georgia,
Maryland, Massachusetts, Michigan, Minnesota, Mississippi,
New Hampshire, New Mexico, Nevada, Pennsylvania,
Tennessee, Vermont
* North Carolina operations expected to commence Oct. 1, 2020, subject
to closing conditions and regulatory approval. Illinois’ sole source foster
care contract expected to be implemented in 2020.
Product offerings highlighted in the above maps reflect the impact of
Centene’s acquisition of WellCare.
INTERNATIONAL
Since our investment in 2014, we
continue expanding our international
presence. In 2019 we increased our
ownership in our joint venture in
Spain, Ribera Salud, to 90 percent.
Ribera Salud is a health management
group primarily operating in the
fully integrated Accountable Care
System sector, and has controlling
and non-controlling interests in Spain,
Slovakia, and Latin America. In 2019,
Ribera Salud acquired a controlling
interest in the largest private hospital
in Spain, Hospital Povisa de Vigo,
as well as its nursing and allied
health institute, Centro de Estudios
Povisa. In the United Kingdom,
Operose Health leverages the
management of General Practice
physicians to support UK accountable
care initiatives based on the
blueprint outlined by the National
Health Service (NHS), which is the
publicly funded national healthcare
system for England.
8
Products and Presence
9
CENTENE CORPORATION
SHAPING A BETTER WORLD
OF HEALTHCARE
For more than 35 years,
Centene has worked tirelessly
to reshape how people access
high-quality healthcare,
better empowering them to
take charge of their health.
Never satisfied with the status quo,
we continue to transcend traditional
methods of care through new clinical
initiatives, innovative technology,
and strategic partnerships.
1010
Shaping a Better World of Healthcare
Shaping a Better World of Healthcare
CENTENE CORPORATION
11
IMPACT ON POPULATION HEALTH
Central to our purpose is ensuring that each member has access to the right
care, at the right place, at the right time. We understand that healthcare is
never one size fits all, which is why our population health and clinical
operations are rooted in holistic healthcare and our uniquely local approach.
Integrating physical and behavioral health gives a full picture of a member’s
life and circumstances. Addressing non-medical barriers to care, also called
social determinants of health, is critical to improving the health of individuals
and families.
Centene’s medical directors are practicing physicians, ensuring that they stay
up to date on current tools and treatment options. Medical directors work
closely with our provider networks to ensure the best possible care for our
members while leading the development of cutting-edge clinical programs
for diverse populations. Going beyond the immediate medical needs of our
members, Centene advances the broader health of the community.
TACKLING MODERN HEALTH RISKS
Centene understands that modern challenges to staying healthy require
modern solutions, and caring for millions of members is a responsibility
we don’t take lightly.
Keeping communities healthy involves providing access to fresh food,
promoting an active lifestyle, and educating members at risk of adverse
health outcomes.
Today, the risks of tobacco use, vaping, and prescription drug abuse have
never been more clear. The U.S. opioid epidemic spans urban, suburban, and
rural communities. OpiEnd™, Centene’s clinical program addressing opioid
misuse, uses data-driven integrated care management, member education,
pharmacy policies, provider engagement, and community outreach
interventions to manage pain and prevent opioid misuse. Furthermore,
Centene partners with the American Society of Addiction Medicine (ASAM)
to deliver to providers online trainings focused on best practices for the
treatment of opioid use disorder. To date, more than 320 Centene-partnered
providers have completed training for buprenorphine waiver requirements.
Centene utilizes
machine learning to
proactively identify
members at risk of
opioid dependency
while offering
providers online
trainings that assist
in the treatment
of opioid abuse.
As demographics shift, risks change. Following our most recent acquisition,
Centene provides healthcare coverage to approximately 1 million Medicare
members, and promoting fall prevention is a significant part of our commitment
to keeping an aging population healthy. Centene recently applied the CDC’s
STEADI (Stopping Elderly Accidents, Deaths & Injuries) program to assess
members’ environmental, biological, and behavioral fall risk factors. Centene’s
By 2030, one out of
every five Americans
will be older than
65. To assist this
population, Centene’s
Fall Prevention
program provides
resources that help
older adults maintain
their independence.
12
Shaping a Better World of Healthcare
13
CENTENE CORPORATION Fall Prevention program identifies at-risk members and educates them on fall
severity while providing resources for prevention, keeping homes safe, and
discussing fall risks with providers.
CROSS-INDUSTRY PARTNERSHIP
Centene continues to lead not only in novel clinical program design but also
in forming partnerships focused on treatments for chronic conditions. At the
enterprise level, Centene will fund up to $100 million over 10 years in research
at Washington University School of Medicine in St. Louis to accelerate research
into treatments for Alzheimer’s disease, breast cancer, diabetes, and obesity.
All are common, debilitating, and often deadly diseases that affect millions of
people worldwide, at all levels of income. The partnership will leverage the
university’s cutting-edge research and biomedical capabilities, resulting in the
development and implementation of affordable and accessible treatment
options. With consistent management of chronic conditions, Centene helps
eliminate obstacles preventing individuals from receiving the care they deserve.
MANAGED CARE TECHNOLOGY
Predicting adverse health scenarios enables providers and patients to get a
jump on heading off a health crisis. Our innovative technology refines, tailors,
and improves how members manage their health. Scalable tools, such as
Interpreta and TruCare, help us gather and analyze information, giving providers
a comprehensive picture of our members’ healthcare needs.
Interpreta interprets
clinical data and can
analyze 12 million
medical data points in
less than one minute.
Centene engages artificial intelligence and other cutting-edge technology to
better serve our members. Centene’s robotics program is transforming the
way we do business, especially in the realm of claims processing. Leveraging
robotics improves our ability to process complex claims faster and more
efficiently, while driving improved quality and paving the way for next-
generation capabilities.
With advancements in health-focused technology, it’s become easier to connect
members and providers and enable the orchestration of timely, high-quality
healthcare while preventing drastic health events. Interpreta, Centene’s powerful
analytics engine, continuously updates, interprets, and synchronizes clinical
and genomics data, creating a personalized roadmap of person-centered care.
Interpreta immediately identifies medical red flags and can ping real-time
messages to providers.
VIRTUAL MEDICINE
Supported by new technology, we’re increasing the ways healthcare can be
delivered. With advancements in virtual medicine, Centene’s health plans are
able to bring healthcare closer to vulnerable populations.
14
Shaping a Better World of Healthcare
15
CENTENE CORPORATION Virtual medicine helps ease the barriers of travel time, traditional appointment
scheduling, and overcrowded emergency rooms. All of Centene’s product lines
provide access to virtual medicine or are in the pilot stages of expanding
member access. Members are able to see board-certified physicians or
behavioral health providers regardless of physical location or scheduling
constraints. Particularly for members living in areas where specialty care
options can be limited, virtual medicine means healthcare is a click away.
CARING FOR THE WHOLE PERSON
We believe that health is driven by the conditions in which our members were
born, live, work, and age. Addressing social determinants of health relies on
innovative interventions that improve outcomes for people facing acute and/or
chronic health conditions while preventing certain health conditions before
they develop.
Centene’s Social Health Bridge™ connects community-based organizations
with healthcare entities to address non-medical barriers to health, resulting
in an effective and easy way to connect people with critical resources.
Internally, Centene established a Social Determinants of Health Innovation
Team that works closely with health plan leadership to share over 200
initiatives that address social determinants of health across all Centene
products and membership.
REMOVING BARRIERS AND SERVING OUR COMMUNITIES
At Centene, social responsibility is not a single corporate program or
initiative. It is at the core of who we are and what we do, and is a living
expression of Centene’s purpose. We are proud of our corporate citizenship
and regularly invest in the communities where our members and employees
live, work, and play. Our organization has long understood that improving
the health and well-being of individuals helps create vibrant and healthy
communities.
In line with Centene’s history of and steadfast commitment to removing
disability access barriers in healthcare, our Provider Accessibility Initiative
(PAI) was launched in 2018. We were honored to be recognized by FORTUNE
with a No. 7 ranking on its 2019 Change the World List. Designed in
collaboration with Centene’s National Disability Advisory Council and the
National Council on Independent Living, PAI transitions healthcare delivery
into a fully accessible system for people with disabilities. Centene was also
awarded the Centers for Medicare & Medicaid Services’ (CMS) 2019 Health
Equity Award in recognition of the PAI.
According to the
National Academies of
Sciences, Engineering,
and Medicine, more
than 3.6 million people
miss healthcare
appointments each
year due to
transportation issues,
costing the healthcare
industry approximately
$150 billion annually.
In 2019, Centene
worked with rideshare
industry leaders to
pilot non-emergency
transportation
programs in seven
states.
2019 NOTEWORTHY
ACCREDITATIONS AND AWARDS
Centene continues to gain national and international
recognition for growth and innovation, as well as for our
commitment to diversity and inclusion.
NO.
51
NO.
168
Ranked #51 on FORTUNE®
500 List (2019):
Centene Ranks No. 51 on the 2019 FORTUNE 500®
list of largest U.S. corporations by revenue, up from
No. 61 in 2018. Since first entering the list in 2010,
Centene has climbed 445 spots.
Ranked #168 on FORTUNE®
Global 500 List (2019):
Centene ranks No. 168 on the 2019 FORTUNE Global
500® list of the world’s largest corporations by
revenue. Since first entering the list in 2016, Centene
has risen 344 spots.
Ranked #7 on FORTUNE®
Change the World List (2019):
Centene ranks No. 7 on the FORTUNE 2019 Change
the WorldTM list of 52 companies meeting unmet
needs around the globe. The ranking recognizes
Centene’s Provider Accessibility Initiative, which
aims to transition healthcare delivery into a fully
accessible system for people with disabilities.
FORTUNE World’s Most
Admired Companies:
For the second consecutive
year, Centene has been selected
one of FORTUNE World’s
Most Admired CompaniesTM,
a recognition chosen by
industry executives, directors,
and analysts asked to rate
enterprises in their own industry
on nine criteria, from
investment value and quality
of management and products
to social responsibly and
ability to attract talent.
Gender-Equality Index:
Centene is listed on the Bloomberg 2020 Gender-
Equality Index for our strong dedication to gender
equality and the advancement of women
in the workplace.
Disability Equality:
Centene is again recognized as
a top employer by the American
Association of People with
Disabilities (AAPD).
From FORTUNE ©2019,©2020 FORTUNE Media IP Limited. FORTUNE and The World’s Most Admired Companies are registered trademarks
of Fortune Media IP Limited and are used under license. FORTUNE and Fortune Media IP Limited are not affiliated with, and do not
endorse the products or services of, Centene Corporation.
16
Shaping a Better World of Healthcare
CENTENE CORPORATION
17
QUARTERLY SELECTED
FINANCIAL INFORMATION
SELECTED FINANCIAL
INFORMATION
Total revenues
Net earnings attributable to Centene Corporation
Net earnings per common share attributable to
Centene Corporation:
Basic earnings per common share
Diluted earnings per common share
Total revenues
Net earnings attributable to Centene Corporation
Net earnings per common share attributable to
Centene Corporation:
Basic earnings per common share
Diluted earnings per common share
For the Quarter Ended, 2019
(in millions, except per share data in dollars)
(unaudited)
March 31
$ 18,444
$ 522
June 30
September 30
December 31
$ 18,356
$ 18,976
$ 18,863
$ 495
$ 95
$ 209
$ 1.26
$ 1.24
$ 1.20
$ 1.18
$ 0.23
$ 0.23
$ 0.50
$ 0.49
For the Quarter Ended, 2018
(in millions, except per share data in dollars)
(unaudited)
March 31
$ 13,194
$ 340
June 30
September 30
December 31
$ 14,181
$ 300
$ 16,182
$ 16,559
$ 19
$ 241
$ 0.98
$ 0.96
$ 0.77
$ 0.75
$ 0.05
$ 0.05
$ 0.59
$ 0.57
Year Ended December 3
1
(in millions, except shar
e data in dollars
and membership data)
2019
2018
2017
2016
2015
Consolidating Operating Results:
Total revenues
Net earnings attributable to Centene
Corporation
Basic net earnings per share
attributable to Centene:
Diluted net earnings per share
attributable to Centene:
Health benefits ratio(1)
Selling, general, and administrative
expense ratio(2)
$ 74,639
$ 60,116
$ 48,382
$ 40,607
$ 22,760
$ 1,321
$ 900
$ 828
$ 562
$ 355
$ 3.19
$ 2.31
$ 2.40
$ 1.76
$ 1.49
$ 3.14
87.3%
$ 2.26
85.9%
$ 2.34
87.3%
$ 1.71
86.5%
$ 1.44
88.9%
9.3%
10.7%
9.7%
9.8%
8.5%
Membership
15,241,800
14,171,200
12,207,100
11,441,800
5,107,900
Consolidated Balance Sheet Data:
Cash and cash equivalents,
Investments and Restricted deposits
Total assets
Medical claims liability
Long-term debt
Total stockholders’ equity
$ 21,361
40,994
7,473
13,638
12,659
$ 13,480
$ 10,050
30,901
6,831
6,648
11,013
21,855
4,286
4,695
6,864
$ 9,118
20,197
3,929
4,651
5,909
$ 3,978
7,339
2,298
1,216
2,168
(1) Health benefits ratio represents medical costs as a percentage of premium revenue.
(2) Selling, general, and administrative (SG&A) expense ratio represents SG&A expenses as a percentage of premium and service revenues.
18
Quarterly Financial Information / Selected Financial Information
19
CENTENE CORPORATION
NON-GAAP FINANCIAL RECONCILIATIONS
Year Ended December 31
(in millions, except per share data in dollars)
2019
2018
2017
2016
2015
GAAP net earnings attributable to Centene
$ 1,321
$ 900
$ 828
$ 562
$ 355
Amortization of acquired intangible assets
Acquisition-related expenses
Other adjustments(1)
258
104
301
211
425
30
156
20
(7)
147
234
(134)
24
27
—
Income tax effects of adjustments(2)
(127)
(155)
(108)
(79)
(20)
58.25
45.44
63.15
52.14
Adjusted net earnings
$ 1,857
$ 1,411
$ 889
$ 730
$ 386
GAAP diluted earnings per share (EPS)
attributable to Centene
Amortization of acquired intangible assets(3)
Acquisition-related expenses(4)
Other adjustments(5)
Adjusted Diluted EPS
$ 3.14
$ 2.26
$ 2.34
0.47
0.19
0.62
0.41
0.81
0.28
0.04
0.06
(0.14)
$ 4.42
$ 3.54
$ 2.52
(1) Other adjustments include the non-cash goodwill and intangible asset impairment of $271 million for the year ended December 31, 2019,
debt extinguishment costs of $30 million for the year ended December 31, 2019, and the impact of retroactive changes to the California
minimum MLR of $30 million for the year ended December 31, 2018. Additional adjustments include the following items:
2017 - (a) the Penn Treaty assessment expense of $56 million; (b) the cost sharing reduction (CSR) expense of $22 million; (c) the charitable
contribution of $40 million; and (d) the benefit associated with income tax reform of $125 million; and
2016 - (a) the impact of retroactive changes to the California minimum medical loss ratio (MLR) of a $195 million benefit; (b) the charitable
contribution of $50 million; and (c) the debt extinguishment cost of $11 million.
(2) The income tax effects of adjustments are based on the effective income tax rates applicable to each adjustment.
(3) The amortization of acquired intangible assets per diluted share presented above is net of an income tax benefit of $0.14 and $0.12 for
the year ended December 31, 2019 and 2018, respectively.
(4) The acquisition-related expenses per diluted share presented above are net of an income tax benefit of $0.06 and $0.25 for the year ended
December 31, 2019 and 2018, respectively. Acquisition-related expenses for 2019 include net carrying costs on the $7.0 billion senior notes
issued in preparation of the WellCare acquisition of approximately $13 million, or $0.02 per diluted share, net of an income tax benefit of
approximately $0.01.
(5) The non-cash impairment is net of an income tax benefit of $0.08 for the year ended December 31, 2019. Debt extinguishment costs are
net of an estimated income tax benefit of $0.02 for the year ended December 31, 2019. The California Minimum MLR adjustment is net
of an income tax benefit of $0.02 for the year ended December 31, 2018.
CORPORATE
INFORMATION
COMMON STOCK INFORMATION
Centene common stock is traded and quoted
on the New York Stock Exchange under the
symbol “CNC.”
2020*
2019
2018
High
Low
High
Low High
Low
68.64 60.50 69.25
49.56
56.21
48.81
54.89
42.77
74.12
60.51
63.79
41.62
74.49 54.25
Stock
Price
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
*Stock price through February 14, 2020
20
Corporate Information
TRANSFER AGENT
Broadridge Corporate Issuer Solutions, Inc.
51 Mercedes Way
Edgewood, NY 11717
855-627-5087
https://shareholder.broadridge.com/bcis/
ANNUAL MEETING
The Annual Meeting of Stockholders will be held
on Tuesday, April 28, 2020, at 10 a.m. at Centene
Corporation, 7700 Forsyth Blvd., St. Louis, MO
63105 in the Auditorium, 314-725-4477.
CASH DIVIDEND POLICY
Centene has not paid any dividends on its
common stock and expects that its earnings will
continue to be retained for use in the operation
and expansion of its business.
CORPORATE
INFORMATION
Included in this 2019 Annual Review are financial
and operating highlights and summary financial
statements. For complete financial statements,
including notes, please refer to Centene’s Annual
Report on Form 10-K for the fiscal year ended
December 31, 2019, filed with the Securities and
Exchange Commission (the “2019 Form 10-K”),
which also includes Management’s Discussion and
Analysis of Financial Condition and Results of
Operations. This 2019 Annual Review, together
with our 2019 Form 10-K, constitute our annual
report to security holders for purposes of Rule
14a-3(b) of the Securities Exchange Act of 1934, as
amended. Our 2019 Form 10-K may be obtained
by accessing the investor section of our
company’s website at www.centene.com, or by
going to the SEC’s website at www.sec.gov.
NON-GAAP FINANCIAL PRESENTATION
The Company is providing certain non-GAAP
financial measures in this report as the Company
believes that these figures are helpful in allowing
investors to more accurately assess the ongoing
nature of the Company’s operations and measure
the Company’s performance more consistently
across periods. The Company uses the presented
non-GAAP financial measures internally to allow
management to focus on period-to-period
changes in the Company’s core business
operations. Therefore, the Company believes that
this information is meaningful in addition to the
information contained in the GAAP presentation
of financial information. The presentation of this
additional non-GAAP financial information is not
intended to be considered in isolation or as a
substitute for the financial information prepared
and presented in accordance with GAAP.
Specifically, the Company believes the
presentation of non-GAAP financial information
that excludes amortization of acquired intangible
assets, acquisition related expenses, as well as
other items, allows investors to develop a more
meaningful understanding of the Company’s
performance over time.
FORM 10-K
Centene has filed an Annual Report on Form 10-K
for the year ended December 31, 2019, with the
Securities and Exchange Commission.
Stockholders may obtain a copy of this report,
without charge, by writing:
Investor Relations
Centene Corporation
7700 Forsyth Boulevard
St. Louis, MO 63105
www.centene.com
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS
All statements, other than statements of current or historical fact, contained in this 2019 Annual Review are forward-looking statements. Without limiting the foregoing, forward-looking statements often
use words such as “believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,” “seek,” “target,” “goal,” “may,” “will,” “would,” “could,” “should,” “can,” “continue” and other similar words or expressions
(and the negative thereof). Centene (the Company, our, or we) intends such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, and we are including this statement for purposes of complying with these safe-harbor provisions. In particular, these statements include, without limitation,
statements about our future operating or financial performance, market opportunity, growth strategy, competition, expected activities in completed and future acquisitions, including statements about the
impact of our recently completed acquisition (the WellCare Acquisition) of WellCare Health Plans, Inc. (WellCare), other recent and future acquisitions, investments and the adequacy of our available cash
resources. These forward-looking statements reflect our current views with respect to future events and are based on numerous assumptions and assessments made by us in light of our experience and
perception of historical trends, current conditions, business strategies, operating environments, future developments and other factors we believe appropriate. By their nature, forward-looking statements
involve known and unknown risks and uncertainties and are subject to change because they relate to events and depend on circumstances that will occur in the future, including economic, regulatory,
competitive and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity,
performance or achievements expressed or implied by these forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and
assumptions. All forward-looking statements included in this 2019 Annual Review are based on information available to us on the date hereof. Except as may be otherwise required by law, we undertake no
obligation to update or revise the forward-looking statements included in this press release, whether as a result of new information, future events or otherwise, after the date hereof. You should not place
undue reliance on any forward-looking statements, as actual results may differ materially from projections, estimates, or other forward-looking statements due to a variety of important factors, variables
and events including but not limited to: uncertainty as to our expected financial performance following completion of the WellCare Acquisition; the possibility that the expected synergies and value creation
from the WellCare Acquisition will not be realized, or will not be realized within the expected time period; the risk that unexpected costs will be incurred in connection with the integration of the WellCare
Acquisition or that the integration of WellCare will be more difficult or time consuming than expected; unexpected costs, charges or expenses resulting from the WellCare Acquisition; the inability to retain
key personnel; disruption from the completion of the WellCare Acquisition, including potential adverse reactions or changes to business relationships with customers, employees, suppliers or regulators,
making it more difficult to maintain business and operational relationships; the risk that, following the WellCare Acquisition, we may not be able to effectively manage our expanded operations; our ability to
accurately predict and effectively manage health benefits and other operating expenses and reserves; competition; membership and revenue declines or unexpected trends; changes in healthcare practices,
new technologies, and advances in medicine; increased healthcare costs; changes in economic, political or market conditions; changes in federal or state laws or regulations, including changes with respect
to income tax reform or government healthcare programs as well as changes with respect to the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation
Act, collectively referred to as the Affordable Care Act (ACA) and any regulations enacted thereunder that may result from changing political conditions or judicial actions, including the ultimate outcome in
“Texas v. United States of America” regarding the constitutionality of the ACA; rate cuts or other payment reductions or delays by governmental payors and other risks and uncertainties affecting our
government businesses; our ability to adequately price products on the Health Insurance Marketplaces and other commercial and Medicare products; tax matters; disasters or major epidemics; the outcome
of legal and regulatory proceedings; changes in expected contract start dates; provider, state, federal and other contract changes and timing of regulatory approval of contracts; the expiration, suspension,
or termination of our contracts with federal or state governments (including but not limited to Medicaid, Medicare, TRICARE or other customers); the difficulty of predicting the timing or outcome of pending
or future litigation or government investigations; challenges to our contract awards; cyber-attacks or other privacy or data security incidents; the possibility that the expected synergies and value creation
from acquired businesses, including, without limitation, the WellCare Acquisition, will not be realized, or will not be realized within the expected time period; the exertion of management’s time and our
resources, and other expenses incurred and business changes required in connection with complying with the undertakings in connection with any regulatory, governmental or third party consents or
approvals for acquisitions; disruption caused by significant completed and pending acquisitions, including, among others, the WellCare Acquisition, making it more difficult to maintain business and
operational relationships; the risk that unexpected costs will be incurred in connection with the completion and/or integration of acquisition transactions; changes in expected closing dates, estimated
purchase price and accretion for acquisitions; the risk that acquired businesses, including WellCare, will not be integrated successfully; the risk that we may not be able to effectively manage our operations
as they have expanded as a result of the WellCare Acquisition; restrictions and limitations in connection with our indebtedness; our ability to maintain or achieve improvement in the Centers for Medicare
and Medicaid Services (CMS) Star ratings and maintain or achieve improvement in other quality scores in each case that can impact revenue and future growth; availability of debt and equity financing, on
terms that are favorable to us; inflation; foreign currency fluctuations; and risks and uncertainties discussed in the reports that Centene has filed with the Securities and Exchange Commission. This list of
important factors is not intended to be exhaustive. We discuss certain of these matters more fully, as well as certain other factors that may affect our business operations, financial condition and results of
operations, in our filings with the Securities and Exchange Commission (SEC), including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Due to these
important factors and risks, we cannot give assurances with respect to our future performance, including without limitation our ability to maintain adequate premium levels or our ability to control our
future medical and selling, general and administrative costs.
7700 Forsyth Blvd.
St. Louis, MO 63105 U.S.A.
1-314-725-4477
www.centene.com