2020 Annual Review
Centene Corporation
Centene Corporation, a FORTUNE® 50 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
(including 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
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6
7
8
11
17
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20
2020 at a Glance
Letter from the Chairman
Financial Highlights
2020 Noteworthy Accreditations and Awards
Products and Presence
Challenges of a Global Pandemic
Board of Directors
Quarterly and Selected Financial Information
Corporate Information
2020
AT A
GLANCE
25.5M
Members
Largest Medicaid managed care
organization in the country
No.1
Carrier in the nation on the
Health Insurance Marketplace
National leader in managed
long-term services and supports
$111.1B
In total revenues
$3.12
Diluted earnings per share
$5.00
Adjusted diluted earnings per share
$5.5B
Total operating cash flow
CENTENE CORPORATION
1
MICHAEL F. NEIDORFF
Chairman, President, and Chief Executive Officer
LETTER FROM THE CHAIRMAN
In 2020, Centene demonstrated our agility through our ability to meet the unparalleled
challenges that defined the year. The global magnitude of the COVID-19 pandemic touched
every aspect of our business as we shifted operations to address employee health and
safety, while continuing to meet the needs of our members. The global pandemic served as
a wake-up call for many, exposing vulnerabilities in healthcare and government
infrastructures in addition to systemic disparities that impact underserved communities.
The pandemic also showed the courage and selflessness of individuals, as healthcare
professionals and essential workers around the globe met the virus's many challenges with
a consistent outpouring of compassion, dedication, and commitment.
At Centene, we are proud of the new and enhanced initiatives we implemented to protect
and serve our members, employees, and the nation’s frontline healthcare workers.
I believe purpose-driven organizations have the greatest longevity because they deliver
tangible value to the people they serve. We have a long track record of supporting our
communities — a commitment that only intensified in 2020 as America confronted serious
issues of racial equity and social justice. Centene embraced the opportunity to engage in
courageous conversations with employees and community partners. Across the
organization, our commitment to the value of diversity was as strong as ever.
In a year defined by a healthcare crisis and social unrest, our ability to deliver value to our
stakeholders served as a testament to the strength of our capabilities and talents, as well
as our adaptability to the ever-changing world in which we operate. As we move into 2021,
we continue to prove why Centene is a leader in the evolving healthcare industry.
CLEAR GROWTH DRIVERS
Centene has transformed from a health insurer that originally served customers in just
three counties across two states to a $111 billion diversified international healthcare
enterprise with leadership positions across multiple products and geographic markets.
The diversification and scale of our business today are critical elements of our future
long-term success, and provide us with attractive opportunities for growth.
During 2020, we grew our membership by approximately 10.3 million members to serve
over 25.5 million members at the end of the year, which exceeded our initial
expectations and drove incremental revenue growth. Furthermore, in 2020 overall we
delivered revenue and adjusted diluted EPS growth of 49% and 13%, respectively.
We completed the acquisition of WellCare in January 2020, executing the integration
of our companies throughout the year while meeting all business and financial
expectations.The addition of WellCare added scale to Medicare, pharmacy, and key
Medicaid markets. We now operate in all 50 states, and we are beginning to see the
benefits of that addition in our performance. As part of our multi-year strategy, we'll
continue to expand into new markets and go deeper in each of our existing markets
through further product development.
In Medicaid, we feel we are positioned for continued success. We expect COVID-related
membership growth to peak in April 2021, with over 1.9 million new members, primarily
in Medicaid. We look forward to serving our new members in North Carolina and Oklahoma
and continue to participate in an active request-for-proposal pipeline.
In the Marketplace business, we saw meaningful membership growth in 2020 across our
broad geographic footprint. However, as a result of aggressive price competition, we are
forecasting membership losses in select counties for 2021. We have experienced these
dynamics before, and we believe the best strategy is to take a disciplined approach. We
remain the leader in the Marketplace, and we are confident in our strategy and in the
continued growth of our business.
As the industry leader in government-sponsored healthcare, we have unique insights into
the events of 2020. We provide healthcare to 1 in 15 Americans and have seen firsthand
how the pandemic has affected millions of individuals from every walk of life, but
especially from the most underserved and complex communities. This view of the
healthcare landscape drives Centene to innovate and imagine new ways to better serve
our members.
CONTINUED INVESTMENTS IN OUR BUSINESS
At Centene, technology propels everything we do, and over the next 10 years, we believe
the evolution of digital infrastructure will transform the healthcare industry. In order to
remain a leader, we are strategically investing in innovative, organic initiatives and
acquisitions that are intended to enhance our technological resources as well as our
broader, whole-health capabilities.
It is time for a fundamental shift in healthcare, moving away from paper-based charts and
fax machines toward digital infrastructure and integrated systems with tools that support
the needs of the modern customer. To create a delightful experience for our members and
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Letter from the Chairman
Letter from the Chairman
3
CENTENE CORPORATION providers, we are committed to removing barriers and roadblocks that have been built
over time. We believe our experience in providing healthcare to vulnerable populations,
combined with our investments in automation and technology, uniquely positions Centene
to power this new generation of healthcare management.
Centene’s 2020 acquisition of Apixio highlights our focus on ensuring that technology is
enabling everything we do. Apixio's proprietary artificial intelligence platform renders data
from clinical notes, administrative forms, and other clinical text that are then fed into
health profiles to be analyzed. In combination with Interpreta, Centene's powerful
analytics engine, Apixio will help physicians improve quality of care. Furthermore, this
technology will enrich Centene applications and services in an effort to create better
outcomes for our members and lessen the burden on our providers, allowing us to operate
more efficiently.
This transformative work would not be possible without a world-class team of talented
professionals. On July 1, 2020, Centene announced our establishment of a new East Coast
headquarters in Charlotte, North Carolina. This technology hub is expected to create
6,000 new jobs, and Centene will invest $1 billion in the Charlotte community over time.
Technology will play a key role in our growth and continued innovation, allowing us to
become an even more efficient organization through our highly disciplined approach.
We are confident in our ability to continue investing in new products, operational systems,
and technologies that will deliver better health outcomes and lower costs for our
customers and members.
COMMITMENT TO SOCIAL RESPONSIBILITY AND REMOVING BARRIERS TO HEALTH
Given our experience in serving at-risk populations, we believe we are in a unique position
to address the environmental, social, and health barriers that affect underserved
individuals and families, particularly as we consider the impact of COVID-19. Additionally,
we remain committed to a culture of sound corporate governance, and the secure and
responsible management of information and data.
In 2020, we made environmental, social, and governance outcomes an enterprise-wide
priority. Our multifaceted approach included the establishment of an Environmental and
Social Responsibility Committee of the Board of Directors, enhanced governance, and
a renewed focus on employee engagement.
Throughout 2020, Centene and our subsidiaries took action to address the social
determinants of health that contribute to an individual’s health and wellness beyond
access to medical care. These important investments include a multilayered
partnership with Feeding America® and the launch of the Workforce Innovation
Care Coordination Model, which has increased access and success for our members
enrolled in workforce programs.
GROWTH AND INNOVATION
On December 30, 2020, we completed our acquisition of PANTHERx, a leader in rare
disease pharmacy, bringing unique capability to our comprehensive pharmacy portfolio.
PANTHERx will continue to operate independently as part of Centene’s Envolve Pharmacy
Solutions, our total drug management program focusing on Pharmacy Benefit Manager
(PBM) services and specialty pharmacy solutions.
Looking ahead to 2021, we announced our intent to acquire Magellan Health, which we feel
represents attractive growth opportunities as we integrate behavioral health capabilities
with physical health services. The transaction will make Centene one of the nation’s largest
behavioral health platforms, offering behavioral health services for 41 million unique
members, nearly half of whom will be new to Centene.
The transaction also advances our growing Health Care Enterprises group, an independent
group that serves as a vehicle for companies building innovative technologies and service
models. Magellan Health will sit independently within Health Care Enterprises, and will be
focused on serving new and existing customers as well as Centene members.
As we reflect on 2020, I want to thank the more than 70,000 employees across the
enterprise who remained committed to our mission, continued to support our
providers and state partners, and ensured continuity of care for our members during
a challenging year.
We look forward to building on Centene’s growth and innovation as we enhance our ability
to deliver value to our stakeholders. Increasing access to high-quality healthcare takes
many forms, and I challenge those working within the healthcare industry and those
outside to consider how we can innovate, inform, and invest in the health of those in
need. From increasing our investments in Federally Qualified Health Centers (FQHC) to
modernizing our digital infrastructure, advances must be made while keeping the needs
of vulnerable populations top of mind. We are proud to have earned the trust of those
who support us in our purpose of transforming the health of the communities we serve.
MICHAEL F. NEIDORFF
Chairman, President, and Chief Executive Officer
We will continue to invest in new
products, systems, and technologies
to deliver better health
outcomes and lower costs for our
customers and members.
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Letter from the Chairman
5
CENTENE CORPORATION Financial
Highlights
(in millions)
2020
2019
2018
2017
2016
Total Revenues
$111,115
$74,639
$60,116
$48,382
$40,607
Net Earnings(1)
$1,808
$1,321
$900
Adjusted Net Earnings(1)
$2,896
$1,857
$1,411
$828
$889
$562
$730
Total Assets
$68,719
$40,994
$30,901
$21,855
$20,197
TOTAL
REVENUES
(in millions)
NET
EARNINGS(1)
(in millions)
MEMBERSHIP
(in thousands)
2020
2019
2018
2017
2016
2020
2019
2018
2017
2016
2020
2019
2018
2017
2016
$111,115
$74,639
$60,116
$48,382
$40,607
$1,808
$1,321
$900
$828
$562
15,242
14,171
12,207
11,442
25,523
2020 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.
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NO.
285
Listed on the FORTUNE®
Change the World List (2020):
Centene’s 2020 inclusion noted COVID-19-related
initiatives that helped disproportionately vulnerable
members stay connected to high-quality healthcare
as the global pandemic continued to evolve.
Human Rights Campaign Corporate
Equality Index – Best Places to Work
for LGBTQ Equality:
Centene earned a score of 100 on the
benchmarking report that measures corporate
policies and practices related to LGBTQ
workplace equality.
Ranked #42 on FORTUNE®
500 List (2020):
Centene ranks no. 42 on the 2020 FORTUNE
500® list of largest U.S. corporations by revenue,
up from no. 51 in 2019. Since first entering the list
in 2010, Centene has climbed 444 spots.
Ranked #285 on Forbes® Global 2000
List (2020):
Centene ranked #285 on the Forbes Global 2000:
World's Largest Public Companies list. Established
in 2003, the list ranks the top 2,000 public
companies in the world based on four metrics:
sales, profits, assets, and market value.
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.
Global Finance Outstanding Crisis
Leadership 2020 Honoree in the
“Overall Excellence – Corporate”
Category:
Centene is among the banks and companies that
went above and beyond in responding to the
global pandemic crisis — those that assisted their
customers, protected their employees, and
provided critical support to society at large.
FORTUNE® World’s Most Admired
Companies:
For the second consecutive year, Centene has
been selected as 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
responsibility and ability to attract talent.
(1) Attributable to Centene Corporation
Disability Equality:
Centene was again recognized as a top employer by the
American Association of People with Disabilities (AAPD).
From FORTUNE, ©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.
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Financial Highlights
CENTENE CORPORATION
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Products
and Presence
ALASKA
HAWAII
ALASKA
HAWAII
ALASKA
HAWAII
LONG-TERM SERVICES & SUPPORTS/IDD
Arkansas, California, Florida, Hawaii, Illinois, Iowa, Kansas,
New Jersey, New Mexico, New York, North Carolina, Ohio,
Pennsylvania, Texas
MEDICARE
Alabama, Arizona, Arkansas, California, Connecticut, Florida,
Georgia, Hawaii, Illinois, Indiana, Kansas, Kentucky, Louisiana,
Maine, Michigan, Mississippi, Missouri, New Jersey, New
Hampshire, Nevada, 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, Michigan, Mississippi, Missouri, Nebraska, Nevada,
New Hampshire, New Jersey, New Mexico, New York,
North Carolina*, Ohio, Oklahoma*, Oregon, South Carolina,
Texas, Washington, Wisconsin
ABD (NONDUAL)
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, Wisconsin
ABD (MEDICAID ONLY DUAL-ELIGIBLE)
Arizona, California, Florida, Hawaii, Iowa, Kansas, Kentucky,
Michigan, Nebraska, New Hampshire, New Mexico, Oregon,
Pennsylvania, Washington, Wisconsin
FOSTER CARE
Arizona, California, Florida, Illinois, Iowa, Indiana, Kansas,
Kentucky, Louisiana, Michigan, Mississippi, Missouri, Nebraska,
New Hampshire, New Jersey, New Mexico, Ohio, Oklahoma*,
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
Arkansas, Arizona, California, Oregon, Washington
MEDICAID-MEDICARE PLANS
California, Illinois, Michigan, Ohio, South Carolina, Texas
ALASKA
HAWAII
CORRECTIONAL HEALTHCARE
Arizona, California, Connecticut, Delaware, Florida, Georgia,
Kansas, Maryland, Massachusetts, Michigan, Minnesota,
New Hampshire, New Mexico, Pennsylvania, Tennessee
*North Carolina operations expected to commence in summer 2021.
O klahoma operations expected to commence in late 2021.
INTERNATIONAL
Since our investment in 2014, we have
continued expanding our international
presence. In Spain, Centene has 90%
ownership of Ribera Salud, a health
management group operating in both
private healthcare, and the fully integrated
Accountable Care System sector. Ribera
Salud owns and manages the largest private
hospital in Spain, Hospital Povisa de Vigo,
and has controlling and noncontrolling
interests in primary care, outpatient,
hospital and diagnostic centers in Spain,
Central Europe, and Latin America. In the
United Kingdom, Operose Health is the
leading provider of primary care services,
building scale and density through
technological platforms, data analytics,
and population management capabilities.
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Products and Presence
CENTENE CORPORATION
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With more than three decades of experience
in managing the complex health needs of the
nation’s most vulnerable communities,
Centene continues to discover and embrace
innovative approaches to healthcare that result
in the individual well-being of our members.
Challenges of a
Global Pandemic
As the COVID-19 global pandemic spread, it touched every area of
Centene’s operations. Our domestic and international teams quickly and
efficiently identified COVID-related challenges and the modifications we
needed to ensure continuity of care for our members. Centene leaders
worked to address the unique needs of the communities we serve and the
emerging challenges facing frontline healthcare professionals.
FAST FACTS:
Transitioned 90% of our workforce to remote
work in less than one week, while ramping up
safety protocols at facilities, and increased
available sick time for employees caring for
loved ones suffering from COVID-19.
Distributed 6.7 million pieces of
personal protective equipment (PPE) to our
safety net partners in 30 states and
Washington, D.C.
Committed more than $18 million to
enhance telehealth solutions for Federally
Qualified Health Centers and other clinical
and behavioral health providers.
90%
6.7M
$18M
In partnership with Feeding America®,
committed to providing one million
meals to families across the U.S. every
month for 12 months.
National
Partnerships
Centene health plans waived member
cost sharing for COVID-19-related
testing and treatment.
Waived
Member Cost
Sharing
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Challenges of a Global Pandemic
CENTENE CORPORATION
11
Connecting
Quality Health
to Vulnerable
Communities
Centene recognizes that healthcare
needs vary and are unique across
communities and the individuals
and families we serve. We are
committed to ensuring that our
members and providers have access
to the care and support that they
need, including those in rural
communities. We are proud to help
bring a collective focus to issues
facing rural communities, and we
continue to support pioneering
programs that create critical
healthcare solutions for the most
vulnerable populations.
While our investments in telehealth services have been building in
recent years, the COVID-19 pandemic further strengthened our belief
in the ability of virtual medicine to improve access to high-quality
healthcare, particularly in rural areas across America. When it became
critical to move in-person service to virtual care, Centene established
a Medicaid telehealth partnership with the National Association of
Community Health Centers (NACHC), which launched an immediate
response, delivering equipment, technical assistance, and training
for community-based Federally Qualified Health Centers (FQHC) that
needed to ramp up their telehealth services.
In addition, Centene has worked closely with FQHCs to increase
COVID-19 testing capabilities and PPE distribution for our target
populations, including rural populations.
In collaboration with AT&T to offer healthcare providers
access to FirstNet, the only nationwide, high-speed
broadband communications platform dedicated to and
purpose-built for America’s first responders and the
extended public safety community, Centene helped to
expedite the rollout of streamlined access to affordable,
high-speed wireless broadband services for primary care
providers (PCPs) in rural and underserved communities.
11,000
Rural-based FQHCs
and PCPs in 27 states.
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systems, products, tools, and technologies designed to increase our
capability to collect and analyze data and insights. Centene is working
to lead the digital transformation of healthcare and creating a world-class
experience for stakeholders and those we serve.
y Over time, we have employed an investment strategy targeting the best
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Centene has pursued a pipeline of partners to advance our technology agenda
and our growth strategy. One example of this is the acquisition of Apixio,
a healthcare analytics company offering artificial intelligence technology
solutions. Apixio operates independently within Centene’s Health Care
Enterprises group to continue bringing value to its clients and the industry,
while also realizing the benefits of enhanced scale with Centene. We have
completed deployment of TruCare Cloud®, a next-generation application that
delivers new utilization management and care management capabilities to our
Population Health teams. TruCare Cloud shares each member’s individual story
over time, including care plan progress, and follow-through for clinical and
behavioral health appointments.
f
o
In July 2020, we announced plans that will drive Centene’s next phase of
growth, a new East Coast headquarters in Charlotte, North Carolina, that will
serve as a technology hub, housing technologists with a variety of skill sets
including machine learning, artificial intelligence, and human-centered design
specialists. Completion of the first phase of construction for the facility
is scheduled for 2022, with a second phase of construction scheduled to
begin in 2024.
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The Next Generation of Healthcare Technology
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CENTENE CORPORATION
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h In a year that will be forever defined by the tragic effects of COVID-19, particularly on
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communities of color, and the rise of voices speaking out for equity, Centene's focus
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and commitment to equality and social justice helped to drive our work in the
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communities we serve.
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We launched two partnerships in 2020 that address health inequities in some of our
most vulnerable populations. First, Centene convened medical, nonprofit, and
community leaders to form the Centene Health Disparities Task Force. The Task Force
will provide recommendations to Centene through the COVID-19 pandemic and into the
future. The team will also study the causes of healthcare disparities among the most
vulnerable during the pandemic and recommend actions to improve Centene policies
and practices.
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Second, Centene and the National Minority Quality Forum (NMQF), an independent
research and educational organization dedicated to ensuring high-risk racial and ethnic
populations receive optimal healthcare, announced a research partnership for the
"Minority and Rural Health Coronavirus Study (MRCS)" to assess the impact of COVID-19
on racial minorities and underserved communities across the country.
An International Presence
Centene’s business model remains
purposeful, methodical, and
disciplined. Our international
operations provide additional
perspective on the potential
domestic impact of COVID-19.
Innovative technology helps
clinicians worldwide adapt to the
challenges of the pandemic and
will continue to increase efficiency
as the pandemic subsides.
Centene’s Spanish subsidiary, Ribera Salud, adopted predictive
modeling to improve health outcomes by indicating which
COVID-19 patients are most likely to require ICU care. Operose
Health is Centene's organization of general practitioner (GP)
practices in the U.K., and it quickly adapted to remote operations
when the outbreak hit and reserved in-person treatment for the
most vulnerable. In both countries, Centene provided leadership
in dealing with the pandemic.
As an active partner with the World Economic Forum and the
United Nations, we have prioritized our participation in global
initiatives, recognizing the critical value they have on our
long-term business goals and objectives. In 2020, Centene
became a founding signatory to the Ethical Principles in Health
Care, a collaborative effort between the International Finance
Corporation and the World Bank, and we also support the
UN Global Compact at the Participant Level and are a signatory
to the UN Women’s Empowerment Principles.
Centene unequivocally
condemns racism, inequity, and
injustice in every form and is
committed to positive action to fight
them in order to help create a better
future for our communities and
our workforce.
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Advancing Social Justice in Health
CENTENE CORPORATION
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CENTENE CORPORATION
e Centene has grown markedly over the years by staying true to its mission of helping
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people live healthier lives, diversifying, and adding markets and significant
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technological capabilities. Transforming the health of our communities is a bold
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challenge, and one we fully embrace. We will continue to meet opportunities head-on
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through a local approach that focuses on the whole health of those we serve.
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Committed to enhancing thought leadership through continuing education, the Centene
Institute for Advanced Education™ improves whole health outcomes, quality of care, and
the performance of the healthcare team through innovative and accessible
Interprofessional Continuing Education (IPCE) activities. Through a commitment to the
ongoing development of our clinical staff and providers, we equip our experts with the
latest information through no-cost, cutting-edge education that enables staff to gain
and/or maintain clinical licensure and keeps them at the forefront of delivering premier
healthcare solutions.
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As the largest Medicaid managed care organization in the country, Centene supports
many of our nation’s most vulnerable citizens. In order to fully support the behavioral
health needs of our membership, Centene's Advanced Behavioral Health team works to
improve health outcomes through prevention, screening, intervention, treatment
enhancements and innovation, and federal and state policy recommendations. During
this unprecedented time, Centene must continue expanding community partnerships
and supporting the whole health of our membership.
Throughout a challenging year, continuity of care was
a top priority. Our commitment to making high-quality
healthcare accessible is a direct reflection of our
employees' dedication to serving the nation's most
vulnerable populations. Our essential healthcare workers
continued their acts of service and commitment to our
purpose while navigating the uncertainty of COVID-19.
At the same time, most of Centene's employees learned
new ways to communicate in a virtual environment while
still moving our business forward.
Board 0f Directors
Centene’s Board of Directors provides exceptional business and
healthcare insight that has helped shape our corporate culture
of accountability, ethics, and integrity.
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
Interim President of University of Wisconsin System;
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
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A Clinical Advantage
CENTENE CORPORATION
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Quarterly Selected
Financial Information
Total revenues
Net earnings (loss) attributable to Centene
Net earnings per common share attributable to
Centene Corporation:
Basic earnings (loss) per common share
Diluted earnings (loss) 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, 2020
(in millions, except per share data in dollars)
(unaudited)
March 31
$26,025
$46
June 30
September 30
December 31
$27,712
$1,206
$29,090
$28,288
$568
$(12)
$0.08
$0.08
$2.08
$2.05
$0.98
$0.97
$(0.02)
$(0.02)
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
$495
$95
$18,863
$209
$1.26
$1.24
$1.20
$1.18
$0.23
$0.23
$0.50
$0.49
Selected Financial
Information
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)
Year Ended December 31
(in millions, except share data in dollars
and membership data
)
2020
2019
2018
2017
2016
$111,115
$74,639
$60,116
$48,382
$40,607
$1,808
$1,321
$900
$828
$3.17
$3.19
$2.31
$2.40
$3.12
86.2%
$3.14
87.3%
$2.26
85.9%
$2.34
87.3%
$562
$1.76
$1.71
86.5%
9.5%
9.3%
10.7%
9.7%
9.8%
Membership
25,522,900
15,241,800
14,171,200
12,207,100
11,441,800
Consolidated Balance Sheet Data:
Cash and cash equivalents,
investments and restricted deposits
Total assets
Medical claims liability
Long-term debt
Total stockholders’ equity
$26,293
$68,719
$12,438
$16,682
$25,885
$21,361
$40,994
$7,473
$13,638
$12,659
$13,480
$30,901
$6,831
$6,648
$11,013
$10,050
$21,855
$4,286
$4,695
$6,864
$9,118
$20,197
$3,929
$4,651
$5,909
(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 Selected Financial Information / Selected Financial Information
19
CENTENE CORPORATION
NON-GAAP FINANCIAL RECONCILIATIONS
Year Ended December 31
(in millions, except per share data in dollars)
2020
2019
2018
GAAP net earnings attributable to Centene
$1,808
$1,321
$900
Amortization of acquired intangible assets
Acquisition-related expenses
Other adjustments(1)
719
602
29
258
104
301
211
425
30
2017
$828
156
20
(7)
2016
$562
147
234
(134)
Income tax effects of adjustments(2)
(262)
(127)
(155)
(108)
(79)
Adjusted net earnings
$2,896
$1,857
$1,411
$889
$730
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
$3.12
$3.14
$2.26
0.95
0.86
0.07
0.47
0.19
0.62
0.41
0.81
0.06
$5.00
$4.42
$3.54
(1) Other adjustments include divestiture gain of $104 million, or $0.10 per diluted share for the year ended December 31, 2020; non-cash
impairment of $72 million, or $0.10 per diluted share for the year ended December 31, 2020; debt extinguishment costs of $17 million and
$30 million, or $0.02 and $0.05 per diluted share for the three months ended December 31, 2020 and 2019, respectively, and $61 million and
$30 million, or $0.07 and $0.05 per diluted share for the year ended December 31, 2020, and 2019, respectively; and noncash goodwill and
intangible asset impairment of $271 million, or $0.57 per diluted share, for the year ended December 31, 2019.
(2) The income tax effects of adjustments are based on the effective income tax rates applicable to each adjustment.
(3) T he amortization of acquired intangible assets per diluted share presented above is net of an income tax benefit of $0.08 and $0.04 for
the three months ended December 31, 2020, and 2019, respectively, and $0.29 and $0.14 for the year ended December 31, 2020, and 2019,
respectively; and an estimated $0.31 for the year ended December 31, 2021.
(4) T he acquisition related expenses per diluted share presented above are net of an income tax benefit of $0.05 and $0.02 for the three months
ended December 31, 2020, and 2019, respectively, and $0.18 and $0.06 for the year ended December 31, 2020, and 2019, respectively; and an
estimated $0.08 to $0.10 for the year ended December 31, 2021.
(5) Other adjustments include the following items: gain r
elated to the divestiture of certain products of the Company's Illinois health plan of $0.10
per diluted share, net of income tax expense of $0.08 for the year ended December 31, 2020; noncash impairment of our third party-care
management software system of $0.10 per diluted share, net of an income tax benefit of $0.02 for the year ended December 31, 2020; debt
extinguishment costs of $0.02 and $0.05 per diluted share, net of an income tax benefit of $0.01 and $0.02 for the three months ended
December 31, 2020, and 2019, respectively, and $0.07 and $0.05 per diluted share, net of an income tax benefit of $0.04 and $0.02 for the
year ended December 31, 2020, and 2019, respectively; noncash impairment of $0.57 per diluted share, net of an income tax benefit of $0.08
for the year ended December 31, 2019; and restructuring costs of an estimated $0.08 to $0.10 per diluted share, net of an estimated income
tax benefit of $0.03 for the year ended December 31, 2021.
Corporate
Information
Included in this 2020 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, 2020, filed with the Securities and
Exchange Commission (the “2020 Form 10-K”),
which also includes Management’s Discussion and
Analysis of Financial Condition and Results of
Operations. This 2020 Annual Review, together
with our 2020 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 2020 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, and 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, 2020, 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
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
in a virtual format at 10 a.m., Central Time, on
Tuesday, April 27, 2021, at http://www.
virtualshareholdermeeting.com/CNC2021
CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS OF CENTENE
All statements, other than statements of current or historical fact, contained in this communication 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 proposed acquisition of Magellan Health (the Magellan Acquisition), our recently
completed acquisition of WellCare Health Plans, Inc. (WellCare and such acquisition, the WellCare Acquisition), 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 communication 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 communication, 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: the impact of COVID-19 on global
markets, economic conditions, the healthcare industry and our results of operations and the response by governments and other third parties; the risk that regulatory or other approvals
required for the Magellan Acquisition may be delayed or not obtained or are obtained subject to conditions that are not anticipated that could require the exertion of management’s time and
our resources or otherwise have an adverse effect on the company; the risk that Magellan Health's stockholders do not approve the definitive merger agreement; the possibility that certain
conditions to the consummation of the Magellan Acquisition will not be satisfied or completed on a timely basis and accordingly the Magellan Acquisition may not be consummated on a
timely basis or at all; uncertainty as to the expected financial performance of the combined company following completion of the Magellan Acquisition; the possibility that the expected
synergies and value creation from the Magellan Acquisition or the WellCare Acquisition will not be realized, or will not be realized within the applicable expected time periods; 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 the Magellan Acquisition; the risk that unexpected costs will be incurred in connection with the completion and/or integration of the
Magellan Acquisition or that the integration of Magellan Health will be more difficult or time consuming than expected; the risk that potential litigation in connection with the Magellan
Acquisition may affect the timing or occurrence of the Magellan Acquisition or result in significant costs of defense, indemnification and liability; a downgrade of the credit rating of our
indebtedness, which could give rise to an obligation to redeem existing indebtedness; the possibility that competing offers will be made to acquire Magellan Health; the inability to retain key
personnel; disruption from the announcement, pendency and/or completion and/or integration of the Magellan Acquisition or the integration of the WellCare Acquisition, or similar risks from
other acquisitions we may announce or complete from time to time, 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; our ability to accurately predict and effectively manage health benefits and other operating expenses
and reserves, including fluctuations in medical utilization rates due to the impact of COVID-19; 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 (aca) and the
Health Care and Education Affordability Reconciliation Act, collectively referred to as the ACA and any regulations enacted thereunder that may result from changing political conditions, the
new administration 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; tax matters; disasters or major epidemics;
changes in expected contract start dates; provider, state, federal, foreign 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 legal and regulatory proceedings 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 businesses we may acquire in the future, 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 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 will not be integrated successfully; 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.
Corporate
Information
COMMON STOCK INFORMATION
Centene common stock is traded and quoted
on the New York Stock Exchange under the
symbol “CNC.”
Stock
Price
2021
2020
High
Low High
Low
First
Quarter $70.26 $57.71 $68.64 $43.96
Second
Quarter
74.70
53.83
Third
Quarter
Fourth
Quarter
68.45
53.60
72.31
57.56
*Stock price through February 19, 2021
20
Corporate Information
7700 Forsyth Boulevard
St. Louis, MO 63105 U.S.A.
1-314-725-4477
www.centene.com