Centene announces fourth quarter and full year 2009 financial results

Centene Corporation (NYSE: CNC) today announced its financial results for the quarter and year ended December 31, 2009.  The results of operations for our New Jersey health plan, University Health Plans, are classified as discontinued operations.  The discussions below, with the exception of cash flow information, are in the context of continuing operations and all financial ratios exclude premium taxes.

2009 Highlights Q4 Full Year ---- ---------- Premium and Service Revenues (in millions) $1,050.8 $3,878.3 Consolidated HBR 83.9% 83.5% Diluted EPS $0.53 $1.94 Cash flow from operations (in millions) $71.3 $248.2

Fourth Quarter Highlights

• Quarter-end managed care at-risk membership of 1,455,600, an increase of 259,600 lives year over year.
• Premium and Service Revenues of $1,050.8 million, representing 19.6% year over year growth.
• Health Benefits Ratio (HBR) of 83.9%.  
• General and Administrative (G&A) expense ratio of 12.7%.
• Cash flow from operations of $71.3 million.
• Days in claims payable of 50.1, including pharmacy claims payable.
• Diluted earnings per share from continuing operations of $0.53.  

Other Events

• During the fourth quarter of 2009, CeltiCare Health Plan of Massachusetts enrolled 27,300 members under our new managed healthcare service contracts for the Commonwealth Bridge and Commonwealth Care programs.  
• In November 2009, we announced we were selected to provide managed care services in Mississippi to Medicaid recipients through the Mississippi Coordinated Access Network (MississippiCan) program.  We are working with the State and currently expect a 2010 start date.  
• In December 2009, Don Imholz was promoted to Executive Vice President and Chief Information Officer, and in January 2010, Toni Simonetti was appointed Senior Vice President of Public Affairs.  
• We recently completed the sale of an additional 5.75 million shares of common stock, including the underwriters overallotment option, for a public offering price of $19.25 per share. Net proceeds from the sale of the additional shares were approximately $104.5 million.  As a result of the sale of these shares, the pro-forma debt to capital ratio is reduced to 23.6% from 33.2% at December 31, 2009.

Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "Our commitment to quality and fundamentals drove solid 2009 results and we endeavor to maintain this momentum in 2010."

The following table depicts membership in Centene's managed care organizations, by state, at December 31, 2009 and 2008:

December 31, ------------ 2009 2008 ---- ---- Arizona 18,100 14,900 Florida 102,600 - Georgia 309,700 288,300 Indiana 208,100 175,300 Massachusetts 27,800 - Ohio 150,800 133,400 South Carolina 48,600 31,300 Texas 455,100 428,000 Wisconsin 134,800 124,800 ------- ------- Total at-risk membership 1,455,600 1,196,000 --------- --------- Non-risk membership 63,700* 3,700 ------- ----- Total 1,519,300 1,199,700>The following table depicts membership in Centene's managed care organizations, by member category, at December 31, 2009 and 2008:

December 31, ------------ 2009 2008 ---- ---- Medicaid 1,081,400 877,400 CHIP & Foster Care 263,600 257,300 ABD & Medicare 82,800 61,300 Other State programs 27,800 - ------ --- Total at-risk membership 1,455,600 1,196,000 --------- --------- Non-risk membership 63,700 3,700 ------ ----- Total 1,519,300 1,199,700>Statement of Operations

Q4:2009 vs. Q4:2008 Q4:2009 vs. Q3:2009 ------------------- ------------------- Fourth Quarter 2008 82.3% Third Quarter 2009 83.7% New markets reserved at New markets reserved at higher higher rates 1.6 rates 1.1 Impact of additional costs related to the Impact of additional costs flu 0.8 related to the flu 0.3 Decrease in Texas CHIP/ Perinate rates 0.6 Rate increases (1.2) ---- Improvements in ABD markets (1.7) Fourth Quarter 2009 83.9%>

Balance Sheet and Cash Flow

At December 31, 2009, the Company had cash and investments of $986.1 million, including $949.9 million held by its regulated entities and $36.2 million held by its unregulated entities.  Medical claims liabilities totaled $470.9 million, representing 50.1 days in claims payable, an increase of 1.2 days from September 30, 2009.  Total debt was $307.7 million and debt to capitalization was 33.2%.  Year to date cash flow from operations was $248.2 million.

Days in claims payable have been adjusted to reflect the inclusion of pharmacy claims payable.  A reconciliation of the Company's change in days in claims payable from the immediately preceding quarter-end is presented below:

Days in claims payable, September 30, 2009 48.9 Timing of medical claims processing 1.0 Pharmacy 0.2 --- Days in claims payable, December 31, 2009 50.1

Outlook

The table below depicts the Company's annual guidance from continuing operations for 2010:

Full Year 2010 -------------- Low High --- ---- Premium and Service revenues (in millions) $4,350 $4,450 Earnings per diluted share (EPS) $1.70 $1.80 HBR % 84.0% 86.0% G&A % 12.4% 12.9% Diluted Shares Outstanding (in thousands) 50,500

The Company is adjusting the EPS range of its earnings guidance to reflect the issuance of 5.75 million common shares of stock related to the Company's recently completed stock offering, which is partially offset by a reduction in interest expense from the pay down of our revolving credit facility.

Conference Call

As previously announced, the Company will host a conference call Tuesday, February 9, 2010, at 8:30 A.M. (Eastern Time) to review the financial results for the fourth quarter ended December 31, 2009, and to discuss its business outlook.  Michael F. Neidorff and William N. Scheffel will host the conference call.  Investors and other interested parties are invited to listen to the conference call by dialing 800-273-1254 in the U.S. and Canada; 973-638-3440 from abroad, or via a live, audio webcast on the Company's website at www.centene.com, under the Investors section.  A replay will be available for on-demand listening shortly after the completion of the call until 11:59 PM (Eastern Time) on Tuesday, February 23, 2010, at the aforementioned URL, or by dialing 800-642-1687 in the U.S. and Canada, or 706-645-9291 from abroad, and entering access code 51681793.