Centene Q4 Earnings Beat Estimates on Membership Growth, 2025 View Up

Core Viewpoint - Centene Corporation (CNC) reported strong fourth-quarter 2024 results, with adjusted earnings per share (EPS) of 80 cents, exceeding estimates by 63.3% and showing a year-over-year increase of 77.8% [1][2]. Financial Performance - Revenues for the quarter reached $40.8 billion, a 3.4% increase year over year, surpassing the consensus estimate by 4.8% [2]. - Medicaid revenues decreased by 1% to$ 20.8 billion, while Medicare revenues grew by 4% to $5.5 billion. Commercial revenues saw a significant increase of 18% to$ 8.7 billion [3]. - Total premiums amounted to $35.5 billion, up 3.8% year over year, exceeding the consensus estimate of$ 34.7 billion [4]. - Service revenues fell by 29.7% to $777 million, missing the consensus mark [5]. - Investment and other income decreased by 14.2% to$ 344 million, also falling short of estimates [5]. Membership and Operational Metrics - Total membership reached 28.6 million, a 4.1% increase year over year, with notable growth in the Commercial Marketplace business [6]. - The Health Benefits Ratio (HBR) deteriorated by 10 basis points to 89.6% [6]. - Adjusted net earnings rose by 68.3% to $404 million [6]. Expense Management - Total operating expenses increased by 2.5% to$ 40.6 billion, driven by higher medical costs and premium tax expenses [7]. - The adjusted SG&A expense ratio improved by 80 basis points to 8.9%, attributed to the divestiture of Circle Health Group and cost leveraging [8]. Cash and Debt Position - As of December 31, 2024, cash and cash equivalents stood at $14.1 billion, down 18.2% from the previous year [9]. - Total assets decreased by 2.6% to$ 82.4 billion, while long-term debt rose by 4% to $18.4 billion [9]. Full-Year Overview - For the full year 2024, total revenues reached$ 163.1 billion, a 5.9% increase, with adjusted EPS of $7.17, up 7.3% year over year [12]. - Total operating expenses for the year rose by 5.8% to$ 159.9 billion [12]. Share Repurchase Activity - Centene repurchased $3 billion in common shares during 2024, with$ 2.2 billion remaining under the share repurchase authorization as of February 4, 2025 [13]. 2025 Guidance - Management projects premium and service revenues between $158 billion and$ 160 billion for 2025, indicating a growth of 9.3% from 2024 [14]. - Adjusted EPS is expected to exceed $7.25, reflecting a 1.1% increase from 2024 [14].