Centene Corporation (CNC)

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Centene Corp. (CNC)

F1Q09 Earnings Call Transcript

April 28, 2009 at 8:30 am ET


Michael Neidorff - Chairman & Chief Executive Officer

Eric Slusser - Executive Vice President & Chief Financial Officer

Jesse Hunter - Executive Vice President, Corporate Development

William Scheffel - Executive Vice President, Specialty Business Unit


Joshua Raskin - Barclays Capital

Gregg Genova - Deutsche Bank

Greg Nersessian - Credit Suisse

Daryn Miller - Goldman Sachs



Good morning. My name is Jackie and I will be your conference operator today. At this time, I would like to welcome everyone to the CNC Q1 2009 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions)

I will now turn the call over to Ed Kroll, Senior Vice President of Finance and Investor Relations for Centene Corporation. You may begin your conference.

Ed Kroll

Thank you and good morning everyone. It is Ed Kroll, Senior Vice President of Finance and Investor Relations at Centene Corporation. Thank you for joining us on today’s conference call for our first quarter earnings. Michael Neidorff, our Chairman, President and Chief Executive Officer; and Eric Slusser, Executive Vice President and Chief Financial Officer, will host this morning’s call.

The call is expected to last about 45 minutes and may also be accessed through our website at www.centene.com. A replay will be available shortly after the call’s completion, also on our website at centene.com or by dialing 800-642-1687 in the US and Canada or 706-645-9291 from all other countries and the access code for those calls is 93132567.

Any remarks that Centene may make about future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor Provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements, as a result of various important factors, including those discussed in Centene’s Form 10-Q dated today, April 28, 2009, and other public SEC filings.

Centene anticipates that subsequent events and developments will cause its estimates to change. While the Company may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so.

With that, I would like to turn the call over to our Chairman and CEO, Michael Neidorff.

Michael Neidorff

Thank you, Ed. Good morning everyone and thank you for joining Centene’s first quarter earnings call. I will briefly review some of the highlights of the first quarter and then turn the call over to Eric, who will walk you through the financial results in greater detail.

Before I discuss another solid quarter for Centene, I would like to take a moment to briefly comment on three important and timely topics. One, our first swine flu and its possible impact. Secondly, Centene’s position as a Medicaid Managed Care organization in the current economic environment, and thirdly, the impact on our business from possible federal healthcare reform.

While the recently ended regular flu season was significantly lighter than last year, the very recent outbreak of so called swine flu has become the main topic of healthcare news around the world. Swine flu is a respiratory disease of pigs caused by the Type A flu virus. People do not normally get swine flu but human infections can and do happen.

Swine flu virus has been reported to spread from person-to-person and is contagious. The symptoms of swine flu in people are similar to the symptoms of regular human flu and include high fever, cough, sore throat, body aches, headaches, chills, fatigue, and gastrointestinal tract related issues.

Centene has a detailed response plan in place that was developed in 2006 during the bird flu pandemic scare to manage major disease outbreaks which allows us to be proactive rather than reactive in our actions. We communicate and coordinate with providers, state and local agencies and our members as we continuously monitor the disease incidents in our markets.

Our NurseWise call centers are in invaluable resource in disseminating useful information on symptoms, treatment, and prevention, while there is no flu vaccine for swine flu. Antiviral medications like Tamiflu and Relenza have proven successful as a treatment. These medications should be taken only on the advice of physician within 48 hours of the onset of symptoms.

In addition, Centene has a comprehensive business continuity plan to ensure that our operations are not significantly disrupted in the event of a pandemic. We have mobilized our team and our on alert to implement the plan if needed. Right now, it is simply too early to predict the scope and implications of the swine flu situation. But we will keep you updated as necessary.

Switching to the economy, the downturn in the US economy has had a significant impact on state budgets, with the majority of the states now forecasting budget deficits for the full year 2010. Let me remind you, Centene’s business model is built to grow in both good and bad economic times. We understand the strain this economic environment in places, on our state partners and we are committed to working with them to ensure we provide better health outcomes at lower cost.

We will maintain our focus, dedication, and discipline in managing our business in 2009 and beyond and remain committed to our growth, the improvement of our profit margins and producing consistent and adequate returns for our investors. Also, the fiscal stimulus bill passed in February includes $87 billion in additional federal funding for state Medicaid programs over a two-year period through the increase to add FMAP, with states eligible for additional funding based on their unemployment levels.

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