Q2 2010 Earnings Call
July 27, 2010 8:30 a.m. ET
Michael Neidorff - Chairman, Chief Executive Officer and President
Edmund Kroll - Senior Vice President of Finance and Investor Relations
William Scheffel - Chief Financial Officer, Executive Vice President and Treasurer
Jesse Hunter - Executive Vice President of Corporate Development
Mark Eggert - Executive Vice President of Health Plan Business Unit
Darren Miller - Goldman Sachs
Brian Wright - Collins Stewart LLC
Thomas Carroll - Stifel, Nicolaus & Co., Inc.
Chris Rigg - Susquehanna Financial Group
Scott Fidel - Deutsche Bank
Scott Green -Banc of America Merrill Lynch
John Rex - JP Morgan Chase & Co.
Joshua Raskin - Barclays Capital
Melissa McGinnis - Morgan Stanley
Previous Statements by CNC
» Centene Corporation Q4 2009 Earnings Call Transcript
» Centene Corporation Q3 2009 Earnings Call Transcript
» Centene Corporation Q2 2009 Earnings Call Transcript
Thank you and good morning everyone. I’m Ed Kroll, senior vice president of finance and investor relations at Centene Corporate. Thank you for joining us on our Q2 earnings call today. Michael Neidorff, chairman and chief executive officer and Bill Scheffel, executive vice president and chief financial officer of Centene will host this morning’s call. The call is expected to last about 45 minutes and may also be accessed through our web site at centene.com. A replay will be available shortly after the call’s completion, also on our web site at centene.com, or by dialing 877-344-7529 in the U.S. and Canada or 412-317-0088 from other countries, and for both of those the playback number is 442132.
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 July 27, 2010, today, 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.
We would also like to announce that our next annual Investor Day will be held June 14, 2011 in New York City. Please mark your calendars.
With that, I'd like to turn the call over to our chairman and CEO, Michael Neidorff. Michael?
Thank you Ed. Good morning everyone and thank you for joining Centene’s second quarter 2010 earnings call. As has become our practice, I would like to take a moment to discuss certainly timely topics for our company and industry before I begin to comment on another solid quarter.
First, I’d like to reinforce our commitment to an important new part of our strategy that we have been communicating to you for this past year. In order to be responsive to the needs of our state customers, we have expanded beyond our historic focus on managed care. Centene is now offering cost-effective healthcare coverage for under- and uninsured low income populations, significantly expanding our addressable market.
It is the combination of Centene’s Medicaid experience and Celtic’s individual and small group skill set, recently enhanced by Nova Systems, that gives us the ability to leverage our networks and infrastructure by offering hybrid health plan solutions. We can effectively serve these populations as they move in and out of Medicaid eligibility, from fully subsidized to partially subsidized, and even to tax-subsidized small group plans. We have been talking to states and are seeing more and more heading in the direction of setting up state-based exchanges or other coverage solutions for their uninsured and underinsured populations.
Our first experience with the state-based exchanges is with the Massachusetts Connector Authority. We have built on our initial efforts in Massachusetts, now have a hybrid plan in place in Arkansas, and in 2011 will commence Healthy Indiana, the state-mandated participation in this Healthy Indiana program and its recent Medicaid re-procurement. We foresee other states following suit in the future. In summary, this experience gives us the ability to serve both Medicaid and exchange-based populations of approximately 32 million people in 2014.
Next, let me discuss some state budgets. State budgets remain under pressure and the big concern right now is the expiration of extra FMAP funding at December 31, 2010 and whether or not it will be expended through June 30, 2011. If it is not extended, it will likely serve as a catalyst for states to move more quickly to embrace cost-effective managed care solutions. While I cannot answer whether or not the FMAP funding will be extended, I can say at Centene we are proactive and have already reached out to our state partners with scenario planning that assumes no FMAP extension. We are managers not victims, and believe it is important to plan for all eventualities.
Our medical management tools, including predictive modeling and the dashboard, allow us to demonstrate to states where there is an opportunity for cost-savings while enhancing quality. This is how one becomes a total low-cost producer while maintaining fair reimbursement for providers. There are a few states that are considering an (inaudible) the status of some programs to FMAP solution or extension. For example, Massachusetts is reviewing whether it would continue our Commonwealth Bridge contract for legal immigrants without the extension. We are currently working with the Commonwealth on alternative ways to continue the program in the event of no FMAP extension.