Centene's (CNC) Q2 Earnings Miss Estimates, Revenues Beat

Centene Corporation CNC reported second-quarter 2020 adjusted earnings per share of $2.40, missing the Zacks Consensus Estimate of $2.41 by 0.4%. However, the bottom line soared 79.1% year over year on the back of solid revenues.

For the second quarter, total revenues surged 51% to $27.7 billion from the year-ago period, primarily aided by the WellCare buyout, growth in Health Insurance Marketplace business, expansions and new programs across many states in 2019 and 2020 as well as the reinstatement of the health insurer fee in 2020. However, this upside was offset by the Illinois health plan divestiture.

Meanwhile, the top line surpassed the consensus mark by 1.2%.

Quarterly Operational Update

As of Jun 30, 2020, managed care membership came in at 24.6 million, up 64% year over year.

Health Benefit Ratio (HBR) for the reported quarter was 82.1% compared with 86.7% in the prior-year period. This decrease can be attributed to the current COVID-19 pandemic.

Adjusted Selling, General & Administrative (SG&A) expense ratio was 8.5% for the quarter compared with 9% for the same period last year.

This year-over-year contraction of 50 basis points can be attributed to the WellCare buyout, and leveraging of costs over higher revenues.

Centene Corporation Price, Consensus and EPS Surprise

Centene Corporation Price, Consensus and EPS Surprise

Centene Corporation price-consensus-eps-surprise-chart | Centene Corporation Quote

Financial Update

As of Jun 30, 2020, the company's cash and cash equivalents totaled $12.8 billion, up 5.6% from the figure at 2019 end.

As of Jun 30, 2020, total assets were up 66.7% to $68.3 billion from the level at 2019 end.

Centene’s long-term debt summed $16.7 billion, up 22.5% from the figure at 2019 end.

Net cash provided by operating activities as of Jun 30, 2020 was $3.4 billion compared with net cash provided by operating activities of $2.3 billion a year ago.

2020 Outlook

The company now expects revenues in the range of $109-$111.4 billion, lowered from the previous anticipation of $110-$112.4 billion.

Adjusted EPS is anticipated between $4.76 and $4.96, up from the previous projection of $4.56-$4.76 per share.

Zacks Rank

Centene carries a Zacks Rank #3 (Hold), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases From Medical Sector

Some stocks worth considering from the medical sector with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:

Tenet Healthcare Corporation THC has an Earnings ESP of +7.87% and a Zacks Rank of 3, currently. The company is scheduled to release second-quarter earnings on Aug 3.

Molina Healthcare, Inc. MOH is set to report second-quarter earnings on Jul 30. The stock is currently a #2 Ranked player and has an Earnings ESP of +4.08%.

bluebird bio, Inc. BLUE is set to report second-quarter earnings on Aug 6. The stock presently has a Zacks Rank #3 and an Earnings ESP of +69.18%.

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