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Centene's Contract Renewal to Aid Medicaid Members in Indiana

Centene Corporation CNC recently unveiled that its Indiana subsidiary received a contract from the Indiana Department of Administration again. The subsidiary — Managed Health Services (MHS) — currently serves more than 330,000 members in the state and has a long history of effectively catering to health issues in the region.

The new deal has a duration of four years with an option of two contract renewals of one year each.

The renewed agreement will continue to benefit members of Hoosier Care Connect, which is a coordinated care program catering to members of Indiana Health Coverage Programs (IHCP) who are aged 65 years and older or are suffering from blindness or any disability.

These members, who are not eligible for Medicare, will continue to be served by the healthcare providers’ Medicaid managed care and care coordination services. The renewed program is likely to enable Centene in improving health conditions of the state further by catering to the needs of this vulnerable population.

In fact, this contract gain is expected to strengthen the company’s presence in Indiana, where it already boasts of a robust Medicaid business.

Shares of this Zacks Rank #3 (Hold) healthcare provider have gained 35% in a year compared with the industry’s growth of 25.9%.

Moreover, Centene's focus on addressing the health issues of several U.S. states through its subsidiaries has been instrumental in it winning several contracts time and again. In fact, it’s not only the Indiana subsidiary that has received contract renewal but also the company’s Kentucky subsidiary has been selected by the state of Kentucky this June for serving its Medicaid managed care program.

These contract gains across different regions can be touted as one of the primary reasons for a spike in the company’s medical membership over the past several quarters. This is evident from Centene’s managed care membership, which totaled 24.6 million as of Jun 30, 2020, up 64% year over year.

Other Initiatives Undertaken by Centene

Apart from several contract gains and program expansion across different regions, the company continues to benefit from undertaking acquisitions and mergers. These initiatives are intended to bolster the company’s product offerings, expand its addressable markets and boost its Medicaid membership, which in turn, has been driving revenues for the past few years.

Case in point, Centene’s revenues improved 46% year over year in the first half of 2020 on the back of membership growth in Medicaid and WellCare buyout, which was completed this year in January.

It’s worth mentioning, Centene and Quartet Health have expanded their existing partnership last month, which was forged in June 2019. The collaboration is intended to help members effortlessly access the behavioral health care they need. The move bodes well in the light of the ongoing worldwide crisis, which has aggravated mental illness and behavioural issues.

Moreover, Centene has been proactively taking measures from March itself through eliminating certain costs related to coronavirus treatment. Also, increased adoption of telehealth services position Centene well for long-term growth amid this crisis period.

Stocks to Consider

Some better-ranked stocks in the medical space include Select Medical Holdings Corporation SEM, Emergent BioSolutions Inc. EBS and The Ensign Group, Inc. ENSG, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Select Medical, Emergent BioSolutions and Ensign Group have a trailing four-quarter earnings surprise of 212.61%, 127.41% and 17.08%, on average, respectively.

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