exhibit991.htm

Exhibit 99.1

N E W S R E L E A S E

Contact:	Investor Relations Inquiries Edmund E. Kroll
	Senior Vice President, Finance & Investor Relations
	(212) 759-0382
	Media Inquiries
	Toni Simonetti
	Senior Vice President, Public Affairs
	(314) 725-4477

FOR IMMEDIATE RELEASE

CENTENE CORPORATION REPORTS 2009 FOURTH QUARTER AND FULL YEAR EARNINGS

ST. LOUIS, MISSOURI (February 9, 2010) -- Centene Corporation (NYSE: CNC) today announced its financial results for the quarter and year ended December 31, 2009. The results of operations for our New Jersey health plan, University Health Plans, are classified as discontinued operations. The discussions below, with the exception of cash flow information, are in the context of continuing operations and all financial ratios exclude premium taxes.


2009 Highlights
	Q4			Full Year
Premium and Service Revenues (in millions)	$	1,050.8		$	3,878.3
Consolidated HBR		83.9	%		83.5	%
Diluted EPS	$	0.53		$	1.94
Cash flow from operations (in millions)	$	71.3		$	248.2

Fourth Quarter Highlights

·	Quarter-end managed care at-risk membership of 1,455,600, an increase of 259,600 lives year over year.

·	Premium and Service Revenues of $1,050.8 million, representing 19.6% year over year growth.

·	Health Benefits Ratio (HBR) of 83.9%.

·	General and Administrative (G&A) expense ratio of 12.7%.

·	Cash flow from operations of $71.3 million.

·	Days in claims payable of 50.1, including pharmacy claims payable.

·	Diluted earnings per share from continuing operations of $0.53.

Other Events

·	During the fourth quarter of 2009, CeltiCare Health Plan of Massachusetts enrolled 27,300 members under our new managed healthcare service contracts for the Commonwealth Bridge and Commonwealth Care programs.

·	In November 2009, we announced we were selected to provide managed care services in Mississippi to Medicaid recipients through the Mississippi Coordinated Access Network (MississippiCan) program. We are working with the State and currently expect a 2010 start date.

·	In December 2009, Don Imholz was promoted to Executive Vice President and Chief Information Officer, and in January 2010, Toni Simonetti was appointed Senior Vice President of Public Affairs.

We recently completed the sale of an additional 5.75 million shares of common stock, including the underwriters overallotment option, for a public offering price of $19.25 per share. Net proceeds from the sale of the additional shares were approximately $104.5 million. As a result of the sale of these shares, the pro-forma debt to capital ratio is reduced to 23.6% from 33.2% at December 31, 2009.

Michael F. Neidorff, Centene’s Chairman and Chief Executive Officer, stated, “Our commitment to quality and fundamentals drove solid 2009 results and we endeavor to maintain this momentum in 2010.”

The following table depicts membership in Centene’s managed care organizations, by state, at December 31, 2009 and 2008:

	December 31,
	2009	2008
Arizona	18,100	14,900
Florida	102,600	—
Georgia	309,700	288,300
Indiana	208,100	175,300
Massachusetts	27,800	—
Ohio	150,800	133,400
South Carolina	48,600	31,300
Texas	455,100	428,000
Wisconsin	134,800	124,800
Total at-risk membership	1,455,600	1,196,000
Non-risk membership	63,700*	3,700
Total	1,519,300	1,199,700
______________________________
* Increase mainly due to consolidation of our Access Health Solutions LLC investment, effective January 1, 2009.

The following table depicts membership in Centene’s managed care organizations, by member category, at December 31, 2009 and 2008:

	December 31,
	2009	2008
Medicaid	1,081,400	877,400
CHIP & Foster Care	263,600	257,300
ABD & Medicare	82,800	61,300
Other State programs	27,800	—
Total at-risk membership	1,455,600	1,196,000
Non-risk membership	63,700	3,700
Total	1,519,300	1,199,700

Statement of Operations

For the fourth quarter of 2009, Premium and Service Revenues increased 19.6% to $1,050.8 million from $878.8 million in the fourth quarter of 2008. The increase was primarily driven by membership growth in all states, premium rate increases, the consolidation of Access and conversion of members to our at-risk plan in Florida.

·	The consolidated HBR, which reflects medical costs as a percent of premium revenues, was 83.9%. A reconciliation of the change in HBR from the prior year same period and from the immediately preceding quarter is presented below:


Q4:2009 vs. Q4:2008			Q4:2009 vs. Q3:2009
Fourth Quarter 2008	82.3	%	Third Quarter 2009	83.7	%
New markets reserved at higher rates	1.6		New markets reserved at higher rates	1.1
Impact of additional costs related to the flu	0.8		Impact of additional costs related to the flu	0.3
Decrease in Texas CHIP/Perinate rates	0.6		Rate increases	(1.2	)
Improvements in ABD markets	(1.7	)	Fourth Quarter 2009	83.9	%
Net change in other markets	0.3
Fourth Quarter 2009	83.9	%

The increase in the fourth quarter of 2009 over the comparable period in 2008 was due to the effect of reserving at higher rates for new markets, the March 1, 2009 rate decrease for our CHIP/Perinate product in Texas which brought the HBR more in line with our normal range and the impact of additional costs related to the flu. We also experienced improvements in our ABD product, particularly in Ohio and South Carolina. Sequentially, the increase in the HBR reflects the impact of the aforementioned new markets, additional costs related to the flu along with the effect of rate increases, including the rate increase in Georgia for the period July 1, 2009 to December 31, 2009, recorded in the fourth quarter.

Consolidated G&A expense as a percent of premium and service revenues was 12.7% in the fourth quarter of 2009, a decrease from 13.8% in the fourth quarter of 2008. The reduction in the G&A ratio between years reflects improved leveraging of our costs over a higher revenue base and the impact of additional revenue from new business (Florida and South Carolina).

Earnings per diluted share from continuing operations were $0.53, compared to $0.53 in the fourth quarter of 2008. When compared to the fourth quarter of 2008, we anticipated and experienced an increase in costs related to the flu of approximately $8.3 million. This was partially offset by decreases in pharmacy and other medical expense categories and a lower G&A expense ratio as discussed above.

For the year ended December 31, 2009, Premium and Service Revenues increased 18.4% to $3.9 billion in 2009 from $3.3 billion in 2008. G&A expenses as a percent of Premium and Service Revenues decreased to 13.3% in 2009, compared to 13.6% in 2008. Earnings from operations increased to $138.1 million in 2009 from $131.6 million in 2008. Net earnings from continuing operations, were $86.1 million, or $1.94 per diluted share in 2009 compared to $84.2 million, or $1.90 per diluted share in 2008.

Recording the Georgia premium rate increase for the period from July 1, 2007 to December 31, 2007 during the first quarter of 2008 had the effect of increasing our 2008 revenue and pre-tax earnings by $20.8 million, or $0.28 per diluted share.

Balance Sheet and Cash Flow

At December 31, 2009, the Company had cash and investments of $986.1 million, including $949.9 million held by its regulated entities and $36.2 million held by its unregulated entities. Medical claims liabilities totaled $470.9 million, representing 50.1 days in claims payable, an increase of 1.2 days from September 30, 2009. Total debt was $307.7 million and debt to capitalization was 33.2%. Year to date cash flow from operations was $248.2 million.

Days in claims payable have been adjusted to reflect the inclusion of pharmacy claims payable. A reconciliation of the Company’s change in days in claims payable from the immediately preceding quarter-end is presented below:

Days in claims payable, September 30, 2009	48.9
Timing of medical claims processing	1.0
Pharmacy	0.2
Days in claims payable, December 31, 2009	50.1

Outlook

The table below depicts the Company’s annual guidance from continuing operations for 2010:

	Full Year 2010
	Low	High
Premium and Service revenues (in millions)	$ 4,350	$ 4,450
Earnings per diluted share (EPS)	$ 1.70	$ 1.80
HBR %	84.0%	86.0%
G&A %	12.4%	12.9%

Diluted Shares Outstanding (in thousands)	50,500

The Company is adjusting the EPS range of its earnings guidance to reflect the issuance of 5.75 million common shares of stock related to the Company’s recently completed stock offering, which is partially offset by a reduction in interest expense from the pay down of our revolving credit facility.

Conference Call

As previously announced, the Company will host a conference call Tuesday, February 9, 2010, at 8:30 A.M. (Eastern Time) to review the financial results for the fourth quarter ended December 31, 2009, and to discuss its business outlook. Michael F. Neidorff and William N. Scheffel will host the conference call. Investors and other interested parties are invited to listen to the conference call by dialing 800-273-1254 in the U.S. and Canada; 973-638-3440 from abroad, or via a live, audio webcast on the Company’s website at www.centene.com, under the Investors section. A replay will be available for on-demand listening shortly after the completion of the call until 11:59 PM (Eastern Time) on Tuesday, February 23, 2010, at the aforementioned URL, or by dialing 800-642-1687 in the U.S. and Canada, or 706-645-9291 from abroad, and entering access code 51681793.

About Centene Corporation

Centene Corporation is a leading multi-line healthcare enterprise that provides programs and related services to individuals receiving benefits under Medicaid, including the Children’s Health Insurance Program (CHIP), as well as Aged, Blind, or Disabled (ABD), Foster Care, Long-Term Care and Medicare (Special Needs Plans). The Company operates local health plans and offers a wide range of health insurance solutions to individuals and the rising number of uninsured Americans. It also contracts with other healthcare and commercial organizations to provide specialty services including behavioral health, life and health management, managed vision, telehealth services, pharmacy benefits management and medication adherence. Information regarding Centene is available via the Internet at www.centene.com.

The information provided in this press release contains forward-looking statements that relate to future events and future financial performance of Centene. Subsequent events and developments may cause the Company’s estimates to change. The Company disclaims any obligation to update this forward-looking financial information in the future. Readers are cautioned that matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, regulatory, competitive and other factors that may cause Centene’s or its industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Actual results may differ from projections or estimates due to a variety of important factors, including Centene’s ability to accurately predict and effectively manage health benefits and other operating expenses, competition, changes in healthcare practices, changes in federal or state laws or regulations, inflation, provider contract changes, new technologies, reduction in provider payments by governmental payors, major epidemics, disasters and numerous other factors affecting the delivery and cost of healthcare. The expiration, cancellation or suspension of Centene’s Medicaid Managed Care contracts by state governments would also negatively affect Centene.

[Tables Follow]

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

(Unaudited)

	December 31,
	2009			2008
ASSETS
Current assets:
Cash and cash equivalents of continuing operations	$	400,951	$	370,999
Cash and cash equivalents of discontinued operations		2,801		8,100
Total cash and cash equivalents		403,752		379,099
Premium and related receivables, net of allowance for uncollectible accounts of $1,338 and $1,304, respectively		103,456		92,531
Short-term investments, at fair value (amortized cost $39,230 and $108,469, respectively)		39,554		109,393
Other current assets		64,866		75,333
Current assets of discontinued operations other than cash		4,506		9,987
Total current assets		616,134		666,343
Long-term investments, at fair value (amortized cost $514,256 and $329,330, respectively)		525,497		332,411
Restricted deposits, at fair value (amortized cost $20,048 and $9,124, respectively)		20,132		9,254
Property, software and equipment, net of accumulated depreciation of $103,883 and $74,194, respectively		230,421		175,858
Goodwill		224,587		163,380
Intangible assets, net		22,479		17,575
Other long-term assets		36,829		59,083
Long-term assets of discontinued operations		26,285		27,248
Total assets	$	1,702,364	$	1,451,152
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims liability	$	470,932	$	384,360
Accounts payable and accrued expenses		132,001		208,243
Unearned revenue		91,644		17,107
Current portion of long-term debt		646		255
Current liabilities of discontinued operations		20,685		31,013
Total current liabilities		715,908		640,978
Long-term debt		307,085		264,637
Other long-term liabilities		59,561		43,539
Long-term liabilities of discontinued operations		383		726
Total liabilities		1,082,937		949,880

Commitments and contingencies

Stockholders’ equity:
Common stock, $.001 par value; authorized 100,000,000 shares; issued and outstanding 45,593,383 and 45,071,179 shares, respectively		46		45
Additional paid-in capital		281,806		263,835
Accumulated other comprehensive income:
Unrealized gain on investments, net of tax		7,348		3,152
Retained earnings		358,907		275,236
Treasury stock, at cost (2,414,010 and 2,083,415 shares, respectively)		(47,262)		(40,996)
Total Centene stockholders’ equity		600,845		501,272
Noncontrolling interest		18,582		—
Total stockholders’ equity		619,427		501,272
Total liabilities and stockholders’ equity	$	1,702,364	$	1,451,152

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share data)

(Unaudited)

	Three Months Ended December 31,						Year Ended December 31,
	2009			2008			2009			2008
Revenues:
Premium	$	1,031,812		$	860,811		$	3,786,525		$	3,199,360
Service		19,018			17,995			91,758			74,953
Premium and service revenues		1,050,830			878,806			3,878,283			3,274,313
Premium tax		41,896			23,952			224,581			90,202
Total revenues		1,092,726			902,758			4,102,864			3,364,515
Expenses:
Medical costs		865,415			708,163			3,163,523			2,640,335
Cost of services		14,425			13,453			60,789			56,920
General and administrative expenses		133,005			121,343			514,529			444,733
Premium tax		42,103			24,329			225,888			90,966
Total operating expenses		1,054,948			867,288			3,964,729			3,232,954
Earnings from operations		37,778			35,470			138,135			131,561
Other income (expense):
Investment and other income		3,910			6,004			15,691			21,728
Interest expense		(4,108	)		(4,237	)		(16,318	)		(16,673	)
Earnings from continuing operations, before income tax expense		37,580			37,237			137,508			136,616
Income tax expense		13,781			13,971			48,841			52,435
Earnings from continuing operations, net of income tax expense		23,799			23,266			88,667			84,181
Discontinued operations, net of income tax (benefit) expense of $(56), $(671), $(1,204) and $(281), respectively		(28	)		(1,843	)		(2,422	)		(684	)
Net earnings		23,771			21,423			86,245			83,497
Noncontrolling interest		56			—			2,574			—
Net earnings attributable to Centene Corporation	$	23,715		$	21,423		$	83,671		$	83,497

Amounts attributable to Centene Corporation common shareholders:
Earnings from continuing operations, net of income tax expense	$	23,743		$	23,266		$	86,093		$	84,181
Discontinued operations, net of income tax (benefit) expense		(28	)		(1,843	)		(2,422	)		(684	)
Net earnings	$	23,715		$	21,423		$	83,671		$	83,497

Net earnings (loss) per share attributable to Centene Corporation:
Basic:
Continuing operations	$	0.55		$	0.54		$	2.00		$	1.95
Discontinued operations		―			(0.04	)		(0.06	)		(0.02	)
Earnings per common share	$	0.55		$	0.50		$	1.94		$	1.93
Diluted:
Continuing operations	$	0.53		$	0.53		$	1.94		$	1.90
Discontinued operations		―			(0.04	)		(0.05	)		(0.02	)
Earnings per common share	$	0.53		$	0.49		$	1.89		$	1.88

Weighted average number of shares outstanding:
Basic		43,068,502			42,957,593			43,034,791			43,275,187
Diluted		44,513,679			44,043,749			44,316,467			44,398,955

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Year Ended December 31,
	2009			2008
Cash flows from operating activities:
Net earnings	$	86,245		$	83,497
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		44,004			35,414
Stock compensation expense		14,634			15,328
(Gain) loss on sale of investments, net		(141	)		4,988
Impairment loss		—			2,546
Deferred income taxes		3,696			1,286
Changes in assets and liabilities:
Premium and related receivables		2,379			(1,548	)
Other current assets		(1,263	)		(4,244	)
Other assets		9			(2,700	)
Medical claims liability		79,000			47,283
Unearned revenue		78,345			(36,447	)
Accounts payable and accrued expenses		(60,915	)		74,166
Other operating activities		2,202			2,409
Net cash provided by operating activities		248,195			221,978
Cash flows from investing activities:
Capital expenditures		(83,113	)		(65,156	)
Purchase of investments		(791,194	)		(549,652	)
Sales and maturities of investments		642,783			546,264
Investments in acquisitions, net of cash acquired, and investment in equity method investee		(38,563	)		(85,377	)
Net cash used in investing activities		(270,087	)		(153,921	)
Cash flows from financing activities:
Proceeds from exercise of stock options		2,365			5,354
Proceeds from borrowings		659,059			236,005
Payment of long-term debt		(616,219	)		(178,491	)
Distributions to noncontrolling interest		(3,170	)		—
Contribution from noncontrolling interest		11,219			—
Excess tax benefits from stock compensation		53			3,100
Common stock repurchases		(6,304	)		(23,510	)
Debt issue costs		(458	)		—
Net cash provided by financing activities		46,545			42,458
Net increase in cash and cash equivalents		24,653			110,515
Cash and cash equivalents, beginning of period		379,099			268,584
Cash and cash equivalents, end of period	$	403,752		$	379,099

Supplemental disclosures of cash flow information:
Interest paid	$	15,428		$	15,312
Income taxes paid	$	52,928		$	36,801

Supplemental disclosure of non-cash investing and financing activities:
Contribution from noncontrolling interest	$	5,875		$	—

CENTENE CORPORATION

CONTINUING OPERATIONS SUPPLEMENTAL FINANCIAL DATA

	Q4		Q3		Q2		Q1		Q4
	2009		2009		2009		2009		2008
MEMBERSHIP
Managed Care:
Arizona	18,100		17,400		16,200		15,500		14,900
Florida	102,600		84,400		22,300		29,100		—
Georgia	309,700		303,400		292,800		289,300		288,300
Indiana	208,100		200,700		196,100		179,100		175,300
Massachusetts	27,800		500		—		—		—
Ohio	150,800		151,200		141,200		137,000		133,400
South Carolina	48,600		46,100		46,000		48,500		31,300
Texas	455,100		450,200		443,200		421,100		428,000
Wisconsin	134,800		132,500		131,200		127,700		124,800
Total at-risk membership	1,455,600		1,386,400		1,289,000		1,247,300		1,196,000
Non-risk membership	63,700		63,200		114,000		96,000		3,700
TOTAL	1,519,300		1,449,600		1,403,000		1,343,300		1,199,700

Medicaid	1,081,400		1,040,000		958,600		921,100		877,400
CHIP & Foster Care	263,600		263,400		261,400		256,900		257,300
ABD & Medicare	82,800		82,500		69,000		69,300		61,300
Other State programs	27,800		500		—		—		—
Total at-risk membership	1,455,600		1,386,400		1,289,000		1,247,300		1,196,000
Non-risk membership	63,700		63,200		114,000		96,000		3,700
TOTAL	1,519,300		1,449,600		1,403,000		1,343,300		1,199,700

Specialty Services(a):
Cenpatico Behavioral Health
Arizona	120,100		117,300		110,500		104,700		105,000
Kansas	41,400		41,000		41,100		40,600		41,100
Bridgeway Health Solutions
Long-term Care	2,600		2,500		2,400		2,300		2,100
TOTAL	164,100		160,800		154,000		147,600		148,200

(a) Includes external membership only.

REVENUE PER MEMBER PER MONTH(b)	$	226.42	$	222.77	$	219.75	$	220.29	$	218.52

CLAIMS(b)
Period-end inventory	423,400		414,900		362,200		325,000		269,300
Average inventory	279,000		227,100		234,500		267,600		288,600
Period-end inventory per member	0.29		0.30		0.28		0.26		0.23
(b) Revenue per member and claims information are presented for the Managed Care at-risk members.

	Q4		Q3		Q2		Q1		Q4
	2009		2009		2009		2009		2008

DAYS IN CLAIMS PAYABLE
Medical	48.1		47.1		47.5		45.3		48.5
Pharmacy	2.0		1.8		1.5		1.8		1.4
TOTAL	50.1		48.9		49.0		47.1		49.9
Days in Claims Payable is a calculation of Medical Claims Liabilities at the end of the period divided by average claims expense per calendar day for such period.

CASH AND INVESTMENTS (in millions)
Regulated	$	949.9	$	911.4	$	825.8	$	816.8	$	798.0
Unregulated		36.2		27.6		27.0		28.9		24.1
TOTAL	$	986.1	$	939.0	$	852.8	$	845.7	$	822.1

DEBT TO CAPITALIZATION	33.2%		31.9%		33.0%		34.6%		34.6%
Debt to Capitalization is calculated as follows: total debt divided by (total debt + total equity). The pro-forma debt to capital ratio, adjusted for the follow on stock offering which would have reduced total debt by $84.0 million and increased total equity by $104.5 million, is reduced to 23.6% from 33.2% at December 31, 2009.

OPERATING RATIOS:

	Three Months Ended December 31,				Year Ended December 31,
	2009		2008		2009		2008
Health Benefits Ratios:
Medicaid and CHIP	85.3	%	80.3	%	84.6	%	80.6	%
ABD and Medicare	79.9		90.1		81.1		91.1
Specialty Services	81.8		85.4		80.2		83.8
Total	83.9		82.3		83.5		82.5

General & Administrative Expense Ratios	12.7	%	13.8	%	13.3	%	13.6	%

MEDICAL CLAIMS LIABILITY (In thousands)

The changes in medical claims liability are summarized as follows:

Balance, December 31, 2008	$	384,360
Acquisitions		—
Incurred related to:
Current period		3,216,533
Prior period		(53,010	)
Total incurred		3,163,523
Paid related to:
Current period		2,752,983
Prior period		323,968
Total paid		3,076,951
Balance, December 31, 2009	$	470,932

Centene’s claims reserving process utilizes a consistent actuarial methodology to estimate Centene’s ultimate liability. Any reduction in the “Incurred related to: Prior period” amount may be offset as Centene actuarially determines “Incurred related to: Current period.” As such, only in the absence of a consistent reserving methodology would favorable development of prior period claims liability estimates reduce medical costs. Centene believes it has consistently applied its claims reserving methodology in each of the periods presented.

The amount of the “Incurred related to: Prior period” above includes the effects of reserving under moderately adverse conditions, new markets where we use a conservative approach in setting reserves during the initial periods of operations, increased receipts from other third party payors related to coordination of benefits and lower medical utilization and cost trends for dates of service prior to December 31, 2008.