Centene Revises Its 2019 EPS Guidance Upward

EPS guidance

On its first-quarter earnings conference call, Centene (CNC) guided for 2019 adjusted diluted EPS of $4.24–$4.44, $0.13 higher at the midpoint than its previous guidance of $4.11–$4.31. This expectation is partly attributable to the company’s solid EPS performance in the first quarter, a positive impact of $0.05 per diluted share due to increased estimates for investment income in 2019, and another positive impact of $0.05 per diluted share due to better-than-expected health insurance marketplace revenue. The company, however, expects a negative impact of $0.02 per diluted share associated with rising business expansion costs in 2019.

On its first-quarter earnings conference call, Centene guided for 2019 GAAP (generally accepted accounting principles) diluted EPS of $3.67–$3.84, higher than its earlier guidance of $3.65–$3.83.

Centene Revises Its 2019 EPS Guidance Upward

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Analysts expect Centene’s non-GAAP EPS to rise 20.47% YoY (year-over-year) to $4.26 in 2019, 14.49% YoY to $4.88 in 2020, and 14.26% YoY to $5.58 in 2021.

HBR guidance

In its first-quarter earnings press release, Centene reiterated its guidance for a 2019 HBR (health benefits ratio) of 86.5%–87.0%. In the first quarter, the company reported an HBR of 85.7%, a YoY rise of 140 basis points mainly driven by a one-year moratorium on a health insurer fee in 2019 and the company’s acquisition of Fidelis Care. The company, however, reported a 110-basis-point sequential decline in its HBR in the first quarter, which was associated with the performance of the health insurance marketplace business and a one-year health insurer fee moratorium in 2019.

In its first-quarter earnings press release, Centene raised its guidance for its 2019 SG&A (selling, general, and administrative) expense ratio from 9.3%–9.8% to 9.4%–9.9% and reiterated its adjusted SG&A expense ratio guidance of 9.3%–9.8%. The company reported an SG&A expense ratio of 9.5% in the first quarter, a YoY fall of 80 basis points and a sequential fall of 40 basis points.