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Revenue Growth Prospects: What to Expect from CNC and UNH

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Revenue guidance

In fiscal 2018, Centene (CNC) reported revenues of $60.12 billion, a YoY rise of 24.25%. According to the company’s fourth-quarter earnings conference call, this performance was mainly driven by robust growth of Centene in the health insurance marketplace business, the company’s expansion across product categories and geographic markets, and the acquisition of government health plan Fidelis Care.

In its fourth-quarter earnings conference call, Centene guided for fiscal 2019 revenues in the range of $70.3 billion and $71.1 billion, $600 million higher at the midpoint than the previous projection of $69.7 billion to $70.5 billion. The company attributed the rise in revenue guidance to higher-than-anticipated membership growth for its health insurance market place business in fiscal 2018, an acquisition of a stake in University Hospital of Torrejón in Spain, and the selection of Centurion, the company’s subsidiary, to provide healthcare services to the Arizona Department of Corrections.

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In the Centene-WellCare investor presentation, Centene highlighted its fiscal 2019 proforma revenue after the completion of the acquisition of WellCare Health Plans (WCG) to be close to $97 billion. In November 2018, UnitedHealth Group (UNH) issued a press release announcing a fiscal 2019 revenue guidance range of $243 billion to $245 billion.

Wall Street’s projections

Wall Street analysts have projected Centene’s revenues to be $70.87 billion, $77.13 billion, and $83.15 billion, for fiscal 2019, fiscal 2020, and fiscal 2021, respectively. These projections imply a YoY change of 17.88%, 8.84%, and 7.81% for fiscal 2019, fiscal 2020, and fiscal 2021, respectively.

On the other hand, Wall Street analysts have projected UnitedHealth Group’s revenues to be $244.36 billion, $264.96 billion, and $286.42 billion, for fiscal 2019, fiscal 2020, and fiscal 2021, respectively, which imply a YoY change of 8.00%, 8.43%, and 8.10%, for fiscal 2019, fiscal 2020, and fiscal 2021, respectively.

UnitedHealth Group is expected to report higher absolute revenues but a lower CAGR (compound average growth rate) revenue growth from fiscal 2019 to fiscal 2021 as compared to Centene. 

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