- Thanks to its acquisition of WellCare, Centene's first quarter revenue increased 41% year over year to $26 billion. Membership increased 61% to about 24 million members.
- Still, while the payer beat Wall Street expectations on earnings and revenue for the quarter, its medical loss ratio missed, coming in at 88%, an increase from 85.7% the prior-year period. Executives said on an earnings call Tuesday the increase was fueled in part by WellCare's MLR, which tends to be higher in the first quarter.
- Centene CEO Michael Neidorff expects the earnings trajectory for the year to remain on par with prior guidance. However, he said: "There will be some variability when it comes to how we get there. We expect our results to be choppy from quarter to quarter. But overall we continue to view our prior guidance range as a most reliable baseline."
Despite the pandemic, Centene expects to deliver on its projected earnings guidance for the year. However, it may not be smooth sailing in getting there, as the St. Louis-based insurer navigates the COVID-19 outbreak.
Centene expects adjusted diluted earnings per share to be between $4.56 and $4.76 for 2020 and revenue to be between $110 billion and $112.4 billion, an increase from the prior forecast.
Centene's core business is working with states to provide Medicaid coverage to low-income residents. As the economy is thrashed by the virus, Neidorff said he expects membership to increase as unemployment climbs. But ultimately, as the economy improves, Centene will expects to see some of these members roll off.
On use of healthcare services, Neidorff said he expects a continued decline as providers defer procedures to save resources to beat back the novel coronavirus. Yet, there will be significant pent-up demand for care, with the expectation that elective treatments will come back online in the third quarter and continue into the fourth quarter.
"We expect costs to be significantly greater in the third and fourth quarter as the intensity of the utilization rates increase, especially for members with chronic conditions," Neidorff said.
Costs related to COVID-19 could also hit in the second quarter, mainly from the impact of cost waivers of related testing and treatment. But executives declined to provide average claims cost for members with COVID-19 because they have yet to see enough volume.
In talks with major hospital providers, Neidorff said he's heard they're doing everything they can do to get things back to normal and patients in the door, trying to prevent consumers from losing confidence in hospitals.
Those conversations have led him to believe a resurgence of patients utilizing hospitals and healthcare services may begin earlier than expected.
"While I thought we may not see anything until July, third quarter. We may now see it in May and June starting to return, which means there will be a more normalized MLR," he said.
Either way, Neidorff said Centene is preparing for significant levels of "seasonality and choppiness" and is committed to updating investors on new trends or changes to its forecast immediately instead of waiting for the next quarterly earnings call.