ObamaCare often gets a bad rap, but it’s been a boon for some medical insurers like Centene.
The St. Louis-based Medicaid managed care provider is now a player in 20 states vs. three when it came public in 2001, thanks in part to the Affordable Care Act’s new health insurance exchanges. It’s also been an active acquirer.
Centene entered exchanges in nine states through its Ambetter brand, and just added 200,000 members with its buy of Community Health Solutions’ contract with Louisiana.
Analysts expect Centene could gain another 80,000 new members due to new ObamaCare-related eligibility rules that kicked in at the beginning of the year. Initial enrollment numbers from the new exchanges have come in at the low end of the insurer’s estimates, but are expected to pick up going forward. The company has estimated enrollment will reach some 70,000 by the end of Q2.
Another growth driver is Centene’s specialty services business. Its April 2013 acquisition of independent specialty pharmacy AcariaHealth gives it access to expensive drugs and allows it to cross-sell products.
Centene grew earnings per share 140% and 93% vs. year-ago levels the past two quarters, ending a four-quarter streak of declines stemming from higher medical costs. It surprised Wall Street by topping Q1 profit and revenue views by a wide margin, and raising its full-year guidance. Membership grew 13% in Q1. Revenue has grown by double-digit percentage gains since the first quarter of 2011, helped by steady premium and services revenue. Consensus estimates call for a 34% jump in sales to nearly $3.7 billion in Q2 when it reports July 22 before the open.
The stock gapped up 12% in heavy volume April 22 on Q1 results, helping it clear the 67.94 buy point of an unusual first-stage base shortly after. It ran up as much as 12% before pausing to form a three-weeks-tight pattern, and is still within buy range at nearly 2% above a 76 entry.
Date: July 15, 2014