Driven by a strong performance in its health insurance marketplace business, Centene reported better-than-expected second-quarter earnings on Tuesday—the same day Senate Republicans were poised to vote to advance legislation to repeal the Affordable Care Act.
The insurer, which primarily specializes in Medicaid managed care, said its its profits rose to $254 million ($1.44 earnings per share) in the quarter, up from $171 million in the second quarter of 2016. Its adjusted EPS of $1.59 beat analysts’ consensus estimate of $1.30 per share, and it raised its full-year guidance by 18 cents to a range of $4.70 to $5.06 per share.
Centene said its “strong 2017 marketplace performance” exceeded its expectations in the second quarter by $0.12 diluted earnings per share, and added that its second-quarter earnings included a 17-cents-per-share net benefit related to risk adjustment under the ACA.
The insurer previously said it would expand its ACA exchange presence in 2018, even as policy uncertainty has driven other insurers to exit.
Indeed, as he has done in other recent earnings calls, Centene CEO Michael Neidorff downplayed the business threat of the GOP’s ACA repeal effort, saying it “is a moving target with a long way to play out.”
“We continue to follow our business as usual approach from an execution standpoint,” he said.
He also noted that Centene is well-positioned to weather any potential changes to Medicaid given its expertise in managed care. Centene’s Medicaid membership grew 7% year over year in the second quarter, reaching 12.2 million.
However, Neidorff was emphatic about the need to continue funding cost-sharing reduction payments to help insurers lower out-of-pocket costs for ACA exchange enrollees.
Any “intentional act” to stop CSR payments, Neidorff said during Tuesday’s call with investors, would not advance the debate for how to fix our healthcare system and hurt low-income Americans.
“The leadership in Washington bears the responsibility to make sure that does not happen,” Neidorff said.
Neidorff’s comments likely were in response to statements from President Donald Trump indicating he could stop the payments anytime and let the ACA “fail.” Trump’s administration made the payments in July, but hasn’t taken a position on what will happen to the program in the future.
Other improvements that would help stabilize the marketplaces, Neidorff added, would be to eliminate taxes that put upward pressure on premiums and enact a reinsurance mechanism.