Centene Corporation is undergoing a broad organizational restructuring initiative in an effort to boost efficiency and scale, executives told investors Tuesday morning.
CEO Michael Neidorff said on Centene's earnings call that the effort will cull 3,000 employees from the company and eliminate 1,500 open jobs. The initiative is set to reduce Centene's workforce by roughly 6%, he said.
Nixing the open jobs was initially laid out as part of Centene's investor day in December, Neidorff said. In determining where to make changes, he said the company focused on "innovation, growth and agility" in its strategy.
"The reductions are primarily in areas where we have significant overlap from acquisitions and where we have opportunity to leverage our size and scale for increased efficiency remain focused on innovation, growth and agility," he said.
Neidorff also outlined several headwinds and tailwinds that the company is bracing for in the coming months. He said Centene expects to be buoyed by several policy changes undertaken due to COVID-19, such as the suspension of Medicaid redetermination and the new special enrollment period on the Affordable Care Act's exchanges that opens shortly.
However, he said that changes to the physician fee schedule and potential fluctuations in care utilization due to the pandemic are headwinds to watch.
"Taken together, we expect they will trend to the positive," Neidorff said.
Centene held on to its 2021 guidance, but Neidorff said that if the company feels it needs to make adjustments based on these potential impacts, it will do so on the first-quarter 2021 call.
Centene posted a $12 million profit loss in the fourth quarter of 2020.
In the same quarter a year earlier, the insurer brought in $209 million in profits, according to its earnings report released Tuesday morning. Despite the fourth-quarter loss, Centene's profits for full-year 2020 were up from the year before, with the company earning $1.8 billion, up 38% compared to $1.3 billion in 2019.
Centene brought in $28.2 billion in revenue for the quarter. The company beat Wall Street analysts' projections on profits but missed on revenue.
Centene's full-year revenue in 2020 was $111.1 billion, up 49% from $74.6 billion in 2019.
Centene joins its peers in experiencing weaker results in the fourth quarter as the financial impacts of the COVID-19 pandemic fully come to bear. Humana also posted a loss in the fourth quarter.
While it posted a fourth-quarter loss, Neidorff said in a statement that the insurer's overall performance in 2020 highlights the success of its growth strategy.
"Building on our leadership position in government-sponsored healthcare, we are focused on delivering the next phase of growth through product and geographic expansion, advancing our technology strategy and further integrating our diverse capabilities," Neidorff said. "Looking ahead, we have great confidence in our ability to pursue our growth strategy in 2021 and beyond."
By the end of the year, Centene reached 25.5 million members, up 67% from 2019, due in large part to its acquisition of rival WellCare closing in the beginning of 2020.
In 2021, the insurer expects earnings per share to be between $5 and $5.30 and revenues between $116.1 billion and $118.1 billion.