Centene offers look at its Medicaid strategy in 2024

UPDATED at 5 p.m. ET on April 26

Medicaid was a key focus at Centene's Q1 earnings call on Friday, with executives saying that this year is a critical one in its strategy in negotiation with states.

CEO Sarah London told investors that the company is about 90% of the way through the redeterminations process, and it is ahead on membership compared to estimates it shared at its investor day in December. 

"We continue to be well guided with respect to membership and rate by the projection model we built state-by-state more than a year ago and that we continue to refine as we move through the redeterminations process," she said.

State Medicaid programs and managed care plans were tasked with sifting through a lengthy backlog of eligibility determinations, as these rulings were paused during the COVID-19 pandemic.

London also said that the company has already secured some key Medicaid contracts in the early part of this year, notably in Florida. Those early contract discussions produced key learnings that can carry through the rest of the year, she said.

She added that she expects to see conversations with states that hinge around rate changes and fluctuating acquity.

"As we've noted before, 2024 represents an important year for blocking and tackling through acuity shifts and corresponding rate discussions with our state partners to ensure we are positioned to provide high-quality services for our members. We are actively engaged in that process and are seeing solid results thus far with opportunities still ahead.

Centene Corporation is boosting its guidance for the year following a quarter where it beat the Street in both profit and revenue.

The company posted $1.16 billion in profit and $40.4 billion in total revenue for the first quarter of 2024. By comparison, Centene reported $1.13 billion in profit and $38.9 billion in revenue in the prior year quarter.

Both figures surpassed Wall Street's expectations, according to analysts at Zacks Invesment Research.

Centene now expects at least $6.80 in earnings per share for 2024, according to the report.

"Centene's first quarter results demonstrate the strength of our diversified platform," CEO Sarah London said in the press release. "We are pleased to raise full year 2024 guidance as we look to maximize the positive momentum being generated by our core businesses. We are executing against our strategic plans for growth and increasing access to affordable, high-quality healthcare for our members and the communities we serve."

Of note in the quarter, Centene highlighted several key Medicaid contract wins in Oklahoma, Florida and Michigan. These followed disappointing results in Texas, which it is likely to challenge.

Total membership across Centene's product lines was 28.4 million in Q1, down slightly from 28.5 million in the prior year quarter. Medicaid enrollment was down by about 3 million amid the ongoing redetermination process, though that was largely offset by gains in its Affordable Care Act marketplace plans as well as Medicare prescription drug plans.

The company also reported a health benefits ratio of 87.1%, according to the report.