Centene is boosting its guidance for the year as it continues its value-creation project.
The insurer launched its value-creation plan about a year ago, and, under the initiative, it is taking a closer look at its real estate holdings. Real estate was identified as a focus as the company shifted to a more flexible work environment due to the pandemic.
The company expects to incur $750 million to $800 million in impairments as it slims down its leased space, as well as $750 million to $850 million in owned space. The costs will be recorded likely in the second and third quarters of this year and will sit outside of earnings per share.
Centene said it expects to decrease expenses for leased real estate by an $180 million to $200 million annualized run rate.
"Overall, the work we are doing today not only positions Centene to deliver on our financial objectives but also to better serve our members, providers, and communities, now and in the future," said Sarah London, CEO of Centene, in a statement.
The company offered the update on its progress as part of its investor day on Friday. Alongside filling investors in on the value-creation initiative, Centene upped its guidance range for premium and service revenue by $2 billion for the year, now expecting between $134.3 billion and $136.3 billion.
The insurer also bumped up its earnings guidance by 15 cents and now expects $5.55 to $5.70 in earnings per share.