Centene Corp. (NYSE:CNC) Q4 2014 Earnings Conference Call - Final Transcript

Feb 03, 2015 • 08:30 am ET


Centene Corp. (NYSE:CNC) Q4 2014 Earnings Conference Call - Final Transcript


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Good morning, and welcome to the Centene Corporation Fourth Quarter and Year-End 2014 Financial Results Conference Call. All participants will be in a listen-only mode. (Operator Instructions). After today's presentation there will be an opportunity to ask questions. (Operator Instructions). Please note this event is being recorded.I would now like to turn the conference over to Ed Kroll, Senior Vice President of Finance and Investor Relations. Please go ahead.

Ed Kroll

Thank you, operator, and good morning, everyone. Thank you for joining us on our fourth quarter 2014 earnings call.Michael Neidorff, Centene's Chairman and Chief Executive Officer; and Bill Scheffel, our Executive Vice President and Chief Financial Officer; will host this morning's call. The call is expected to last approximately 45 minutes and may also be accessed through our website at centene.com. A replay will be available shortly after the call's completion, also at centene.com, or by dialing (877) 344-7529 in the U.S. and Canada, or in other countries by dialing (412) 317-0088. The playback code for both of these calls is 10058403 (forward-looking cautionary statements)With that, I'd like to turn the call over to our Chairman and CEO, Michael Neidorff.

Michael Neidorff

Good morning, everyone, and thank you for joining Centene's fourth quarter and full year 2014 earnings call.During the course of this morning's call, we will review our strong 2014 performance and provide updates on Centene's markets and products, and recent M&A activity.I will begin with highlights of Centene's 2014 achievement. Our 2014 financial performance was very strong, capped off by the fourth quarter results we reported this morning.

Michael Neidorff

In 2014, we added 1.2 million members surpassing the 4 million mark. We grew revenues by almost 50% to $15.7 billion, and diluted EPS by 55% to $4.45. This compares favorably to our initial 2014 revenue guidance of $13.8 billion, and EPS guidance of $3.65 at the midpoint. Note that these 2014 growth rates exceed Centene's 5-year CAGR of 32% for revenue and 18% for EPS.

Our shareholders benefit from this strong financial performance, as Centene's stock increased 76% and our return on equity was 18% in 2014.Our expanding market cap placed us into the mid-cap equity category as evidenced by Centene's inclusion in the S&P 400 MidCap and Russell 1000 indices. We successfully navigated the first year of a key provision of the ACA. Centene selectively participated in Health Insurance Marketplaces in nine states.

Consistent with our forecast, we secured reimbursement for 99% of the health insurer fee in 2014.We also enhanced our diversification by product and geography, including our initial entry into international markets. Centene continues to create jobs across its enterprise, the number of our employees increased by over 50% to 13,400 in 2014 alone. Over 85% of these employees are outside Centene's headquarters.

This is consistent with our local approach.Next I would turn to market and product updates. First, we will discuss recent Medicaid activity. Louisiana. On February 1, we began our new statewide contract. Under this program Centene is covering all its members on a full risk basis. We