More ACA exchange members, Fidelis deal bolster Centene's revenue
Centene Corp.'s Affordable Care Act exchange membership reached nearly 1.5 million last year, helping boost the health insurer's revenue during the fourth-quarter and full-year 2018.
In January, after the ACA open enrollment period ended, Centene's exchange membership surged to almost 2 million, giving it about 20% market share of the entire ACA exchange population, the company said Tuesday. St. Louis-based Centene, which primarily serves Medicaid beneficiaries across the nation, has in recent years solidified itself as the dominant insurer on the exchanges, owing to its experience covering low-income Americans in narrow network plans. That didn't change in 2018, when Centene grew its ACA exchange membership by half a million over the previous year.
Centene CFO Jeffrey Schwaneke told investment analysts on a conference call Tuesday morning that the exchange business would account for $10 billion of the insurer's annual revenue in 2019. In 2018, Centene's revenue totaled $16.6 billion in the fourth quarter, up 29.3% from a year ago, and topped $60.1 billion for the full year, an increase of 24.3% over 2017.
While other insurers struggled to turn a profit on the exchanges, especially in the early years, Centene's margins on that business have hovered between 5% and 10% and will continue to do so in 2019, Schwaneke said.
The rise in Centene's fourth-quarter and annual revenue was also driven by its acquisition of New York-based not-for-profit insurer Fidelis Care, which closed in July 2018, as well as new and expanded Medicaid contracts in many of the states where it operates. Centene's Medicaid membership jumped 18% to 8.4 million at year-end.
It also grew its much smaller Medicare membership by 24.9% to 416,900 over 2017. In total, its membership across all business lines hit 14 million, a 14.8% increase over 2017.
On Monday, Carolina Complete Health, a joint venture between Centene and the North Carolina Medical Society, won a contract to serve Medicaid beneficiaries in two regions in North Carolina starting in 2020. But Centene had been gunning for a statewide contract.
CEO Michael Neidorff said Tuesday the company is considering appealing the contract award because he doesn't think North Carolina fully understood how a provider-led organization could help improve cost and quality in the Medicaid program.
Meanwhile, Centene's medical loss ratio, which represents the amount of premiums spent on medical claims and quality improvement, improved to 86.8% in the fourth quarter, compared with 87.3% in the same period a year ago, which the company attributed to membership growth in the exchanges and the reinstatement of the health insurer fee in 2018.
Its net income totaled $241 million in the fourth quarter, up 8.1% over the year-ago period, and $894 million for the 12 months of 2018, up 10.6% over 2017.
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