Centene grew revenue and profit in the first quarter of this year as it reaped the benefits of its 2018 acquisition of New York insurer Fidelis Care, grew enrollment in the Affordable Care Act exchanges and participated in new or expanded managed Medicaid contracts in several states.
St. Louis-based Centene, which recently announced plans to buy rival WellCare Health Plans, closed a deal with not-for-profit Fidelis Care in July 2018, boosting its Medicaid and ACA exchange membership. Centene also grew its Medicaid membership and revenue year-over-year thanks to new Medicaid contracts in Florida, Illinois, New Mexico and Pennsylvania. Centene said its revenue was also helped by increased pass-through payments in California and New York.
In total, its revenue was $18.4 billion for the three months ended March 31, an increase of nearly 39.8% compared with the same period a year ago. That's on net income of $519 million, up 53.6% over same period last year.
Centene said its higher revenue was driven by a 53.7% increase in revenue from the Medicaid business to $12.6 billion and a 19% increase in revenue from Centene's commercial insurance plans to $3.6 billion. Centene also grew Medicare revenue 18.9% to $1.4 billion year-over-year.
While it's not the company's biggest segment, CEO Michael Neidorff has described Medicare Advantage as a renewed area of focus. If approved by regulators, Centene's $17.3 billion purchase of Tampa, Fla.-based WellCare would give the company a head start in growing its Advantage footprint in the lucrative, but crowded, space.
The companies are already having discussions with federal and state regulators and are planning how they will integrate.
"We would describe these discussions as constructive," Neidorff said Tuesday during a conference call with investment analysts of the company's preliminary regulatory discussions with the Justice Department.
He noted that the companies will likely have to divest some business in Nebraska and Missouri, but he still expects the merger to close in the first half of 2020. The combined company would serve 22 million people in Medicare, Medicaid and exchange plans across 50 states.
As of March 31, Centene provided insurance to 14.7 million people, an increase of 14.4% over the time a year ago. It grew Medicaid membership 20.9% to 8.6 million people and commercial membership 14.4% to 2.5 million, which includes nearly 2 million ACA exchange members. Centene's Medicare membership reached 393,900 at the quarter's end, which was up from a year ago but a decrease from the fourth quarter of 2018. It also served 2.9 million TriCare members.
Centene said its medical loss ratio, or the amount of premiums spent on medical care and quality improvement, was 85.7% for the first quarter compared with 84.3% in the year-ago period. The measure was affected by the acquisition of Fidelis Care, which operates at a higher medical loss ratio, and the delay of the health insurer fee in 2019.
