Can Government Business Drive Centene's (CNC) Q1 Earnings?
Zacks Investment Research | Apr 19, 2018 11:42PM ET
Centene Corporation (NYSE:CNC) will release first-quarter 2018 results on Apr 24, before the market opens.
The company’s membership has been rising over the past few quarters, significantly boosting the revenue base. This trend is likely to continue in the to-be-reported quarter as well led by membership growth in The Zacks Consensus Estimate for total membership is pegged at 13 billion, reflecting 7.5% year-over-year growth.
Centene’s top line has largely benefitted from Medicaid expansion. The company’s firm decision to continue with its public exchange business despite other health insurers exiting it, has aided its Medicaid membership growth. This momentum is expected to continue in the first quarter as well. The Zacks Consensus Estimate for Medicaid membership stands at 5.8 billion, representing a year-over-year rise of 2%.
Apart from Medicaid, the company’s Medicare business is poised for long-term growth. Increase in the company’s Medicare membership is also anticipated in the impending quarterly results. The Zacks Consensus Estimate is pegged at 874 million, up 6% year over year.
Additionally, Centene’s cost-saving initiatives are projected to aid its margins in the first quarter. The consensus mark for total general and administrative expense ratio is pegged at 0.09 compared with 9.80 a year ago.
The company’s exchange business has been performing well over the past many quarters. This upside is likely to recur in the period to be reported on the back of the company’s increased participation in public exchanges.
Centene’s share repurchase programs intended to enhance shareholders’ value might impact its margins positively by reducing the outstanding share count.
Earnings Whispers
Our proven model does not conclusively show that Centene is likely to beat on earnings this quarter. This is because a stock needs to have both a positive Zacks Investment Research
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