Can Solid Medicaid Business Boost Centene (CNC) Q4 Earnings?
Zacks Investment Research | Feb 01, 2018 08:38PM ET
Centene Corporation (NYSE:CNC) will release fourth-quarter 2017 results on Feb 6, before the market opens.
Centene has been witnessing consistent growth in its membership over the past few quarters that has significantly boosted the top line. This uptrend is expected to continue in the fourth quarter as well. The Zacks Consensus Estimate for total membership is currently pegged at 12.2 billion, reflecting 7% year-over-year growth.
Centene’s membership has been continuously increasing on the back of its solid Medicaid expansion. The company’s intention to continue with its public exchange business while other health insurers are exiting it, has boosted its Medicaid membership. The trend is expected to continue in the fourth quarter. The Zacks Consensus Estimate for Medicaid membership stands at 5.9 billion, reflecting year-over-year growth of 4%.
In addition, Centene’s cost saving initiatives are likely to aid the margins in the fourth quarter. The Zacks Consensus Estimate for total general and administrative expense ratio is currently pegged at 0.10 compared with 9.00 in the third quarter of 2017.
Other Factors
The company’s growing Medicare beneficiaries are also likely to boost the top line in the fourth quarter.
Centene expects its exchange business to perform well in the to-be-reported quarter, continuing the previous trend.
We also expect Centene’s international business to boost the top line in the quarter.
The company’s share repurchase programs intended to enhance shareholders’ value might impact margins positively by reducing the outstanding share count.
Why a Likely Positive Surprise?
Our proven model shows that Centene has the right combination of two key ingredients to beat estimates this quarter.
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