- Centene reported significant revenue and profit growth for the first quarter of the year compared to the same period last year as members used less medical care amid the coronavirus pandemic and flu costs were lower than normal.
- COVID-19 costs and inpatient admissions peaked in January and have continued to decline throughout the quarter, executives said during the first quarter earnings call with investors Tuesday. The insurer added 1.3 million members in the first quarter compared to the prior-year period.
- Centene executives seemed optimistic about the remainder of the year, raising full-year guidance as they see momentum coming from Medicaid and Affordable Care Act marketplace growth due to the special enrollment period.
The industry has been focused on medical utilization rates as COVID-19 cases wane in the U.S. and vaccinations accelerate. Even though coronavirus cases have slowed, medical usage is still below the historical average, executives said Tuesday.
It’s a trend Centene CEO Michael Neidorff expects to continue into the second quarter of the year. The lower utilization has served to benefit insurers as it’s less care they have to pay for.
The first quarter performance is a rebound from how Centene ended last year. The St. Louis-based insurer reported a fourth-quarter loss as COVID-19 costs outweighed the savings attributed to members who were deferring medical care amid the pandemic. At the time, the country was experiencing a surge of COVID-19 cases that lasted through the beginning of the first quarter.
Centene announced then an organizational restructuring that would result in the reduction of 3,000 employees and elimination of 1,500 job openings. Overall, it represents a workforce reduction of about 6% for the St. Louis-based insurer.
The job cuts were not discussed on Tuesday’s call.
But Centene executives seemed optimistic about the year as they raised guidance, Neidorff also rattled off a number of tailwinds and headwinds, but noted when taken altogether these factors “balance in our favor.”
Neidorff pointed to continued Medicaid growth as states are barred from kicking Medicaid members off the program under the public health emergency due to a stall in what is called the eligibility redetermination process.
If the PHE is renewed through the end of the year, Centene expects Medicaid growth to peak at 2.4 million. It has added about 2 million Medicaid members since March of last year due to the pandemic, executives said during the call.
Another tailwind for the company is the special enrollment period that is allowing consumers to sign up for marketplace plans outside of the normal open enrollment period. Since the beginning of the year, Centene has added about 320,000 new marketplace customers.
The enhanced financial help available for consumers that come online in April and the additional funds to help navigators aid plan purchases is all viewed as a positive for Centene.
In touting its growing Medicare business, Neidorff said the business grew by $1 billion from March of last year, and that the company expects Medicare Advantage membership growth to exceed 20% this year.