By:
Dave Kingsley
Centene Corporation’s Business & 3rd Quarter Results
Centene Corporation contracts with states to manage Medicaid programs. Two-thirds of the company’s revenue flows from means-tested, welfare, programs. The other one-third of its revenue is derived from Medicare, Tri-Care, and their prison contracting subsidiary Centurion. Basically, the bulk of this corporation’s business is poverty medicine.
Centene purchased a non-profit organization in the 1990s and took it private. In 2001, the company issued an IPO. In a mere two decades, Centene increased its revenue to $111 billion (2021 revenue). In 2021, Fortune magazine placed it at 24th in the “Fortune 500.” Ahead of Centene was Anthem at 23rd with revenues of $122 billion, at 22nd was General Motors with revenue of $122.5 billion. As an illustration of the rapid growth of this poverty-medicine company, in 2018, it was ranked 63rd in the “Fortune 500,” with revenue of $48.6 billion.
Centene’s 3rd quarter revenue of $35.9 billion was a 11% increase over their 2021 3rd quarter revenue of $32.4 billion. The company is on track to increase its 2022 revenue to $135 billion. According to the 3rd quarter report, “The increase was driven by organic Medicaid growth, primarily due to the ongoing suspension of eligibility redetermination, 22% membership growth in the Medicare business, and [our] acquisition of Magellan Health, Inc. (Magellan), partially offset by the PANTHERx divestiture.”
Centene is predicting (called guidance in finance lingo) an increase in 2022 earnings per share of $5.65 to $5.75. The company’s stock which is trading above $81 per share as I write this, has been outperforming the DOW & S&P since the equities market moved lower at a rapid rate in late November of 2021. On November 29, 2021, Centene closed at $73.77 and has been incrementally moving up while the overall market has been moving down.
Executives, Board Members, & Shareholders
The recently retired Centene CEO/Chairman John Neidorff is one of the highest paid corporate executives in the United States. Over the past 3 years his compensation has totaled $72,033,192. He owns 1.5% of 560 million outstanding shares of Centene stock – today worth over $80 per share. Hence, his wealth in stock alone is worth approximately $680 million.
Sarah London – Neidorff replacement as CEO – earned $15 million in 2021 before her promotion to CEO. The eleven 2021 board members earned from $335,000 to $426,000. In 2021, two powerful former congressmen on the board, Richard Gephardt and Tommy Thompson, were paid $426,923 and $403,046 respectively.
An activist investor (Quinten Koffey of Politan Capital Management) acquired 2 percent of the stock and made a successful move to oust Neidorff. London, his successor, was most likely in on the move. The board has been restructured as part of the company’s long-term plan to improve its profit margin (https://www.healthcaredive.com/news/neidorff-retire-centene-activist-investor-board-shakeup/611465/).