Centene (CNC) is a Fortune 25 company that operates in the health insurance industry. It serves members of the Medicaid and Medicare programs in the U.S. and has a presence in several international markets. Let’s take a look at Centene’s latest financial results and risk factors.
Centene’s Q2 Financial Results and 2021 Outlook
Centene reported its second-quarter financial results on July 27. Revenue increased 12% year-over-year to $31 billion and beat consensus estimates of $30.1 billion. Adjusted EPS came in at $1.25, marking a decline from $2.40 a year ago and missing consensus estimates of $1.40.
“Centene delivered solid second-quarter results as we continued to support our members with high quality service and deliver value to state and local partners…We are monitoring COVID variants closely as the pandemic continues to evolve. Our scale and diversification provide a solid foundation to execute through this environment as we focus on implementing various initiatives to deliver on our stated margin goals,” said Centene CEO Michael Neidorff.
The company offered full-year 2021 revenue guidance of $123.3 billion – $125.3 billion and expects adjusted EPS for the year to be in the range of $5.05 – $5.35. (See Centene stock charts on TipRanks).
Centene’s Risk Factors
According to the new Tipranks Risk Factors tool, 36 risk factors have been identified for Centene. Finance and Corporate is the primary risk category, representing 31% of the total risks. Legal and Regulatory and the Ability to Sell are the next major risk categories at 28% and 14%, respectively.
Since June 2021, Centene has revised its risk profile to remove one risk and adjust the wording of five risk factors. The removed risk fell under the Finance and Corporate category and related to the debt financing agreements for the WellCare acquisition. The company had cautioned that the debt arrangements it entered into for the acquisition of WellCare could come with restrictions that affect its ability to operate. That risk is no longer there.
The Finance and Corporate risk factor’s sector average is 34%, compared to Centene’s 31%. The company’s shares have gained 16% since the beginning of 2021.
Analysts’ Take
After Centene reported its Q2 earnings and issued 2021 guidance, Bank of America analyst Kevin Fischbeck reiterated a Buy rating on Centene stock with a price target of $85. Fischbeck’s price target suggests 21.90% upside potential. The analyst liked Centene’s long-term outlook.
“The company reiterated both its LT EPS growth outlook of 15% CAGR, and that more of this performance will be realized in 2023/24…On 2022, CNC again reiterated it would not ‘race to the bottom’ on pricing,” commented Fischbeck.
Consensus among analysts is a Strong Buy based on 9 Buys and 1 Hold. The average Centene price target of $87.70 implies 25.77% upside potential to current levels.
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