Centene reported strong fourth quarter and full year 2023 results, with adjusted EPS of $0.45 for the quarter and $6.68 for the full year.
The company raised its premium and service revenue guidance for 2024 by $2.5 billion, reflecting stronger than expected growth in the marketplace segment.
Centene's Medicaid business has been navigating the redeterminations process and is on track to resume organic enrollment growth. The company expects a membership reduction of approximately 1.9 million due to redeterminations, but remains confident in its 2024 Medicaid guidance.
In Medicare, Centene saw growth in Dual Eligible Special Needs Plan (DSNP) members, which aligns with its strategic focus on lower income and complex members. The company continues to invest in improving star ratings and quality measures in Medicare Advantage.
The implementation of the pharmacy benefit manager (PBM) platform migration was successful, processing over 40 million scripts so far. Centene also completed divestitures of international assets, streamlining its portfolio and generating cash for deployment.
Preliminary Medicare Advantage rates for 2025 were released, indicating a negative impact on rates. Centene plans to provide feedback and evaluate bid strategy based on final rates in April.
Overall, Centene had a strong performance in 2023, with positive momentum heading into 2024. The company is focused on positioning each of its business lines for long-term growth while addressing challenges such as redeterminations and rate changes in Medicare. Opportunities lie in marketplace growth and improving customer satisfaction and provider relationships in Medicaid. Risks include potential impacts from COVID costs and trends in medical utilization. No specific mention of dividends or buybacks was made during the call.
Current Fair Value
Undervalued by 26.5% based on the discounted cash flow analysis.