ST. LOUIS (AP) — Centene Corp. reported a $35 million second-quarter loss Tuesday, more than a month after the Medicaid coverage provider slashed its full-year earnings forecast to account for a spike in medical costs in Kentucky and Texas and from its Celtic individual health business.
The St. Louis insurer’s medical costs climbed 78% to $1.89 billion in the April-June period, and it recorded a $28 million impairment loss as it wrote down the value of its Celtic unit.
Centene has said medical costs rose in Kentucky due in part to the retroactive assignment of members, while costs climbed in Texas, where it expanded last March. Problems with its Celtic business centered on members converted from another insurer through the first quarter.
But the company returned to profitability in June, expects to be profitable in the current quarter and will improve further in the last three months of the year, said CEO Michael Neidorff.
Overall, Centene’s loss amounted to 68 cents per share in the three months that ended June 30. That compares with net income of $28.4 million, or 54 cents per share, in the second quarter of 2011. Not counting the impairment loss, the company lost 16 cents per share in this year’s quarter. Analysts polled by FactSet expected a narrower loss of 9 cents per share.
Revenue jumped 61% to $2.11 billion, due in part to the expansion into Kentucky and the insurer’s growth in Texas and other states. Analysts predicted $2 billion in revenue.
Medicaid, the state and federally funded program that provides coverage for the needy and disabled, makes up the largest portion of enrollment for Centene, which has members in 13 states. The company’s membership grew 52% to 2.4 million people, as it added customers in Texas, Louisiana, Kentucky and Illinois, among other states.
Centene expects earnings per share, excluding the impairment loss, to range from $1.45 to $1.65 this year on premium and service revenue of between $7.7 billion and $8.1 billion.
Analysts forecast profit of $1.49 per share on $8.06 billion in revenue.