Centene Is Getting More COVID-19 Bills: Earnings

Centene Corp. — a health insurer that focuses on serving low and moderate-income people and Medicare enrollees  —  says it spent about $1.45 billion on COVID-19 care in the third quarter.

COVID-19 accounted for about 6% of the $23 billion Centene spent on care in the third quarter, about three times higher than COVID-19 spending in the previous quarter, according to company figures.

(Related: 50 States of Data for the Third Wave of COVID-19)

The third quarter started July 1 and ended Sept. 30.

Jeff Schwaneke, Centene’s chief financial officer, said COVID-19 spending was much higher in the third quarter, even though a severe wave of cases hit places like Boston and New York City in the second quarter, because of the way medical billing works.

“There’s usually a 30- to 45-day delay between when the inpatient state happens and when we actually pay the dollars to the provider,” Schwaneke said.

So far this year, use of traditional care has been lower than usual, Schwaneke said.

The combination of the reduction in use of ordinary care and the new COVID-19 care use has led to total use of care being just slightly below the historical average, Schwaneke said.

Michael Neidorff, Centene’s chairman, said he would like to see more people wearing masks so that the United States can get the COVID-19 pandemic under control, and Centene can get its employees back to working in the company’s offices.

“We’ve announced to our employees not to expect to come back before the end of spring break, which is April of next year,” Neidorff said.

That a mask-wearing mentality helped Hong Kong and Japan get their COVID-19 outbreaks under control, Neidorff said, adding that If people in the United States would wear masks, the country could save 100,000 lives and get the country open more quickly.

Centene’s Earnings

Schwaneke, Neidorff and other Centene (NYSE:CNC) executives spoke during a conference call the company held to go over earnings for the third quarter with securities analysts.

Centene reported $565 million in net income for the third quarter on $29 billion in revenue, up from $95 million in net income on $19 billion in revenue for the third quarter of 2019.

The St. Louis-based company ended the quarter providing or administering health coverage for 25 million people, up from 15 million people a year earlier.

Here’s what happened to key types of enrollment between the third quarter of 2019 and the latest quarter:

• Medicare Plans: 1 million (up from 404,500)
• U.S. Commercial Major Medical Insurance: 2.7 million (up from 2.4 million)
• Affordable Care Act Public Exchange Plans: 2.2 million (up from 1.9 million)
• Medicaid and Similar Programs: 13 million (up from 8.7 million)
• International: 599,900 (up from 462,400)

The company said it has done things such as waiving COVID-19-related co-payments and deductibles for COVID-19 screening, testing and treatment for all Medicare, Medicaid and ACA exchange plan enrollees; donating 1 million meals a month for 12 months; waiving all cost-sharing for in-network primary care for Medicare Advantage plan enrollees for the rest of 2020; providing 10 extra working days of paid leave for support employees; and giving workers up to three months of paid leave and benefits for COVID-19 pandemic volunteering efforts.

Aflac (NYSE:AFL)

Aflac is reporting $2.5 billion in net income for the third quarter on $5.7 billion in revenue, compared with $777 million in net income on $5.5 billion in revenue for the third quarter of 2019.

Net earnings at the Columbus, Georgia-based insurer were higher partly because recognized $1.4 billion in one-time income tax benefits, due to a change in U.S. tax regulations. Earnings before income tax, which leave out the effects of the tax rule change, increased to $1.2 billion, from $1 billion.

The Aflac U.S. unit is reporting $329 million in pretax adjusted earnings for the latest quarter on $1.6 billion in revenue, compared with $335 million in pretax adjusted earnings on $1.6 billion in revenue for the year-earlier quarter.

New annualized premiums from sales of U.S. products fell 36%, to $221 million, because of the effects of the COVID-19 pandemic.

Annualized premiums from in-force U.S. coverage fell 2.9%, to about $6 billion.

Here’s what happened to new annualized premiums for U.S. sales of some types of products in the third quarter, when compared with the year-earlier quarter.

• Short-Term Disability Insurance: $54 million (down from $78 million)
• Life Insurance: $16 million (down from $22 million)
• Accident Insurance: $58 million (down from $100 million)
• Critical Care Insurance: $45 million (down from $72 million)
• Hospital Indemnity Insurance: $37 million (down from $55 million)
• Dental and Vision Insurance: $11 million (down from $17 million)

The average number of weekly producer equivalents fell to 5,485, from 7,805.

The COVID-19 pandemic and pandemic-related restrictions and changes also hurt sales in Japan. At Aflac Japan, sales for the third quarter fell 32%, to 13 trillion yen.

Unum Group (NYSE: UNM)

Unum is reporting $231 million in net income for the third quarter on $3 billion in revenue, compared with $242 million in net income on $3 billion in revenue for the third quarter of 2019.

The Chattanooga, Tennessee-based company says the latest results include $23 million in costs, before income taxes, related to an organizational design update.

Richard McKenney, Unum’s chief executive officer, said in a comment included in the latest earnings announcement that the results reflect “pressure from elevated mortality rates and unemployment levels.”

“This environment reinforces the fundamental purpose for what we do in protecting employees and their families in time of need,” McKenney said. “We continue to be well-positioned to benefit from better business conditions as the economy improves and will continue to effectively manage through today’s challenges.”

Unum US

Unum US, Unum’s based company’s traditional group insurance unit, is reporting $188 million in adjusted operating income for the latest quarter on $1.7 billion in revenue, compared with $261 million in adjusted operating income on $1.7 billion in revenue.

Commission spending fell to $146 million, from $155 million.

Here’s what happened to sales revenue for some key products between the year-earlier quarter and the latest quarter:

• Group Long-Term Disability: $30 million (up from $24 million)
• Group Short-Term Disability: $15 million (down from $20 million)
• Group Life and Accidental Death and Dismemberment: $31 million (flat)

Colonial Life

Colonial Life, Unum’s worksite marketing unit, is reporting $92 million in adjusted operating income on $464 million in adjusted operating revenue, compared with $87 million in adjusted operating income on $458 million in adjusted operating revenue.

Commission spending fell to $80 million, from $91 million.

Here’s what happened to Colonial Life sales for several key products, year-over-year:

• Accident, Sickness and Disability: $55 million (down from $79 million)
• Life: $20 million (down from $24 million)
• Cancer and Critical Illness: $13 million (down from $18 million)

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