Centene(US:CNC)2021-10-25 16:00Acquisitions and Integrations - Centene Corporation is in the process of acquiring Magellan Health, which may impact future operating performance and market opportunities[6] - The company completed the acquisition of WellCare Health Plans, Inc., which is expected to enhance its service offerings and market presence[6] - There are risks associated with the Magellan Acquisition, including potential delays in regulatory approvals and the realization of expected synergies[7] - The integration of acquired businesses, such as Magellan Health, poses challenges that could affect operational efficiency and financial outcomes[15] Financial Performance - GAAP net earnings for the three months ended September 30, 2021, were $584 million, compared to $568 million for the same period in 2020, representing a 2.8% increase[18] - Adjusted net earnings for the nine months ended September 30, 2021, were $2.442 billion, down from $2.627 billion for the same period in 2020, reflecting a decrease of 7.0%[18] - GAAP diluted earnings per share (EPS) for the three months ended September 30, 2021, was $0.99, compared to $0.97 for the same period in 2020, an increase of 2.1%[18] - Adjusted diluted EPS for the nine months ended September 30, 2021, was $4.14, down from $4.56 for the same period in 2020, a decrease of 9.2%[18] - Selling, general and administrative expenses for the three months ended September 30, 2021, were $2.684 billion, compared to $2.507 billion for the same period in 2020, an increase of 7.1%[24] - The company reported acquisition-related expenses of $54 million for the three months ended September 30, 2021, down from $62 million for the same period in 2020, a decrease of 12.9%[18] - Legal settlement expenses for the three months ended September 30, 2021, amounted to $11 million, or $0.01 per diluted share[19] Market and Operational Risks - The company faces uncertainties related to COVID-19, which may affect healthcare costs and operational performance[7] - Centene's revenue and results of operations are influenced by risk-adjustment payment systems, which complicate financial forecasting[13] - The company derives a significant portion of its premium revenues from a limited number of states, making it vulnerable to regional economic changes[13] - Centene's business is subject to extensive regulations, and changes in laws could adversely impact its operations and financial condition[15] - Future performance is uncertain due to various risks, including competition and potential litigation related to acquisitions[9] Investments and Financial Instruments - The company had short-term investments of $1.5 billion and long-term investments of $14.7 billion as of September 30, 2021[237] - A hypothetical 1% increase in market interest rates would decrease the fair value of the company's fixed income investments by approximately $357 million[237] - The company has a foreign currency swap for a notional amount of $705 million to manage foreign exchange risk, with a potential decrease in fair value of approximately $7 million if the Great British Pound increases by 1% against the US Dollar[238] Non-GAAP Financial Measures - The company utilizes non-GAAP financial measures to provide a clearer view of its operational performance, which may differ from GAAP presentations[17]