exv99w1

CENTENE CORPORATION REPORTS SEVENTEENTH CONSECUTIVE QUARTER
OF INCREASED PROFITABILITY

ST. LOUIS, MISSOURI (October 27, 2003) — Centene Corporation (NYSE: CNC) today announced its financial results for the quarter ended September 30, 2003.

•

Earnings from operations of $12.6 million, a 57% increase over the third quarter of 2002.

•

Centene completed a follow-on offering on August 13, 2003, issuing 3,450,000 shares of common stock from which the Company received net proceeds of $81.4 million.

•

Days in claims payable of 52.5, within the Company’s target range of 50-55.

•

Health benefits ratio of 82.0%, within the Company’s target range of 82.0% to 83.5%.

•

Effective August 1, 2003, the Company’s Texas subsidiary, Superior HealthPlan, acquired the Medicaid-related contract rights of HMO Blue Texas in the San Antonio, Texas market.

•

In September 2003, the Company signed a definitive agreement to acquire the Medicaid-related assets of Family Health Plan, Inc., a wholly owned subsidiary of Mercy Health Partners. This transaction includes the right to serve up to 24,000 of Family Health Plan’s Medicaid members in Toledo, Ohio, a new market and state for the Company.

Michael F. Neidorff, Centene’s president and chief executive officer, said, “We are pleased with the ongoing predictable performance of our Company including strong organic growth in our existing markets. We continue to demonstrate the clear capability to acquire and integrate companies that achieve our goals and save states money. Our objective is to build a balanced multi-line company, in both the Medicaid Managed Care and Specialty Services arenas. To that end, we are in the process of adding our fifth state, Ohio, where we believe there is a significant opportunity to grow organically while providing better health outcomes for our Medicaid members.

Additionally, our recent service area expansion and increased investment in New Jersey confirms our commitment to this market. We continue to add the requisite management to be able to successfully grow organically and through acquisitions.”

The following table depicts membership in Centene’s managed care organizations by state at September 30, 2003 and 2002:

The following table depicts membership in Centene’s managed care organizations by member category at September 30, 2003 and 2002:

•

For the third quarter of 2003, revenues increased 70% to $198.4 million from $116.4 million in the third quarter of 2002.

•

The health benefits ratio, which reflects medical costs as a percent of premium revenues, was 82.0% for the third quarter of 2003, with the Medicaid category at 81.3% as compared to 82.2% for the same period in 2002. The Medicaid portion of this ratio was affected by a distribution from an escrow account for costs incurred prior to the Company’s acquisition of UHP.

•

General and administrative expenses as a percent of revenues on the Company’s Medicaid business segment has consistently decreased and was 10.1% for the third quarter of 2003 as compared to 10.9% for the third quarter of 2002 and 10.3% for the second quarter of 2003. Including the effects of the Company’s specialty business segment, which the Company entered into during the first quarter of 2003 and which has a higher level of general and administrative expenses, the combined general and administrative expense ratio was 11.3% for the third quarter of 2003.

•

Earnings from operations increased to $12.6 million in the third quarter of 2003 from $8.0 million in the comparable period of 2002. Net earnings were $8.7 million, or $0.44 per diluted share, compared to $9.3 million, or $0.52 per diluted share, for the third quarter of 2002. The Company’s 2002 operating results included a one-time dividend of $5.1 million from a captive insurance company in which the Company maintained an investment. Excluding this one-time gain, net income in the third quarter of 2002 was $6.1 million, or $0.34 per share.

•

For the nine months ended September 30, 2003, revenues increased 76% to $562.1 million from $319.8 million for the same period in the prior year. The health benefits ratio was 82.9%, with the Medicaid component at 82.0%, and compares to 82.2% for the same period in 2002. General and administrative expenses as a percent of revenues for the Medicaid segment decreased to 10.3% from 10.9% and were slightly higher on a combined basis at 11.2%, reflecting the addition of the Company’s specialty segment.

Earnings from operations increased 51% to $33.1 million from $22.0 million in 2002. Net earnings improved to $23.6 million, or $1.28 per diluted share.

•

The following table sets forth fully diluted earnings per share for the first, second and third quarters of 2003 as reported (GAAP) and on a pro-forma basis (non-GAAP). Pro forma (non-GAAP) net earnings per diluted share assumes that as of January 1, 2003: 1) the Company’s follow-on public offering was completed, 2) the net proceeds were invested in short-term instruments bearing interest of 2.0% and 3) the Company’s tax rate was 38%.


	Q3 2003		Q2 2003		Q1 2003

Net earnings, as reported (GAAP)	$	8,704	$	7,708	$	7,161
Pro forma interest income, net of related tax effects		121		252		252

Pro forma (non-GAAP) net earnings	$	8,825	$	7,960	$	7,413

Earnings per common share:
Diluted, as reported (GAAP)	$	0.44	$	0.43	$	0.40
Diluted, pro forma (non-GAAP)	$	0.41	$	0.37	$	0.35
Shares used in computing per share amounts:
As reported (GAAP)		19,842,145		17,803,016		17,757,266
Pro forma effect (non-GAAP)		1,612,500		3,450,000		3,450,000

Pro forma (non-GAAP)		21,454,645		21,253,016		21,207,266

At September 30, 2003, the Company had cash and investments of $258.3 million, a portion of which is restricted due to state regulatory requirements. Medical claims liabilities totaled $91.7 million, representing 52.5 days in claims payable versus 52.0 days from the previous quarter.

Karey L. Witty, Centene’s chief financial officer, commented, “Our fourth quarter 2003 revenue guidance is in the range of $204 million to $206 million, and we anticipate net earnings of $0.43 to $0.44 per diluted share, based on 21.5 million shares outstanding.” A review of the complete results for the third quarter and management’s outlook for the fourth quarter, together with preliminary views on 2004, will take place during the Company’s scheduled third quarter earnings call.

As previously announced, the Company will host a conference call tomorrow, October 28, 2003, at 8:15 a.m. (Eastern Time) to review the financial results for the third quarter ended September 30, 2003, and to discuss its business outlook. Michael F. Neidorff and Karey L. Witty will host the conference call. Investors are invited to participate in the conference call by dialing 800-273-1254 in the U.S. and Canada, 706-679-8592 from abroad, or via a live Internet broadcast on the Company’s website at www.centene.com, under the Investor Relations section. A replay will be available for on demand listening shortly after the completion of the call until 11:59 p.m. (Eastern Time) on November 4, 2003 at the aforementioned URL, or by dialing 800-642-1687 in the U.S. and Canada, or 706-645-9291 from abroad, and entering access code 3204094.

The Company is providing certain non-GAAP financial measures in this release as the Company believes that these figures are helpful in allowing individuals to more accurately assess the ongoing nature of the Company’s operations and measure the Company’s performance more consistently.

The pro forma (non-GAAP) information presented above in the sixth paragraph under “Statement of Earnings Highlights” assumes that the Company’s follow-on public offering was completed as of January 1, 2003. This assumption has been made in the non-GAAP financial measures as management believes that this assumption generally provides a more consistent measure of the Company’s performance.

The Company uses the presented non-GAAP financial measures internally to focus management on period-to-period changes in the Company’s core business. Therefore, the Company believes that this information is meaningful in addition to the information contained in the GAAP presentation of financial information. The presentation of this additional non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP.

Centene Corporation provides managed care programs and related services to individuals receiving benefits under Medicaid, including Supplemental Security Income (SSI), and the State Children’s Health Insurance Program (SCHIP). The Company operates health plans in Wisconsin, Texas, Indiana and New Jersey. In addition, the Company contracts with other healthcare organizations to provide specialty services including behavioral health, nurse triage and pharmacy compliance. Information regarding Centene is available via the Internet at www.centene.com.

The information provided above in the first paragraph following the bullet listing under “Third Quarter Highlights” and in the paragraph under “Outlook” contain forward-looking statements that relate to future events and future financial performance of Centene. These forward-looking statements represent the Company’s estimates as of October 27, 2003. Subsequent events and developments may cause the Company’s estimates to change. The Company disclaims any obligation to update this forward-looking financial information in the future. Readers are cautioned that matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, regulatory, competitive and other factors that may cause Centene’s or its industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Actual results may differ from projections or estimates due to a variety of important factors, including Centene’s ability to

accurately predict and effectively manage health benefits and other operating expenses, competition, changes in healthcare practices, changes in federal or state laws or regulations, inflation, provider contract changes, new technologies, reduction in provider payments by governmental payors, major epidemics, disasters and numerous other factors affecting the delivery and cost of healthcare. The expiration, cancellation or suspension of Centene’s Medicaid managed care contracts by state governments would also negatively affect Centene.


				SEPTEMBER 30,		DECEMBER 31,
				2003		2002

				(Unaudited)
			ASSETS
Current assets:
	Cash and cash equivalents			$	62,906	$	59,656
	Premium and related receivables, net of allowances of $720 and $219, respectively				22,076		16,773
	Short-term investments, at fair value (amortized cost $10,660 and $9,687, respectively)				10,659		9,571
	Deferred income taxes				2,049		2,846
	Other current assets				5,283		4,243

		Total current assets			102,973		93,089
Long-term investments, at fair value (amortized cost $162,533 and $78,025, respectively)					164,685		79,666
Restricted deposits, at fair value (amortized cost $19,844 and $15,561, respectively)					20,038		15,762
Property and equipment, net					20,953		6,295
Intangible assets, net					15,232		10,695
Deferred income taxes					586		472
Other assets					3,985		4,348

		Total assets		$	328,452	$	210,327

			LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Medical claims liabilities			$	91,739	$	91,181
	Accounts payable and accrued expenses				13,471		10,748
	Current portion of long-term debt and notes payable				869		—
	Other current liabilities				631		—

		Total current liabilities			106,710		101,929
Long-term debt					7,688		—
Other liabilities					5,504		5,334

		Total liabilities			119,902		107,263
Minority interest					—		881
Stockholders’ equity:
	Common stock, $.001 par value; 40,000,000 shares authorized; 20,060,949 and 16,243,649 shares issued and outstanding, respectively				20		16
	Additional paid-in capital				154,775		72,372
	Accumulated other comprehensive income:
	Net unrealized gain on investments, net of tax				1,477		1,087
	Retained earnings				52,278		28,708

		Total stockholders’ equity			208,550		102,183

		Total liabilities and stockholders’ equity		$	328,452	$	210,327


				THREE MONTHS ENDED						NINE MONTHS ENDED
				SEPTEMBER 30,						SEPTEMBER 30,

				2003			2002			2003			2002

				(Unaudited)						(Unaudited)
Revenues:
	Premiums			$	195,827		$	116,289		$	554,939		$	319,441
	Services				2,580			109			7,134			320

		Total revenues			198,407			116,398			562,073			319,761

Expenses:
	Medical costs				160,672			95,644			459,983			262,697
	Cost of services				2,681			84			6,269			252
	General and administrative expenses				22,414			12,642			62,698			34,804

		Total operating expenses			185,767			108,370			528,950			297,753

			Earnings from operations		12,640			8,028			33,123			22,008
Other income (expense):
	Investment and other income, net				1,245			6,768			3,476			8,659
	Interest expense				(71	)		(16	)		(102	)		(27	)

			Earnings before income taxes		13,814			14,780			36,497			30,640
Income tax expense					5,110			5,507			13,805			11,833
Minority interest					—			—			881			—

		Net earnings		$	8,704		$	9,273		$	23,573		$	18,807

Earnings per common share, basic:
		Net earnings per common share		$	0.47		$	0.58		$	1.38		$	1.21
Earnings per common share, diluted:
		Net earnings per common share		$	0.44		$	0.52		$	1.28		$	1.08
Shares used in computing per share amounts:
	Basic				18,430,713			16,042,196			17,094,621			15,558,080
	Diluted				19,842,145			17,750,072			18,439,050			17,348,018


				NINE MONTHS ENDED
				SEPTEMBER 30,

				2003			2002

				(Unaudited)
Cash flows from operating activities:
	Net earnings			$	23,573		$	18,807
	Adjustments to reconcile net earnings to net cash provided by operating activities - Depreciation and amortization				4,299			1,534
	Stock compensation expense				232			264
	Minority interest				(881	)		—
	Gain on sale of investments				(1,188	)		(632	)
	Loss on disposal of equipment				102			—
	Changes in assets and liabilities -
		Increase in premium and related receivables			(4,132	)		(1,218	)
		Increase in other current assets			(849	)		(663	)
		Decrease in deferred income taxes			452			248
		Decrease in other assets			363			171
		Increase in medical claims liabilities			558			5,629
		Decrease in accounts payable and accrued expenses			(396	)		(2,247	)
		Increase in unearned capitation premium			—			897
		Increase in other current liabilities			27			—
		Increase (decrease) in other liabilities			164			(659	)

			Net cash provided by operating activities		22,324			22,131

Cash flows from investing activities:
	Purchase of property and equipment				(16,253	)		(3,110	)
	Proceeds from disposal of equipment				11			—
	Purchase of investments				(291,462	)		(155,690	)
	Sales and maturities of investments				202,306			96,975
	Contract acquisitions				(1,451	)		(570	)
	Investment in subsidiary, net of cash acquired				(1,767	)		(3,193	)

			Net cash used in investing activities		(108,616	)		(65,588	)

Cash flows from financing activities:
	Net proceeds from issuance of common stock				81,403			10,317
	Extinguishment of acquired liabilities				(1,218	)		—
	Proceeds from borrowings				8,581			—
	Reduction of long-term debt				(24	)		—
	Cash dividends paid				(3	)		—
	Proceeds from exercise of stock options				803			339

			Net cash provided by financing activities		89,542			10,656

			Net increase (decrease) in cash and cash equivalents		3,250			(32,801	)

Cash and cash equivalents, beginning of period					59,656			88,867

Cash and cash equivalents, end of period				$	62,906		$	56,066

Supplemental disclosures of cash flow information:
	Interest paid			$	85		$	11
	Income taxes paid			$	13,479		$	11,878


			Q3		Q2		Q1		Q4
			2003		2003		2003		2002

MEMBERSHIP
	Wisconsin			150,200		145,600		139,100		133,000
	Texas			152,100		131,400		122,700		118,000
	Indiana			112,100		109,000		104,800		105,700
	New Jersey			52,700		52,700		52,700		52,900

		Total		467,100		438,700		419,300		409,600


	Medicaid			389,200		361,700		344,700		336,100
	SCHIP			68,600		68,800		66,600		65,900
	SSI			9,300		8,200		8,000		7,600

		Total		467,100		438,700		419,300		409,600


REVENUE PER MEMBER			$	143.73	$	142.26	$	142.06	$	134.08

CLAIMS
	Period-end inventory			59,436		109,865		144,465		150,717
	Average inventory			75,615		85,412		131,382		73,800
	Period-end inventory per member			0.13		0.25		0.34		0.37

DAYS IN CLAIMS PAYABLE(a)				52.5		52.0		58.1		71.8

(a)

Days in Claims Payable is a calculation of Medical Claims Liabilities at the end of the period divided by average medical costs per calendar day for such period.

(b)

Annualized Return on Equity is calculated as follows: (net income for quarter x 4) divided by ((beginning of period equity + end of period equity) divided by 2).

Four rolling quarters of the changes in medical claims liabilities are summarized as follows:

(d)

Includes reserves acquired in connection with the acquisition of the outstanding capital stock of University Health Plans, Inc.

Our claims reserving process utilizes a consistent actuarial methodology to estimate our ultimate liability. Any reduction in the “Incurred related to: Prior period” claims may be offset as we actuarially determine “Incurred related to: Current period.” As such, only in the absence of a consistent reserving methodology would favorable development of prior period claims liability estimates reduce medical costs. We believe we have consistently applied our claims reserving methodology in each of the periods presented.


ANNUALIZED RETURN ON EQUITY(b)			21.3	%(c)			27.1	%			27.0	%			27.7	%


Balance, September 30, 2002			$	65,194
Acquisitions				16,230	(d)
Incurred related to:
	Current period			597,338
	Prior period			(20,585	)

		Total incurred		576,753

Paid related to:
	Current period			524,945
	Prior period			41,493

		Total paid		566,438

Balance, September 30, 2003			$	91,739


Contact:		Centene Corporation Karey L. Witty Chief Financial Officer (314) 725-4477

		Lisa M. Wilson Investor Relations Department (212) 759-3929


	2003			2002

Medicaid (excluding SSI)		389,200			264,100
SCHIP		68,600			29,400
SSI		9,300	(a)		2,600

*TOTAL*		467,100			296,100


		EXHIBIT 99.1


NEWS RELEASE