EX-99.1 2 exhibit991.htm PRESS RELEASE Exhibit


Exhibit 99.1

N E W S R E L E A S E                                                                                
Contact:
Investor Relations Inquiries
 
Edmund E. Kroll, Jr.
 
Senior Vice President, Finance & Investor Relations
 
(212) 759-0382
 
 
 
Media Inquiries
 
Marcela Manjarrez-Hawn
 
Senior Vice President and Chief Communications Officer
 
(314) 445-0790

FOR IMMEDIATE RELEASE

CENTENE CORPORATION REPORTS 2016 FIRST QUARTER RESULTS & UPDATES 2016 GUIDANCE

ST. LOUIS, MISSOURI (April 26, 2016) -- Centene Corporation (NYSE: CNC) today announced its financial results for the first quarter ended March 31, 2016.  On March 24, 2016, Centene acquired all of the issued and outstanding shares of Health Net, Inc. (Health Net). Our consolidated financial statements as of and for the three months ended March 31, 2016 reflect eight days of Health Net operations. The following discussions, with the exception of cash flow information, are in the context of continuing operations.

For the first quarter of 2016, we reported a diluted net loss per share of $(0.13) and adjusted diluted earnings per share (Adjusted Diluted EPS) of $0.74 when excluding Health Net acquisition related expenses and intangible amortization. A reconciliation of GAAP diluted net loss per share to Adjusted Diluted EPS is highlighted below:
GAAP diluted net earnings (loss) per share
$
(0.13
)
Health Net acquisition related expenses
0.83

Amortization of acquired intangible assets
0.04

Adjusted Diluted EPS
$
0.74

In summary, the 2016 first quarter results were as follows:
Total Revenues (in millions)
$
6,953

 
Health Benefits Ratio
88.7
%
 
General & Administrative expense ratio
11.3
%
 
General & Administrative expense ratio excluding Health Net acquisition related expenses
8.3
%
 
GAAP diluted net loss per share
$
(0.13
)
 
Adjusted Diluted EPS
$
0.74

 
Total cash flow from operations (in millions)
$
195

 

Michael F. Neidorff, Centene's Chairman and Chief Executive Officer, stated, "We are pleased to have closed the Health Net transaction, as expected, in the first quarter.  This acquisition is transformational -- building on our critical mass and new products and capabilities that will enhance the sustainability of our long-term growth.  The integration process is proceeding as planned and we look forward to continued success in 2016 and beyond."


1


First Quarter Highlights

•
On March 24, 2016, we acquired all of the issued and outstanding shares of Health Net for approximately $6.0 billion, including the assumption of debt. This strategic acquisition broadens our current service offerings, providing expansion in Medicaid and Medicare programs. This acquisition provides further diversification across our markets and products through the addition of government-sponsored care under federal contracts with the Department of Defense and the U.S. Department of Veteran's Affairs, as well as Medicare Advantage. Our consolidated financial statements as of and for the three months ended March 31, 2016 reflect eight days of Health Net operations.

•
March 31, 2016 managed care membership of 11.5 million, an increase of 7.1 million members, or 162% compared to the first quarter of 2015.

•
Total revenues for the first quarter of $7.0 billion, representing 36% growth compared to the first quarter of 2015.

•
Health Benefits Ratio of 88.7% for the first quarter of 2016, compared to 89.8% in the first quarter of 2015.

•
General and Administrative expense ratio of 11.3%, or 8.3% excluding Health Net acquisition related expenses for the first quarter of 2016, compared to 8.3% in the first quarter of 2015.

•
Operating cash flow of $195 million for the first quarter of 2016.

•
Diluted loss per share for the first quarter of 2016 of $(0.13), or $0.74 of Adjusted Diluted EPS when excluding Health Net acquisition related expenses and intangible amortization. In comparison, diluted EPS for the first quarter of 2015 was $0.52, or $0.55 Adjusted Diluted EPS when excluding intangible amortization.

Other Events

•
In April 2016, our Nebraska subsidiary, Nebraska Total Care, executed a contract with the Nebraska Department of Health and Human Services' Division of Medicaid and Long-Term Care as one of three managed care organizations to administer its new Heritage Health Program for Medicaid, ABD and CHIP enrollees. The contract is expected to commence in the first quarter of 2017, pending regulatory approval.

•
In April 2016, Centurion of Mississippi, LLC was selected to provide correctional healthcare services for the Mississippi Department of Corrections (MDOC). Centurion began providing healthcare services to the MDOC in July 2015 under a one-year emergency contract. The new three year contract will begin in July 2016.

•
In April 2016, Centurion of Florida, LLC began providing correctional healthcare services for the Florida Department of Corrections in Regions 1, 2 and 3.

•
In April 2016, Coordinated Care of Washington began operating as the sole contractor with the Washington State Health Care Authority to provide foster care services through the Apple Health Foster Care contract.

•
In April 2016, we announced the appointment of Mark Brooks to Senior Vice President and Chief Information Officer.

•
In April 2016, the Health Net Federal Services call center operations earned the ranking of first place for large call centers (those with more than 250 full-time representatives) in BenchmarkPortal’s Top 100 Call Center Contest.

•
In April 2016, Centene was awarded the Hispanic Health Leadership Award by the National Hispanic Medical Association.

•
In March 2016, Centene was added to the S&P 500 Index.






2


Membership

The following table sets forth the Company's membership by state for its managed care organizations:
 
March 31,
 
2016
 
2015
Arizona
607,000

 
202,200

Arkansas
50,700

 
43,200

California
3,125,400

 
171,200

Florida
660,800

 
463,100

Georgia
495,500

 
405,600

Illinois
239,100

 
184,800

Indiana
290,300

 
227,700

Kansas
141,100

 
143,700

Louisiana
381,200

 
359,500

Massachusetts
52,400

 
64,500

Michigan
2,600

 
—

Minnesota
9,500

 
9,500

Mississippi
328,300

 
141,900

Missouri
100,000

 
75,600

New Hampshire
81,500

 
67,500

Ohio
314,000

 
296,000

Oregon
209,000

 
—

South Carolina
107,700

 
106,000

Tennessee
20,100

 
20,800

Texas
1,036,700

 
974,900

Vermont
1,500

 
1,600

Washington
226,500

 
207,100

Wisconsin
78,400

 
82,100

Total at-risk membership
8,559,300

 
4,248,500

TRICARE eligibles
2,819,700

 
—

Non-risk membership
161,400

 
153,200

Total
11,540,400

 
4,401,700


The following table sets forth our membership by line of business:
 
March 31,
 
2016
 
2015
Medicaid:
 
 
 
TANF, CHIP & Foster Care
5,464,200

 
3,372,200

ABD & LTC
757,600

 
457,500

Behavioral Health
456,500

 
195,100

Commercial
1,518,900

 
161,700

Medicare & Duals
303,100

 
19,400

Correctional
59,000

 
42,600

Total at-risk membership
8,559,300

 
4,248,500

TRICARE eligibles
2,819,700

 
—

Non-risk membership
161,400

 
153,200

Total
11,540,400

 
4,401,700


At March 31, 2016, the Company served 984,900 members in Medicaid expansion programs in nine states and 362,300 dual-eligible members, compared to 331,800 members in Medicaid expansion programs in seven states and 184,000 dual-eligible members at March 31, 2015. At March 31, 2016, the Company served 683,000 members in Health Insurance Marketplaces, compared to 161,700 at March 31, 2015.


3



Statement of Operations: Three Months Ended March 31, 2016

•
For the first quarter of 2016, Total Revenues increased 36% to $7.0 billion from $5.1 billion in the first quarter of 2015. The increase was primarily a result of the impact from expansions, acquisitions or new programs in many of our states in 2015 and the acquisition of Health Net.

•
HBR of 88.7% for the first quarter of 2016 represents a decrease from 89.8% in the comparable period in 2015 and an increase from 88.0% in the fourth quarter of 2015. The year over year HBR decrease is primarily attributable to improvement in medical expense in the higher acuity populations and membership growth in Medicaid expansion and Health Insurance Marketplace, which operate at a lower HBR. HBR increased from 88.0% in the fourth quarter of 2015 to 88.7% in the first quarter of 2016, primarily attributable to an increase in flu related costs over the fourth quarter.

•
The following table compares the results for new business and existing business for the quarters ended March 31:
 
2016
 
2015
Premium and Service Revenue
 
 
 
New business
18
%
 
23
%
Existing business
82
%
 
77
%
 
 
 
 
HBR
 
 
 
New business
90.6
%
 
91.0
%
Existing business
88.3
%
 
89.5
%

•
G&A expense ratio of 11.3%, or 8.3% excluding Health Net acquisition related expenses for the first quarter of 2016, compared to 8.3% in the first quarter of 2015.

•
Diluted loss per share for the first quarter of 2016 of $(0.13), or $0.74 of Adjusted Diluted EPS when excluding Health Net acquisition related expenses and intangible amortization. In comparison, diluted EPS for the first quarter of 2015 was $0.52, or $0.55 Adjusted Diluted EPS when excluding intangible amortization.

Balance Sheet and Cash Flow

At March 31, 2016, the Company had cash, investments and restricted deposits of $7.8 billion, including $139 million held by its unregulated entities. Medical claims liabilities totaled $3.9 billion. The Company's days in claims payable was 66, 42 on a pro-forma basis to include a full quarter of Health Net medical costs. Total debt was $4.3 billion, which includes $515 million of borrowings on the $1.0 billion revolving credit facility at quarter end. Debt to capitalization was 44.3% at March 31, 2016, excluding the $66 million non-recourse mortgage note. Cash flow from operations for the three months ended March 31, 2016, was $195 million.

Our consolidated financial statements as of and for the three months ended March 31, 2016 reflect eight days of Health Net operations. A reconciliation of the Company's change in days in claims payable from the immediately preceding quarter-end is presented below:
 
 
 
Days in claims payable, December 31, 2015
44

 
Impact of Health Net acquisition
(2
)
 
Days in claims payable, March 31, 2016 1
42

 
 
 
 
1 A pro-forma adjustment has been made to medical costs to include a full quarter of Health Net medical costs. Using actual medical costs, days in claims payable was 66.

4



Outlook

The table below depicts the Company's updated annual guidance for 2016.
 
 
Full Year 2016
 
 
 
Low
 
High 
 
Total Revenues (in billions)
 
$
39.0

 
$
39.8

 
GAAP diluted EPS
 
$
2.45

 
$
2.80

 
Adjusted diluted EPS1
 
$
4.00

 
$
4.35

 
HBR
 
87.0
%
 
87.5
%
 
G&A expense ratio
 
9.4
%
 
9.9
%
 
G&A expense ratio, excluding acquisition related costs
 
9.0
%
 
9.5
%
 
Effective tax rate
 
55.0
%
 
57.0
%
 
Diluted shares outstanding (in millions)
 
162.5

 
163.5

 
 
 
 
 
 
 
1Adjusted diluted earnings per share excludes approximately $1.00 to $1.05 per diluted share of Health Net acquisition related expenses and total intangible amortization associated with acquisitions of $0.50 to $0.55 per diluted share.

Conference Call

As previously announced, the Company will host a conference call Tuesday, April 26, 2016, at 8:30 AM (Eastern Time) to review the financial results for the first quarter ended March 31, 2016, and to discuss its business outlook.  Michael Neidorff and Jeffrey Schwaneke will host the conference call. 

Investors and other interested parties are invited to listen to the conference call by dialing 1-877-883-0383 in the U.S. and Canada; +1-412-902-6506 from abroad, including the following Elite Entry Number: 2633125 to expedite caller registration; or via a live, audio webcast on the Company's website at www.centene.com, under the Investors section.

A webcast replay will be available for on-demand listening shortly after the completion of the call for the next twelve months or until 11:59 PM (Eastern Time) on Tuesday, April 25, 2017, at the aforementioned URL. In addition, a digital audio playback will be available until 9:00 AM Eastern Time on Tuesday, May 3, 2016, by dialing 1-877-344-7529 in the U.S. and Canada, or +1-412-317-0088 from abroad, and entering access code 10083202.


5


Other Information

The discussion in the third bullet under the heading "Statement of Operations: Three Months Ended March 31, 2016" contains financial information for new and existing businesses. Existing businesses are primarily state markets or significant geographic expansion in an existing state or product that we have managed for four complete quarters. New businesses are primarily new state markets or significant geographic expansion in an existing state or product that conversely, we have not managed for four complete quarters.

Non-GAAP Financial Presentation

The Company is providing certain non-GAAP financial measures in this release as the Company believes that these figures are helpful in allowing investors to more accurately assess the ongoing nature of the Company's operations and measure the Company's performance more consistently across periods. The Company uses the presented non-GAAP financial measures internally to allow management to focus on period-to-period changes in the Company's core business operations. 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.

Specifically, the Company believes the presentation of non-GAAP financial information which excludes Health Net acquisition related expenses and intangible amortization allows investors to understand the Company's performance more consistently. The table below provides a reconciliation of non-GAAP items ($ in millions, except share data):

 
Three Months Ended March 31,
 
2016
 
2015
 
 
 
 
GAAP general and administrative expenses
$
722

 
$
396

Health Net acquisition related expenses
189

 
—

General and administrative expenses, excluding Health Net acquisition related expenses
$
533

 
$
396

 
 
 
 
GAAP diluted net earnings (loss) per share
$
(0.13
)
 
$
0.52

Health Net acquisition related expenses
0.83

 
—

Amortization of acquired intangible assets
0.04

 
0.03

Adjusted Diluted EPS
$
0.74

 
$
0.55

About Centene Corporation

Centene Corporation, a Fortune 500 company, is a diversified, multi-national healthcare enterprise that provides a portfolio of services to government sponsored healthcare programs, focusing on under-insured and uninsured individuals. Many receive benefits provided under Medicaid, including the State Children's Health Insurance Program (CHIP), as well as Aged, Blind or Disabled (ABD), Foster Care and Long Term Care (LTC), in addition to other state-sponsored programs, Medicare (including the Medicare prescription drug benefit commonly known as "Part D"), as well as programs with the U.S. Department of Defense and U.S. Department of Veterans Affairs. Centene operates local health plans and offers a range of health insurance solutions. It also contracts with other healthcare and commercial organizations to provide specialty services including behavioral health management, care management software, correctional healthcare services, dental benefits management, in-home health services, life and health management, managed vision, pharmacy benefits management, specialty pharmacy and telehealth services.

Centene uses its investor relations website to publish important information about the Company, including information that may be deemed material to investors. Financial and other information about Centene is routinely posted and is accessible on Centene's investor relations website, http://www.centene.com/investors.


6


Forward-Looking Statements
The information provided in this press release may contain certain forward-looking statements with respect to the financial condition, results of operations and business of Centene and certain plans and objectives of Centene with respect thereto, including the expected benefits of the acquisition of Health Net. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as “anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe”, “hope”, “aim”, “continue”, “will”, “may”, “would”, “could” or “should” or other words of similar meaning or the negative thereof. There are several factors which could cause actual plans and results to differ materially from those expressed or implied in forward-looking statements. Such factors include, but are not limited to, the possibility that the expected synergies and value creation from the acquisition will not be realized, or will not be realized within the expected time period, including, but not limited to, as a result of conditions, terms, obligations or restrictions imposed by regulators in connection with their approval of, or consent to, the acquisition; the exertion of management’s time and Centene’s resources, and other out-of-pocket expenses incurred in connection with complying with the undertakings in connection with certain regulatory approvals; the risk that the businesses will not be integrated successfully; disruption from the acquisition making it more difficult to maintain business and operational relationships; the risk that unexpected costs will be incurred; changes in economic conditions or political conditions; changes in federal or state laws or regulations, including the Patient Protection and Affordable Care Act and the Health Care Education Affordability Reconciliation Act and any regulations enacted thereunder; provider and state contract changes; the outcome of pending legal or regulatory proceedings; reduction in provider payments by governmental payors; the expiration or termination of Centene’s Medicare or Medicaid managed care contracts with federal or state governments; tax matters; increased health care costs; and risks and uncertainties discussed in the reports that Centene has filed with the Securities and Exchange Commission (the “SEC”). These forward-looking statements reflect Centene’s current views with respect to future events and are based on numerous assumptions and assessments made by Centene in light of its experience and perception of historical trends, current conditions, business strategies, operating environments, future developments and other factors it believes appropriate. By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that will occur in the future. The factors described in the context of such forward-looking statements in this announcement could cause Centene’s plans with respect to the acquisition, actual results, performance or achievements, industry results and developments to differ materially from those expressed in or implied by such forward-looking statements. Although it is believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and persons reading this announcement are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as of the date of this announcement. Centene does not assume any obligation to update the information contained in this announcement (whether as a result of new information, future events or otherwise), except as required by applicable law. This list of important factors is not intended to be exhaustive. We discuss certain of these matters more fully, as well as certain risk factors that may affect our business operations, financial condition and results of operations, in our filings with the Securities and Exchange Commission, including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.



[Tables Follow]

7


CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except share data)
 
March 31, 2016
 
December 31, 2015
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
3,436

 
$
1,760

Premium and related receivables
2,529

 
1,279

Short term investments
269

 
176

Other current assets
1,317

 
390

Total current assets
7,551

 
3,605

Long term investments
3,973

 
1,927

Restricted deposits
143

 
115

Property, software and equipment, net
580

 
518

Goodwill
4,442

 
842

Intangible assets, net
1,646

 
155

Other long term assets
317

 
177

Total assets
$
18,652

 
$
7,339

 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 

 
 

Current liabilities:
 

 
 

Medical claims liability
$
3,863

 
$
2,298

Accounts payable and accrued expenses
3,228

 
976

Return of premium payable
579

 
207

Unearned revenue
197

 
143

Current portion of long term debt
4

 
5

Total current liabilities
7,871

 
3,629

Long term debt
4,276

 
1,216

Other long term liabilities
1,052

 
170

Total liabilities
13,199

 
5,015

Commitments and contingencies
 
 
 
Redeemable noncontrolling interests
144

 
156

Stockholders’ equity:
 

 
 

Preferred stock, $0.001 par value; authorized 10,000,000 shares; no shares issued or outstanding at March 31, 2016 and December 31, 2015
—

 
—

Common stock, $0.001 par value; authorized 400,000,000 shares; 175,952,159 issued and 170,449,444 outstanding at March 31, 2016, and 126,855,477 issued and 120,342,981 outstanding at December 31, 2015
—

 
—

Additional paid-in capital
4,084

 
956

Accumulated other comprehensive earnings (loss)
10

 
(10
)
Retained earnings
1,341

 
1,358

Treasury stock, at cost (5,502,715 and 6,512,496 shares, respectively)
(138
)
 
(147
)
Total Centene stockholders’ equity
5,297

 
2,157

Noncontrolling interest
12

 
11

Total stockholders’ equity
5,309

 
2,168

Total liabilities and stockholders’ equity
$
18,652

 
$
7,339






8


CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share data)
(Unaudited)
 
Three Months Ended March 31,
 
2016
 
2015
Revenues:
 
 
 
Premium
$
5,986

 
$
4,299

Service
425

 
462

Premium and service revenues
6,411

 
4,761

Premium tax and health insurer fee
542

 
370

Total revenues
6,953

 
5,131

Expenses:
 
 
 
Medical costs
5,311

 
3,861

Cost of services
367

 
402

General and administrative expenses
722

 
396

Amortization of acquired intangible assets
9

 
7

Premium tax expense
450

 
281

Health insurer fee expense
74

 
55

Total operating expenses
6,933

 
5,002

Earnings from operations
20

 
129

Other income (expense):
 
 
 
Investment and other income
15

 
9

Interest expense
(33
)
 
(10
)
Earnings from continuing operations, before income tax expense
2

 
128

Income tax expense
17

 
63

Earnings (loss) from continuing operations, net of income tax expense
(15
)
 
65

Discontinued operations, net of income tax
(1
)
 
(1
)
Net earnings (loss)
(16
)
 
64

(Earnings) loss attributable to noncontrolling interests
(1
)
 
(1
)
Net earnings (loss) attributable to Centene Corporation
$
(17
)
 
$
63

 
 
 
 
Amounts attributable to Centene Corporation common shareholders:
Earnings (loss) from continuing operations, net of income tax expense
$
(16
)
 
$
64

Discontinued operations, net of income tax
(1
)
 
(1
)
Net earnings (loss)
$
(17
)
 
$
63

 
 
 
 
Net earnings (loss) per common share attributable to Centene Corporation:
Basic:
 
 
 
Continuing operations
$
(0.13
)
 
$
0.54

Discontinued operations
(0.01
)
 
(0.01
)
Basic earnings (loss) per common share
$
(0.14
)
 
$
0.53

 
 
 
 
Diluted:
 
 
 
Continuing operations
$
(0.13
)
 
$
0.52

Discontinued operations
(0.01
)
 
(0.01
)
Diluted earnings (loss) per common share
$
(0.14
)
 
$
0.51

 
 
 
 
Weighted average number of common shares outstanding:
Basic
125,543,076

 
118,783,755

Diluted
125,543,076

 
122,572,366



9


CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 
Three Months Ended March 31,
 
2016
 
2015
Cash flows from operating activities:
 
 
 
Net earnings (loss)
$
(16
)
 
$
64

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities
Depreciation and amortization
35

 
27

Stock compensation expense
51

 
16

Deferred income taxes
(17
)
 
(6
)
Gain on contingent consideration
(1
)
 
(10
)
Changes in assets and liabilities
 

 
 

Premium and related receivables
(174
)
 
(334
)
Other current assets
(35
)
 
(3
)
Medical claims liabilities
196

 
227

Unearned revenue
(64
)
 
(51
)
Accounts payable and accrued expenses
35

 
58

Other long term liabilities
192

 
68

Other operating activities, net
(7
)
 
(11
)
Net cash provided by operating activities
195

 
45

Cash flows from investing activities:
 

 
 

Capital expenditures
(45
)
 
(27
)
Purchases of investments
(212
)
 
(307
)
Sales and maturities of investments
203

 
111

Investments in acquisitions, net of cash acquired
(782
)
 
(9
)
Other investing activities, net
—

 
7

Net cash used in investing activities
(836
)
 
(225
)
Cash flows from financing activities:
 

 
 

Proceeds from borrowings
3,790

 
500

Payment of long term debt
(1,388
)
 
(253
)
Common stock repurchases
(22
)
 
(4
)
Purchase of noncontrolling interest
(14
)
 
—

Debt issue costs
(51
)
 
(4
)
Other financing activities, net
2

 
(3
)
Net cash provided by financing activities
2,317

 
236

Net increase in cash and cash equivalents
1,676

 
56

Cash and cash equivalents, beginning of period
1,760

 
1,610

Cash and cash equivalents, end of period
$
3,436

 
$
1,666

Supplemental disclosures of cash flow information:
 

 
 

Interest paid
$
3

 
$
2

Income taxes paid
$
33

 
$
24

Equity issued in connection with acquisitions
$
3,105

 
$
13








10



CENTENE CORPORATION
SUPPLEMENTAL FINANCIAL DATA FROM CONTINUING OPERATIONS
 
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
 
 
2016
 
2015
 
2015
 
2015
 
2015
MANAGED CARE MEMBERSHIP BY STATE
 
 
 
 
 
 
Arizona
 
607,000

 
440,900

 
223,600

 
210,900

 
202,200

Arkansas
 
50,700

 
41,900

 
40,900

 
45,400

 
43,200

California
 
3,125,400

 
186,000

 
183,900

 
178,700

 
171,200

Florida
 
660,800

 
510,400

 
486,500

 
470,300

 
463,100

Georgia
 
495,500

 
408,600

 
406,700

 
405,000

 
405,600

Illinois
 
239,100

 
207,500

 
211,300

 
209,100

 
184,800

Indiana
 
290,300

 
282,100

 
276,700

 
250,400

 
227,700

Kansas
 
141,100

 
141,000

 
137,500

 
143,000

 
143,700

Louisiana
 
381,200

 
381,900

 
358,800

 
358,900

 
359,500

Massachusetts
 
52,400

 
61,500

 
63,700

 
61,500

 
64,500

Michigan
 
2,600

 
4,800

 
6,600

 
2,700

 
—

Minnesota
 
9,500

 
9,600

 
9,400

 
10,900

 
9,500

Mississippi
 
328,300

 
302,200

 
301,000

 
250,600

 
141,900

Missouri
 
100,000

 
95,100

 
88,400

 
82,600

 
75,600

New Hampshire
 
81,500

 
71,400

 
71,900

 
70,800

 
67,500

Ohio
 
314,000

 
302,700

 
308,100

 
287,100

 
296,000

Oregon
 
209,000

 
98,700

 
99,800

 
—

 
—

South Carolina
 
107,700

 
104,000

 
104,800

 
112,600

 
106,000

Tennessee
 
20,100

 
20,000

 
20,200

 
21,400

 
20,800

Texas
 
1,036,700

 
983,100

 
976,500

 
969,700

 
974,900

Vermont
 
1,500

 
1,700

 
1,500

 
2,800

 
1,600

Washington
 
226,500

 
209,400

 
208,600

 
214,100

 
207,100

Wisconsin
 
78,400

 
77,100

 
78,100

 
78,600

 
82,100

Total at-risk membership
 
8,559,300

 
4,941,600

 
4,664,500

 
4,437,100

 
4,248,500

TRICARE eligibles
 
2,819,700

 
—

 
—

 
—

 
—

Non-risk membership
 
161,400

 
166,300

 
169,900

 
176,600

 
153,200

Total
 
11,540,400

 
5,107,900

 
4,834,400

 
4,613,700

 
4,401,700

 
 
 
 
 
 
 
 
 
 
 
MANAGED CARE MEMBERSHIP BY LINE OF BUSINESS
Medicaid:
 
 
 
 
 
 
 
 
 
 
TANF, CHIP & Foster Care
 
5,464,200

 
3,763,400

 
3,719,900

 
3,536,000

 
3,372,200

ABD & LTC
 
757,600

 
478,600

 
473,700

 
454,000

 
457,500

Behavioral Health
 
456,500

 
456,800

 
216,700

 
203,900

 
195,100

Commercial
 
1,518,900

 
146,100

 
155,600

 
167,400

 
161,700

Medicare & Duals
 
303,100

 
37,400

 
39,300

 
28,200

 
19,400

Correctional
 
59,000

 
59,300

 
59,300

 
47,600

 
42,600

Total at-risk membership
 
8,559,300

 
4,941,600

 
4,664,500

 
4,437,100

 
4,248,500

TRICARE eligibles
 
2,819,700

 
—

 
—

 
—

 
—

Non-risk membership
 
161,400

 
166,300

 
169,900

 
176,600

 
153,200

Total
 
11,540,400

 
5,107,900

 
4,834,400

 
4,613,700

 
4,401,700

 
 
 
 
 
 
 
 
 
 
 
NUMBER OF EMPLOYEES
 
28,000

 
18,200

 
17,100

 
15,800

 
14,800



11


 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
 
2016
 
2015
 
2015
 
2015
 
2015
 
 
 
 
 
 
 
 
 
 
DAYS IN CLAIMS PAYABLE (a)
66

 
44

 
45

 
46

 
46

(a) Days in Claims Payable is a calculation of Medical Claims Liabilities at the end of the period divided by average claims expense per calendar day for such period. On a pro-forma basis, DCP for Q1 2016 is 42, reflecting adjusted medical costs to include a full quarter of Health Net operations.
 
 
 
 
 
 
 
 
 
 
CASH, INVESTMENTS AND RESTRICTED DEPOSITS (in millions)
Regulated
$
7,682

 
$
3,900

 
$
3,834

 
$
3,667

 
$
3,345

Unregulated
139

 
78

 
91

 
82

 
97

Total
$
7,821

 
$
3,978

 
$
3,925

 
$
3,749

 
$
3,442

 
 
 
 
 
 
 
 
 
 
DEBT TO CAPITALIZATION
44.6
%
 
36.0
%
 
38.4
%
 
37.1
%
 
38.0
%
DEBT TO CAPITALIZATION EXCLUDING NON-RECOURSE DEBT (b)
44.3
%
 
34.7
%
 
37.1
%
 
35.7
%
 
36.6
%
(b) The non-recourse debt represents the Company's mortgage note payable ($66 million at March 31, 2016).
Debt to Capitalization is calculated as follows: total debt divided by (total debt + total equity).

OPERATING RATIOS
 
Three Months Ended March 31,
 
2016
 
2015
Health Benefits Ratio
88.7
%
 
89.8
%
General & Administrative expense ratio
11.3
%
 
8.3
%
General & Administrative expense ratio excluding Health Net acquisition related expenses
8.3
%
 
8.3
%

MEDICAL CLAIMS LIABILITY

The changes in medical claims liability are summarized as follows (in millions):
Balance, March 31, 2015
 
$
1,950

Acquisitions
 
1,450

Incurred related to:
 
 
Current period
 
18,900

Prior period
 
(208
)
Total incurred
 
18,692

Paid related to:
 
 
Current period
 
16,520

Prior period
 
1,709

Total paid
 
18,229

Balance, March 31, 2016
 
$
3,863


Centene's claims reserving process utilizes a consistent actuarial methodology to estimate Centene's ultimate liability. Any reduction in the “Incurred related to: Prior period” amount may be offset as Centene actuarially determines “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. Centene believes it has consistently applied its claims reserving methodology in each of the periods presented. Additionally, as a result of minimum HBR and other return of premium programs, approximately $13 million of the “Incurred related to: Prior period” was recorded as a reduction to premium revenues.

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The amount of the “Incurred related to: Prior period” above represents favorable development and includes the effects of reserving under moderately adverse conditions, new markets where we use a conservative approach in setting reserves during the initial periods of operations, receipts from other third party payors related to coordination of benefits and lower medical utilization and cost trends for dates of service March 31, 2015 and prior.

13