8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): October 25, 2005

CENTENE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	000-33395	42-1406317
(State or other jurisdiction of incorporation)	(Commission file number)	(IRS Employer Identification No.)

7711 Carondelet Avenue, Suite 800, St. Louis, Missouri 63105

(Address of principal executive office and zip code)

Registrant’s telephone number, including area code: (314) 725-4477

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On October 25, 2005, we issued a press release announcing our financial results for the quarter ended September 30, 2005. The full text of the press release is included as Exhibit 99.1 to this report. The information contained in the website cited in the press release is not a part of this report.

The information in this Form 8-K and exhibit 99.1 attached hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. Nor shall such information or exhibit be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as expressly set forth by specific reference in such a filing.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(c) Exhibits

The follow exhibit relating to Item 2.02 shall be deemed to be furnished and not filed:

99.1 Press release of Centene Corporation issued October 25, 2005 as to financial results for the quarter ended September 30, 2005.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: October 25, 2005	CENTENE CORPORATION
	By:	/s/    MICHAEL F. NEIDORFF
		Michael F. Neidorff Chairman and Chief Executive Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press release* of Centene Corporation issued October 25, 2005 as to financial results for the quarter ended September 30, 2005.

* The press release is being furnished pursuant to Item 2.02, and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange of 1934, as amended.

EX-99.1

Exhibit 99.1

N E W S  R E L E A S E

Contact:	Karey L. Witty
	Chief Financial Officer
	(314) 725-4477
	Lisa M. Wilson
	Senior Vice President, Investor Relations
	(212) 759-3929

FOR IMMEDIATE RELEASE

CENTENE CORPORATION REPORTS THIRD QUARTER

NET EARNINGS OF $0.27 PER SHARE, NET OF ONE-TIME

LITIGATION SETTLEMENT CHARGE

ST. LOUIS, MISSOURI (October 25, 2005) — Centene Corporation (NYSE: CNC) today announced its financial results for the quarter ended September 30, 2005.

Third Quarter Highlights

• Revenues of $400.6 million, a 57.9% increase over the third quarter of 2004.

• Arizona behavioral health contract commenced operations effective July 1.

• Centene’s Wisconsin health plan subsidiary entered into a settlement agreement with Aurora Health Care, Inc., resulting in a one-time litigation settlement charge of $4.5 million, and a new long-term provider contract.

• Health benefits ratio within guided range, exclusive of the one-time charge.

• Earnings per diluted share of $0.27, net of a one-time litigation settlement charge of $0.06.

• Membership growth of 32.1% over the third quarter of 2004.

• Days in claims payable of 41.4, net of claims process improvements and 1.4 days for litigation settlement.

• Operating cash flows of $51.9 million for the three months ended, an 89.8% increase over the third quarter of 2004.

• Acquired AirLogix, Inc., an industry leader in respiratory disease management.

PAGE 2 : CENTENE CORPORATION REPORTS THIRD QUARTER NET EARNINGS OF $0.27 PER SHARE

• Awarded Medicaid contracts by the Georgia Department of Community Health to begin serving three regions in 2006.

Michael F. Neidorff, Centene’s chairman and chief executive officer, said, “I am pleased to report that overall, it has been a predictable, in-line quarter, and we remain confident about the manner in which Centene conducts its business. Our consistent earnings growth demonstrates the solid visibility we have over the state of the business and the strength of our operating systems. Membership growth was particularly strong in Indiana, as anticipated, and Kansas posted solid gains during the quarter. Our specialty companies have made consistent progress, including our Arizona behavioral health contract, which provides a strong foundation for continued growth in this business segment.

“In keeping with our philosophy of ongoing financial transparency, we hosted for the first time a contracting and claims liability accounting methodology seminar in September. Our goal was to help participants understand the key factors for our ongoing success —claims processing and system reporting, sound contracting, consistent claims liability reserving and provider relationships —all of which enhance the predictability and consistency of our financial results. This disciplined approach, which has been in place for many years, gives consistent control over costs and reduces volatility. It is important that we recognize that the sector and industry are strong and are meeting the needs of recipients and the states in terms of quality, cost-effective care.”

There were several nonrecurring events during the quarter that affected our results, including:

Aurora one-time litigation settlement charge	$	(0.06	)
Georgia start-up costs		(0.04	)
Claims payment process improvements		(0.02	)
Charitable foundation contribution		(0.01	)
Tax benefits		0.03

PAGE 3 : CENTENE CORPORATION REPORTS THIRD QUARTER NET EARNINGS OF $0.27 PER SHARE

The following table depicts membership in Centene’s Medicaid Managed Care segment by state at September 30, 2005 and 2004:

	2005	2004
Indiana	176,300	150,000
Kansas	107,600	—
Missouri	37,300	—
New Jersey	50,900	53,200
Ohio	58,100	23,500
Texas	243,600	250,200
Wisconsin	173,900	164,700
TOTAL	847,700	641,600

The following table depicts membership in Centene’s Medicaid Managed Care segment by member category at September 30, 2005 and 2004:

	2005		2004
Medicaid	657,500		479,500
SCHIP	176,900		152,100
SSI	13,300	(a)	10,000	(b)
TOTAL	847,700		641,600

(a) 6,800 at-risk, 6,500 ASO

(b) 4,500 at-risk; 5,500 ASO

Statement of Earnings Highlights

- For the third quarter of 2005, revenues increased 57.9% to $400.6 million from $253.7 million in the third quarter of 2004.

- The health benefits ratio (HBR), which reflects medical costs as a percent of premium revenues, now includes a larger component of behavioral health claims and was 83.7% compared to 80.7% for the same period in 2004. The effect of the behavioral health business increased the HBR by 0.4%. The current quarter also reflects a $4.5 million

PAGE 4 : CENTENE CORPORATION REPORTS THIRD QUARTER NET EARNINGS OF $0.27 PER SHARE

litigation settlement increasing the ratio by 1.2%. Additionally, the Company’s SSI HBR was 96.2% compared to 92.8% in 2004. While growing, Centene’s small SSI member base can experience a volatile HBR. The table below depicts Centene’s HBR by member category:

	Three Months Ended September 30,
	2005*		2004
Medicaid and SCHIP	81.7	%	80.4	%
SSI	96.2		92.8
Medicaid Managed Care Total	82.1		80.7
Specialty Services	89.7		—
Total	82.5		80.7

* Excludes one-time litigation settlement charge.

- General and administrative (G&A) expenses as a percent of revenues were 13.1% in the third quarter of 2005, compared to 12.7% in the third quarter of 2004. Centene’s total G&A ratio increased due to implementation costs related to its new contracts in Georgia, and as discussed later, higher spending on information systems process improvements and increased contributions to its charitable foundation.

- Earnings from operations decreased 8.1% to $15.1 million from $16.4 million in the third quarter of 2004, reflecting the one-time settlement charge and increased G&A spending.

- Centene’s effective tax rate for the quarter was 27.8% compared to 37.0% in 2004. The decrease was primarily due to a lower state income tax expense resulting from the resolution of state examinations and the recognition of deferred tax benefits related to a change in tax law during the quarter. These tax benefits, totaling $2.4 million gross of federal taxes, were reinvested in the business through the corresponding increase in G&A spending as noted above.

- Net of the one-time charge of $0.06 and increased G&A spending, net earnings were $12.1 million, or $0.27 per diluted share, which was in-line with previous guidance and compares to $11.3 million, or $0.26 per diluted share, for the third quarter of 2004.

PAGE 5 : CENTENE CORPORATION REPORTS THIRD QUARTER NET EARNINGS OF $0.27 PER SHARE

- For the nine months ended September 30, 2005, revenues increased 51.9% to $1,082.6 million from $712.9 million for the same period in the prior year. The HBR was 82.0%, compared to 80.9% for the same period in 2004. G&A expenses as a percent of revenues were 12.9% as compared to 12.5% in 2004. Earnings from operations increased 24.8% to $58.8 million from $47.1 million in 2004. Net earnings improved to $41.8 million, or $0.93 per diluted share.

Balance Sheet Highlights

At September 30, 2005, the Company had cash and investments of $332.8 million, including $27.7 million held by its unregulated entities and $305.1 million held by its regulated entities. Medical claims liabilities totaled $148.9 million, representing 41.4 days in claims payable versus 49.5 days from the previous quarter. Medical claims liabilities were affected by a reduction in pended claims from 54,000 to 21,000, many of which were large liability claims. Additionally, the average cost per claim held in inventory at September 30 was $144.00 and compares to $204.00 in the immediately preceding quarter.

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, June 30, 2005	49.5
Increased efficiencies in claims processing	(5.2	)
Effect of AZ behavioral health block payment business	(1.5	)
Payment of Aurora settlement	(1.4	)
Days in claims payable, September 30, 2005	41.4

As predicted, cash flows provided by operating activities were $51.9 million for the three months ended and $44.9 million for the nine months ended September 30, 2005. Centene received the State of Wisconsin’s June capitation payment of $29 million in July.

PAGE 6 : CENTENE CORPORATION REPORTS THIRD QUARTER NET EARNINGS OF $0.27 PER SHARE

Outlook

Karey L. Witty, Centene’s chief financial officer, stated, “For the fourth quarter of 2005, we expect revenue in the range of $415 million to $420 million and net earnings of $0.30 to $0.32 per diluted share. Additionally, we expect organic membership growth in excess of 10% for 2005. Our preliminary outlook for 2006 includes revenue in the range of $2.03 billion to $2.18 billion and net earnings of $1.72 to $1.87 per diluted share. This guidance excludes the potential impact of any other acquisitions we may undertake during the remainder of 2005 as well as expenses related to stock option grants under SFAS 123R (“Share Based Payment”), which is required to be adopted on January 1, 2006.

Conference Call

As previously announced, the Company will host a conference call this morning, October 25, 2005, at 8:30 a.m. (Eastern Time) to review the financial results for the third quarter ended September 30, 2005, 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 8, 2005 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 1255588.

PAGE 7 : CENTENE CORPORATION REPORTS THIRD QUARTER NET EARNINGS OF $0.27 PER SHARE

About Centene Corporation

Centene Corporation provides multi-line 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 Indiana, Kansas, Missouri, New Jersey, Ohio, Texas and Wisconsin. In addition, the Company contracts with other healthcare organizations to provide specialty services including behavioral health, disease management, nurse triage and treatment compliance. Information regarding Centene is available via the Internet at www.centene.com.

The information provided in the first paragraph following the bullet listing under “Third Quarter Highlights,” the second bullet under “Statement of Earnings Highlights,” and the paragraph under “Outlook” above contain forward-looking statements that relate to future events and future financial performance of Centene. 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.

[Tables Follow]

PAGE 8 : CENTENE CORPORATION REPORTS THIRD QUARTER NET EARNINGS OF $0.27 PER SHARE

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	September 30,			December 31,
	2005			2004
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	121,424		$	84,105
Premium and related receivables, net of allowances of $156 and $462, respectively		43,235			31,475
Short-term investments, at fair value (amortized cost $58,760 and $94,442, respectively)		58,642			94,283
Other current assets		20,500			14,429
Total current assets		243,801			224,292
Long-term investments, at fair value (amortized cost $132,394 and $117,177, respectively)		130,347			116,787
Restricted deposits, at fair value (amortized cost $22,614 and $22,295, respectively)		22,344			22,187
Property, software and equipment		55,073			43,248
Goodwill		159,579			101,631
Other intangible assets		21,217			14,439
Other assets		7,250			5,350
Total assets	$	639,611		$	527,934
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Medical claims liabilities	$	148,889		$	165,980
Accounts payable and accrued expenses		47,302			31,737
Unearned revenue		12,437			3,956
Current portion of long-term debt and notes payable		486			486
Total current liabilities		209,114			202,159
Long-term debt		87,650			46,973
Other liabilities		9,614			7,490
Total liabilities		306,378			256,622
Stockholders’ equity:
Common stock, $.001 par value; authorized 100,000,000 shares; issued and outstanding 42,646,184 and 41,316,122 shares, respectively		43			41
Additional paid-in capital		186,659			165,391
Accumulated other comprehensive income:
Unrealized loss on investments, net of tax		(1,522	)		(407	)
Retained earnings		148,053			106,287
Total stockholders’ equity		333,233			271,312
Total liabilities and stockholders’ equity	$	639,611		$	527,934

PAGE 9 : CENTENE CORPORATION REPORTS THIRD QUARTER NET EARNINGS OF $0.27 PER SHARE

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
	(Unaudited)						(Unaudited)
Revenues:
Premiums	$	395,667		$	251,536		$	1,075,027		$	705,556
Services		4,975			2,207			7,619			7,320
Total revenues		400,642			253,743			1,082,646			712,876
Expenses:
Medical costs		331,050			202,974			881,021			570,720
Cost of services		2,002			2,111			3,573			6,149
General and administrative expenses		52,450			32,187			139,274			88,915
Total operating expenses		385,502			237,272			1,023,868			665,784
Earnings from operations		15,140			16,471			58,778			47,092
Other income (expense):
Investment and other income		2,818			1,683			7,461			4,529
Interest expense		(1,190	)		(126	)		(2,386	)		(317	)
Earnings before income taxes		16,768			18,028			63,853			51,304
Income tax expense		4,662			6,677			22,087			19,002
Net earnings	$	12,106		$	11,351		$	41,766		$	32,302
Earnings per share:
Basic earnings per common share	$	0.28		$	0.28		$	0.99		$	0.79
Diluted earnings per common share	$	0.27		$	0.26		$	0.93		$	0.74
Weighted average number of shares outstanding:
Basic		42,582,129			40,972,858			42,120,149			40,693,804
Diluted		45,278,328			43,640,180			45,078,852			43,364,120

PAGE 10 : CENTENE CORPORATION REPORTS THIRD QUARTER NET EARNINGS OF $0.27 PER SHARE

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Nine Months Ended September 30,
	2005			2004
	(Unaudited)
Cash flows from operating activities:
Net earnings	$	41,766		$	32,302
Adjustments to reconcile net earnings to net cash provided by operating activities —
Depreciation and amortization		9,658			7,219
Deferred income taxes		(3,567	)		(303	)
Tax benefits related to stock options		4,511			1,858
Stock compensation expense		3,557			44
Loss (gain) on sale of investments		58			(212	)
Changes in assets and liabilities —
Premium and related receivables		(9,396	)		(2,431	)
Other current assets		(1,990	)		(4,803	)
Other assets		(1,380	)		(1,773	)
Medical claims liabilities		(17,091	)		19,825
Unearned revenue		5,892			(3	)
Accounts payable and accrued expenses		11,798			5,184
Other operating activities		1,096			568
Net cash provided by operating activities		44,912			57,475
Cash flows from investing activities:
Purchase of property, software and equipment		(16,837	)		(9,487	)
Purchase of investments		(108,630	)		(207,385	)
Sales and maturities of investments		129,095			188,918
Acquisitions, net of cash acquired		(55,410	)		(7,005	)
Net cash used in investing activities		(51,782	)		(34,959	)
Cash flows from financing activities:
Reduction of long-term debt and notes payable		(4,323	)		(507	)
Proceeds from borrowings		45,000			—
Proceeds from stock options and employee stock purchase plan		3,925			2,332
Other financing activities		(413	)		—
Net cash provided by financing activities		44,189			1,825
Net increase in cash and cash equivalents		37,319			24,341
Cash and cash equivalents, beginning of period		84,105			64,346
Cash and cash equivalents, end of period	$	121,424		$	88,687
Interest paid	$	2,184		$	324
Income taxes paid	$	19,658		$	18,844
Supplemental schedule of non-cash investing and financing activities:
Common stock issued for acquisitions	$	8,991		$	—

PAGE 11 : CENTENE CORPORATION REPORTS THIRD QUARTER NET EARNINGS OF $0.27 PER SHARE

CENTENE CORPORATION AND SUBSIDIARIES

SUPPLEMENTAL FINANCIAL DATA

	Q3 2005			Q2 2005			Q1 2005			Q4 2004
MEMBERSHIP
Indiana		176,300			152,800			149,900			150,600
Kansas		107,600			103,000			94,900			94,200
Missouri		37,300			39,900			41,300			41,200
New Jersey		50,900			52,900			52,700			52,800
Ohio		58,100			59,600			23,900			23,800
Texas		243,600			243,800			243,700			244,300
Wisconsin		173,900			173,400			170,900			165,800
TOTAL		847,700			825,400			777,300			772,700
Medicaid		657,500			637,300			588,100			580,200
SCHIP		176,900			176,200			178,500			182,100
SSI		13,300			11,900			10,700			10,400
TOTAL		847,700			825,400			777,300			772,700
REVENUE PER MEMBER	$	147.73		$	143.41		$	142.15		$	139.38
CLAIMS
Period-end inventory		206,900			195,500			227,700			150,300
Average inventory		148,300			170,300			191,900			128,300
Period-end inventory per member		0.24			0.24			0.29			0.19
DAYS IN CLAIMS PAYABLE (a)		41.4			49.5			59.7			66.5
(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.
CASH AND INVESTMENTS (in millions)
Regulated	$	305.1		$	260.5		$	295.0		$	271.4
Unregulated		27.7			27.4			42.1			46.0
TOTAL	$	332.8		$	287.9		$	337.1		$	317.4
ANNUALIZED RETURN ON EQUITY (b)		14.9	%		20.0	%		20.5	%		18.2	%

^(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).

PAGE 12 : CENTENE CORPORATION REPORTS THIRD QUARTER NET EARNINGS OF $0.27 PER SHARE

HEALTH BENEFITS RATIO BY CATEGORY:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2005		2004		2005		2004
Medicaid and SCHIP	83.0	%	80.4	%	81.5	%	80.5	%
SSI	96.2		92.8		92.6		96.6
Medicaid Managed Care Total	83.3		80.7		81.7		80.9
Specialty Services	89.7		—		91.0		—
Total	83.7		80.7		82.0		80.9

GENERAL AND ADMINISTRATIVE EXPENSE RATIO BY BUSINESS SEGMENT:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2005		2004		2005		2004
Medicaid Managed Care	10.6	%	10.5	%	10.6	%	10.4	%
Specialty Services	30.2		56.0		38.9		51.8
Total	13.1		12.7		12.9		12.5

MEDICAL CLAIMS LIABILITIES

(In thousands)

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

Balance, September 30, 2004	$	126,394
Acquisitions		24,909
Incurred related to:
Current period		1,123,677
Prior period		(12,900	)
Total incurred		1,110,777
Paid related to:
Current period		1,000,533
Prior period		112,658
Total paid		1,113,191
Balance, September 30, 2005	$	148,889

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” claims 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.