Centene Corporation

This is our first report on Centene Corporation, one of the largest health insurance players in the U.S. Centene had a successful year in 2022 and ended it on a positive note with an all-around beat. The company faced a number of difficulties, including a leadership transition, organizational structure change, modernization of corporate governance approach, concentration on core business, better operations and quality, and on-time financial obligation fulfillment. Total revenue grew by $3 billion, driven by strong organic growth in Medicaid, strong growth in Medicare membership, and the acquisition of Magellan. In Marketplace, they increased the profitability of their Ambetter product line with improvements in their clinical programs and strategic product positioning, delivering more than 500 basis points in margin improvement while continuing to demonstrate strong growth and market expansion. Marketplace products produced remarkable growth that exceeded the robust expansion of the overall market. Centene’s Medicare Advantage division experienced outsized growth. Throughout the year, their local markets performed well, serving more Medicaid members in more places. We initiate coverage on the stock of Centene Corporation with a ‘Hold’ rating.