• Centene reported strong Q3’24 results, beating revenue expectations by $4.13 billion and achieving EPS of $1.62, driven by Medicaid rate increases and membership growth.
• Key highlights from the quarter include successful Medicaid reprocurements, improved 2025 Medicare Advantage star ratings, and advancements in AI for operational efficiency, positioning Centene for long-term growth.
• Despite some leverage, Centene’s investment-grade rating and attractive debt maturities suggest financial stability, with a promising outlook for EPS growth and Medicare revenue.
• Insider buying and undervaluation, with Centene trading at around 10x earnings, indicate confidence in the company’s future despite Medicaid redetermination and regulatory risks.

Introduction

Centene (NYSE:CNC) is a U.S. healthcare company that serves as an intermediary for government-sponsored and privately insured healthcare programs, focusing on providing services to under-insured and uninsured individuals. The company offers a wide range of health plans through Medicaid, Medicare, and

Analyst’s Disclosure: I/we have a beneficial long position in the shares of CNC either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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• Centene, a leading health insurer, shows strong fundamentals and growth despite sector challenges, making it a “Buy” at a target price of $70/share.
• The company’s 2Q24 results indicate robust earnings growth and increasing membership, contrasting with peers like Humana, which face significant declines.
• Centene’s valuation at $61/share with a P/E of 9x is attractive, projecting a potential 27.17% annualized upside until 2026.
• Despite lacking a dividend, Centene’s stability and growth prospects in government programs and managed healthcare segments justify a conservative investment approach.

Dear readers/followers,

Centene (NYSE:CNC) is an interesting stock and play in health insurance, with both age, tradition, and the sort of fundamentals that you’d really want to be focusing on if you were looking to invest in healthcare companies. It has revenues in the hundred-billions, it has exposure to Medicaid and Medicare. The fact that it lacks a dividend is only a slight discouragement. My last article was back in late December of 2022. That was, at this point, almost 2 years ago. Unfortunately, during this article, I went “Buy” on the company. This was indisputably the wrong choice, given that this stance has underperformed by over 75%, with a negative 25.48% RoR, while the S&P500 is up 52%.

At the same time, my thesis before this was a “Hold” – as were the articles preceding it. It was a miscalculation on my part, going “In” at that time. I’m only thankful that my position in this case was fairly small, and above all that it was options-based, and I was able to leave it behind. Centene is, in fact, in a sector that i, in fact, have mostly left behind entirely.

Why have I left the sector behind?

Because the trends in healthcare and health insurance, especially in the USA, are not necessarily things I want to get into. The visibility here too is poor – and I don’t see a clear pathway to profit that would entail me taking the risk that I see this being (in terms of a risk/reward ratio).

At the same time, one consideration that I will be looking at here is that Centene is being unfairly dragged down with other insurers, despite being better than those insurers.

Is that the case we have here? Should we, in fact, Buy, more of the company?

That’s the question that I aim to answer here.

Centene – Updating for 2024-2026E

Centene is in the business of offering insurance plans. Despite the drop in valuation, we’re talking about a market capitalization of a $32.2B. Centene has 28.5M members as of the last full annual and manages to generate earnings in excess of $2.6B every single year, out of premiums of over $140B for 2021.

Centene is the #1 health insurance carrier in the United States (marketplace).

Like other companies in this field, the company claims that its conviction and goal is to deliver better healthcare outcomes at lower costs. It’s these healthcare savings that both politicians and individuals are looking for. 1 in 15 people in the USA have coverage with Centene using Medicaid and Medicare, including things like prescription drug plans as well as the TRICARE program.

Centene also partners with other commercial organizations and healthcare players to provide specialty services.

The latest set of results we have to look at for Centene is 2Q24, but we’re a short time away from the 3Q24 period. That means that this article will serve as a preview of what Centene could deliver as a business – and based on this, whether the case for the company is stronger or weaker here.

2Q24 would certainly suggest that the positive stance is the one to take.

Why?

Because earnings continue to grow despite the trends seen in valuation. Adjusted EPS on a diluted basis is up 15%, premiums and service memberships are growing, and the trends in health insurance actually mean that more members are seeking to join Centene as a service, not less. The company’s SG&A expense ratio is below 8.5%, and its health benefit ratio for 2Q24 is at 87.6%. These numbers alone are of course not enough to suggest or to see what upside or what trends we might see here.

Also, membership in the company’s various programs has been increasing, suggesting that there is further growth here to be had – despite the company selling off segments.

I want to trace a connection between Centene and other insurers here – namely Humana (HUM). Humana is a company that I personally never invested in, even though at times it was interesting to do so if the right valuation appeared. However, Humana is on track for a decline in 2024E earnings, and a fairly significant one. We’re talking well over 35% (Source: F.A.S.T Graphs Paywalled Link). The question is if Centene will mirror this decline in earnings and results.

The current forecast tells us that this is not the case – or at least, not the current assumption. Centene has been improving its structure, including selling off the Collaborative Health Systems – but above all, it has not been declining.

The company, since last year, has maintained its 12-15% average adjusted EPS long-term growth target. I believe we can assume that this target, at this point based on estimates, is about halved. So that needs to be taken into consideration when considering an investment into Centene.

The company is continuing to see growth in the fastest-growing segment of the market, including government programs. Centene – and others – are expecting the government programs to continue to drive healthcare spending and enrollment. The risk here in opposition to this expectation is that the government/s will be looking at every avenue to cut costs – and when it comes to something like healthcare, governments can sometimes “decide” on something even knowing that it will hurt the margins of the companies that are involved. Just look at what happened with Humana. The thing about these insurers is that their profit margins are incredibly slim. Every single adjustment or restriction has impacts – a company with a 2-3 % profit margin doesn’t have a whole lot of wiggle room.

So while Medicaid is attractive, and while US spending for Medicaid programs, in my estimate, is expected to grow in accordance with the expectations we see below…

…the question becomes also what the company can expect in terms of margins. When looking at things like margins, inflation, wage growth, and other factors (including some of the arguments like a growing population of “gig” workers, which the company views as a positive for its marketplace), the question becomes again, pricing for the individual and margin for the company, and the government’s role in all of this.

A lot hinges on these companies managing this rope-balancing act in a good way. Take a look at one of the things that caused Humana to drop. The government was set to cut its rating on one of the insurer’s large Medicare Advantage plans, due to missed performance measures – with analysts clarifying that any such drop would significantly impact rebates and quality payments from the government (Source).

This caused a 21.3% drop in a single day as the day was starting by Humana. And this also dragged down Centene as well – as well as other insurers with similar exposure. In fact, I believe Humana’s response made it worse, actually, given that the cut was due to “narrowly missing” higher cut points in the industry on a small number of measures.

Because if the margins for error are so small, what does that say for the company’s fundamental appeal?

So, is Centene an attractive company? Yes – and it also had a decent 2024 Q2, though it does have some work to do with some of its plans. But the risks I see here are significant, not as they are right now, but as I would see them over the next 5-10 years. And that’s where I am looking for a company like this one, without a dividend and with no real rating advantage.

Centene is not Humana. It has a different mix. 2Q24 is only the latest proof of that. I do not currently expect Centene to decline in earnings this year, nor next year or the year after that, 2026. But I do expect the growth, for all of these aforementioned trends, to be significantly less than the company was originally forecasted at. Perhaps even as low as 7-9% annualized EPS growth.

Why is this low for Centene, and what drives this valuation?

Centene – The valuation shows appeal, but we have to consider the worst scenario

First off and repeating, Centene is not Humana. This is not a company that has declined massively in earnings. At this time, it’s trading at $61/share, which represents a normalized P/E of just south of 9x based on its current estimated earnings. This is attractive, even with BBB- and no dividend, given the company’s growth rate even if that growth rate is halved, to 7.5% per year. The current estimated EPS growth rate is on average about 9% per year.

The fact that it does not pay a dividend makes it tricky. But using even the shortest-term and lowest average forecast multiple of 12x P/E, we find a 27.17% annualized upside or a total RoR of 70% until 2026 as well as an estimated share price of $103/share. And that is what I would consider the more conservative estimate.

Using 20-year averages, we find an annualized upside of nearly 50% or a total RoR of 140%. But because we are unlikely to see historical growth rates for healthcare here, I don’t think that this is valid.

Still, it wouldn’t be fair to not consider the fact that Centene 50% of the time beats estimates.

It is, therefore, in my estimate, a false equivalency to consider Centene impaired just because Humana and the sector is impaired. We do need to discount it for a lower growth rate, but that’s all we’ll do here. I’ll apply a fairly steep discount for the company to account for the risk I see here, but I view it as crucial that we do not engage in overreaction as to this company’s overall potential, its upside or downside, and what might happen.

For 3Q24, my expectation is for the company to perform in line with a full-year EPS growth estimate of 1-2%. Unlike other peers, which are set to drop over 30%, I do not forecast Centene will drop in earnings. Beyond that, the state of the industry is in flux and therefore hard to forecast. But generally speaking, and also because the company does not have the burden of a dividend (a burden in this context), I believe Centene will have an easier time outperforming and continuing to grow even in this environment – and this should, consequently, result in some upside and some positive trends.

I do not believe that Centene’s valuation reflects its earnings growth or stability trajectory. Centene is not Humana, and its path of earnings is better illustrated than talked about.

As you can see above, the company is being traded down, despite the estimate of continued growth and stability. It, in fact, reminds me quite a bit of the Teleperformance situation, which I have covered in other articles.

While I remain careful about these companies due to the aforementioned political challenges that I see in them, I do clearly see and state that Centene is undervalued here. The lowest valuation I can see myself moving to in PT is $70/share – any lower would be unfairly valuing the company’s equity, even with every risk in consideration.

Consequently, Centene receives a “Buy” recommendation with the following thesis for the 3Q24 period.

Thesis on Centene’s Common Shares

• Centene is a class-leading managed healthcare company in several key segments that aren’t going anywhere. It has proven, historically, that it can effectively allocate capital and outperform over time no matter the market. It is, however, BBB-rated and has no dividend – and losses or underperformance is a very real possibility if you don’t pay attention to valuation.
• For that reason, my conservative view on Centene is that it should not be bought above $83/share, and that’s where I put my PT.
• I played the company and the situation using options last time around and was able to sell those at an attractive profit. At this time, I do think it still warrants a “Buy” recommendation, but I am not interested in going in deeper at this time but may do so going forward

Here are my criteria and how the company fulfills them (italicized).

• This company is overall qualitative.
• This company is fundamentally safe/conservative & well-run.
• This company pays a well-covered dividend.
• This company is currently cheap.
• This company has a realistic upside based on earnings growth or multiple expansion/reversion.

The company fulfills 3 out of 3 quality indicators, and 1 out of 2 valuation indicators. Based on this, and a valuation target of $70/share where I see a risk/reward-adjusted upside that’s attractive enough for me, I give the company a “Buy” rating as of October 2024.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of TLPFY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

While this article may sound like financial advice, please observe that the author is not a CFA or in any way licensed to give financial advice. It may be structured as such, but it is not financial advice. Investors are required and expected to do their own due diligence and research prior to any investment. Short-term trading, options trading/investment and futures trading are potentially extremely risky investment styles. They generally are not appropriate for someone with limited capital, limited investment experience, or a lack of understanding for the necessary risk tolerance involved. I own the European/Scandinavian tickers (not the ADRs) of all European/Scandinavian companies listed in my articles. I own the Canadian tickers of all Canadian stocks I write about. Please note that investing in European/Non-US stocks comes with withholding tax risks specific to the company's domicile as well as your personal situation. Investors should always consult a tax professional as to the overall impact of dividend withholding taxes and ways to mitigate these.

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• Centene Corporation is a financially healthy company but is assessed a Hold opportunity for retail value investors due to political uncertainties about government healthcare programs and lack of a dividend.
• Despite a positive Q2 ’24 earnings report, Centene stock has exhibited high volatility and faces growth challenges.
• Risks for investors include reliance on government programs, potential regulatory changes, and limited growth opportunities in the healthcare sector.

Politics Creates the Unknown

Five months ago, we assessed Centene Corporation (NYSE: CNC) as a Buy opportunity. Centene is still a potentially moderate buy on dips in the share price now near its 52-week high of $81.42 each. Overall, we judge Centene stock as a Hold at this time for retail value investors for several reasons:

• The company has cash and equivalents to offset its debt and substantial free cash flow but pays no dividend.
• Shares have been volatile YTD following many months of low volatility.
• Congress talks about managed care companies like they are war profiteers, an enemy in the war against poverty, responsible for skyrocketing medical service costs and keeping Americans uninsured; lower reimbursement rates, price controls, and narrowing government services are on the political agenda.
• The political positions of the presidential candidates about Medicare’s future and managed healthcare leave us skittish about Centene at this time.

Centene’s stock price average of $71.12 outpaces the S&P 500 and the Relative Strength Index of $65.36 for one year. Centene is +21.48% over the last 12 months but at a slight +5.26% YTD. The share price was about $78 when our last article was posted in March, just about the same as where it closed the second week of August. The stock dived in June and July bottoming at $64.89 per share.

According to researchers at US Growth Equities, in April ’24, Medicare Advantage rates for services to seniors and paid to managed care companies were disappointing; next “medical costs have risen because of post-COVID normalization trends, as many older members seek elective medical procedures that were deferred during the pandemic.” Shares sunk this summer on comments from other CEOs about more procedures since the pandemic curtailed, older Americans are costing the system more money for services like knees and hips, and we foresee a shortage of doctors and nurses sparking higher wages and operating costs.

Profile

Centene is the largest managed healthcare provider in the four largest Medicaid states: California, Florida, New York, and Texas. Centene claims to serve the largest number of military families offering “doctor and hospital coverage, …prescription drug coverage, dental, hearing, vision, fitness memberships, and more. Wellcareoffers Medicare Advantage plans in 37 states as well as standalone Medicare Prescription Drug Plans (PDPs) to 6.4 million members across all 50 U.S. states and Washington, D.C.” State health insurance marketplace business continues to be a notable source of strength for Centene.

Q1 ’24 earnings announcement in April was accompanied by management’s guidance upgrade of the company’s FY ’24 EPS. The company beat EPS estimates by $0.18 and revenue by $4B. Premium and service revenue increased in the first quarter and membership in its Marketplace program jumped 41%. These numbers provided investors with a sense of momentum going into Q2 ’24.

In July, ’24, the company financials filed with the USSEC for Q2

• Adjusted quarterly net earnings were $1.28M up from $1.15M Y/Y.
• EPS was $2.42 compared to $2.10 in Q2 ’23 and $4.68 per share versus $4.21 for 6 months in 2024 and 2023, respectively. Earnings from operations of $1.22M in Q2 ’24 jumped from $1.17M for 3 months ending in 2024 over 2023.
• GAAP SG&A dropped in Q1 ’24 to $2.89M from $3.016M in the first quarter of 2023.
• Cash and equivalents and premium/trade receivables increased ($3.419M) since December ’23 ($3.272M). At the last report, Centene had $17.6B in cash and equivalents, ~$17B in receivables (up from ~$15.7B in December ’23), and long-term debt of $17.5B that is down from $18B in FY ’21.

Since 85% of Centene’s revenue source is from government-sponsored programs where growth can be stunted. In the 3 months ending in June, Q2 ’24 revenue increased a modest 3% from Q2 ’23. In our opinion, Medicaid and Medicare will continue to be the mainstays of America’s healthcare payment system for the poor, the working poor, and seniors, for reasons we describe in our book, Healthcare Insights: Better Care, Better Business.

Centene reported in its Q2 ’24 announcement that its cash flow from operations for the first 6 months of 2024 was down to $1.719M versus $6.815M in the 6 months ending June 30, ’23. It is our opinion that the downturn was driven by poor numbers in premium and trade receivables, accounts payable, and accrued expenses.

This can turn into a trend with states covering illegal immigrants under Medicaid and states “expanding Medicaid coverage to adults with incomes up to 138 percent of the poverty level (about $20,780 annually for an individual or $35,630 for a family of three). States that have adopted the expansion have dramatically lowered their uninsured rates,” according to the Center on Budget and Policy Priorities. Centene’s CEO seems aware and told shareholders about developing a timely response to the

unprecedented scale and has driven a similarly unprecedented membership shift that we knew would require the rebalancing of rates to account for the acuity of the members we continue to serve on behalf of our state partners.

Mixed Reviews

From late 2023 through June, Seeking Alpha rated Centene stock a Buy to Strong Buy opportunity. Since then, the Quant Rating assessment has leaned from Hold toward Sell despite Seeking Alpha’s Factor Grade report still giving high marks for all factors except growth.

Wall Street analysts are evenly divided between a Hold rating and acquiring shares at the current price. Centen’s Levered/Unlevered Beta is a high-side 0.85 for volatility but short interest is less than 2%. Neither metric appears to affect the stock’s price performance; its momentum ticked up from B- to B over 6 months, and its one-year price performance rates a B+ grade when comparing Centene (21.48%) to the healthcare sector median of -11.32%.

A great opportunity for managed care growth is for the company to focus on marketing on the expanding numbers of 1099 workers. 45% of the workforce or +72M workers are independent contractors. 29% are Gen X, 33% are millennials most likely with families to cover, and 19% are Gen Z. Health and dental coverage are rarely part of the benefit package for 1099 workers leaving them to navigate a complex system usually on their own.

Valuation

Based on the estimated 2024 earnings forecast by a consensus of analysts of $6.75 to $6.84 times the PE of 11.42, Centene stock is selling at a fair value of over $78 per share. By nearly every metric Centene beats the healthcare sector metric medians. The stock is moderately undervalued and can, with high momentum underpinning the stock, move to an average target price of $85 during the remainder of this year. One analyst has a target price of $92 expecting the company to maintain its healthy margins and positive guidance from management for the full year. The company reported excellent profits in Q2 ’24, as well. Though the gross profit margin is a low 15.45% garnering a D Factor Grade versus the sector median of gross profit of $57.55%, all other metrics beat the sector medians: EBIT margin, EBITDA, and net income. But compared to peers, the Centene valuation has room for improvement:

Risks

Risks facing retail investors include owning a stock that exhibited high volatility lately; the Beta is up from 0.47 over 24 months to 0.85 currently. Lacking a dividend when competitors pay makes Centene appear too conservative. Most of Centene’s competitors pay dividends, though the managed care industry is notorious for low payout ratios and yields. A company that reported a second-quarter profit of $1.1B and nearly $40B in revenue can afford to pay its retail investors a dividend. That move will spark a pop in the share price.

Another risk is the F-assigned Centene for growth. The lack of growth in an industry where 27M Americans do not have coverage seems inexplicable. Revenue growth at Centene has been below average, fails for EBITDA growth, EPS FWD, Free Cash Flow per share growth, and operating cash flow growth, and falls below the sector median of -16.97% for CAPEX growth at -24.35% Y/Y. These numbers are bound to be hit by the recent announcement, “Centene will exit the Medicare Advantage market in at least six states in 2025… These states account for about 3% of Centene’s (Wellcare) Medicare Advantage membership.” Susan Morse, editor, of Healthcare Finance, surmises that “higher patient acuity and utilization of services” with inadequate Medicare reimbursement may account for the decision.

Other risks facing Centene investors are its reliance on government-sponsored programs and the vagaries of political whim that undergird them. At times, the company’s operational costs can exceed reimbursements hurting cash flow, eating away at profit margins, and requiring internal cost-cutting to reduce efficiencies. Last year’s EPS for Q3 ’23 was $2; our estimated EPS this year is about $1.63 to $1.65 which will be announced tentatively on October 25, ’24. The company has consecutively beaten the estimated EPS for the last 9 quarters. Over 99% of the outstanding common shares are owned by institutions.

Takeaway

Centene Corporation is on sound financial footing at present. Acquiring shares modestly at lower prices in dips can be a wise move but overall our judgment is to rate the stock a Hold opportunity. Growth opportunities are limited as the focus is on government healthcare sector programs. Centene’s insiders have been selling their shares this year when the price generally topped $75 per share. They have sold $67,000 worth in the last 3 months. At the close of 2023, 50 hedge funds owned shares but only 49 owned Centene at the end of Q2 24.

The primary concerns that force us to take this conservative position on Centene are the lack of dividends and the company’s reliance on government reimbursements that might degrade with an activist Congress or push by the Executive branch to re-writ regulations to cut the federal budget deficit; rising administrative costs from increasing patient use and skilled services an older population requires can dampen profitability and margins.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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• Centene has a 10-year price return of 313.77%, almost double the 179.34% price return of the S&P 500.
• The company is strategically positioned in the market, and the current favorable trends serve as major growth levers.
• The stock is undervalued, making it a decent buy.

Investment Thesis

I am bullish on Centene Corporation (NYSE:CNC) due to its market position and competitive advantage. I have a buy rating for this stock owing to its robust financials, favorable industry trends, and growth levers. Centene has positioned itself as a managed care market leader, focusing on the underinsured and uninsured. Furthermore, with a market capitalization of $41.09 billion and a revenue stream of $144.06 billion over the previous twelve months, its financial health is strong, with revenue expanding steadily throughout the past decade. Over the last 10, it has had a price return of 313.77% almost double the 179.34% price return of the S&P 500 making this stock a compelling investment.

Above all, this stock is undervalued, which makes it a decent entry point for potential investors. In addition, from a technical point of view, the stock has moved above the 50-day and 100-day moving average, an indication of a bullish momentum. Notably, the 50-day MA has crossed above the 100-dy MA from the golden cross, which is a solid bullish trajectory signal. The RSI is also at 58.6 implying that the stock has ample space before hitting the overbought region of 70 where the upside will be limited.

Brief Company Overview

Centene, founded in 1984, has experienced considerable development through strategic acquisitions and organic expansion. Managed Care and Specialty Services are the company’s two primary business segments. Individuals in the Managed Care segment receive health plan coverage through government-subsidized programs such as Medicaid, Medicare, and the Health Insurance Marketplace. The Specialty Services business provides a wide range of healthcare solutions, including behavioral health, pharmaceutical benefit management, and telehealth services.

Financials

While financial health is an important aspect when making investment decisions, CNC has maintained a steady and strong financial position. To begin with, over the last decade, the company’s revenue has grown significantly. Its revenue grew from $15.69 billion in 2014 to more than $141 billion in 2023, showing a CAGR of about 20%. This solid growth appears to continue even in the MRQ, with revenue growing by 5.92% in Q2 2024 to $39.84 billion.

Its profitability indicators are very appealing, particularly when compared to other companies. Although the margins are primarily one-digit percentages, I believe they are respectable given the managed care market’s low margins and the fact that the majority of them are significantly higher than the industry median, resulting in a profitability grade of “A” for the company. Furthermore, Centene has continuously produced positive free cash flow, which is critical for funding future growth initiatives and returning value to shareholders.

The reason behind the company’s strong financial performance is majorly its membership growth and acquisitions. For instance, its total membership increased from 27.06 million in 2022 to 27.47 million in 2023.

Most recently, their consolidated HBR was 87.6% for the second quarter and 87.3% year to date. This puts them on track to meet the high end of their previous full-year forecast range of around 87.9%.

Moving to the balance sheet, CNC has a very solid financial footing. With a total debt of $17.63 billion and total cash of $20.21 billion, the company has net cash of $2.58 billion, which not only shows its impressive liquidity but a much deleveraged balance sheet. Most interestingly, with a total equity of $27.46 billion, the debt-to-equity ratio stands at 0.64 which is very low, signifying a very low debt risk. Above all, its interest coverage stands at a whopping 8.8x, demonstrating the company’s ability to meet its debt obligations.

This strong balance sheet not only boosts investor trust, but also gives the company operational freedom to make strategic investments, explore growth opportunities, and weather economic downturns. Its substantial liquidity is very reassuring because it indicates that the company will easily meet its short-term obligations and continue to operate smoothly. Most importantly, I believe a healthy balance sheet fosters trust among stakeholders such as customers, employees, supporters, and suppliers, which is critical for long-term success.

Overall, the company has a strong financial position and effective management techniques, as evidenced by its expanding client base, and the health benefits ratio has stayed stable at 87.7%. A constant health benefits ratio suggests that medical costs are under control relative to premiums, which could lead to long-term growth and stability. These aspects, in my opinion, provide grounds to be optimistic about the company’s current prospects.

Market Position And Growth Drivers

Centene’s strategy focus on managed care makes it a countercyclical investment. It profits from economic downturns by increasing enrollment in Medicaid and individual exchange products. Its unique positioning enables it to expand its customer base across economic cycles. It is the largest Medicaid-managed care organization in the United States, with more than 27 million members. Its wide network and considerable experience executing government-sponsored projects provide it with a significant competitive advantage. Its portfolio’s diversity of services helps to reduce the risks that come with depending just on one source of income.

Given this strategic market positioning, the company has several growth levers that, I believe, will keep fueling its long-term growth. To begin with, is the aging population. The aging population in the United States is a key growth driver for Centene. As the baby boomer population ages, demand for Medicare and other healthcare services is likely to increase, resulting in a continual inflow of potential new members for its plans. It is anticipated that there will be 47% more Americans aged 65 and over by 2050-from 58 million in 2022 to 82 million-and that their proportion of the overall population will climb from 17% to 23%. This explains why the US managed care market is expected to increase at a CAGR of 6.09% from 2024 to 2028 when it is projected to reach $4.37 trillion.

The second lever is government healthcare programs. Policy changes and rising enrollment are driving the expansion of programs like Medicaid and Medicare Advantage. Due to its experience running these initiatives, Centene is well-positioned to profit from this trend. Three examples of these policy changes are;

• Accessibility and Behavioral Health: The Centers for Medicare & Medicaid Services [CMS] under the Biden-Harris Administration has established plans to increase access to behavioral health care and improve healthcare coverage for millions of Americans by 2024. One aspect of this is streamlining the selection and enrollment procedures for health plans.
• Special Enrollment Periods: For those who are no longer eligible for Medicaid or the Children’s Health Insurance Plan [CHIP], a new special enrollment period [SEP] was established. This gives customers the option to choose a Marketplace plan 60 days in advance or 90 days following the loss of Medicaid or CHIP coverage.
• Medicare Advantage and Part D Protections: Policies have been finalized to strengthen protections for Medicare Advantage and Medicare Part D beneficiaries. These policies encourage healthy competition while protecting enrollees from inappropriate marketing and prior authorization activities.

With these developments, it appears that this is a significant tailwind. For fiscal year 2023, the corporation reported $140 billion in premium and service income, indicating that government contracts are a key source of revenue for them.

Besides its diversified portfolio and acquisitions, CNC is better positioned to leverage these tailwinds. I think so because of several reasons. For example, its ability to attract and retain new members. The company’s membership has grown significantly, particularly in the Marketplace, with a 34% rise in Q2 2024 over the second quarter of 2023. This expansion demonstrates its capacity to attract and retain members, which is critical for capitalizing on industry trends.

Secondly is enhanced reputation. Centene has garnered several accolades, including rankings on the Fortune 500 and Forbes Global 2000 lists, which boosts its reputation and positions it positively in the sector.

These aspects, together with the company’s expertise in administering government-sponsored programs and specialty services, allow it to effectively capitalize on market trends and government healthcare initiatives for future growth and success.

Bright Outlook

Centene is still seen favorably by 15 Wall Street analysts, who have a consensus price target of $85.14, which would mean a possible gain of 9% over the stock’s current value in the next 12 months.

To further strengthen its position in the market, the company has surpassed earnings projections and raised forecasts on rising premiums and memberships.

To solidify its bright outlook are its 11 upward revenue revisions with zero downward revisions.

Valuation

From a relative valuation metrics, CNC is undervalued, offering a decent entry point. To begin with, its trailing PE is 14.85 which is a 57.37% discount to the sector median of 34.84. Further, its trailing PS of 0.29 is 92.33% lower than the sector median of 3.78. This implies that this stock is undervalued based on its earnings and sales. This is the phenomenon with nearly all other relative metrics, implying that this stock is indeed undervalued from all spheres.

With this apparent undervaluation, I projected the price target for this stock over the next 5 years which will be the basis of my investment decision. Using the forward PE of $13.12 and the projected EPS of $10.42 by 2028, I arrived at a price target of $136.7 by 2028. This translates to an upside potential of about 75% over the next 5 years, which, I believe, are good returns.

Risks

Investing in this stock has its share of risks, just like any other investment. The primary risk of investing in Centene is its reliance on government-sponsored initiatives. Its business strategy is heavily reliant on contracts with Medicaid, Medicare, and other healthcare programs. This reliance exposes the company to regulatory and political changes that could affect finance and profitability.

Conclusion

CNC has a solid financial foundation, a strategic market position, and a promising growth trajectory. Its recent performance and analyst consensus indicate that it is an attractive investment choice for those wishing to diversify into the healthcare sector.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

The post Centene Corporation: Strategic Market Position Amid Favorable Trends, Buy appeared first on Up2info.com.

• Centene Corporation is a successful company in the government-sponsored healthcare sector, experiencing revenue and profit growth.
• The company’s Medicaid segment generates the most revenue, followed by Medicare and the Commercial segment.
• While some parts of the business have seen declines, the growth aspects of the company have robust profit margins and show promising growth potential.

In many respects, health care in this country is broken. It is not only overly costly, it also is terribly complex, with many different types of coverage. In this chaos, a number of companies have found ways to make a great deal of money. And one of the most successful firms in this space is Centene Corporation (NYSE:CNC), a business that is primarily focused on providing government sponsored health care to its clients. While this may not seem like all that exciting a space to be in, largely because of the lack of innovation that many might perceive to exist, the fact of the matter is that Centene is going through a rather interesting transformation at this point in time.

Revenue, profits, and cash flows, are all rising nicely. But when you dig deeper, you see that certain parts of the company are shrinking, while others are growing at a rapid pace. The parts of the business that have seen declines are the parts that generate the smallest profit margins for shareholders. Meanwhile, the growth aspects of the company generate rather robust margins that continue to grow year after year. Add on top of this how cheap shares are, not only on an absolute basis, but also relative to similar enterprises, and it is difficult not to like what I see. At the end of the day, I have decided to rate this business a solid ‘buy’. And frankly, it wouldn’t take much for me to upgrade it further to a ‘strong buy’.

A transforming enterprise

With a market capitalization as of this writing of $38.20 billion, Centene is a giant in the healthcare market. It’s a far cry from some of the other firms out there in terms of size. But it is large enough to dwarf most other firms. Operationally speaking, the company has three primary lines of business. Its largest segment is the Medicaid segment. As its name suggests, this is the part of the company responsible for providing all sorts of Medicaid plans to its customers. Using data from 2023, this part of the company was responsible for $100.76 billion in revenue. That’s up soundly from the $84.14 billion generated one year earlier.

Next in line, we have the Medicare segment. This includes various initiatives such as Medicare Advantage, Medicare Supplement, Dual Eligible Special Needs Plans, and Medicare Prescription Drug Plans. Using data from the 2023 fiscal year, this part of the business was responsible for $22.26 billion worth of revenue. That’s up from the $17.51 billion generated in 2021. We also have the Commercial segment. This is the part of the company that includes its Health Insurance Marketplace products, as well as individual, small group, and large group commercial health insurance plans. This part of the company was responsible for $24.85 billion of sales last year. That’s an increase of 46.5% compared to the $16.96 billion generated one year earlier. There is a fourth segment just known as ‘Other’ that includes the company’s pharmacy operations, vision and dental services, clinical healthcare, and a wide variety of other lines of business. But this was responsible for only about 4% of the firm’s revenue in 2023. So for all intents and purposes, we won’t really be focused on this part of the firm.

As a whole, revenue for the company has been on the rise in recent years. From 2021 to 2023, revenue grew by 22.2%, or 10.6% per annum, from $125.98 billion to $154 billion. This increase was driven by a couple of factors and came in spite of certain asset sales that the company completed. For starters, it ended 2023 with 27.47 million members on its books. This is up 6.4% from the 25.81 million that the company had just two years earlier. In addition to this, the amount that the firm is able to charge for its services also grew. Management cited higher Medicaid premium tax revenue, net rate increases, the launch of new plans in some states, and other initiatives, as key reasons behind this side of growth.

While revenue for all three core segments grew during this window of time, there was a decline in some parts of the firm. For instance, in 2022, the number of Medicaid members on the company’s roster peaked at 15.97 million. By the end of 2023, this number had fallen to 14.47 million. And as of the end of the first quarter of 2024, there was a further decline to 13.30 million. To be clear, this was not part of some strategy that the company implemented. The fact of the matter is that, due to the COVID-19 pandemic, a public health emergency was declared. With the declaration of this ending, as well as the subsequent expiration of what management calls eligibility determination waivers, management expects a decline in the number of Medicaid recipients.

This is not the only weak spot that the company has seen. Its TRICARE eligible members, which includes not only active duty service members in the US armed forces and their families, but also members of the National Guard/Reserve, and retired service members and their families, have been declining in recent years. The company went from having 2.87 million such members at the end of 2021 to having 2.77 million members by the first quarter of 2024. As painful as this is to see, there has been some really impressive growth elsewhere. The Medicare side of the business has exploded. After growing from 5.32 million members in 2021 to 5.90 million members last year, there was a further increase to 7.59 million in the first quarter of 2024.

According to management, this surge was driven at least in part by a strong bid position for the company that helped to push its Medicare Prescription Drug Plan membership up by roughly 44% year over year. Although not as impressive, the Commercial segment for the company has also been on the rise. Membership initially fell from 2.60 million in 2021 to 2.52 million in 2022. But in 2023, it soared by 71.9% to 4.33 million. And in the first quarter of 2024, there was a further increase of 10.3% to 4.77 million. An expanded footprint that includes 29 states for the Health Insurance Marketplace, as well as what management describes as ‘strong product positioning’ can be attributed for a good portion of this growth.

As I mentioned already, revenue for all parts of the company continues to grow. But not all growth is the same. In 2023, for instance, the gross profit margin associated with Medicaid was only 8.6%. This was actually down from 10.7% back in 2021. Over that same window of time, Medicare gross margin remained more or less flat at about 12.9%. However, for the Commercial segment, the gross profit margin was a hefty 20.2% last year. But what’s really impressive is how margins for that segment have grown so far this year. In the first quarter of 2024, the gross profit margin for the Commercial segment came in at 36.5%. That’s well above the 31.1% reported the same time one year earlier. If we accept management’s explanation, this rise can be chalked up to not only a 41% surge in membership growth for the Health Insurance Marketplace, but also to improved product design and execution strategies.

With revenue growing, profits and cash flows for the company have also been on the rise. Over the past three years, net profits have gone from $1.35 billion to $2.70 billion. Even on an adjusted basis, we have seen a rise from $3.04 billion to $3.65 billion. Operating cash flow has nearly doubled from $4.21 billion to $8.05 billion. But on an adjusted basis, it expanded from $2.69 billion to $4.68 billion. Meanwhile, EBITDA has moved up only slightly from $5.41 billion to $6.08 billion. As the chart above illustrates, results for the first quarter of 2024 also came in largely better than with the company experienced in the first quarter of the 2023 fiscal year. Although operating cash flow worsened during this window of time, all other profitability metrics showed growth.

This kind of top line and bottom line expansion, particularly in such a competitive and developed market, is great to see. You would expect a company like this to trade at lofty multiples. But that’s not the case. For the 2024 fiscal year, management anticipates revenue of between $147.5 billion and $150.5 billion. Even at the high end, that would be down from the $154 billion generated last year. However, they expect earnings per share greater than $5.94 and adjusted earnings per share greater than $6.80. If we go just one cent higher for both of these, this would translate to net profits of $3.12 billion and adjusted profits of $3.57 billion. Although net profits are higher than the $2.70 billion reported last year, adjusted profits are down slightly from the $3.65 billion reported. On the other hand, if we annualize growth seen in the first quarter of this year, we would expect adjusted operating cash flow of about $5.57 billion and EBITDA totaling $6.26 billion.

With these figures, we can value the company as shown in the chart above. I also priced the company using data from 2023. In two out of three ways, shares do get cheaper on a forward basis. I then took the price to operating cash flow approach and the EV to EBITDA approach for the company and compared it to five similar firms. This can be seen in the table below. Even using the 2023 figures where shares of Centene are more expensive than if we use the forward estimates, it ended up being cheaper than any of the five firms using each of the two valuation metrics.

Click to enlarge

Takeaway

Fundamentally speaking, Centene strikes me as an interesting company. There happen to be some weak spots for the firm, but the good overwhelmingly exceeds the bad. Cash flows look robust and shares are trading at very attractive levels. Obviously, there is always political risk. Cuts to Medicare or Medicaid, for instance, could hurt shareholders, potentially to a significant degree. But as things stand, I would argue that the company makes for a compelling opportunity and that shares definitely warrant a solid ‘buy’ rating.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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The post Centene Corporation: A Great Business At A Great Price appeared first on Up2info.com.

• Centene Corporation is a managed health insurance services provider and an American success story.
• The company is a leading Medicaid-managed care corporation servicing millions of low-income individuals across all 50 states.
• Centene’s market cap has grown to $42 billion, and its valuation metrics suggest potential for long-term growth and profitability.

My father used to tell me that success demands you have 75% common sense, 15% smarts to build on the momentum you create from your efforts, and 10% good luck. Managed health insurance services provider Centene Corporation (NYSE:CNC); appears to enjoy all three ingredients. The company is a true American success story worthy of our Buy rating as an investment opportunity.

Profile

The histories of Centene Corp and Medicaid are intertwined. Until 1965, veterans and the poor received limited government help paying medical and healthcare bills. There was the G. I. Bill. Public hospitals are supported by cities, and states, with supplements of federal dollars under the relatively new Social Security Act improved access. Until the 1960s, privately purchased insurance covered the self-employed. Employers started including healthcare coverage as a benefit, and it became an integral stipulation of union contracts.

In 1960, the Kerr-Mills Act established a new federal program to cover the costs of medical care for the elderly and the income-deficient. 5 years on, a mishmash of programs merged into Medicaid and Medicare to include families with children and disabilities; the publicly supported programs grew, like the U. S. Maternal and Child Health Care Clinics and WIC for pregnant women and children when I was a consultant to the U. S. Surgeon General in the 1970s.

Adding to the puzzle parts of medical care programs operating at all levels of government came along the Affordable Care Act passed in 2010. A century later, industry lobbyists and political ideologues still oppose government spending, management, and oversight of medical care. Others with a capitalist spirit saw the growing industry as an opportunity to bring care to the needy and profit for their companies and investors.

Elizabeth Brinn of Milwaukee, Wisconsin, is a victim of the Matilda Effect. She founded Managed Health Services as an NGO in 1984 after growing up in a children’s home. Within a short time, the corporate structure was changed to a publicly traded corporation delivering 3 main products – Medicaid, Medicare, and the Health Insurance Marketplace – to persons of lower income in all 50 states. The company fully supports Elizabeth’s original mission through its Centene Foundation.

Centene is the nation’s largest Medicaid-managed care corporation. Its products and services directly address the needs of governments and special populations; it claims to be “the number one carrier in the nation on the Health Insurance Marketplace.”

• Medicaid–We partner with state governments to provide health coverage to millions of eligible low-income adults, children and pregnant women.
• Medicare–Our Medicare Advantage and Medicare-Medicaid plans provide access to personal, local care, and promote health and independence.
• Health Insurance Marketplace–We provide affordable, comprehensive plans for individuals and families who may not qualify for Medicaid or other government coverage.
• Military & Veterans–Our Federal Services division provides high-quality, cost-effective managed healthcare programs and behavioral health services to public sector employees and beneficiaries.

27.5M clients are enrolled in Centene managed care programs; that is 1-in-15 across all 50 states as of the end of 2023. The growth in the federal government’s spending on these 4 program areas, we expect, will bode well for Centene over the next two years.

Industry Growth

Medicaid’s enrollment as of April 2023 totaled 94.5M. That represents an increase of 23M (32%) from 2019. Medicaid enrollment has annually grown on average 6.5% to 8.4%. Medicaid renewal rates run about 34% on average. Medicaid and Medicare are the primary financing and access portals for medical care for 20% of low-income Americans. It is the major source of care for racial minorities, claims KKF, an independent source we respect for health policy, research, and news.

Medicaid is a major source of coverage for births, Black, Hispanic, American Indian or Alaska Native and Native Hawaiian or Other Pacific Islander populations, some lawfully present immigrants, low-income children, working-age people with disabilities, and people needing long-term services and supports.

KFF shows the change in spending and enrollment; forecasts bode well for Centene:

Likewise, federal spending on veteran medical care is raised under the new budget agreement:

Valuation

Centene’s last earnings report was released on February 6. The next earnings report will be announced on April 26, ’24. Highlights from the last report include:

• FY ’23 diluted EPS of $4.95 compared to its adjusted EPS of $6.68, or +15% from $5.78 in FY ’22.
• 2023 health benefits ratio of 87.7%, consistent with 2022.
• It executed a $1.6B buyback of shares in 2023.
• Sold Circle Health and Operose Health.
• Centene total enrollment growth was modest to 27.47M in ’23 versus 27.06M Y/Y with enrollment in Medicaid decreasing but Commercial and Medicare enrollment up.
• Centene increased 2024 premium and service revenue guidance by $2.5B.

The company’s market cap has grown to $42B. The downturn in Medicaid enrollment doesn’t surprise us with the nation’s unemployment rate dropping below the threshold of 4%; more individuals and families moved from aid to work becoming income ineligible. The growth in enrollment in SSI which offers better benefits than Medicaid and Medicare attracts big numbers away from other government programs; being self-administered, SSI might be a competitor for companies like Centene.

Shares sell today near their 52-week high by recognizing Centene will experience long-term growth and profitability making it a Strong Buy opportunity for investors. Share price performance in our opinion will continue outstripping the average momentum of the healthcare sector median because the customer base is potentially ~350M Americans and their demand for national healthcare insurance continues to grow. 43% of American adults are not adequately covered and costs keep rising.

Currently, the Seeking Alpha Factor Grades are excellent. This includes Valuation even after the stock price climbed 48.6% over 5 years, 24.33% over the last 12 months, and 5.75% YTD and is closing the third week in March ’24 about 3.5% from its 52-week high.

Centene’s valuation metrics substantially beat the healthcare sector’ medians suggesting there is room for the average target share price to rise to about $90 per share in 2024. With a PE at 11.6 x $6.65 EPS, the stock sells at a fair value; $81 will be a fair value if the high estimate EPS consensus among analysts of $6.87 is met.

Half of the analysts at S A rate the stock a Buy to Strong Buy, and the other half assess Centene at Hold. We conclude the high grade for Centene’s Momentum is undergirded by ratings of Buy and Strong Buys for its peers. The state of the industry is healthy and prosperous.

Briefly, total cash to total debt is a wash. Free cash flow per share was reported be $13.35 in February’s report. Cash from operations topped $8B. The levered/unlevered Beta is a mere 0.54.

S A’s Quant Rating has its assessment at a full-blown Strong Buy:

Risks

The few risks we foresee for Centene investors is first to stabilize the gross profit margin and raise it from 9.28% at the end of FY ’23 to +15% as it has hit during some quarters. The sector median gross profit is 56.8%. Net income was a hearty $2.7B, or about 1.9% versus -4.63% for the sector median. Throughout 2023, insider buying was strong but insiders began selling shares in greater numbers beginning in September ’23 when the share price rose from $61 to $78 each. Insiders sold $1.7M in the last 3 months. Hedge funds also sold 128.3K shares in the last quarter.

Three extrinsic events make us uneasy about the Strong Buy rating, at this time. First, a study from the World Economic Forum reports that “education is a critical component to driving uptake in adoption of health insurance amongst young people.” The growing diversity of the population who can education less-afford higher education and the concomitant high dropout rate from high schools puts a damper on the high growth Centene and others experienced the last few years.

Second, the insurance industry faces a digital transformation; we do not see it talked about on the company website nor hear about it as a challenge from management.

Third is the political challenge managed care companies face. S A just reported on President Biden issuing a slew of Executive Orders clamping down on junk health insurance plans. Centene ought to initiate a self-evaluation study and release it shareholders to calm investor skittishness that can develop if his administration pursues this tactic pre or post-November. Candidate Trump still pursues dispensing the Affordable Care Act, cuts, and following up on changes to Medicaid that can undercut Centene.

Foresight

We are bullish on Centene Corporation believing it is well-positioned to grow and for the share price to move-up. We agree and appreciate the visualization from Infront Analytics of our characterization:

Paying a dividend can be more attractive to retail value investors than adding $4B to the company’s stock buyback program. Insider selling and other risks make us more damper our enthusiasm and self-assurance that the stock is worth a Strong Buy, so we will assess the stock a Buy opportunity, at this time.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

The post Centene Corporation Still An Opportunity With An A-Grade Valuation appeared first on Up2info.com.

• Centene is a leading healthcare enterprise specializing in managed care services.
• Healthcare stocks are currently undervalued compared to other sectors, presenting a buying opportunity.
• Valuation suggests the company’s shares are considerably undervalued.

Investment Thesis

With increasing economic uncertainty and an inverted yield curve, the attractiveness of defensive low-beta stocks such as Centene (NYSE:CNC) has only grown. After a prolonged period of sideways trend, an upward trend is hence likely to follow.

Corporate profile

Centene Corporation is a leading healthcare enterprise based in the United States, specializing in managed care services. Founded in 1984, the company has grown into a Fortune 500 organization and a key player in the healthcare industry. Centene focuses on providing high-quality, accessible healthcare solutions to individuals and families, particularly those covered by government-sponsored programs such as Medicaid, Medicare, and the Health Insurance Marketplace. Centene’s corporate mission centers around improving the health and well-being of its members, emphasizing preventive care and innovative healthcare solutions.

Relative healthcare sector undervaluation

In the broader market context, healthcare stocks now seem inexpensive compared to other sectors. Over the last 30 years, the healthcare sector has been in an upward channel, with peaks and bottoms in certain years. And 2024 appears to be the year when healthcare stocks are historically cheap relative to the S&P 500. Moreover, some sub-indices within the healthcare sector are trading at even more depressed levels. For example, the Nasdaq Biotechnology index, which includes larger and established businesses, currently has a price-to-sales multiple of approximately 5.5 times, down from nearly 13 times at the last peak in 2015. Sentiment and cyclicality can be seen as factors behind this undervaluation, as investors have favored predominantly tech stocks in recent years and there have not been many new developments driving the healthcare sector to the forefront. One can notice that healthcare got pricier, especially during post-correction, recessionary environments, which have not occurred frequently in the recent past.

Key insights from the latest quarterly earnings call

Reading through the latest quarterly earnings call transcript, the management sounded very optimistic about the business’s performance in the recent period and improved outlook for the whole year:

We are pleased with the performance of the company in the first three quarters of the year and are increasing our outlook to at least $6.60 of adjusted EPS for 2023. As Sarah mentioned, this puts us at greater than 14% adjusted EPS growth in 2023 after posting 12% in 2022, two pretty good years. – Drew Asher – Chief Financial Officer

The CEO of the company also talked about operational improvements stemming from workflow automation and new technology introductions:

For the initial installations of our new telephony system, we are now layering on additional features that are driving month-over-month improvement in cell service. And over the last few months within our now centralized utilization management teams, we have been focused on reducing provider abrasion by expanding the use of our proprietary tool CATA, which automates the approval of authorizations for clinically appropriate procedures using AI technology we developed in collaboration with Apixio. – Sarah M. London – Chief Executive Officer

Financial analysis

From the financial statements perspective, Centene maintains a sustainable level of debt, which positively contributes to profitability (ROE of ~10%). The company also has sufficient liquidity levels, with a current ratio just above 1.

Valuation

Through the lenses of F.A.S.T. Graphs forecasting calculator, the company’s growth outlook appears bullish. Should the company’s shares trade at price-earnings multiple of 15x in five years from now and Centene’s operating earnings expand at an annualized growth rate of around 12 percent, the shares’ fair price implies as much as 17 percent annualized upside potential.

DCF analysis

Plugging in Centene’s financial statement figures into my DCF template, the company’s shares show to be considerably undervalued. Under the perpetuity growth method with a terminal growth rate of 2 percent, 24 percent annual revenue growth over the next five years and stable operating income margin of 2.9 percent assumption, the model’s estimate of the intrinsic value of the stock comes at 253 USD. Under the EBITDA multiple approach of a discounted cash flow model, the intrinsic value per share of the company stands roughly at 150 USD if we assume that the appropriate exit EV/EBITDA multiple in five years’ time is around 10x.

Key risks

Investing in Centene shares, like any other investment, comes with its set of risks that potential investors should carefully consider. One key risk is the company’s sensitivity to changes in healthcare policy and regulations. Centene operates in the managed care sector, and any alterations to government healthcare programs or policies can significantly impact its revenue and profitability. Additionally, the healthcare industry is subject to rapid and unpredictable changes, including advancements in medical technology, drug pricing fluctuations, and demographic shifts. Centene’s business model heavily relies on government-sponsored healthcare programs, making it vulnerable to political and budgetary decisions that may affect its contracts and reimbursement rates. Furthermore, competition within the healthcare sector is intense, and any failure to adapt to evolving market dynamics or effectively manage costs could pose challenges for Centene’s financial performance. Lastly, for the company’s shareholders, there is also a risk of equity dilution, which has already occurred several times in the past.

The bottom line

To sum up, Centene is an outstanding healthcare company with very attractive valuations and long-term prospects. With imminent economic uncertainty, it is wise to stay cautious and aware of possible risks for equity portfolios. High-beta stocks may currently not be the best choice, as lower entry points might emerge after economic risks clear out.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: Please note that this article has an informative purpose, expresses its author's opinion, and does not constitute investment recommendation or advice. The author does not know individual investor's circumstances, portfolio constraints, etc. Readers are expected to do their own analysis prior to making any investment decisions.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

The post Centene: Stay Defensive Amid Economic Uncertainty With This Low-Beta Bargain appeared first on Up2info.com.

• Centene beat Q3 earnings expectations, with revenue reaching $38.04 billion and membership growth expanding to over 3.6 million members.
• The company has consistently performed well, generating $150 billion in annual sales and trading at a discount to peers.
• The company continues to hold a steady market share and compounds steadily, which could lead to more upside in the future.

Centene Corporation (NYSE:CNC) fits the archetype of a seemingly boring value stock, often overlooked in favor of larger healthcare providers like UnitedHealth (UNH). Operating in the healthcare sector, Centene specializes in managed care services, offering health insurance plans to government-sponsored programs such as Medicaid, Medicare, and the Health Insurance Marketplace. Its mature business model may lack the flashy allure of high-growth industries, but it has demonstrated resilience and steady growth.

Despite residing in the shadows of industry giants, Centene has quietly delivered consistent performance, as evidenced by its latest earnings report. After all, the healthcare giant is on track to generate $150 billion in annual sales, while trading at a discount to peers.

Earnings Snapshot

Centene beat Q3 earnings on the top and bottom line, with Non-GAAP EPS at $2.00, surpassing expectations by $0.46. The company’s revenue reached $38.04 billion, exceeding estimates by $1.91 billion, marking a 6.0% year-over-year increase. Centene also raised its 2023 full-year adjusted diluted EPS guidance by $0.15 to a minimum of $6.60, compared to the consensus estimate of $6.50.

In terms of membership growth, Centene’s Marketplace has expanded to over 3.6 million members as of September 30, 2023, a significant rise from the 2.1 million members reported a year earlier. Overall, total memberships grew by roughly 1.2 million from last year, representing 4.5% growth. The company remains committed to effective cash flow management, evident in its execution of $773 million in share repurchases during Q3 2023 and year-to-date repurchases totaling $1.6 billion.

Solid Valuation

Over the past few decades, Centene has recorded consistent revenue and earnings growth although the sources of this growth have partially been linked to aggressive acquisitions. While these acquisitions have boosted revenue and market share growth, they incur complexity in forecasting future growth. As mentioned in the latest earnings call, Centene has initiated the repurchase of its outstanding shares, a move that may suggest the company is entering a maturation phase. It could also signal that management believes shares are currently attractively valued at just 10 times P/E and part of its strategy to return capital to shareholders.

As Centene’s revenue continued to climb over the past few years and its share price traded sideways, its valuation deflated. Part of this is probably because the market expects lower growth going forward at $150 billion in annual sales, growing revenues at a CAGR of 5%. This compares to its past growth of well above 10% annually over the past two decades. However, Centene also beat revenue estimates by $1.9 billion last quarter or 5%, demonstrating that the market may be underestimating Centene’s revenue and market share growth going forward. After all, part of its low valuation is tied to its loss of market share in the Medicaid and Medicare market segments. As a result, the business announced earlier this year, that it would lay off 3% of its workforce.

Despite the negative sentiment compared to market leader UnitedHealth, I believe Centene’s valuation is too low compared to competitors, despite holding the lowest profit margins, as demonstrated above. Most healthcare names such as Cigna (CI), Humana (HUM), and Molina Healthcare (MOH) trade at around 0.5-0.6 times Price to Sales (P/S) and hold profit margins of around 2-4%. The small divergence comes from the relatively low pricing power of healthcare providers, as well as government regulations. While Centene deserves a lower valuation due to its smaller profit margins, I believe Centene can reach a 2% profit margin, considering its relatively attractive gross margin profile of 12%.

Takeaways

Centene, though not the most thrilling business, maintains a robust market position, commanding a significant share of the healthcare market. The recent substantial beat in its financials suggests that future growth prospects might be underestimated, and the prevailing negative sentiment stemming from its Medicaid loss could be overly pessimistic. The lack of engagement on SeekingAlpha posts indicates that the stock appears overlooked, a sentiment that is mirrored in its relatively low valuation. Despite its unassuming nature, Centene has the potential to be a steady compounder, with the prospect of upside in the future.

Nevertheless, there are risks to the thesis. Centene, like other healthcare providers heavily rely on government-sponsored healthcare programs, making it susceptible to changes in policies or funding. The recent Medicaid contract loss highlights its vulnerability to significant contract changes. Finally, regulatory uncertainties in the healthcare industry could impact operations and compliance costs.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of CNC, ELV either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

All predictions and projections are solely median estimates by financial analysts and are due for uncertainty. All graphs, charts, etc. may not be up to date and only represent the latest available data. I do not guarantee the accuracy of any of my mentioned price targets, and thus, they should not be used as investment advice.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

The post Centene: Overlooked Healthcare Giant appeared first on Up2info.com.

• CNC demonstrated solid performance in Q3 2023, with a significant increase in EPS and total revenue growth.
• CNC’s Health Benefits Ratio remained strong at 87%, positioning the company for future growth.
• CNC’s strategic initiatives and market expansions, including Medicaid expansion, support its positive growth outlook, but its current share price lacks a margin of safety.

Investment action

I recommended a holding rating for Centene Corporation (NYSE:CNC) when I wrote about it the last time, opting for a conservative stance until CNC demonstrated progress in executing its plans and aligning with its FY24 guidance. The third quarter shows CNC’s solid performance, with a noteworthy EPS increase of over 50% and a year-over-year total revenue growth of roughly 6%. Furthermore, the growth in the marketplace segment and strong HBR performance position CNC well for future growth. However, the current share price hovers near my model’s target price, presenting a limited margin of safety and upside potential. Thus, I continue to uphold my hold rating for CNC.

Review

CNC showcased a robust financial performance in the third quarter of 2023. The company reported $35 billion in premium and service revenue. This was complemented by an impressive adjusted diluted EPS of $2, marking a significant rise of over 50% from the previous year’s third quarter EPS of $1.30. Notably, this EPS exceeded their internal forecast by $0.20, underscoring the company’s ability to outperform expectations.

The Health Benefit Ratio [HBR], a key metric reflecting the company’s financial health, stood firm at 87% for the consolidated figures. This was slightly better than what the company had anticipated, and the positive variance was primarily attributed to the commercial segment. Specifically, the Medicaid HBR was reported at a stable 90%. In terms of growth, CNC’s continues to capture growth from redeterminations. The previous quarter saw a growth of 200,000 members, and this momentum continued into the third quarter with an addition of 386,000 members. This consistent growth, combined with a solid HBR performance, positions CNC favorably for anticipated revenue growth and margin expansion in the forthcoming quarters.

CNC’s growth trajectory in the third quarter of 2023 is marked by a combination of strategic initiatives and market expansions that underscore its commitment to serving a broader demographic. One of the significant growth drivers is the impending Medicaid expansion in North Carolina, slated for later this year. This expansion is anticipated to bring a larger segment of the population under CNC’s care, further solidifying its position in the Medicaid market.

In addition to North Carolina, CNC has also secured a significant win in Oklahoma, encompassing both broad Medicaid and sole-source foster care. This expansion is scheduled to commence on April 1, 2024. The company’s growth strategy doesn’t stop there. They are actively eyeing a pipeline of complex populations expected to transition into managed care over the upcoming years. A case in point is the recent Request for Proposal in Georgia.

The Marketplace segment is crucial for CNC’s expansion strategy. It’s not just a noteworthy asset for CNC, but also shows promise as a major income source. Already, the revenue from this division has surpassed that from the Medicare Advantage sector, with projections indicating a wider gap in 2024. This growth is further accentuated by the prescription drug plan business. Though revenue wise it may appear modest, its growth outlook for 2024 is optimistic. Participants in this sector contribute to pharmacy spending and are potential Medicare Advantage Prescription Drug candidates down the line.

Valuation

I believe CNC can grow at mid-single digit for FY24 and FY25. The 15% revenue increase in 2022 was largely attributed to strategic acquisitions, notably Magellan Health. However, as of 2023, there have been no new acquisition announcements from CNC; hence, a moderation in the growth rate is expected. The anticipated mid-single-digit growth can be attributed to the company’s robust health benefits ratio, showcasing CNC’s financial health. Additionally, the marketplace segment has undergone remarkable expansion, further supporting a consistent growth outlook. The sustained growth in the marketplace, coupled with a solid HBR performance, aligns CNC favorably for projected revenue growth in the subsequent quarters. Lastly, CNC’s dedication to business growth is apparent through its aggressive market expansion strategies. A notable example is the expansion into Oklahoma, set to kick off in mid-2024. With these factors in play, I hold a positive outlook on CNC’s positioning for future growth.

CNC is currently trading at approximately 10x forward P/E, while its peer is trading at approximately 14x. Considering that CNC’s EBITDA margin of 2.3% is lower than its peer’s margin of approximately 4.3%, along with a lower net margin of about 2% compared to its peer’s roughly 3% and a higher debt/equity ratio of about 0.75 versus its peer’s around 0.65, I believe that its current forward P/E of roughly 10x is justified. My price target for CNC stands at approximately $71, representing an upside of 4%, which does not offer a substantial margin of safety. Based on my analysis of CNC, I maintain my hold rating even though it is a high-quality stock with a positive growth outlook.

Risk and final thoughts

One upside risk to my hold rating could arise if CNC’s marketplace expansion and strategic initiatives result in greater revenue growth than what the market currently anticipates. Given that CNC’s financial metrics like EBITDA and net margins are closely aligned with its peers, should these metrics improve and edge closer to their peers’ due to the benefits from these initiatives, its current forward P/E of 10x might trend closer to its peers’ 14x. At a 12x forward P/E, the share price appreciation is estimated to be around 24%.

Given the robust financial performance displayed by CNC in the third quarter, alongside its strategic market expansions and steady growth in its marketplace segment, there’s a positive growth outlook for the company. However, when comparing its financial metrics against peers, its current lower valuation is justified. My price target indicates that CNC’s current traded price lacks a margin of safety for investors. Despite the positive growth trajectory and market expansion initiatives, the financial metrics signal a cautious approach. Hence, I maintain my hold rating for CNC.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

The post Centene: Solid Performance With Positive Outlook, But Limited Upside Potential appeared first on Up2info.com.

• Centene serves the underinsured and uninsured in the U.S. healthcare sector, filling a significant market gap.
• CNC operates through two main segments: Managed Care and Specialty Services, catering to over 26 million members.
• The company has commendable lobbying efforts. However, it faces challenges, including political dynamics, Medicare Advantage Star Ratings, and the potential impacts of the 2024 elections.
• My financial analysis suggests potential vulnerabilities due to interest rate fluctuations and the yield curve’s movements.
• Despite challenges, my valuation suggests CNC is undervalued with a potential upside of 38.1%, leading to a “buy” rating with a $98.0 price target.

Centene Corporation (NYSE:CNC) operates in the U.S. healthcare sector, primarily serving the underinsured and uninsured. This focus effectively addresses a notable void in the healthcare landscape. Through its dual-segment strategy, encompassing Managed Care and Specialty Services, CNC has established itself as a comprehensive healthcare provider, catering to a vast membership of over 26 million. However, the company has its challenges. It grapples with political, regulatory, and market dynamics, notably concerns surrounding Medicare Advantage Star Ratings and the potential ramifications of the 2024 elections. Despite these hurdles, I believe that CNC’s overall business model, financial standing, and valuation metrics indicate that the stock might be undervalued. My analysis suggests a potential upside of 38.1% from its current levels. While this projection is promising, it’s essential to recognize the inherent risks associated with CNC’s business model. Given the balance of its strengths and challenges, CNC’s stock offers a compelling investment opportunity, and I rate it a “buy” with a target price of $98.0.

Business Overview

Centene, headquartered in St. Louis, Missouri, serves a vital niche in the U.S. healthcare sector by focusing on the underinsured and uninsured. This emphasis fills a notable gap in the healthcare market and reflects CNC’s dedication to ensuring access to medical care for vulnerable groups. The company is divided into Managed Care and Specialty Services and highly depends on the US’s political landscape. The Managed Care segment, emphasizing health plans via government programs, showcases CNC’s commitment to public health. Conversely, the Specialty Services segment, offering services from behavioral health to specialized pharmacy benefits, demonstrates CNC’s adaptability. This breadth enhances CNC’s market presence, making it a comprehensive healthcare entity. Their involvement in government contracts, particularly the TRICARE program, indicates a significant alignment with governmental initiatives. CNC has a long track record since its founding in 1984 and employs over 74,300 individuals today.

With a membership base exceeding 26 million, Centene is the largest provider of managed healthcare insurance in the U.S., primarily delivering its services through Medicaid, Medicare, and commercial products. This extensive member base is a significant financial driver for the company, courtesy of the recurring revenue model inherent in the insurance sector. Being ranked as the 25th company on the 2023 Fortune 500 list further highlights its robust market presence. In my view, CNC’s entrenched position as an intermediary for government-sponsored and privately insured healthcare programs reflects a solid foundation in a competitive market landscape. However, to sustain its market position and work towards long-term growth, I believe it’s imperative for CNC to continually evolve its strategies in response to the dynamic healthcare market. The ability to adapt to policy changes, especially those concerning Medicaid and Medicare, could be pivotal in securing its market position and ensuring a steady revenue trajectory.

Regulatory Challenges and Lobbying Efforts

There are concerns regarding CNC’s ability to improve its Medicare Advantage Star Ratings and secure future Medicaid contracts. These aspects are crucial as they affect CNC’s revenue and market position. The Medicare ratings impact financial bonuses, while Medicaid contracts are essential revenue streams. There have been billing investigations and settlements related to Medicaid contracts and an observed decline in Medicare Star Ratings, all challenging CNC’s long-term growth narrative. One consequence of these hurdles was a Morgan Stanley (MS) downgrade with a price target cut from $94 to $73.

On the other hand, U.S. states resumed yearly Medicaid reviews in April, intending to complete all renewals by May 31, 2024, which might lead to millions of low-income people losing government healthcare, reversing the surge in Medicaid enrollment during the pandemic. Consequently, the insurance companies like CNC that manage these Medicaid plans could lose millions of customers, as some may choose not to buy private insurance.

In my view, lobbying is key to CNC’s business model. Thus, election risks in 2024, given CNC’s high Medicaid and health insurance exchange exposure, could pose significant challenges. In my opinion, given Centene’s extensive operations in managing Medicaid and Medicare programs, the policy inclinations of Democrats could potentially align more closely with Centene’s business model, possibly fostering a friendlier environment for its growth and operations. Conversely, while Republicans might appreciate Centene’s role in the private sector’s involvement in healthcare, their traditional stance on limiting the expansion of government-funded healthcare programs could pose challenges for Centene, especially if policy shifts lead to reduced funding or more stringent regulations on Medicaid and Medicare programs.

Therefore, the US’s political climate and CNC’s lobbying efforts are key for securing crucial revenue-generating contracts. Additionally, the investigations and settlements underscore a pattern of billing issues and legal challenges CNC faces across different states, impacting its financial standing and potentially its reputation within the healthcare industry.

Valuation and Financial Analysis

The company has a significant amount of debt, with its enterprise value estimated at around $42.44 billion, and 50.3% of this value is financed through debt. A notable aspect of CNC’s financial structure is its reliance on variable interest rates, predominantly benchmarked against the LIBOR. In my view, this presents a potential vulnerability. Given that the company’s EBIT is roughly $5.02 billion for 2023, a slight 1% increase in interest rates could result in a loss of around half a billion dollars. This equates to nearly 10% of the company’s current annual EBIT.

The recent trend of a steepening yield curve further accentuates this risk. Suppose the Federal Reserve maintains higher rates for an extended period, as they have indicated. In that case, it’s likely that long-term interest rates, which constitute a majority of CNC’s debt, will see a significant rise. This inference is drawn from the current state of the yield curve, which is notably inverted. If short-term rates remain stable, a continued steepening of the yield curve could imply a marked increase for longer-duration debt. I believe this could translate to potential losses amounting to billions for CNC. While these losses might be unrealized and may not immediately impact CNC’s FCF if the company holds its debt to maturity, I believe that given CNC’s highly financialized business model, it’s probable that such losses will be realized over time. However, it’s essential to consider both sides of the coin. If long-term rates were to decrease from their current levels, CNC could benefit. So, I think investors must be aware of CNC’s sensitivity to fluctuations in interest rates and the yield curve’s movements.

While it’s essential to consider various factors in CNC’s valuation, if we set aside the interest rate risk for a moment, we can determine its fair value using a straightforward DCF model. In my observation, CNC’s EBIT margins have remained relatively consistent, with a long-term average of 3.5% of total revenues since 2013. Similarly, the D&A, CAPEX, and Effective Tax Rates figures have shown stability over time. Based on this data, I incorporated these values into my model. When projecting the 2024 revenue growth rate, I took an average of CNC’s long-term premium-related revenue CAGR since 2013, which stands at 32.4%, and my current growth estimate for 2023, which is 13.2%. This calculation results in a growth rate of 22.8% for 2024. In my view, this approach is logical, given the historical data and current market conditions.

From this point, I gradually reduced the revenue growth rate to 5.5% by 2027, which I believe is a reasonable terminal value for my model, especially considering industry trends and conservative market potential. Finally, I discounted the projected FCFFs using the company’s WACC. I believe this method provides a balanced and objective valuation while accounting for potential future shifts in the market.

In my analysis, the valuation model indicates that the company is undervalued at its current levels. I estimate a potential upside of approximately 38.1%, translating to a fair value of around $98.0 per share. However, considering the upcoming elections, which might influence the company’s revenues based on the resulting political landscape, is essential. Additionally, the unpredictable yield curve and interest rates pose challenges for the company’s balance sheet and the present value of its debt holdings. Despite these concerns, the company’s underlying business model and savvy lobbying efforts are robust. This leads me to believe CNC is undervalued and merits a “buy” rating at its current levels. My valuation aligns closely with MS’s price target of $94.0 per share before their recent downgrade. While qualitative factors might influence MS’s downgrade, the quantitative data suggests that CNC is significantly undervalued. Indeed, qualitative factors are worth noting, but they don’t justify such a downgrade. Hence, I believe CNC remains a promising investment opportunity at these levels.

Conclusion

Given CNC’s role in the U.S. healthcare sector, it’s evident that it has made strides in addressing the needs of the underinsured and uninsured. CNC’s dual-segment strategy has expanded its reach and solidified its market position in public health. However, Centene’s challenges, especially in politics, regulations, and market dynamics, cannot be overlooked. The concerns regarding Medicare Advantage Star Ratings and the potential outcomes of the 2024 elections add complexity to its business prospects. While these challenges are significant, CNC’s robust business model and financial metrics suggest its stock is undervalued. Accordingly, I estimate it has a 38.1% upside potential from current levels. Yet, investors must approach this with a balanced perspective, weighing both the opportunities and the inherent risks. Based on the data and the company’s resilience, I maintain that CNC’s stock is a promising investment, and I reaffirm my “buy” rating with a target price of $98.0.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha’s Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

The post Decoding Centene: Why I Think It’s Undervalued appeared first on Up2info.com.