J.P. Morgan 34 th Annual Healthcare Conference -San Francisco- January 11, 2016

Transcription

1 J.P. Morgan 34 th Annual Healthcare Conference -San Francisco- January 11, 2016

2 Forward-Looking Statements During the course of this presentation, we may make projections or other forward-looking statements that relate to future events and future financial performance of Centene. Subsequent events and developments may cause the Company's estimates to change. The Company disclaims any obligation to update this forward-looking financial information in the future. Readers are cautioned that matters subject to forward-looking statements involve known and unknown risks and uncertainties, including economic, regulatory, competitive and other factors that may cause Centene's, Health Net's, or its industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Actual results may differ from projections or estimates due to a variety of important factors, including the ultimate closing date of proposed merger with Health Net (Proposed Merger); the possibility that the expected synergies and value creation from the Proposed Merger will not be realized, or will not be realized with the expected time period; the risk that acquired businesses will not be integrated successfully; disruption from the Proposed Merger making it more difficult to maintain business and operational relationships; the risk that unexpected costs related to the Proposed Merger will be incurred; the possibility that the Proposed Merger does not close, including, but not limited to, due to the failure to satisfy the closing conditions thereto; the risk that financing for the Proposed Merger may not be available on favorable terms; and the risk that the required regulatory approvals are not obtained, on a timely basis or otherwise, or are obtained subject to conditions that are not anticipated. Additional factors include, but are not limited to, Centene's or Health Net's ability to accurately predict and effectively manage health benefits and other operating expenses and reserves; competition; membership and revenue projections; timing of regulatory contract approval; changes in healthcare practices; changes in federal or state laws or regulations, including the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act and any regulations enacted thereunder; changes in expected contract start dates; changes in expected closing dates, estimated purchase price and accretion for acquisitions, including our Proposed Merger; inflation; foreign currency fluctuations; provider and state contract changes; new technologies; advances in medicine; reduction in provider payments by governmental payors; major epidemics; disasters and numerous other factors affecting the delivery and cost of healthcare; the expiration, cancellation or suspension of our or Health Net's managed care contracts by federal or state governments (including but not limited to Medicare and Medicaid); the outcome of our or Health Net's pending legal proceedings; availability of debt and equity financing, on terms that are favorable to us; and changes in economic, political and market conditions; as well as those factors disclosed in the Company's and Health Net s publicly filed documents. This list of important factors is not intended to be exhaustive. We discuss certain of these matters more fully, as well as certain risk factors that may affect our business operations, financial condition and results of operations, in our filings with the Securities and Exchange Commission, including our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K and the joint proxy statement/prospectus we filed on Form S-4 on September 21,

3 Earnings Guidance Policy Our Company s policy is, that the Company undertakes no obligation to update its earnings guidance, other than as part of its quarterly or yearly earnings disclosure, and that silence on guidance by the Company or Company officials should not be interpreted that guidance has or has not changed. In any event, no updated guidance would ever be given that is not previously or simultaneously disclosed in an SEC filing or other broad non-exclusionary means. Further, it is Company policy to generally not hold discussions with investors commencing two weeks prior to earnings release. 3

4 Centene Overview 17,100 employees # 186 on the Fortune 500 list WHO WE ARE St. Louis based company founded in Milwaukee in 1984 $ 3.9 billion in cash and investments $ billion expected revenue for 2015 # 4 on Fortune s Fastest Growing Companies list Medicaid (20 states) WHAT WE DO Exchanges (13 States) 23 states with government sponsored healthcare programs 4.8 million members 237,000 Physicians MA D-SNP (8 States) & in our provider networks Correctional (5 States) 2,000 Hospitals 4

5 2015 Growth 35% Growth in Premium & Service Revenues* 31% Growth in EPS* 27% Increase in Stock Price * Represents growth from the guidance mid-point; EPS excludes Health Net merger related expenses. 5

6 2016 Guidance ($ IN MILLIONS, EXCEPT SHARE DATA) Low High Total Revenue $41,200 $42,000 GAAP diluted EPS $2.85 $3.15 Adjusted diluted EPS $4.10 $4.40 Adjusted earnings per diluted share excludes: approximately $0.65 to $0.70 per diluted share of Health Net merger related expenses, and total intangible amortization of $0.55 to $0.60 per diluted share. 6

7 Key 2016 Guidance Assumptions Health Net Transaction closes on February 1 st, * New transaction intangible assets of $1.5 billion amortized over 10 year average life. GAAP EPS guidance includes transaction costs. Synergy realization consistent with expectations. We do not have any business subject to re-procurement risk in * Closing of the Health Net Transaction remains subject to the satisfaction of remaining conditions to closing, including receipt of applicable California regulatory approvals. As such, no closing date has been established, though we expect the transaction to close in Q

8 Centene Has Delivered Growth Since 2008 HEALTHCARE COVERAGE SOLUTIONS Government Solutions AZ FL GA IN OH SC TX Low-Income Medicaid CHIP ABD (non duals) ABD (dual-eligible) or Dual Demonstrations Long-Term Services and Supports Foster Care Medicare Special Needs Plan Specialty Health Solutions Pharmacy Benefits Behavioral & Specialty Therapies Life & Health Management Managed Vision Telehealth WI 8 States 70 Solutions 8

9 All Products, All Markets Government Solutions AZ AR CA FL GA IL IN KS LA MA MI MN MS MO NH 1 OH OR SC TN TX VT WA WI TANF Medicaid Expansion CHIP ABD (non-duals) ABD (Medicaid only dual-eligibles ) Dual Demonstrations (including LTSS) Intellectually/Developmentally 23 Disabled Long-Term Services and Supports Foster Care Medicare Special Needs Plan Health Insurance Marketplaces Correctional Healthcare Specialty Health Solutions States Int l Markets Solutions Pharmacy Benefits Behavioral & Specialty Therapies Life & Health Management Primary Care Solutions for Complex Pop. Managed Vision Dental Benefits 1 Telehealth (Nurse Triage and Education Line) 1 Waiver HCBS services and nursing facility services are anticipated to go-live January 1, 2016 and July 1, 2016, respectively. 9

10 Increasing Scale and Diversification 2016 HEALTH PLANS AND PROGRAM PARTICIPATION WITH HEALTH NET Medicare Advantage LTSS/IDD Medicaid Expansion Exchanges DSNP/ Duals ABD TANF/CHIP 10

11 Health Insurance Marketplace Health Insurance Marketplace Membership ~500K w/ Health Net Key Growth Drivers Existing states market growth / additional penetration FL GA IL IN MA AR MS OH TX WA WI OR New state in 2016 private option Medicaid expansion 155K NH With Health Net - ~500,000 members expected in 2016 Q CA AZ 11

12 Dual Demonstration Program Dual Demo Program Membership 28K ~50k w/ Health Net Highlights Strategic program for long term duals opportunity - - $250B + opportunity Stabilizing membership and opt out Focus beyond start up - - Care management Provider experience Lower cost, better quality Financials in line with expectations Q With Health Net - - ~50,000 members in

13 Specialty Business Update $8.00 $7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $ (F) Premium and Service Revenue External 68% Internal 32% 880 External Customers Recent Awards Nurtur: Asthma Management Case In Point Platinum Award NurseWise: Nurse call center program Case in Point Platinum Cenpatico/Centene: No bullying Zone IMPACT Award Cenpatico/Centene: No bullying Zone Anti-Bullying Corp Hero Award 13

14 Interpreta Expertise Provides prospective clinical interpretation that prevents gaps in patient care Daily guidance updated at the single member level to maximize quality scores for HEDIS, P4P, and Risk Adjustment Analytic tool can be embedded into TruCare, enhancing TruCare product and increase cross-sell opportunities 14

15 International Investments Generated new opportunities Diversifies product portfolio Provides services to 850,000 individuals Exploring targeted opportunities 15

16 Growth Strategy M&A Disciplined approach to M&A investments 16

17 Market Size by Product Medicaid & CHIP $616B Medicare $728B Health Insurance Marketplace $104B Correctional Healthcare $9B $1.46 trillion Specialty Services Federal Services International 17

18 Pipeline Medicaid & CHIP Medicare Health Insurance Marketplace Correctional Healthcare $205 billion Specialty Services Federal Services International 18

19 Health Net Builds critical mass and expertise Further diversifies markets and products Medicare TRICARE Veterans Affairs 19

20 Health Net Leading platform of governmentsponsored programs Largest Medicaid MCO Total Membership: 10+ million (6+ million Medicaid members) Growth & Enhanced Service Offerings Leader in Managed Long-Term Support Services (MLTSS) 20

21 Health Net Expands opportunities beyond the Dual eligibles Medicare Advantage expertise Creates significant growth opportunities across our markets Low-income Medicare opportunity of $150+ billion in current markets 21

22 Health Net Value Based Contracting Further Deploy Specialty Solutions Health Insurance Marketplace (HIM) presence 15 States 500,000 Members Committed to the California Commercial Market Stronger Financial Profile 22

23 Health Net Acquisition Announced July 2, 2015 Received early termination of the waiting period under HSR Shareholder approval obtained Approval of Arizona Department of Insurance and Health Care Cost Containment System obtained OR Form A approval was issued on November 30th (starting the 60-day waiting period) Currently working through the regulatory process in California 23

24 Well Positioned for the Future Successful 2015 Growth Company 2016 Disciplined Growth 24