Yahoo Finance Centene (CNC) Wins Contract From DHCS to Serve Medi-Cal Members
Centene Corporation CNC recently declared that its California subsidiary, Health Net of California, has been awarded direct contracts from the California Department of Health Care Services (“DHCS”) to serve the Medi-Cal members of 10 counties across the state. Medi-Cal is the Medicaid healthcare program of California. The recently won contracts are likely to be effective from the beginning of 2024.
Among the abovementioned 10 counties, Centene will take the help of another leading U.S.-managed healthcare services provider, Molina Healthcare MOH, who will perform the role of a subcontractor, to serve the residents of Los Angeles County. In return, as soon as DHCS’ contracts received by CNC’s subsidiary come into effect, Centene will allot 50% of the membership to MOH.
The nine other counties that Centene will serve through the latest Medi-Cal contract wins include Sacramento, Amador, Calaveras, Inyo, Mono, San Joaquin, Stanislaus, Tulare and Tuolumne.
The recently awarded contracts are likely to offer an opportunity to Centene for working closely with DHCS, through which it will gain an in-depth understanding of local communities. This is expected to eliminate hindrances while availing care and bring about improved health outcomes for the Medi-Cal members of California.
Centene boasts an expansive presence throughout California. It continues to fetch a decent share of its total revenues from the state.
CNC’s presence in California is expected to solidify with DHCS contracts. An extended California footprint, coupled with a modest impact of the enhanced set of TRICARE Managed Care Support Contracts announced by the Defense Health Agency in December 2022, encouraged Centene’s management to hike its adjusted earnings per share floor from $7.00 to $7.15 in 2024.
A solid California footprint is a result of Centene’s continuous efforts to serve the state’s members. Just a day before the DHCS awarded contracts to CNC’s subsidiary, Health Net renewed its tie-up with Community Health Systems CYH to extend the comprehensive services suite of the latter to benefit Fresco county’s current and future Health Net members enrolled within commercial, Medicare and Medi-Cal plans.
Centene has a solid Medicaid business in place, which it has built through provider collaborations and significant investments. Contract wins similar to the latest one can add strength to the business by bringing more customers under CNC’s plan coverage.
Needless to say, membership growth usually drives premiums (the most significant revenue contributor) of a managed care organization. As of Sep 30, 2022, Centene’s Medicaid membership witnessed a 5% year-over-year rise, and Medicaid members accounted for a significant chunk of its total membership.
Shares of Centene have declined 5.9% in the past six months against the industry’s growth of 5.6%. CNC currently carries a Zacks Rank #3 (Hold).
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A Key Pick
A better-ranked stock from the Medical space is United Therapeutics Corporation UTHR, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
United Therapeutics’ earnings surpassed estimates in two of the last four quarters and missed the mark twice, the average surprise being 7.24%. The Zacks Consensus Estimate for UTHR’s 2023 earnings suggests an improvement of 12.5% from the year-ago reported figure, while the same for revenues indicates growth of 12.2%.
The consensus mark for United Therapeutics’ 2023 earnings has moved north by 0.2% in the past 30 days. Shares of UTHR have rallied 15.3% in the past six months.
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Centene Corporation (CNC) : Free Stock Analysis Report
