Centene Corporation operates as a diversified and multi-national healthcare enterprise that provides programs and services to under-insured and uninsured individuals in the United States. It operates through two segments, Managed Care and Specialty Services. The Managed Care segment offers Medicaid and Medicaid-related health plan coverage to individuals through government subsidized programs, including Medicaid, the State children's health insurance program, long-term care, foster care, and dual-eligible individual, as well as aged, blind, or disabled programs. Its health plans include primary and specialty physician care, inpatient and outpatient hospital care, emergency and urgent care, prenatal care, laboratory and X-ray services, home health and durable medical equipment, behavioral health and substance abuse, 24-hour nurse advice line, transportation assistance, vision care, dental care, immunizations, prescriptions and limited over-the-counter drugs, specialty pharmacy, therapies, social work services, and care coordination. The Specialty Services segment provides pharmacy benefits management services; health, triage, wellness, and disease management services; vision services; dental services; correctional healthcare services; in-home health services; and integrated long-term care services, as well as care management software that automate the clinical, administrative, and technical components of care management programs. This segment offers its services and products to state programs, healthcare organizations, employer groups, and other commercial organizations. The company provides its services through primary and specialty care physicians, hospitals, and ancillary providers. Centene Corporation was founded in 1984 and is headquartered in St. Louis, Missouri.
Business Analysis of Centene
The Healthcare Services Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Centene compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Centene to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of Centene with an interactive chart.
- Revenue Growth: Centene reported a revenue growth of 78.4% year-on-year during 2016. Healthcare Payers Industry grew at 13.5% in the same period
- COGS share of Revenues: As a percentage of revenue, Centene spent 86.4% of its total revenues on COGS. Healthcare Payers industry average (COGS share of revenue) in the same period was 78.2%
- R&D share of Revenues: Centene R&D share of Revenues details are not available because either company does not share the data or we do not have it
- SG&A share of Revenues: As a percentage of revenue, Centene spent 9.1% of its total revenues on Sales, Marketing, and General Administration (SG&A). Healthcare Payers industry average SG&A spending in the same period was 15.1%
- Inventory share of Revenues: Centene Inventory share of Revenues details are not available because either company does not share the data or we do not have it
- Accounts Payable share of Revenues: As a percentage of revenue, Centene invested 9.3% of its total revenues on Accounts Payable (A/P) Healthcare Payers industry average Accounts Payable investment in the same period was 13.9%
- Accounts Receivable share of Revenues: As a percentage of revenue, Centene invested 7.6% of its total revenues on Accounts Receivable (A/R). Healthcare Payers industry average Accounts Receivable investment in the same period was 9.0%
- PP&E share of Revenues: As a percentage of revenue, Centene invested 2.0% of its total revenues on Property, Plants, and Equipments (PP&E). Healthcare Payers industry average PPE investment in the same period was 2.6%
- Intangibles share of Revenues: As a percentage of revenue, Centene invested 15.4% of its total revenues on Intangibles. Healthcare Payers industry average Intangibles investment in the same period was 21.9%
- Net Margins: Centene Net Margins in the year 2016 were 1.4%. Healthcare Payers industry average Net Margins in the same period were 3.0%
Sector and Industry Association of Centene
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries. For high-level analysis purposes, related/similar sectors are grouped into sector groups.
Centene is associated with Healthcare Sector Group, Healthcare Services Sector, and Healthcare Payers Industry.
Healthcare Services sector is comprised of the following industries: Drug Stores, PBM and Distributors; Healthcare Payers; Healthcare Providers; Medical Software; Healthcare Research Services. The definitions for each of the industries is as follows:
- Drug Stores, PBM and Distributors industry includes nationwide drugstore chains, pharmacy benefit management (PBM) companies, and drug distributors. Drug stores also offer walk-in clinics and related pharmacy services. Distributors distribute branded and generic pharmaceutical and other healthcare products to hospitals, pharmacies and other healthcare providers. PBMs are primarily responsible for developing and maintaining the formulary, contracting with pharmacies, negotiating discounts and rebates with drug manufacturers, and processing and paying prescription drug claims.
- Healthcare Payers industry includes healthcare insurance companies that finance or reimburse the cost of health services. These companies also offer collaborative care, population health management, healthcare technology, Pharmacy Benefit Management, analytics, consulting and administrative services.
- Healthcare Providers industry consist primarily of hospitals but recent changes in the health services industry have contributed to both increasing numbers of other types of facility providers. Companies in this industry include traditional healthcare providers and emerging healthcare facility providers like ambulatory surgery centers, behavioral healthcare facilities, dialysis clinics, home health care companies and others.
- Medical Software industry includes companies that offer any software item or system used within a healthcare context. These companies offer standalone software used for diagnostic, therapeutic purposes, clinical financial and operational purposes.
- Healthcare Research Services industry includes companies that offer biopharmaceutical development services, commercial outsourcing services; commercial pharmaceutical sales and service organizations, consulting, health information analytics and technology consulting.
Industry Ranking of Centene
With $40.6 billion revenues, Centene ranked number 5 of all the companies in the US Healthcare Payers industry. There were a total of 14 public companies in the US Healthcare Payers industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Healthcare Payers industry by revenues during 2016 were:
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.