Centene Layoffs – Centene Corporation, a major US health insurer, revealed plans to cut 3,000 workers and 1,500 open roles in 2021. On February 9, 2021, Centene president and CEO Michael Neidorff made the reorganization announcement. It happened during the health insurer’s conference call to discuss its 2020 performance. The job cuts, according to Neidorff, focus on roles where Centene has “significant overlap” from acquisitions. Sarah London took over as the company’s CEO in March 2022, succeeding Neidorff.
Based in St. Louis, Missouri, Centene Corporation is a publicly listed managed care organization. It acts as an interface between healthcare programs that are publicly funded and privately covered. On the Fortune 500 in 2023, Centene came in at number 25. For its fiscal year that ends in December 2022, Centene reported having 74.3K employees. Centene will not lay off its employees in 2023. Let us know more about this corporation in detail in this article.
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About the company
In Milwaukee, Wisconsin, Elizabeth Brinn established Centene in 1984. Centene Corporation is now a major healthcare organization. It is dedicated to assisting people to live better lives. Nearly 1 in 15 Americans is served by Centene’s affordable and high-quality products. They are available to Medicaid and Medicare beneficiaries, including those enrolled in Medicare prescription drug plans. It is also offered to individuals and families covered by the Health Insurance Marketplace and the TRICARE program.
Centene thinks that healthcare is best offered locally. For government-sponsored and private healthcare programs, their local health plans offer completely integrated, superior, and reasonably priced services. It focuses on those who are underinsured and uninsured.
The employment procedures used by Centene are a reflection of the communities and members they serve. Employees at Centene contribute to the transformation of communities and the healthcare industry.
Centene’s new chief communications officer is Shannon Susko. She moved from Edelman Smithfield, a division of the Edelman public relations agency, to the insurance company. James Murray, the COO, will retire in 2024; thus, Centene has started looking for a replacement.
Centene’s layoff plan ( 2021) as part of its restructuring drive
According to Centene Corp.’s senior executive, the managed care provider will undergo organizational restructuring in 2021. It would result in a reduction of 1,500 open positions and 3,000 layoffs of existing staff members.
Centene completed two significant acquisitions in December 2020. They are:
- PANTHERx is one of the largest and fastest-growing specialty pharmacies in the US. It specializes in orphan drugs, treating rare diseases, and
- Apixio is a healthcare analytics company. It offers artificial intelligence (AI) technology solutions.
The company has also announced a definitive agreement to purchase Magellan Health, Inc. It provides technological solutions for complicated areas of health. It includes special populations, complete pharmacy benefits, and other specialty areas of healthcare.
In 2020, Centene’s revenue increased due to acquisitions. The company reported overall revenues of $28.3 billion for the fourth quarter. It was up 50% from $18.9 billion in the same quarter of 2018. According to the company, the increase was brought about by the purchase of WellCare. It is also due to the expansions and new programs in many states’ Medicaid and Health Insurance Marketplace operations.
The health insurer’s total income for the entire year 2020 increased by 49% to $111.1 billion.
According to Neidorff, Chairman, President, and CEO of Centene,
“2020 was a year when Centene proved the power of our diversified business and our operational excellence. We delivered strong top-and bottom-line growth while serving all our stakeholders.”
Centene disclosed a $12 million loss for the fourth quarter. It was a 2-cent loss per share, compared to net earnings of $209 million, or 49 cents per share, the previous year. However, that is not the reason they intend to cut 3,000 jobs and 1,500 open ones. After Centene completed a significant acquisition in January, the CEO claimed that position overlap was what led to the cutbacks in staff.
Centene abandons plans to build a $1 billion regional office in Charlotte
In 2022, Centene discontinued plans to build a new East Coast headquarters and technology base near UNC Charlotte.
The Fortune 50 business in St. Louis cited a “fundamental shift in the way people work” as the reason for its choice. Nowadays, approximately 90% of its employees either work entirely remotely or in a hybrid setting.
“Because of this change, Centene opted not to establish an East Coast headquarters in Charlotte. Many of our 1,700 employees will now work from home or in a hybrid environment that best matches their needs.” The company representative said this in August 2022.
When Centene announced plans to construct a Charlotte facility, it was the largest single-job announcement in North Carolina history. It was known as Project Big Boy Undercover. It was the year 2020, and both a pandemic and a recession were underway. Centene remained upbeat about Charlotte, though.
On the site, Centene intended to invest $1 billion. The business committed to bringing 3,200 employees here at the time. The state of North Carolina, Mecklenburg County, and the City of Charlotte would have given it incentives worth up to $450 million if it had achieved those hiring targets.
The county provided $26 million as part of the incentive package. According to a spokesperson for Centene, Andrew Fair,
“With this change of plans, those funds will no longer be accessible to Centene. It’s because those funds were based on a physical presence in Mecklenburg County.”
If Centene had achieved its job-creation targets, it would have received close to $32 million from the city of Charlotte. Gregg Watkins, the city’s spokesperson, claims that no incentives have been given out.
According to NC Commerce Department spokesperson David Rhoades, Centene did not receive any incentive money from the state.
“6,000 employees could eventually work on Centene’s campus.” This is according to then-CEO Michael Neidorff, who spoke to reporters in the summer of 2021. Additionally, he said it was possible the business would relocate its global headquarters to Charlotte.
“What a fantastic facility! At the time, Neidorff stated, “We’ll see how things develop. Everything is always up for discussion, but for the time being, our headquarters (in St. Louis) are fantastic.”
The business declared in February 2021 that it was “committed” to Charlotte despite significant job layoffs elsewhere in the organization. A cutting-edge facility with 800,000 square feet is being constructed by Centene in Charlotte. According to CBJ, it will be finished in a few weeks (as of August 2022).
According to the business, it is in talks with other businesses to occupy the building. According to CBJ, Centene has been reducing its real estate footprint under new management. The business has assured CBJ that there won’t be any local layoffs as a result of its decision to abandon plans for a regional headquarters in Charlotte.
Approximately 700 individuals were employed by Centene in Charlotte. According to Watkins, a spokesperson for the city,
They’ll continue to have a “significant presence” in Charlotte, which will include Camp North End.
In a statement, Charlotte City Council member Dimple Ajmera stated,
“I am optimistic that their decision to develop the proposed facility to sell will result in a $540 million private investment. It will attract fresh business to the area.”
Centene expects a setback to its rapidly expanding business in 2023
Centene Corp. stated on February 7, 2023, that the profit from its rapidly expanding Medicare Advantage (MA) business will suffer in 2024. It is the result of a significant reduction in its rating by a federal agency in the United States. Also, it is due to lower-than-expected government payments to health insurers.
The bleak outlook for MA obscured Centene’s fourth-quarter profit beat. It is one of the fastest-growing markets for health insurers. Also, the company’s shares fell by about 2% in early trading.
The U.S. Centers for Medicare and Medicaid Services (CMS) recently proposed new guidelines for an audit program. This is to prevent overpaying the firms. It has put pressure on health insurers that run MA plans.
In contrast to a 5% growth in 2023, the agency proposed a 2.3% reduction in reimbursement rates in February 2023. By April 3, 2023, the final prices were anticipated.
Competitor Cigna Corp., a larger company, has also stated that if the rate change is approved, “some revenue dislocation” will result.
“Centene isn’t expecting its MA business to increase next year. It will likely “shrink a little.” This was stated in a post-earnings conference call by CFO Andrew Asher. After CMS reduced the star rating for Centene’s MA plans in October 2022, Asher stated that the company expected temporary negative profit margins in the industry in 2024.
Private insurance companies that cater to those over 65 offer MA plans. The government sponsors them.
Centene outperformed Wall Street expectations by one cent in the fourth quarter. It reported an adjusted profit of 86 cents per share.
According to six analysts surveyed by Refinitiv, the company’s quarterly health benefits ratio, which compares medical costs to premiums received, was 88.7%. It is beating expectations of 88.8%.
Centene’s Medicare health insurance business had an increase in revenue of roughly 24% to $5.45 billion from the previous year.
Centene recorded a $1.2 billion profit for the entire 2022 fiscal year. It was a decrease from the $1.3 billion it earned in 2021. However, total sales increased, hitting $144.5 billion. In 2021, the business reported $126 billion in revenue.
“In 2022, we were able to complete the groundwork. They are necessary to support our long-term growth goal. It is achieved due to our centered focus. We also outperformed our most recent full-year target. We are delivering outstanding financial performance,” London added in the press release.
“We take advantage of the opportunities that lie ahead for our core business. So this forward momentum prepares us well for 2023 and beyond.”
In the fourth quarter of 2022, Centene also made a number of leadership announcements. It prepared the business for “its next stage of growth.”
As of December 31, there were 27.1 million Centene members overall, up from 25.8 million at the end of 2021. A crucial market for the insurer, open enrollment on the exchanges created by the Affordable Care Act concluded in January.
According to the study, Centene expects sales of between $131.5 billion and $133.5 billion in 2023. Also, an earnings per share of between $6.25 and $6.40 is expected.
Centene expects to lose millions of Medicaid customers
Centene Corp. anticipates losing millions of Medicaid customers. The state governments began reevaluating users’ eligibility in April, following a three-year break. This is triggering a period of rebalancing for health insurers.
In February 2023, the Clayton-based health insurer expressed a desire. They said they wanted to win back some of their former clients who converted to Affordable Care Act exchange plans. Other health insurance providers are making similar predictions.
Molina is a California-based company. It informed investors that “redeterminations” of Medicaid eligibility will largely offset new Medicaid membership from contracts and acquisitions. Membership added to two new contracts will be equally offset. This is according to Kentucky-based Humana.
When the COVID-19 epidemic first broke out, Medicaid enrollment skyrocketed. It’s because businesses cut staff, and unemployment rose. This enlarged the population of people eligible for public health care. Throughout the pandemic, states were barred from disenrolling people who did not openly request it.
Beginning April 1, states will be able to resume examining and disenrolling people. They are those who no longer qualify for Medicaid due to income, age, or other factors.
16 million of Centene’s 27 million clients are covered by Medicaid. The business expects to have added approximately 3.4 million Medicaid enrollees since the outbreak of the epidemic. This is according to Chief Financial Officer Drew Asher.
According to Asher, the business expects to lose around 2.2 million members throughout the redetermination procedure.
According to Julie Utterback, senior stock analyst, the company expects to retain 200,000 to 300,000 customers through its marketplace operation. Utterback stated that “the company has been planning for this eventuality throughout 2022.”
This is in line with predictions made by other health insurers. However, the timeline will also be influenced by how Medicaid reviews are carried out in various states.
There are a lot of unknowns in the process. People have migrated across state borders, reached Medicare eligibility age, passed the Medicaid eligibility age for minors, and gone through major financial changes over the last three years.
The long-term outlook from Centene
The health insurer’s shares increased 4%. It happened after Centene Corp., on April 25, 2023, confirmed its long-term profit growth forecasts. It eased investor concerns about a potential hit to its business. It is because of the competition in the rapidly expanding Medicare Advantage category.
A lower “Star Rating” for Centene’s Medicare Advantage health products in October sparked worries. They worry that clients will select plans with higher ratings as competition in this market heats up.
2024 will bring financial difficulties for health insurers as well. It’s because Medicare Advantage receives reduced government funding. As COVID relief measures that had let low-income people continue on these plans expire, they may decide to leave Medicaid.
Centene warned that it will be most affected by difficulties with the government-backed health plans this year. It lowered its projection for 2024 adjusted earnings to over $6.60 per share from an earlier forecast of at least $7.15 per share. According to Oppenheimer analyst Michael Wiederhorn,
“A more accurate view of 2024 should be comforting” to Wall Street.
The business added that it was sure it could maintain long-term competitiveness in the Medicare market. It remained optimistic about achieving annual earnings growth of 12% to 15% in the second half of the decade.
According to Julie Utterback, the renewed estimate shows “that the 2024 weakness may simply represent a reset year rather than an ongoing growth trend.”
The company increased its earnings expectation for this year from $6.25 to $6.40 per share to at least $6.40. Centene beat Refinitiv IBES predictions of $2.09 per share with adjusted earnings of $2.11 per share for the reported quarter.
Due to redetermination, Centene lost little more than 260,000 Medicaid subscribers in the second quarter. As of June 30, it had about 16 million Medicaid-eligible members. After its earnings release, Centene’s stock dropped roughly 5% to $66.50. Yet, the business said that it has started a significant outreach initiative. This is to re-enroll some customers who may still be Medicaid eligible.
Membership in Centene’s commercial plans increased by 62% to 3.73 million as of June 30. The business had the assumption that premium collections from the commercial health insurance business would be stronger this year. So, the insurer has increased its full-year earnings-adjusted profit prediction by 5 cents to at least $6.45 per share. In the second quarter, the firm earned $2.10 per share on an adjusted basis. It is above projections of $2.03 per share.
According to the company’s earnings report, Centene had a $1.06 billion net profit in the second quarter of 2023. This is after suffering a $172 million loss the previous year. As of September 2023, the organization had not announced any layoffs.