2018: A Healthcare Company in Motion

In 2018, Centene achieved strong results across our business segments, reflecting the strength of our diversification strategy and our portfolio approach. Centene’s ability to execute across our strategic and operational initiatives propelled us to #61 on the Fortune 500® list of America’s largest companies by revenue, and #1 on Fortune’s 100 Fastest-Growing Companies list based on revenue growth over a 10-year period. We continued to diversify and add to our capabilities, driving significant revenue and earnings growth and creating greater opportunities for margin expansion. We ended 2018 as a $60 billion enterprise, and our success this past year was punctuated by the two-for-one stock split announced at the end of 2018, effective in the first quarter of 2019.

At Centene, we don’t just embrace the future, we take the lead. We are a company in motion, and we are taking action to build on our competitive strengths to drive further growth. We continued to see our strategic approach yield results in 2018. Centene offers approximately 350 solutions in 32 states, covering more than 14 million members in the U.S. and approximately 600,000 individuals internationally. Our size and scale afford us the necessary resources for further investments in systems, markets, products, and capabilities that are improving our competitive position in both the short and long term.

By combining our strong organic growth and strategic acquisitions, we have become a transformational leader in the government-sponsored healthcare sector. Notably, we completed the acquisition of Fidelis Care, the leading government health plan in New York, establishing Centene as a leader in the nation’s four largest Medicaid states. Fidelis has maintained its strong operating performance throughout our successful integration, while the acquisition has expanded our reach in Medicare Advantage and the Health Insurance Marketplace. Looking forward, it is clear that we have an incredibly bright future. We have clear sight on new opportunities. We’re expanding our U.S. footprint and we are growing internationally. This positions us to continue delivering results for our members, communities, and shareholders.

Centene is a growth company with expectations of continued margin expansion and strong growth in the top and bottom line.

Driving Growth

Centene drove organic growth in our core products of Medicaid, Medicare, and the Health Insurance Marketplace in 2018. We were successful in reprocurement and service expansion wins in multiple markets, and in 2019 we are expanding our Medicaid geographical footprint with new contracts in Iowa and New Mexico. In addition, we grew our portfolio of Medicare products, offering Medicare Advantage and D-SNP plans in eight new Centene Medicaid states, which will help bring our Medicare product solutions to a total of 20 states. And we are the number one insurer in the nation on the Health Insurance Marketplace. In 2018, we had strong marketplace enrollment of over 1.6 million members at the peak, representing 35% growth over 2017 open enrollment metrics. We now offer access to the Health Insurance Marketplace in 70% of our markets, having already expanded into four new states for 2019 and exploring additional expansion activities for 2020.

Beyond these core offerings, we remain the largest provider of managed long-term services and supports, one of the fastest-growing segments in the managed care market. Our Centurion product is the market leader in correctional health by revenue and is widely recognized for its high standards for quality and care and its innovative and transparent approach. In addition, through our TRICARE program, we continued to be one of the nation’s largest providers of managed care services for military families.

We also continue to gather international momentum by leveraging our public sector and population health expertise, as well as our technology and analytics capabilities, to advance our position in the Spanish and UK markets. At the end of 2018, Centene acquired an 89% ownership in University Hospital of Torrejón, serving approximately 150,000 people with a broad portfolio of services and facilities. This investment furthers the reach of our successful whole health model.

Building on our Competitive Advantages

Our core beliefs have stood the test of time, and today, as we build on those foundations through new technologies and innovations, we are able to take bold steps forward while remaining true to our purpose of transforming the health of the community, one person at a time.

For example, we are proactively streamlining our organization to achieve efficiencies, protect quality and outcomes, and capture the best of our capabilities and talents. In 2018, we launched Centene Forward, an initiative designed to generate operating and economic efficiencies and accelerate margin expansion. Through Centene Forward, we expect to realize up to $500 million in savings over a multiyear period. In addition to long-term savings, this initiative will provide us with additional capital to invest in capabilities and technologies that better position Centene for long-term growth, increased margins, and enhanced profitability.

We continue to invest in technology, which enhances our ability to scale, coordinate, and deliver care. With our focus on innovation, we deliver the next generation of healthcare services through new IT platforms, enhanced data analytics, and technology-based partnerships. In 2018, we introduced RxAdvance, a solution for pharmacy benefit management (PBM), and have been pleased with its early performance. We will continue this implementation across our health plans throughout 2019 and 2020, and will consistently leverage new technology to improve health outcomes.

We are also driving integrated innovation through our organization. Through our Health Care Enterprises group, highlighted by Casenet’s TruCare solutions, we are improving health outcomes by developing more efficient care models and reducing healthcare costs. We also made a significant investment in Interpreta, an innovative health IT company focused on clinical and genomic data and analytics. Interpreta can rapidly identify physiological or laboratory changes by analyzing 12 million medical data points in less than a minute, which allows for continuous interpretation of each patient’s past, present, and future care needs. 

Our ongoing initiatives build on more than 30 years of experience in applying our local approach to government-sponsored healthcare programs. Centene goes beyond traditional healthcare, partnering with states and other key stakeholders to offer programs and services that address the health and social needs of our country’s most vulnerable populations. This commitment is a core piece of Centene’s business strategy.

Leading the Way Forward

The healthcare industry is ever-changing as the nation debates the shape and scope of healthcare policy. That said, the midterm elections of 2018 demonstrated that there is bipartisan support to provide high-quality, efficient, and affordable care to all Americans. This goal has been Centene’s focus and commitment for more than 30 years. We will continue focusing on what we can control. As an exceptionally local, fully integrated, tech-enabled enterprise, we deliver consistent year-over-year market expansion by strategically optimizing our core business.

Ultimately, Centene’s success is due to the talent, skill, and dedication of our more than 47,000 employees, as well as their commitment to providing the highest quality of care to the vulnerable populations entrusted to us. From the leaders we develop through our leadership training programs at Centene University to the individual employees running local programs to promote healthier lives for our members, it is our workforce that facilitates our growth. I want to thank our employees for their commitment, passion, and innovation, which enable Centene to deliver on our mission to provide better health outcomes at lower costs. I also want to use this opportunity to note my appreciation for the guidance and leadership of our Board of Directors.

We have a clear line of sight into our growth drivers for 2019 and beyond. We will keep building on our momentum to deliver enhanced value to shareholders as we transform the health of our communities, one person at a time.



- Chairman & Chief Executive Officer