Centene Corp.'s fourth quarter earnings plunged 70 percent, as flu expenses hit the Medicaid coverage provider and it continued to struggle with costs from two of its state programs.
The St. Louis company said Tuesday that the flu added about 30 cents per share in medical costs during the quarter, as claims came in higher than what Centene experienced in 2011. Analysts have warned that this flu season was off to a quicker, more intense start than those in recent years.
The insurer also said higher costs in its Kentucky and Texas Medicaid programs affected results. Medicaid is the state and federally funded program that provides health coverage to poor and disabled people. States typically hire private insurers to administer the coverage, and that represents the largest slice of Centene's business.
Centene said last fall it was planning to end its contract to administer Medicaid in Kentucky, where costs have come in much higher than it expected.
Centene Chairman and CEO Michael F. Neidorff said in a statement on Tuesday that the company's exit from Kentucky will address the problems it has had in that state, and he believes the company has made progress on premium rates in Texas.
Overall, the insurer earned $9.1 million, or 17 cents per share, in the quarter that ended Dec. 31. That compares to earnings of $30.1 million, or 57 cents per share, in the 2011 quarter.
Premium and service revenue climbed 58 percent to $2.3 billion, helped by new membership added in Louisiana, Missouri and Washington and an expansion of Centene's Texas program.