T
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ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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£
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TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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Delaware
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42-1406317
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
Number)
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7711
Carondelet Avenue
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St.
Louis, Missouri
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63105
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(Address
of principal executive offices)
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(Zip
Code)
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Common
Stock, $0.001 Par Value
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New
York Stock Exchange
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Title
of Each Class
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Name
of Each Exchange on Which
Registered
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Part
I
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Item
1.
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3
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Item
1A.
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16
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Item
1B.
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24
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Item
2.
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24
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Item
3.
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25
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Item
4.
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25
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Part
II
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Item
5.
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25
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Item
6.
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27
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Item
7.
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28
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Item 7A.
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37
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Item
8.
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38
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Item
9.
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39
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Item
9A.
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39
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Item
9B.
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41
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Part
III
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Item
10.
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41
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Item
11.
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41
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Item
12.
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41
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Item
13.
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41
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Item
14.
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41
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Part
IV
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Item 15.
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41
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68
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·
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Strong Historic Operating
Performance. We have increased revenues as we have grown
in existing markets, expanded into new markets and broadened our product
offerings. We entered the Wisconsin market in 1984, the Indiana
market in 1995, the Texas market in 1999, the New Jersey market in 2002,
the Ohio market in 2004, the Georgia market in 2006, and the South
Carolina market in 2007. We have also increased membership by
acquiring Medicaid businesses, contracts and other related assets from
competitors in existing markets, most recently in Ohio in 2005 and
2006. Our Medicaid Managed Care membership totaled
approximately 1.1 million as of December 31, 2007. For the year
ended December 31, 2007, we had revenue from continuing operations of $2.9
billion, representing a 40% CAGR since the year ended December 31,
2003. We generated cash flow from operations of $202.2 million
and net earnings of $73.4 million for the year ended December 31,
2007.
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·
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Medicaid
Expertise. Over the last 20 years, we have strived to
develop a specialized Medicaid expertise that has helped us establish and
maintain relationships with members, providers and state
governments. We have implemented programs developed to achieve
savings for state governments and improve medical outcomes for members by
reducing inappropriate emergency room use, inpatient days and high cost
interventions, as well as by managing care of chronic
illnesses. Our experience in working with state regulators
helps us implement and deliver programs and services efficiently and
affords us opportunities to provide input regarding Medicaid industry
practices and policies in the states in which we operate. We
work with state agencies on redefining benefits, eligibility requirements
and provider fee schedules in order to maximize the number of uninsured
individuals covered through Medicaid, SCHIP and SSI and expand these types
of benefits offered. Our approach is to accomplish this while
maintaining adequate levels of provider compensation and protecting our
profitability.
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·
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Diversified Business
Lines. We continue to broaden our service offerings to
address areas that we believe have been traditionally underserved by
Medicaid managed care organizations. In addition to our
Medicaid and Medicaid-related managed care services, our service offerings
include behavioral health, life and health management, long-term care
programs, managed vision, nurse triage, pharmacy benefits management and
treatment compliance. Through the utilization of a
multi-business line approach, we are able to diversify our revenue and
help control our medical costs.
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·
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Localized Approach with
Centralized Support Infrastructure. We take a localized
approach to managing our subsidiaries, including provider and member
services. This approach enables us to facilitate access by our
members to high quality, culturally sensitive healthcare
services. Our systems and procedures have been designed to
address these community-specific challenges through outreach, education,
transportation and other member support activities. For
example, our community outreach programs work with our members and their
communities to promote health and self-improvement through employment and
education on how best to access care. We complement this
localized approach with a centralized infrastructure of support functions
such as finance, information systems and claims processing, which allows
us to minimize general and administrative expenses and to integrate and
realize synergies from acquisitions. We believe this combined
approach allows us to efficiently integrate new business opportunities in
both Medicaid and specialty services while maintaining our local
accountability and improved access.
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·
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Specialized and Scalable
Systems and Technology. Through our specialized
information systems, we work to strengthen relationships with providers
and states which help us grow our membership base. Our
specialized information systems allow us to support our core processing
functions under a set of integrated databases which are designed to be
both replicable and scalable. Physicians can use claims,
utilization and membership data to manage their practices more
efficiently, and they also benefit from our timely
payments. State agencies can use data from our information
systems to demonstrate that their Medicaid populations receive quality
healthcare in an efficient manner. These systems also help
identify needs for new healthcare and specialty programs. We
have the ability to leverage our platform for one state configuration into
new states or for health plan acquisitions. Our ability to
access data and translate it into meaningful information is essential to
operating across a multi-state service area in a cost-effective
manner.
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·
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Increase Penetration of
Existing State Markets. We seek to continue to increase
our Medicaid membership in states in which we currently operate through
alliances with key providers, outreach efforts, development and
implementation of community-specific products and
acquisitions. In 2006, we were awarded two regions in
connection with Ohio’s statewide restructuring of its Medicaid managed
care program, expanding the number of counties we serve from three to
27. We also were awarded a Medicaid ABD contract in four
regions in Ohio. In Texas, we expanded our operations to the
Corpus Christi market in 2006 and began managing care for SSI recipients
in February 2007. We may also increase membership by acquiring
Medicaid businesses, contracts and other related assets from our
competitors in our existing markets or by enlisting additional
providers. For example, in 2005 and 2006, we acquired certain
Medicaid-related assets in Ohio. In 2006, we began serving members within
a long-term care plan in Arizona. In 2008, we began serving
Medicare members within Special Needs Plans in Arizona, Ohio, Texas and
Wisconsin.
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·
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Diversify Business
Lines. We seek to broaden our business lines into areas
that complement our existing business to enable us to grow and diversify
our revenue. We are constantly evaluating new opportunities for
expansion both domestically and abroad. For instance, in
October 2006, we commenced operations under our managed care program
contracts to provide long-term care services in Arizona, and in January
2006, we completed the acquisition of US Script, a pharmacy benefits
manager. We are also considering other premium based or
fee-for-service lines of business that would provide additional
diversity. We employ a disciplined acquisition strategy that is
based on defined criteria including internal rate of return, accretion to
earnings per share, market leadership and compatibility with our
information systems. We engage our executives in the relevant
operational units or functional areas to ensure consistency between the
diligence and integration process.
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·
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Address Emerging State
Needs. We work to assist the states in which we operate
in addressing the operating challenges they face. We seek to
assist the states in balancing premium rates, benefit levels, member
eligibility, policies and practices, and provider
compensation. For example, in 2007, the Texas Health and Human
Services Commission awarded us a contract for Comprehensive Health Care
for Children in Foster Care, a new statewide program providing managed
care services to participants in the Texas Foster Care
program. In 2005, we began performing under our contracts with
the State of Arizona to facilitate the delivery of mental health and
substance abuse services to behavioral health recipients in
Arizona. Effective January 1, 2005, we were awarded a
behavioral health contract to serve SCHIP members in Kansas. By
helping states structure an appropriate level and range of Medicaid, SCHIP
and specialty services, we seek to ensure that we are able to continue to
provide those services on terms that achieve targeted gross margins,
provide an acceptable return and grow our
business.
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·
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Develop and Acquire Additional
State Markets where Enrollment is Mandated. We continue
to leverage our experience to identify and develop new markets by seeking
both to acquire existing business and to build our own
operations. We expect to focus expansion on states where
Medicaid recipients are mandated to enroll in managed care organizations,
because we believe member enrollment levels are more predictable in these
states. For example, effective June 1, 2006, we began managing
care for Medicaid and SCHIP members in Georgia. In addition, we
focus our attention on states converting to managed care. For
example, in 2007, we entered the South Carolina market and in December
2007, we began participating in the state’s conversion to at-risk managed
care.
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·
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Leverage Established
Infrastructure to Enhance Operating Efficiencies. We
intend to continue to invest in infrastructure to further drive
efficiencies in operations and to add functionality to improve the service
provided to members and other organizations at a low cost. Our centralized
functions enable us to add members and markets quickly and
economically. For example, during 2005, we opened an additional
claims processing facility to accommodate our planned growth initiatives
for this centralized function.
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·
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Maintain Operational
Discipline. We monitor our cost trends, operating
performance, regulatory relationships and the Medicaid political
environment in our existing markets. We seek to operate in
markets that allow us to meet our internal metrics including membership
growth, plan size, market leadership and operating
efficiency. We may divest contracts or health plans in markets
where the state’s Medicaid environment, over a long-term basis, does not
allow us to meet our targeted performance levels. We use
multiple techniques to monitor and reduce our medical costs, including
on-site hospital review by staff nurses and involvement of medical
management and finance personnel in significant cases. Our
financial management teams evaluate the financial impact of proposed
changes in provider relationships. We also conduct monthly
reviews of member demographics for each health
plan.
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State
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Local
Health Plan Name
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First
Year of Operations Under the Company
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Counties
Served at
December
31, 2007
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Market
Share (1)
|
Membership
at
December
31, 2007
|
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Georgia
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Peach
State Health Plan
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2006
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90
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30.0%
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287,900
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||||||
Indiana
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Managed
Health Services
|
1995
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92
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27.8%
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154,600
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||||||
New
Jersey
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University
Health Plans
|
2002
|
20
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7.7%
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57,300
|
||||||
Ohio
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Buckeye
Community Health Plan
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2004
|
43
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10.5%
|
128,700
|
||||||
South
Carolina
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Total
Carolina Care
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2007
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44
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5.0%
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31,800
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||||||
Texas
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Superior
HealthPlan
|
1999
|
217
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21.1%
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354,400
|
||||||
Wisconsin
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Managed
Health Services
|
1984
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29
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21.4%
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131,900
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__________________________________________ | |
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(1)
Represents Medicaid and SCHIP membership as of December 31, 2007 as a
percentage of total eligible Medicaid and SCHIP members in each
state. SSI programs are
excluded.
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·
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Significant cost savings
compared to state paid reimbursement for services. We
bring bottom-line management experience to our health plans. On
the administrative and management side, we bring experience including
quality of care improvement methods, utilization management procedures, an
efficient claims payment system, and provider performance reporting, as
well as managers and staff experienced in using these key elements to
improve the quality of and access to
care.
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·
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Data-driven approaches to
balance cost and verify eligibility. Our Medicaid health
plans have conducted enrollment processing and activities for state
programs since 1984. We seek to ensure effective enrollment
procedures that move members into the plan, then educate them and ensure
that they receive needed services as quickly as possible. Our
IT department has created mapping/translation programs for loading
membership and linking membership eligibility status to all of Centene’s
subsystems.
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·
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Establishment of realistic and
meaningful expectations for quality deliverables. We
have collaborated with state agencies in redefining benefits, eligibility
requirements and provider fee schedules with the goal of maximizing the
number of individuals covered through Medicaid, SCHIP and SSI
programs.
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·
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Managed care expertise in
government subsidized programs. Our expertise in
Medicaid has helped us establish and maintain strong relationships with
our constituent communities of members, providers and state
governments. We provide access to services through local
providers and staff that focus on the cultural norms of their individual
communities. To that end, systems and procedures have been
designed to address community-specific challenges through outreach,
education, transportation and other member support
activities.
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·
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Improved medical
outcomes. We have implemented programs developed to
achieve savings for state governments and improve medical outcomes for
members by reducing inappropriate emergency room use, inpatient days and
high cost interventions, as well as by managing care of chronic
illness.
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·
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Timely payment of provider
claims. We are committed to ensuring that our
information systems and claims payment systems meet or exceed state
requirements. We continuously endeavor to update our systems
and processes to improve the timeliness of our provider
payments.
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·
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Cost saving outreach and
specialty programs. Our health plans have adopted a
physician-driven approach where network providers are actively engaged in
developing and implementing healthcare delivery policies and
strategies. This approach is designed to eliminate unnecessary
costs, improve services to members and simplify the administrative burdens
placed on providers.
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·
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Responsible collection and
dissemination of utilization data. We gather utilization
data from multiple sources, allowing for an integrated view of our
members’ utilization of services. These sources include medical
and behavioral health claims and encounter data, pharmacy data, vision and
dental vendor claims and authorization data from the authorization and
case management system utilized by us to coordinate
care.
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·
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Timely and accurate
reporting. Our information systems have reporting
capabilities which have been instrumental in identifying the need for new
and/or improved healthcare and specialty programs. For state
agencies, our reporting capability is important in demonstrating an
auditable program.
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Ÿ
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primary
and specialty physician care
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Ÿ
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transportation
assistance
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Ÿ
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inpatient
and outpatient hospital care
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Ÿ
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vision
care
|
|
Ÿ
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emergency
and urgent care
|
Ÿ
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dental
care
|
|
Ÿ
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prenatal
care
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Ÿ
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immunizations
|
|
Ÿ
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laboratory
and x-ray services
|
Ÿ
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prescriptions
and limited over-the-counter drugs
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Ÿ
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home
health and durable medical equipment
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Ÿ
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therapies
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Ÿ
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behavioral
health and substance abuse services
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Ÿ
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social
work services
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Ÿ
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24-hour
nurse advice line
|
·
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CONNECTIONS is a
community face-to-face outreach and education program designed to create a
link between the member and the provider and help identify potential
challenges or risk elements to a member’s health, such as nutritional
challenges and health education shortcomings. CONNECTIONS
representatives also contact new members by phone or mail to discuss
managed care, the Medicaid program and our services. Our
CONNECTIONS representatives make home visits, conduct educational programs
and represent our health plans at community events such as health
fairs.
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·
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Start Smart For Your Baby
is a prenatal and infant health program designed to increase the
percentage of pregnant women receiving early prenatal care, reduce the
incidence of low birth weight babies, identify high risk pregnancies,
increase participation in the federal Women, Infant and Children program,
prevent hospital admissions in the first year of life and increase
well-child visits. The program includes risk assessments,
education through face-to-face meetings and materials, behavior
modification plans, assistance in selecting a provider for the infant and
scheduling newborn follow-up
visits.
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·
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EPSDT Case Management
is a preventive care program designed to educate our members on the
benefits of Early and Periodic Screening, Diagnosis and Treatment, or
EPSDT, services. We have a systematic program of communicating,
tracking, outreach, reporting and follow-through that promotes state EPSDT
programs.
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·
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Life and Health Management
Programs are designed to help members understand their disease and
treatment plan and improve their wellness in a cost effective
manner. These programs address medical conditions that are
common within the Medicaid population such as asthma, diabetes and
pregnancy. Our Specialty Services segment manages many of our
life and health management programs. Our SSI program uses a
proprietary assessment tool that effectively identifies barriers to care,
unmet functional needs, available social supports and the existence of
behavioral health conditions that impede a member’s ability to maintain a
proper health status. Care coordinators develop individual care
plans with the member and healthcare providers ensuring the full
integration of behavioral, social and acute care
services. These care plans, while specific to an SSI member,
incorporate “Condition Specific” practices in collaboration with physician
partners and community resources.
|
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Primary
Care
Physicians
|
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Specialty
Care
Physicians
|
|
Hospitals
|
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Georgia
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3,734
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12,467
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128
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|||
Indiana
|
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790
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2,935
|
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63
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New
Jersey
|
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1,379
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4,091
|
|
69
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Ohio
|
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2,412
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8,088
|
|
122
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South
Carolina
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367
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641
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6
|
|||
Texas
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6,092
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|
11,019
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|
340
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Wisconsin
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1,925
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4,632
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67
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Ÿ
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Under
our fee-for-service contracts with physicians, particularly specialty care
physicians, we pay a negotiated fee for covered services. This
model is characterized as having no financial risk for the
physician. In addition, this model requires management
oversight because our total cost may increase as the units of services
increase or as more expensive services replace less expensive
services. We have prior authorization procedures in place that
are intended to make sure that certain high cost diagnostic and other
services are medically appropriate.
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Ÿ
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Under
our capitated contracts, primary care physicians are paid a monthly fee
for each of our members assigned to his or her practice and are at risk
for all costs associated with primary and specialty physician and
emergency room services. In return for this payment, these
physicians provide all primary care and preventive services, including
primary care office visits and EPSDT services. If these
physicians also provide non-capitated services to their assigned members,
they may receive payment under fee-for-service arrangements at standard
Medicaid rates.
|
Ÿ
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Under
risk-sharing arrangements, physicians are paid under a capitated or
fee-for-service arrangement. The arrangement, however, contains
provisions for additional bonus to the physicians or reimbursement from
the physicians based upon cost and quality factors. We often
refer to these arrangements as Model 1
contracts.
|
|
Ÿ
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Customized Utilization Reports
provide certain of our contracted physicians with information that
enables them to run their practices more efficiently and focuses them on
specific patient needs. For example, quarterly detail reports
update physicians on their status within their risk
pools. Equivalency reports provide physicians with financial
comparisons of capitated versus fee-for-service
arrangements.
|
|
Ÿ
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Case Management Support
helps the physician coordinate specialty care and ancillary
services for patients with complex conditions and direct members to
appropriate community resources to address both their health and
socio-economic needs.
|
|
|
|
Ÿ
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Web-based Claims and
Eligibility Resources have been implemented in selected markets to
provide physicians with on-line access to perform claims and eligibility
inquiries.
|
|
|
|
Ÿ
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Smart
Start For Your Baby, a prenatal case management program aimed at helping
women with high-risk pregnancies deliver full-term, healthy
infants;
|
|
Ÿ
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an
emergency room diversion program to reduce the number of inappropriate
emergency room visits; and
|
|
Ÿ
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a
health management program to improve the ability of those with asthma and
their families to control their disease and thereby reduce the need for
emergency room visits and
hospitalizations.
|
Ÿ
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Behavioral
Health. Cenpatico Behavioral Health manages behavioral
healthcare for members via a contracted network of
providers. Cenpatico works with providers to determine the best
course of treatment for a given diagnosis and helps ensure members and
their providers are aware of the full array of services
available. Our networks feature a range of services so that
patients can be treated at an appropriate level of care. We
also run school-based programs in Arizona that focus on students with
special needs. We acquired Cenpatico in
2003.
|
Ÿ
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Life and Health
Management. Our life and health management company,
Nurtur Health (formerly AirLogix, Cardium Health and Work/Life
Innovations), specializes in implementing life and health management
programs that encourage healthy behaviors, promote healthier workplaces,
improve productivity and reduce healthcare costs. Specific
focuses include chronic respiratory health management, cardiac health
management, and work/life management. Through its
specialization in respiratory management, Nurtur Health uses self-care
therapies, in-home interaction and informatics processes to deliver highly
effective clinical results, enhanced patient-provider satisfaction and
greater cost reductions in respiratory management. Through a
people centered, multi-disciplinary and integrated approach, Nurtur Health
also uses primary health coaches, customized care plans, and
disease-specific education to assist patients in achieving their health
goals and deliver enhanced patient-provider satisfaction and greater cost
reductions in chronic life and health management. We acquired
AirLogix in July 2005, Cardium Health in May 2006 and Work/Life
Innovations in November 2007. The combination of these
three entities was
completed in December 2007.
|
Ÿ
|
Long-term
Care. Bridgeway Health Solutions provides long-term care
services to the elderly and people with disabilities on SSI that meet
income and resources requirements who are at risk of being or are
institutionalized. Bridgeway has members in the Maricopa, Yuma
and La Paz counties of Arizona. Bridgeway attempts to
distinguish itself from other Medicaid and Medicare health plans through
ongoing participation with community groups to address situations that
might be barriers to quality care and independent
living. Bridgeway commenced operations in October
2006.
|
Ÿ
|
Managed
Vision. OptiCare manages vision benefits for members via
a contracted network of providers. OptiCare works with
providers to provide a variety of vision plan designs and helps ensure
members and their providers are aware of the full array of products and
services available. Our networks feature a range of products
and services so that patients can be treated at an appropriate level of
care. We acquired the managed vision business of OptiCare
Health Systems, Inc. in July 2006.
|
Ÿ
|
Nurse
Triage. NurseWise provides a toll-free nurse triage line
24 hours per day, 7 days per week, 52 weeks per year. Our
members call one number and reach bilingual customer service
representatives and nursing staff who provide health education, triage
advice and offer continuous access to health plan
functions. Additionally, our representatives verify
eligibility, confirm primary care provider assignments and provide benefit
and network referral coordination for members and providers after business
hours. Our staff can arrange for urgent pharmacy refills,
transportation and qualified behavioral health professionals for crisis
stabilization assessments. Call volume is based on membership
levels and seasonal variation. NurseWise operates in certain
areas under the name Nurse Response. NurseWise commenced
operations in 1998.
|
Ÿ
|
Pharmacy Benefits
Management. US Script is a pharmacy benefits manager
that administers pharmacy benefits and processes pharmacy claims via its
proprietary claims processing software. US Script has developed
and administers a contracted national network of retail
pharmacies. We acquired US Script in January
2006.
|
Ÿ
|
Treatment
Compliance. ScriptAssist is a treatment compliance
program that uses psychological-based tools to predict which patients are
likely to be non-compliant regarding taking their medications, and then to
motivate those at-risk patients to adhere to their doctors’
advice. ScriptAssist uses
registered nurses to educate patients about the reasons for the
medications they were prescribed, to provide accurate information about
side effects and risks of such medications, and to keep the doctors
informed of the patients’ progress between visits. We acquired
ScriptAssist in
2003.
|
Ÿ
|
written
standards of conduct;
|
Ÿ
|
designation
of a corporate compliance officer and compliance
committee;
|
Ÿ
|
effective
training and education;
|
Ÿ
|
effective
lines for reporting and communication;
|
Ÿ
|
enforcement
of standards through disciplinary guidelines and actions;
|
Ÿ
|
internal
monitoring and auditing; and
|
Ÿ
|
prompt
response to detected offenses and development of corrective action
plans.
|
Ÿ
|
Medicaid Managed Care
Organizations focus on providing healthcare services to Medicaid
recipients. These organizations consist of national and
regional organizations, as well as smaller organizations that operate in
one city or state and are owned by providers, primarily
hospitals.
|
Ÿ
|
National and Regional
Commercial Managed Care Organizations have Medicaid members in
addition to members in private commercial plans. Some of these
organizations offer a range of specialty services including pharmacy
benefits management, behavioral health management, health management, and
nurse triage call support centers.
|
Ÿ
|
Primary Care Case Management
Programs are programs established by the states through contracts
with primary care providers. Under these programs, physicians
provide primary care services to Medicaid recipients, as well as limited
medical management oversight.
|
Ÿ
|
premium
and maintenance taxes;
|
Ÿ
|
stringent
prompt-pay laws;
|
Ÿ
|
requirements
of National Provider Identifier numbers on claim
submittals;
|
Ÿ
|
disclosure
requirements regarding provider fee schedules and coding procedures;
and
|
Ÿ
|
programs
to monitor and supervise the activities and financial solvency of provider
groups.
|
Ÿ eligibility,
enrollment and disenrollment processes;
|
Ÿ health education
and wellness and prevention programs;
|
|
Ÿ covered
services;
|
Ÿ timeliness of
claims payment;
|
|
Ÿ eligible
providers;
|
Ÿ financial
standards;
|
|
Ÿ subcontractors;
|
Ÿ safeguarding of
member information;
|
|
Ÿ record-keeping
and record retention;
|
Ÿ fraud and abuse
detection and reporting;
|
|
Ÿ periodic
financial and informational reporting;
|
Ÿ grievance
procedures; and
|
|
Ÿ quality
assurance;
|
Ÿ organization and
administrative systems.
|
State
Contract
|
|
Expiration
Date
|
|
Renewal
or Extension by the State
|
Termination
by the State
|
|
Arizona
– Behavioral Health
|
June
30, 2008
|
May
be extended for up to two additional years.
|
May
be terminated for convenience or an event of default.
|
|||
Arizona
– Long-term Care
|
September
30, 2009
|
May
be extended for up to two additional years.
|
May
be terminated for convenience, an event of default or lack of
funding.
|
|||
Arizona
– Special Needs Plan (Medicare)
|
December
31, 2008
|
Renewable
annually for successive 12-month periods.
|
May
be terminated by an event of default.
|
|||
Georgia
– Medicaid & SCHIP
|
June
30, 2008
|
Renewable
for four additional one-year terms.
|
May
be terminated for an event of default or significant changes in
circumstances.
|
|||
Indiana
– Medicaid & SCHIP
|
December
31, 2010
|
May
be extended for up to two additional years.
|
May
be terminated for convenience or an event of default.
|
|||
Kansas
– Behavioral Health
|
June
30, 2009
|
May
be extended with three one-year renewal options.
|
May
be terminated for cause, or without cause for lack of
funding.
|
|||
New
Jersey – Medicaid, SCHIP & SSI
|
June
30, 2008
|
Renewable
annually for successive 12-month periods.
|
May
be terminated for convenience or an event of default.
|
|||
Ohio
–Medicaid & SCHIP
|
June
30, 2008
|
Renewable
annually for successive 12-month periods.
|
May
be terminated for an event of default.
|
|||
Ohio
– Aged, Blind or Disabled (SSI)
|
June
30, 2008
|
Renewable
annually for successive 12-month periods.
|
May
be terminated for an event of default.
|
|||
Ohio
– Special Needs Plan (Medicare)
|
December
31, 2008
|
Renewable
annually for successive 12-month periods.
|
May
be terminated by an event of default.
|
|||
South
Carolina – Medicaid & SSI
|
March
31, 2008
|
Renewable
annually for successive 12-month periods.
|
May
be terminated for convenience or an event of default.
|
|||
Texas –Medicaid,
SCHIP & SSI
|
August
31, 2008
|
May
be extended for up to six additional years.
|
May
be terminated for convenience, an event of default or lack of federal
funding.
|
|||
Texas
– Exclusive Provider Organization (SCHIP)
|
August
31, 2008
|
May
be extended for up to two additional years.
|
May
be terminated upon any event of default or in the event of lack of state
or federal funding.
|
|||
Texas
– Foster Care
|
August
31, 2010
|
May
be extended for up to five and a half additional years.
|
May
be terminated for convenience, an event of default, or non-appropriation
of funds.
|
|||
Texas
– Special Needs Plan (Medicare)
|
December
31, 2008
|
Renewable
annually for successive 12-month periods.
|
May
be terminated by an event of default.
|
|||
Wisconsin
–Medicaid & SSI
|
December
31, 2009
|
May
be extended for up to one additional year.
|
May
be terminated if a change in state or federal laws, rules or regulations
materially affects either party’s right or responsibilities or for an
event of default or lack of funding.
|
|||
Wisconsin
– Network Health Plan Subcontract
|
December
31, 2011
|
Renews
automatically for successive five-year terms.
|
May
be terminated upon two-years notice prior to the end of the then current
term or if a change in state or federal laws, rules or regulations
materially affects either party’s rights or responsibilities under the
contract, or if Network Health Plan’s contract with the State is
terminated.
|
|||
Wisconsin
– Special Needs Plan (Medicare)
|
December
31, 2008
|
Renewable
annually for successive 12-month periods.
|
May
be terminated by an event of default.
|
|||
|
Ÿ
|
limit
certain uses and disclosures of private health information, and require
patient authorizations for such uses and disclosures of private health
information;
|
|
Ÿ
|
guarantee
patients rights to access their medical records and to know who else has
accessed them;
|
|
Ÿ
|
limit
most disclosure of health information to the minimum needed for the
intended purpose;
|
|
Ÿ
|
establish
procedures to ensure the protection of private health
information;
|
|
Ÿ
|
authorize
access to records by researchers and others;
and
|
|
Ÿ
|
impose
criminal and civil sanctions for improper uses or disclosures of health
information.
|
Name
|
|
Age
|
|
Position
|
Michael
F. Neidorff
|
|
65
|
|
Chairman
and Chief Executive Officer
|
Mark
W. Eggert
|
46
|
Executive
Vice President, Health Plan Business Unit
|
||
Carol
E. Goldman
|
|
50
|
|
Executive
Vice President and Chief Administrative Officer
|
Cary
D. Hobbs
|
40
|
Senior
Vice President, Strategy and Business Implementation
|
||
Jesse
N. Hunter
|
32
|
Senior
Vice President, Corporate Development
|
||
Edmund
E. Kroll
|
48
|
Senior
Vice President, Finance and Investor Relations
|
||
William
N. Scheffel
|
|
54
|
|
Executive
Vice President, Specialty Business Unit
|
Eric
R. Slusser
|
47
|
Executive
Vice President, Chief Financial Officer and Treasurer
|
||
Keith
H. Williamson
|
55
|
Senior
Vice President, General Counsel and
Secretary
|
|
2007
Stock Price
|
|
2006
Stock Price
|
|||||||||
|
High
|
|
Low
|
|
High
|
|
Low
|
|||||
First
Quarter
|
|
$
|
26.66
|
|
$
|
20.68
|
|
$
|
30.26
|
|
$
|
22.70
|
Second
Quarter
|
|
24.28
|
|
19.35
|
|
29.59
|
|
22.88
|
||||
Third
Quarter
|
|
23.79
|
|
17.65
|
|
23.87
|
|
13.25
|
||||
Fourth
Quarter
|
|
27.73
|
|
21.26
|
|
26.95
|
|
16.11
|
Issuer
Purchases of Equity Securities
Fourth
Quarter 2007
|
|||||||||||
Period
|
Total
Number of
Shares
Purchased
|
Average
Price
Per
Share
|
Total
Number
of
Shares
Purchased
as
Part
of Publicly
Announced
Plans
or
Programs
|
Maximum
Number
of Shares
that
May Yet Be
Purchased
Under
the
Plans or
Programs
|
|||||||
October
1 – October 31, 2007
|
18,000
|
$
|
22.99
|
18,000
|
3,159,400
|
||||||
November
1 – November 30, 2007
|
20,000
|
22.33
|
20,000
|
3,139,400
|
|||||||
December 1 - December 31, 2007 | 3,957 | 1 | 24.96 | — | 3,139,400 | ||||||
TOTAL
|
|
41,957
|
|
$
|
22.86
|
|
38,000
|
3,139,400
|
|||
|
|
|
|
|
Year
Ended December 31,
|
|||||||||||||||||||
|
2007
|
2006
|
2005
|
2004
|
2003
|
|||||||||||||||
(In
thousands, except share data)
|
||||||||||||||||||||
Statement
of Operations Data:
|
|
|||||||||||||||||||
Revenues:
|
|
|||||||||||||||||||
Premium
|
|
$
|
2,759,018
|
$
|
1,844,452
|
$
|
1,211,023
|
$
|
965,923
|
$
|
758,338
|
|||||||||
Premium
tax
|
79,572
|
37,961
|
7,214
|
5,503
|
1,425
|
|||||||||||||||
Service
|
|
80,702
|
79,581
|
13,965
|
9,267
|
9,967
|
||||||||||||||
Total
revenues
|
|
2,919,292
|
1,961,994
|
1,232,202
|
980,693
|
769,730
|
||||||||||||||
Expenses:
|
|
|||||||||||||||||||
Medical
costs
|
|
2,324,486
|
1,555,658
|
994,517
|
782,307
|
626,192
|
||||||||||||||
Cost
of services
|
|
61,454
|
60,506
|
5,851
|
8,065
|
8,323
|
||||||||||||||
General
and administrative expenses
|
|
399,687
|
280,067
|
172,349
|
121,045
|
86,863
|
||||||||||||||
Premium
tax expense
|
79,572
|
37,961
|
7,214
|
5,503
|
1,425
|
|||||||||||||||
Total
operating expenses
|
|
2,865,199
|
1,934,192
|
1,179,931
|
916,920
|
722,803
|
||||||||||||||
Earnings
from operations
|
|
54,093
|
27,802
|
52,271
|
63,773
|
46,927
|
||||||||||||||
Other
income (expense):
|
|
|||||||||||||||||||
Investment
and other income
|
|
25,169
|
16,416
|
9,106
|
6,336
|
5,160
|
||||||||||||||
Interest
expense
|
|
(15,626
|
)
|
(10,636
|
)
|
(3,990
|
)
|
(680
|
)
|
(194
|
)
|
|||||||||
Earnings
before income taxes
|
|
63,636
|
33,582
|
57,387
|
69,429
|
51,893
|
||||||||||||||
Income
tax expense
|
|
22,367
|
12,642
|
19,686
|
25,666
|
19,504
|
||||||||||||||
Minority
interest
|
|
—
|
—
|
—
|
—
|
881
|
||||||||||||||
Net
earnings from continuing operations
|
41,269
|
20,940
|
37,701
|
43,763
|
33,270
|
|||||||||||||||
Discontinued
operations, net of income tax (benefit) expense of $(30,899), $9,335,
$10,538, $309 and $0, respectively
|
32,133
|
(64,569
|
)
|
17,931
|
549
|
—
|
||||||||||||||
Net
earnings (loss)
|
|
$
|
73,402
|
$
|
(43,629
|
)
|
$
|
55,632
|
$
|
44,312
|
$
|
33,270
|
||||||||
Net
earnings (loss) per common share:
|
|
|||||||||||||||||||
Basic:
|
||||||||||||||||||||
Continuing
operations
|
|
$
|
0.95
|
$
|
0.49
|
$
|
0.89
|
$
|
1.07
|
$
|
0.93
|
|||||||||
Discontinued
operations
|
|
0.74
|
(1.50
|
)
|
0.42
|
0.01
|
—
|
|||||||||||||
Basic
earnings (loss) per common share
|
|
$
|
1.69
|
$
|
(1.01
|
)
|
$
|
1.31
|
$
|
1.09
|
$
|
0.93
|
||||||||
Diluted:
|
|
|||||||||||||||||||
Continuing
operations
|
|
$
|
0.92
|
$
|
0.47
|
$
|
0.84
|
$
|
1.00
|
$
|
0.87
|
|||||||||
Discontinued
operations
|
|
0.72
|
(1.45
|
)
|
0.40
|
0.01
|
—
|
|||||||||||||
Diluted
earnings (loss) per common share
|
|
$
|
1.64
|
$
|
(0.98
|
)
|
$
|
1.24
|
$
|
1.02
|
$
|
0.87
|
||||||||
Weighted
average number of common shares outstanding:
|
|
|||||||||||||||||||
Basic
|
|
43,539,950
|
43,160,860
|
42,312,522
|
40,820,909
|
35,704,426
|
||||||||||||||
Diluted
|
|
44,823,082
|
44,613,622
|
45,027,633
|
43,616,445
|
38,422,152
|
||||||||||||||
|
December
31,
|
|||||||||||||||||||
|
2007
|
2006
|
2005
|
2004
|
2003
|
|||||||||||||||
|
(In
thousands)
|
|||||||||||||||||||
Balance
Sheet Data:
|
|
|||||||||||||||||||
Cash
and cash equivalents
|
|
$
|
268,584
|
$
|
271,047
|
$
|
147,358
|
$
|
84,105
|
$
|
64,346
|
|||||||||
Investments
and restricted deposits
|
390,611
|
197,197
|
185,697
|
208,255
|
220,335
|
|||||||||||||||
Total
assets
|
|
1,119,122
|
894,980
|
668,030
|
527,934
|
362,692
|
||||||||||||||
Medical
claims liabilities
|
335,856
|
249,864
|
139,687
|
139,602
|
106,569
|
|||||||||||||||
Long-term
debt
|
|
206,406
|
174,646
|
92,448
|
46,973
|
7,616
|
||||||||||||||
Total
stockholders’ equity
|
|
415,047
|
326,423
|
352,048
|
271,312
|
220,115
|
—
|
Year-end
Medicaid Managed Care membership of
1,146,600.
|
—
|
Total
revenues of $2.9 billion.
|
—
|
Medicaid
and SCHIP health benefits ratio, or HBR, of 83.2%, SSI HBR of 92.0%,
Specialty Services HBR of 78.2%.
|
—
|
Medicaid
Managed Care general and administrative, or G&A, expense ratio of
11.1% and Specialty Services G&A ratio of
15.4%.
|
—
|
Diluted
net earnings per share from continuing operations of
$0.92.
|
—
|
Total
operating cash flows of $202.2
million.
|
|
—
|
In
2007, we acquired PhyTrust of South Carolina, LLC, or PhyTrust, as
well as Physician’s Choice, LLC, both of which manage care on a non-risk
basis for Medicaid members in South Carolina. At December 31,
2007, our non-risk membership in South Carolina was 31,700
members. We also became licensed in 2007 to provide risk-based
managed care in the state and began participating in the transition
of the state’s conversion to at-risk managed care in December 2007, with
100 members at December 31, 2007.
|
|
—
|
In
February 2007, we began managing care for SSI recipients in the San
Antonio and Corpus Christi markets of Texas with 33,100 members at
December 31, 2007.
|
|
—
|
In
2007, we began managing care for SSI members in four regions of
Ohio, with 20,300 members at December 31,
2007.
|
|
—
|
In
July 2006, we entered seven new counties in the East Central market
of Ohio, and in October 2006, we entered 17 new counties in the Northwest
market of Ohio with 41,700 members at December 31,
2007.
|
— |
In
September 2006, we expanded operations in Texas to include Medicaid and
SCHIP members in the Corpus Christi, Austin and Lubbock markets, with
28,900 members at December 31,
2007.
|
|
—
|
In
Georgia, we began managing care for Medicaid and SCHIP members in the
Atlanta and Central regions effective June 1, 2006 and Southwest region
effective September 1, 2006. At December 31, 2007, our
membership in Georgia was 287,900.
|
—
|
In July 2007,
we
acquired a minority ownership interest in Access Health Solutions,
LLC, or Access, which provides managed care for Medicaid recipients
in Florida, with 90,600 members at December 31,
2007.
|
—
|
We
have been awarded a contract in Texas for the Children in Foster Care
program. This statewide program will provide managed care services to
participants in the Texas Foster Care program. The State of Texas has
indicated that membership operations are expected to commence April 1,
2008.
|
|
—
|
Effective
October 1, 2006, we began to provide long-term care services in the
Maricopa, Yuma and LaPaz counties in
Arizona.
|
|
—
|
Effective
July 1, 2006, we acquired the managed vision business of OptiCare Managed
Vision, Inc., or OptiCare.
|
|
—
|
Effective
May 9, 2006, we acquired Cardium Health Services Corporation, or Cardium,
a health management company.
|
|
—
|
Effective
January 1, 2006, we acquired US Script, Inc., or US Script, a pharmacy
benefits manager (PBM).
|
|
—
|
Effective
July 22, 2005, we acquired AirLogix, Inc., or AirLogix, a health
management provider.
|
|
—
|
Effective
July 1, 2005, we began to facilitate the delivery of mental health and
substance abuse services to behavioral health recipients in
Arizona.
|
2007
|
2006
|
2005
|
%
Change
2006-2007
|
%
Change
2005-2006
|
||||||||||||||||
Premium
|
$ | 2,759.0 | $ | 1,844.4 | $ | 1,211.0 | 49.6 | % | 52.3 | % | ||||||||||
Premium
tax
|
79.6 | 38.0 | 7.2 | 109.6 | % | 426.2 | % | |||||||||||||
Service
|
80.7 | 79.6 | 14.0 | 1.4 | % | 469.9 | % | |||||||||||||
Total
revenues
|
2,919.3 | 1,962.0 | 1,232.2 | 48.8 | % | 59.2 | % | |||||||||||||
Medical
costs
|
2,324.5 | 1,555.6 | 994.5 | 49.4 | % | 56.4 | % | |||||||||||||
Cost
of services
|
61.4 | 60.5 | 5.9 | 1.6 | % | 934.1 | % | |||||||||||||
General
and administrative expenses
|
399.7 | 280.1 | 172.3 | 42.7 | % | 62.5 | % | |||||||||||||
Premium
tax expense
|
79.6 | 38.0 | 7.2 | 109.6 | % | 426.2 | % | |||||||||||||
Earnings
from operations
|
54.1 | 27.8 | 52.3 | 94.6 | % | (46.8 | )% | |||||||||||||
Investment
and other income, net
|
9.6 | 5.8 | 5.1 | 65.1 | % | 13.0 | % | |||||||||||||
Earnings
before income taxes
|
63.7 | 33.6 | 57.4 | 89.5 | % | (41.5 | )% | |||||||||||||
Income
tax expense
|
22.4 | 12.6 | 19.7 | 76.9 | % | (35.8 | )% | |||||||||||||
Net
earnings from continuing operations
|
41.3 | 21.0 | 37.7 | 97.1 | % | (44.5 | )% | |||||||||||||
Discontinued
operations, net of income tax (benefit) expense of $(30.9), $9.3 and $10.5
respectively
|
32.1 | (64.6 | ) | 17.9 | (149.8 | )% | (460.1 | )% | ||||||||||||
Net
earnings (loss)
|
$ | 73.4 | $ | (43.6 | ) | $ | 55.6 | (268.2 | )% | (178.4 | )% | |||||||||
Diluted
earnings (loss) per common share:
|
||||||||||||||||||||
Continuing
operations
|
$ | 0.92 | $ | 0.47 | $ | 0.84 | 95.7 | % | (44.0 | )% | ||||||||||
Discontinued
operations
|
0.72 | (1.45 | ) | 0.40 | (149.7 | )% | (462.5 | )% | ||||||||||||
Total
diluted earnings (loss) per common share
|
$ | 1.64 | $ | (0.98 | ) | $ | 1.24 | (267.3 | )% | (179.0 | )% |
|
1.
|
Membership
growth
|
December
31,
|
||||||
2007
|
2006
|
2005
|
||||
Georgia
|
287,900
|
308,800
|
—
|
|||
Indiana
|
|
154,600
|
|
183,100
|
|
193,300
|
New
Jersey
|
|
57,300
|
|
58,900
|
|
56,500
|
Ohio
|
|
128,700
|
|
109,200
|
|
58,700
|
South
Carolina
|
31,800
|
—
|
—
|
|||
Texas
|
|
354,400
|
|
298,500
|
|
242,000
|
Wisconsin
|
|
131,900
|
|
164,800
|
|
172,100
|
Total
|
|
1,146,600
|
|
1,123,300
|
722,600
|
|
December
31,
|
|||||
|
2007
|
|
2006
|
|
2005
|
|
Medicaid
|
|
848,100
|
|
887,300
|
|
573,100
|
SCHIP
|
|
224,400
|
|
216,200
|
|
134,600
|
SSI
|
|
74,100
|
|
19,800
|
|
14,900
|
Total
|
|
1,146,600
|
|
1,123,300
|
|
722,600
|
|
2.
|
Premium
rate increases
|
|
3.
|
Specialty
Services segment growth
|
Year
Ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Medicaid
and SCHIP
|
83.2 | % | 84.3 | % | 81.5 | % | ||||||
SSI
|
92.0 | 88.0 | 98.0 | |||||||||
Specialty
Services
|
78.2 | 82.6 | 85.0 |
Year
Ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Medicaid
Managed Care
|
11.1 | % | 11.4 | % | 11.2 | % | ||||||
Specialty
Services
|
15.4 | 17.1 | 36.6 |
Payments
Due by Period
|
||||||||||||||||||||
Total
|
Less
Than
1
Year
|
1-3
Years
|
3-5
Years
|
More
Than
5
Years
|
||||||||||||||||
Medical
claims liabilities
|
$ | 335,856 | $ | 335,856 | $ | — | $ | — | $ | — | ||||||||||
Debt
|
207,377 | 971 | 20,360 | 5,509 | 180,537 | |||||||||||||||
Operating
leases
|
132,927 | 19,046 | 32,512 | 24,437 | 56,932 | |||||||||||||||
Purchase
obligations
|
24,432 | 12,027 | 12,225 | 180 | — | |||||||||||||||
Interest
on long-term debt 1
|
82,469 | 12,688 | 25,375 | 25,375 | 19,031 | |||||||||||||||
Total
|
$ | 783,061 | $ | 380,588 | $ | 90,472 | $ | 55,501 | $ | 256,500 |
Completion
Factors (1):
|
|
Cost
Trend Factors (2):
|
|||||||||
(Decrease)
Increase
in
Factors
|
|
Increase
(Decrease)
in
Medical
Claims
Liabilities
|
(Decrease)
Increase
in
Factors
|
|
Increase
(Decrease)
in
Medical
Claims
Liabilities
|
||||||
|
(in
thousands)
|
|
(in
thousands)
|
||||||||
(3
|
)%
|
$
|
54,800
|
(3
|
)%
|
$
|
(14,400
|
)
|
|||
(2
|
)
|
|
36,200
|
(2
|
)
|
(9,600
|
)
|
||||
(1
|
)
|
|
17,900
|
(1
|
)
|
(4,800
|
)
|
||||
1
|
|
(17,500
|
)
|
1
|
4,800
|
||||||
2
|
|
(34,700
|
)
|
2
|
9,700
|
||||||
3
|
|
(51,500
|
)
|
3
|
14,700
|
(1)
|
Reflects
estimated potential changes in medical claims liabilities caused by
changes in completion factors.
|
(2)
|
Reflects
estimated potential changes in medical claims liabilities caused by
changes in cost trend factors for the most recent
periods.
|
|
Year
Ended December 31,
|
|||||||||||
|
2007
|
2006
|
2005
|
|||||||||
Balance,
January 1
|
|
$
|
249,864
|
$
|
139,687
|
$
|
139,602
|
|||||
Acquisitions
|
|
—
|
1,788
|
—
|
||||||||
Incurred
related to:
|
|
|||||||||||
Current
year
|
|
2,340,716
|
1,569,082
|
1,010,656
|
||||||||
Prior
years
|
|
(16,230
|
)
|
(13,424
|
)
|
(16,139
|
)
|
|||||
Total
incurred
|
|
2,324,486
|
1,555,658
|
994,517
|
||||||||
Paid
related to:
|
|
|||||||||||
Current
year
|
|
2,009,881
|
1,322,607
|
872,019
|
||||||||
Prior
years
|
|
228,613
|
124,662
|
122,413
|
||||||||
Total
paid
|
|
2,238,494
|
1,447,269
|
994,432
|
||||||||
Balance,
December 31
|
|
$
|
335,856
|
$
|
249,864
|
$
|
139,687
|
|||||
|
||||||||||||
Claims
inventory, December 31
|
|
312,700
|
267,700
|
215,000
|
||||||||
Days
in claims payable 1
|
|
49.1
|
46.4
|
45.0
|
·
|
our
ability to accurately predict and effectively manage health benefits and
other operating expenses;
|
·
|
competition;
|
·
|
changes
in healthcare practices;
|
·
|
changes
in federal or state laws or
regulations;
|
·
|
inflation;
|
·
|
provider
contract changes;
|
·
|
new
technologies;
|
·
|
reduction
in provider payments by governmental
payors;
|
·
|
major
epidemics;
|
·
|
disasters
and numerous other factors affecting the delivery and cost of
healthcare;
|
·
|
the
expiration, cancellation or suspension of our Medicaid managed care
contracts by state governments;
|
·
|
availability
of debt and equity financing, on terms that are favorable to us;
and
|
·
|
general
economic and market conditions.
|
For
the Quarter Ended
|
||||||||||||||||
March
31,
2007
|
June
30,
2007
(1)
|
September
30,
2007
|
December
31,
2007
(2)
|
|||||||||||||
Total
revenues
|
$ | 664,234 | $ | 727,731 | $ | 749,888 | $ | 777,439 | ||||||||
Net
earnings from continuing operations
|
11,597 | 10,175 | 16,464 | 3,033 | ||||||||||||
Discontinued
operations, net of tax
|
26,614 | 7,607 | (528 | ) | (1,560 | ) | ||||||||||
Net
earnings
|
$ | 38,211 | $ | 17,782 | $ | 15,936 | $ | 1,473 | ||||||||
Per
share data:
|
||||||||||||||||
Basic:
|
||||||||||||||||
Continued
operations
|
$ | 0.27 | $ | 0.23 | $ | 0.38 | $ | 0.07 | ||||||||
Discontinued
operations
|
0.61 | 0.18 | (0.01 | ) | (0.04 | ) | ||||||||||
Basic
earnings per common share
|
$ | 0.88 | $ | 0.41 | $ | 0.37 | $ | 0.03 | ||||||||
Diluted:
|
||||||||||||||||
Continued
operations
|
$ | 0.26 | $ | 0.23 | $ | 0.37 | $ | 0.07 | ||||||||
Discontinued
operations
|
0.59 | 0.17 | (0.01 | ) | (0.04 | ) | ||||||||||
Diluted
earnings per common share
|
$ | 0.85 | $ | 0.40 | $ | 0.36 | $ | 0.03 | ||||||||
Period
end membership
|
1,103,300 | 1,131,500 | 1,137,300 | 1,146,600 |
|
(1)
|
Includes
a $3.0 million pre-tax, cash contribution of a portion of the FirstGuard
sale proceeds to the company’s charitable
foundation.
|
|
(2)
|
Includes
$4.2 million pre-tax premium revenue refund to the State of Indiana and a
$9.4 million pre-tax charge for impairment and
restructuring.
|
For
the Quarter Ended
|
||||||||||||||||
March
31,
2006
(1)
|
June
30,
2006
(2)
|
September
30,
2006
|
December
31,
2006
|
|||||||||||||
Total
revenues
|
$ | 378,790 | $ | 417,977 | $ | 547,432 | $ | 617,795 | ||||||||
Net
earnings from continuing operations
|
6,554 | 439 | 4,696 | 9,251 | ||||||||||||
Discontinued
operations, net of tax
|
2,212 | 4,526 | (75,889 | ) | 4,582 | |||||||||||
Net
earnings (loss)
|
$ | 8,766 | $ | 4,965 | $ | (71,193 | ) | $ | 13,833 | |||||||
Per
share data:
|
||||||||||||||||
Basic:
|
||||||||||||||||
Continued
operations
|
$ | 0.15 | $ | 0.01 | $ | 0.11 | $ | 0.21 | ||||||||
Discontinued
operations
|
0.05 | 0.11 | (1.76 | ) | 0.11 | |||||||||||
Basic
earnings (loss) per common share
|
$ | 0.20 | $ | 0.12 | $ | (1.65 | ) | $ | 0.32 | |||||||
Diluted:
|
||||||||||||||||
Continued
operations
|
$ | 0.15 | $ | 0.01 | $ | 0.10 | $ | 0.21 | ||||||||
Discontinued
operations
|
0.05 | 0.10 | (1.72 | ) | 0.10 | |||||||||||
Diluted
earnings (loss) per common share
|
$ | 0.20 | $ | 0.11 | $ | (1.62 | ) | $ | 0.31 | |||||||
Period
end membership
|
722,100 | 951,500 | 1,025,100 | 1,123,300 |
|
(1)
|
Includes
$4.7 million pre-tax implementation expenses related to
Georgia.
|
|
(2)
|
Includes
$8.1 million pre-tax adverse medical cost development in estimated medical
claims liabilities from continuing operations from the first quarter of
2006.
|
|
Page
|
|
1. Consolidated
Financial Statements
|
|
|
|
42
|
|
|
43
|
|
|
44
|
|
|
45
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006 and 2005 | 46 | |
|
47
|
|
2. Financial
Statement Schedules
|
|
|
63
|
||
3. Exhibits
|
|
|
December
31,
|
||||||||
2007
|
2006
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents of continuing operations
|
$ | 268,584 | $ | 253,370 | ||||
Cash
and cash equivalents of discontinued operations
|
— | 17,677 | ||||||
Total
cash and cash equivalents
|
268,584 | 271,047 | ||||||
Premium
and related receivables
|
90,072 | 74,379 | ||||||
Short-term
investments, at fair value (amortized cost $46,392 and $57,031,
respectively)
|
46,269 | 56,790 | ||||||
Other
current assets
|
41,414 | 17,279 | ||||||
Current
assets of discontinued operations other than cash
|
— | 32,327 | ||||||
Total
current assets
|
446,339 | 451,822 | ||||||
Long-term
investments, at fair value (amortized cost $314,681 and $117,620,
respectively)
|
317,041 | 116,052 | ||||||
Restricted
deposits, at fair value (amortized cost $27,056 and $24,512,
respectively)
|
27,301 | 24,355 | ||||||
Property,
software and equipment, net
|
138,139 | 110,688 | ||||||
Goodwill
|
141,030 | 129,881 | ||||||
Other
intangible assets, net
|
13,205 | 15,555 | ||||||
Other
assets
|
36,067 | 9,209 | ||||||
Long-term
assets of discontinued operations
|
— | 37,418 | ||||||
Total
assets
|
$ | 1,119,122 | $ | 894,980 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Medical
claims liabilities
|
$ | 335,856 | $ | 249,864 | ||||
Accounts
payable and accrued expenses
|
105,096 | 63,893 | ||||||
Unearned
revenue
|
44,016 | 33,816 | ||||||
Current
portion of long-term debt and notes payable
|
971 | 971 | ||||||
Current
liabilities of discontinued operations
|
861 | 39,407 | ||||||
Total
current liabilities
|
486,800 | 387,951 | ||||||
Long-term
debt
|
206,406 | 174,646 | ||||||
Other
liabilities
|
10,869 | 5,853 | ||||||
Long-term
liabilities of discontinued operations
|
— | 107 | ||||||
Total
liabilities
|
704,075 | 568,557 | ||||||
Stockholders’
equity:
|
||||||||
Common
stock, $.001 par value; authorized 100,000,000 shares; issued and
outstanding 43,667,837 and 43,369,918 shares, respectively
|
44 | 44 | ||||||
Additional
paid-in capital
|
221,693 | 209,340 | ||||||
Accumulated
other comprehensive income:
|
||||||||
Unrealized
gain (loss) on investments, net of tax
|
1,571 | (1,251 | ) | |||||
Retained
earnings
|
191,739 | 118,290 | ||||||
Total
stockholders’ equity
|
415,047 | 326,423 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 1,119,122 | $ | 894,980 |
Year
Ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Revenues:
|
||||||||||||
Premium
|
$
|
2,759,018
|
$
|
1,844,452
|
$
|
1,211,023
|
||||||
Premium
tax
|
79,572
|
37,961
|
7,214
|
|||||||||
Service
|
80,702
|
79,581
|
13,965
|
|||||||||
Total
revenues
|
2,919,292
|
1,961,994
|
1,232,202
|
|||||||||
Expenses:
|
||||||||||||
Medical
costs
|
2,324,486
|
1,555,658
|
994,517
|
|||||||||
Cost
of services
|
61,454
|
60,506
|
5,851
|
|||||||||
General
and administrative expenses
|
399,687
|
280,067
|
172,349
|
|||||||||
Premium
tax
|
79,572
|
37,961
|
7,214
|
|||||||||
Total
operating expenses
|
2,865,199
|
1,934,192
|
1,179,931
|
|||||||||
Earnings
from operations
|
54,093
|
27,802
|
52,271
|
|||||||||
Other
income (expense):
|
||||||||||||
Investment
and other income
|
25,169
|
16,416
|
9,106
|
|||||||||
Interest
expense
|
(15,626
|
)
|
(10,636
|
)
|
(3,990
|
)
|
||||||
Earnings
before income taxes
|
63,636
|
33,582
|
57,387
|
|||||||||
Income
tax expense
|
22,367
|
12,642
|
19,686
|
|||||||||
Net
earnings from continuing operations
|
41,269
|
20,940
|
37,701
|
|||||||||
Discontinued
operations, net of income tax (benefit) expense of $(30,899), $9,335 and
$10,538
|
32,133
|
(64,569
|
)
|
17,931
|
||||||||
Net
earnings (loss)
|
$
|
73,402
|
$
|
(43,629
|
)
|
$
|
55,632
|
|||||
Net
earnings (loss) per share:
|
||||||||||||
Basic:
|
||||||||||||
Continuing
operations
|
$
|
0.95
|
$
|
0.49
|
$
|
0.89
|
||||||
Discontinued
operations
|
0.74
|
(1.50
|
)
|
0.42
|
||||||||
Basic
earnings (loss) per common share
|
$
|
1.69
|
$
|
(1.01
|
)
|
$
|
1.31
|
|||||
Diluted:
|
||||||||||||
Continuing
operations
|
$
|
0.92
|
$
|
0.47
|
$
|
0.84
|
||||||
Discontinued
operations
|
0.72
|
(1.45
|
)
|
0.40
|
||||||||
Diluted
earnings (loss) per common share
|
$
|
1.64
|
$
|
(0.98
|
)
|
$
|
1.24
|
|||||
Weighted
average number of shares outstanding:
|
||||||||||||
Basic
|
43,539,950
|
43,160,860
|
42,312,522
|
|||||||||
Diluted
|
44,823,082
|
44,613,622
|
45,027,633
|
Common
Stock
|
|||||||||||||||||
$.001
Par
Value
Shares
|
Amt
|
Additional Paid-in Capital | Unrealized Gain (Loss) on Investments | Retained Earnings | Total | ||||||||||||
Balance, December 31,
2004
|
41,316,122
|
$
|
41
|
$
|
165,391
|
$
|
(407
|
)
|
$
|
106,287
|
$
|
271,312
|
|||||
Net
earnings
|
—
|
—
|
—
|
—
|
55,632
|
55,632
|
|||||||||||
Change
in unrealized investment losses, net of $(801) tax
|
—
|
—
|
—
|
(1,347
|
)
|
—
|
(1,347
|
)
|
|||||||||
Comprehensive
earnings
|
54,285
|
||||||||||||||||
Common
stock issued for acquisitions
|
318,735
|
1
|
8,990
|
—
|
—
|
8,991
|
|||||||||||
Common
stock issued for stock options and employee stock purchase
plan
|
1,353,373
|
1
|
6,016
|
—
|
—
|
6,017
|
|||||||||||
Stock
compensation expense
|
—
|
—
|
4,974
|
—
|
—
|
4,974
|
|||||||||||
Excess
tax benefits from stock compensation
|
—
|
—
|
6,469
|
—
|
—
|
6,469
|
|||||||||||
Balance, December 31,
2005
|
42,988,230
|
$
|
43
|
$
|
191,840
|
$
|
(1,754
|
)
|
$
|
161,919
|
$
|
352,048
|
|||||
Net
loss
|
—
|
—
|
—
|
—
|
(43,629
|
)
|
(43,629
|
)
|
|||||||||
Change
in unrealized investment losses, net of $306 tax
|
—
|
—
|
—
|
503
|
—
|
503
|
|||||||||||
Comprehensive
loss
|
(43,126
|
)
|
|||||||||||||||
Common
stock issued for stock options and employee stock purchase
plan
|
783,823
|
1
|
7,497
|
—
|
—
|
7,498
|
|||||||||||
Common
stock repurchases
|
(402,135
|
)
|
—
|
(7,944
|
)
|
—
|
—
|
(7,944
|
)
|
||||||||
Stock
compensation expense
|
—
|
—
|
14,904
|
—
|
—
|
14,904
|
|||||||||||
Excess
tax benefits from stock compensation
|
—
|
—
|
3,043
|
—
|
—
|
3,043
|
|||||||||||
Balance, December 31,
2006
|
43,369,918
|
$
|
44
|
$
|
209,340
|
$
|
(1,251
|
)
|
$
|
118,290
|
$
|
326,423
|
|||||
Net
earnings
|
—
|
—
|
—
|
—
|
73,402
|
73,402
|
|||||||||||
Change
in unrealized investment losses, net of $1,625 tax
|
—
|
—
|
—
|
2,822
|
—
|
2,822
|
|||||||||||
Comprehensive
earnings
|
76,224
|
||||||||||||||||
Common
stock issued for stock options and employee stock purchase
plan
|
765,076
|
—
|
6,113
|
—
|
—
|
6,113
|
|||||||||||
Common
stock repurchases
|
(467,157
|
)
|
—
|
(9,541
|
)
|
—
|
—
|
(9,541
|
)
|
||||||||
Stock
compensation expense
|
—
|
—
|
15,781
|
—
|
—
|
15,781
|
|||||||||||
Adjustment
for adoption of FIN 48
|
—
|
—
|
—
|
—
|
47
|
47
|
|||||||||||
Balance, December 31,
2007
|
43,667,837
|
$
|
44
|
$
|
221,693
|
$
|
1,571
|
$
|
191,739
|
$
|
415,047
|
Year
Ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
earnings (loss)
|
$
|
73,402
|
$
|
(43,629
|
)
|
$
|
55,632
|
|||||
Adjustments
to reconcile net earnings (loss) to net cash provided by operating
activities—
|
||||||||||||
Depreciation
and amortization
|
27,807
|
20,600
|
13,069
|
|||||||||
Excess
tax benefits from stock compensation
|
—
|
—
|
6,469
|
|||||||||
Stock
compensation expense
|
15,781
|
14,904
|
4,974
|
|||||||||
Gain
on sale of FirstGuard Missouri
|
(7,472
|
)
|
—
|
—
|
||||||||
Impairment
loss
|
7,207
|
88,268
|
—
|
|||||||||
Deferred
income taxes
|
(10,223
|
)
|
(6,692
|
)
|
1,786
|
|||||||
Changes
in assets and liabilities—
|
||||||||||||
Premium
and related receivables
|
1,663
|
(39,765
|
)
|
(10,305
|
)
|
|||||||
Other
current assets
|
(6,253
|
)
|
5,352
|
(6,177
|
)
|
|||||||
Other
assets
|
(348
|
)
|
91
|
(525
|
)
|
|||||||
Medical
claims liabilities
|
56,287
|
108,003
|
4,534
|
|||||||||
Unearned
revenue
|
10,085
|
20,035
|
8,182
|
|||||||||
Accounts
payable and accrued expenses
|
31,234
|
28,136
|
(4,215
|
)
|
||||||||
Other
operating activities
|
3,070
|
(271
|
)
|
624
|
||||||||
Net
cash provided by operating activities
|
202,240
|
195,032
|
74,048
|
|||||||||
Cash
flows from investing activities:
|
||||||||||||
Purchase
of property, software and equipment
|
(53,937
|
)
|
(50,318
|
)
|
(26,909
|
)
|
||||||
Purchase
of investments
|
(606,366
|
)
|
(319,322
|
)
|
(150,444
|
)
|
||||||
Sales
and maturities of investments
|
456,738
|
286,155
|
176,387
|
|||||||||
Proceeds
from asset sales
|
14,102
|
—
|
—
|
|||||||||
Investments
in acquisitions and equity method investee, net of cash
acquired
|
(36,001
|
)
|
(66,772
|
)
|
(55,485
|
)
|
||||||
Net
cash used in investing activities
|
(225,464
|
)
|
(150,257
|
)
|
(56,451
|
)
|
||||||
Cash
flows from financing activities:
|
||||||||||||
Proceeds
from exercise of stock options
|
5,464
|
6,953
|
5,621
|
|||||||||
Proceeds
from borrowings
|
212,000
|
94,359
|
45,000
|
|||||||||
Payment
of long-term debt and notes payable
|
(181,981
|
)
|
(17,355
|
)
|
(4,552
|
)
|
||||||
Excess
tax benefits from stock compensation
|
—
|
3,043
|
—
|
|||||||||
Common
stock repurchases
|
(9,541
|
)
|
(7,833
|
)
|
—
|
|||||||
Debt
issue costs
|
(5,181
|
)
|
(253
|
)
|
(413
|
)
|
||||||
Net
cash provided by financing activities
|
20,761
|
78,914
|
45,656
|
|||||||||
Net
(decrease) increase in cash and cash equivalents
|
(2,463
|
)
|
123,689
|
63,253
|
||||||||
Cash and cash
equivalents, beginning of period
|
271,047
|
147,358
|
84,105
|
|||||||||
Cash and cash
equivalents, end of period
|
$
|
268,584
|
$
|
271,047
|
$
|
147,358
|
||||||
Interest
paid
|
$
|
11,945
|
$
|
10,680
|
$
|
3,291
|
||||||
Income
taxes paid
|
$
|
7,348
|
$
|
16,418
|
$
|
31,287
|
||||||
Supplemental
schedule of non-cash investing and financing activities:
|
||||||||||||
Common
stock issued for acquisitions
|
$
|
—
|
$
|
—
|
$
|
8,991
|
||||||
Property
acquired under capital leases
|
$
|
1,736
|
$
|
366
|
$
|
5,026
|
|
2007
|
2006
|
2005
|
|||||||||
Allowances,
beginning of year
|
|
$
|
155
|
$
|
343
|
$
|
462
|
|||||
Amounts
charged to expense
|
226
|
512
|
80
|
|||||||||
Write-offs
of uncollectible receivables
|
|
(123
|
)
|
(700
|
)
|
(199
|
)
|
|||||
Allowances,
end of year
|
|
$
|
258
|
$
|
155
|
$
|
343
|
|||||
|
|
2005
|
|
||
Net
earnings
|
|
$
|
55,632
|
|
Stock-based
employee compensation expense included in net earnings, net of related tax
effects
|
|
3,084
|
|
|
Stock-based
employee compensation expense determined under fair value based method,
net of related tax effects
|
|
(11,988
|
)
|
|
Pro
forma net earnings
|
|
$
|
46,728
|
|
|
|
|||
Basic
earnings per common share:
|
|
|
||
As
reported
|
|
$
|
1.31
|
|
Pro
forma
|
|
1.10
|
|
|
Diluted
earnings per common share:
|
|
|
||
As
reported
|
|
$
|
1.24
|
|
Pro
forma
|
|
1.05
|
|
Year
Ended December 31,
|
||||||||||||
|
2007
|
2006
|
2005
|
|||||||||
Revenues
|
|
$
|
6,688
|
$
|
317,026
|
$
|
273,662
|
|||||
Earnings
(loss) before income taxes
|
|
$
|
1,234
|
|
$
|
(55,234
|
)
|
|
$
|
28,469
|
||
Net
earnings (loss)
|
|
$
|
32,133
|
|
$
|
(64,569
|
)
|
|
$
|
17,931
|
December
31,
|
|||||||
2007
|
2006
|
||||||
Current
assets
|
$ | — | $ | 50,004 | |||
Long
term investments and restricted deposits
|
— | 30,275 | |||||
Goodwill
|
— | 5,995 | |||||
Other
intangible assets, net
|
— | 647 | |||||
Other
assets
|
— | 501 | |||||
Assets
of discontinued operations
|
$ | — | $ | 87,422 |
December
31,
|
|||||||
2007
|
2006
|
||||||
Medical
claims liabilities
|
$ | 736 | $ | 30,577 | |||
Accounts
payable and accrued expenses
|
125 | 8,830 | |||||
Other
liabilities
|
— | 107 | |||||
Liabilities
of discounted operations
|
$ | 861 | $ | 39,514 | |||
Ÿ
|
Access Health Solution,
LLC. In July 2007, the Company acquired a 49% minority
ownership interest in Access Health Solutions, LLC, or Access, a
Medicaid managed care entity in Florida. Under the terms of the
transaction, the Company has an option to acquire the remaining interest
in Access at a future date. The Company accounts for its
investment in Access using the equity method of
accounting.
|
Ÿ
|
Other 2007
Acquisitions. The Company acquired PhyTrust of South
Carolina, LLC, effective April 20, 2007, Physician’s Choice, LLC,
effective October 2007, and Work Life Innovations, effective November 30,
2007. The Company paid a total of $11,300 in cash and related
transaction costs for these acquisitions. PhyTrust of South
Carolina and Physician’s Choice, LLC, both with Medicaid members in South
Carolina, are included in the Medicaid Managed Care
segment. Work Life Innovations, a health and wellness
consulting company, is included in the Specialty Services
segment. For these acquisitions, goodwill of $8,323 and $2,859
was allocated to the Medicaid Managed Care segment and the Specialty
Services segment, respectively, all of which is deductible for income tax
purposes. Pro forma disclosures related to these acquisitions
have been excluded as immaterial.
|
Ÿ
|
US Script, Inc.
Effective January 1, 2006, the Company acquired 100% of US Script,
Inc., a pharmacy benefits manager. The Company has paid or
accrued $44,573 in cash and related transaction costs. In
accordance with the terms of the agreement, the Company may pay up to an
additional $6,000 if US Script, Inc. achieves certain earnings targets
over the next three years. The results of operations for US
Script, Inc. are included in the Specialty Services segment and the
consolidated financial statements since January 1,
2006.
|
Ÿ
|
Other 2006
Acquisitions. The Company acquired the assets of Nurse
Response, Inc., effective April 1, 2006, Cardium Health Services
Corporation, effective May 9, 2006, MediPlan Corporation, effective June
1, 2006, and OptiCare Managed Vision, Inc., effective July 1,
2006. The Company paid a total of $30,783 in cash and related
transaction costs for these acquisitions. The results of
operations for these acquisitions are included in the consolidated
financial statements since the respective effective
dates. Nurse Response, Inc., a provider of after hours nurse
triage services, Cardium Health Services Corporation, a chronic health
management provider, and OptiCare Managed Vision, Inc., a managed vision
provider, are included in the Specialty Services
segment. MediPlan Corporation, with Medicaid membership in
Ohio, is included in the Medicaid Managed Care segment. For
these acquisitions, goodwill of $14,756 and $7,150 was allocated to the
Specialty Services segment and Medicaid Managed Care segment,
respectively, of which $5,593 is deductible for income tax
purposes. Pro forma disclosures related to these acquisitions
have been excluded as immaterial.
|
Ÿ
|
AirLogix, Inc.
Effective July 22, 2005, the Company acquired 100% of AirLogix,
Inc., a health management provider. The Company paid
approximately $36,310 in cash and related transaction
costs. The results of operations for AirLogix, Inc. are
included in the Specialty Services segment and the consolidated financial
statements since July 22, 2005.
|
Ÿ
|
SummaCare, Inc.
Effective May 1, 2005, the Company acquired certain
Medicaid-related assets from SummaCare, Inc. for a purchase price of
approximately $30,407. The purchase price and related
transaction costs consisted of $21,416 in cash and 318,735 shares of
common stock valued at $8,991. The cost to acquire the
Medicaid-related assets has been allocated to the assets acquired and
liabilities assumed according to estimated fair values. The
results of operations for SummaCare are included in the Medicaid Managed
Care segment and the consolidated financial statements since May 1,
2005.
|
December
31, 2007
|
||||||||||||||||
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Market
Value
|
|||||||||||||
U.S.
Treasury securities and obligations of U.S. government corporations and
agencies
|
$ | 28,383 | $ | 289 | $ | (27 | ) | $ | 28,645 | |||||||
Corporate
securities
|
33,692 | 14 | (268 | ) | 33,438 | |||||||||||
State
and municipal securities
|
305,433 | 2,336 | (130 | ) | 307,639 | |||||||||||
Life
insurance contracts
|
13,924 | — | — | 13,924 | ||||||||||||
Equity
securities
|
6,697 | 354 | (86 | ) | 6,965 | |||||||||||
Total
|
$ | 388,129 | $ | 2,993 | $ | (511 | ) | $ | 390,611 | |||||||
December
31, 2006
|
||||||||||||||||
Amortized
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Market
Value
|
|||||||||||||
U.S.
Treasury securities and obligations of U.S. government corporations and
agencies
|
$ | 28,320 | $ | 13 | $ | (340 | ) | $ | 27,993 | |||||||
Corporate
securities
|
76,752 | 1 | (937 | ) | 75,816 | |||||||||||
State
and municipal securities
|
80,450 | — | (705 | ) | 79,745 | |||||||||||
Asset
backed securities
|
777 | 2 | — | 779 | ||||||||||||
Life
insurance contracts
|
12,864 | — | — | 12,864 | ||||||||||||
Total
|
$ | 199,163 | $ | 16 | $ | (1,982 | ) | $ | 197,197 | |||||||
Less
Than 12 Months
|
12
Months or More
|
Total
|
||||||||||||||||||||||||||
Amortized
Cost
|
Unrealized
Losses
|
Market Value | Unrealized Losses | Market Value | Unrealized Losses |
Market
Value
|
||||||||||||||||||||||
Equity
|
$ | 1,778 | $ | (86 | ) | $ | 1,692 | $ | — | $ | — | $ | (86 | ) | $ | 1,692 | ||||||||||||
Corporate
|
28,674 | (6 | ) | 907 | (262 | ) | 27,499 | (268 | ) | 28,406 | ||||||||||||||||||
Government
|
8,274 | (21 | ) | 6,154 | (6 | ) | 2,093 | (27 | ) | 8,247 | ||||||||||||||||||
Municipal
|
29,942 | (4 | ) | 5,517 | (126 | ) | 24,295 | (130 | ) | 29,812 | ||||||||||||||||||
Total
|
$ | 68,668 | $ | (117 | ) | $ | 14,270 | $ | (394 | ) | $ | 53,887 | $ | (511 | ) | $ | 68,157 |
Less
Than 12 Months
|
12
Months or More
|
Total | ||||||||||||||||||||||||||
Amortized
Cost
|
Unrealized
Losses
|
Market Value | Unrealized Losses | Market Value | Unrealized Losses | Market Value | ||||||||||||||||||||||
Corporate
|
$ | 68,195 | $ | (10 | ) | $ | 16,973 | $ | (927 | ) | $ | 50,285 | $ | (937 | ) | $ | 67,258 | |||||||||||
Government
|
27,039 | (65 | ) | 15,417 | (275 | ) | 11,282 | (340 | ) | 26,699 | ||||||||||||||||||
Municipal
|
61,297 | (46 | ) | 23,637 | (659 | ) | 36,955 | (705 | ) | 60,592 | ||||||||||||||||||
Total
|
$ | 156,531 | $ | (121 | ) | $ | 56,027 | $ | (1,861 | ) | $ | 98,522 | $ | (1,982 | ) | $ | 154,549 |
Investments
|
Restricted
Deposits
|
|||||||||||||||
Amortized
Cost
|
Estimated
Market
Value
|
Amortized
Cost
|
Estimated
Market
Value
|
|||||||||||||
One
year or less
|
$ | 46,392 | $ | 46,269 | $ | 15,326 | $ | 15,413 | ||||||||
One
year through five years
|
204,311 | 206,296 | 11,223 | 11,359 | ||||||||||||
Five
years through ten years
|
29,524 | 29,899 | 507 | 529 | ||||||||||||
Greater
than ten years
|
80,846 | 80,846 | — | — | ||||||||||||
Total
|
$ | 361,073 | $ | 363,310 | $ | 27,056 | $ | 27,301 |
Investments
|
Restricted
Deposits
|
|||||||||||||||
Amortized
Cost
|
Estimated
Market
Value
|
Amortized
Cost
|
Estimated
Market
Value
|
|||||||||||||
One
year or less
|
$ | 57,031 | $ | 56,790 | $ | 12,631 | $ | 12,544 | ||||||||
One
year through five years
|
86,551 | 85,006 | 11,375 | 11,314 | ||||||||||||
Five
years through ten years
|
13,869 | 13,846 | 506 | 497 | ||||||||||||
Greater
than ten years
|
17,200 | 17,200 | — | — | ||||||||||||
Total
|
$ | 174,651 | $ | 172,842 | $ | 24,512 | $ | 24,355 |
|
2007
|
2006
|
2005
|
|||||||||
Gross
realized gains
|
|
$
|
325
|
$
|
9
|
$
|
—
|
|||||
Gross
realized losses
|
|
(401
|
)
|
(37
|
)
|
(65
|
)
|
|||||
Net
realized (losses) gains
|
|
$
|
(76
|
)
|
$
|
(28
|
)
|
$
|
(65
|
)
|
|
2007
|
2006
|
||||||
Computer
software
|
|
$
|
72,946
|
$
|
44,292
|
|||
Building
|
|
36,781
|
|
34,671
|
||||
Computer
hardware
|
26,742
|
19,580
|
||||||
Furniture
and office equipment
|
|
21,545
|
16,114
|
|||||
Land
|
|
19,509
|
20,216
|
|||||
Leasehold
improvements
|
|
15,200
|
9,226
|
|||||
|
192,723
|
144,099
|
||||||
Less
accumulated depreciation
|
|
(54,584
|
)
|
(33,411
|
)
|
|||
Property,
software and equipment, net
|
|
$
|
138,139
|
$
|
110,688
|
Medicaid
Managed Care
|
Specialty
Services
|
Total
|
||||||||||
Balance
as of December 31, 2005
|
$ | 36,792 | $ | 33,388 | $ | 70,180 | ||||||
Acquisitions
|
6,893 | 52,948 | 59,841 | |||||||||
Other
adjustments
|
50 | (190 | ) | (140 | ) | |||||||
Balance
as of December 31, 2006
|
43,735 | 86,146 | 129,881 | |||||||||
Acquisitions
|
8,663 | 4,049 | 12,712 | |||||||||
Other
adjustments
|
1,238 | (2,801 | ) | (1,563 | ) | |||||||
Balance
as of December 31, 2007
|
$ | 53,636 | $ | 87,394 | $ | 141,030 |
|
Weighted
Average Life
in
Years
|
|||||||||||
|
2007
|
2006
|
2007
|
|
2006
|
|||||||
Purchased
contract rights
|
|
$
|
8,591
|
$
|
8,591
|
7.7
|
|
7.6
|
||||
Provider
contracts
|
|
2,478
|
1,921
|
10.0
|
|
9.9
|
||||||
Customer
relationships
|
7,030
|
5,400
|
8.2
|
6.3
|
||||||||
Trade
names
|
|
4,563
|
3,750
|
19.9
|
19.7
|
|||||||
Other
intangibles
|
|
270
|
3,270
|
5.0
|
|
5.0
|
||||||
Other
intangible assets
|
|
22,932
|
22,932
|
10.7
|
|
9.2
|
||||||
Less
accumulated amortization:
|
|
|
||||||||||
Purchased
contract rights
|
|
(5,870
|
)
|
(4,830
|
)
|
|
||||||
Provider
contracts
|
|
(1,007
|
)
|
(729
|
)
|
|
||||||
Customer
relationships
|
(2,069
|
)
|
(1,025
|
)
|
||||||||
Trade
names
|
|
(542
|
)
|
(280
|
)
|
|
||||||
Other
identifiable intangibles
|
|
(239
|
)
|
(513
|
)
|
|
||||||
Total
accumulated amortization
|
|
(9,727
|
)
|
(7,377
|
)
|
|
||||||
Other
intangible assets, net
|
|
$
|
13,205
|
$
|
15,555
|
|
||||||
|
|
|
2007
|
2006
|
2005
|
|||||||
Current
provision:
|
|
|||||||||
Federal
|
|
$
|
30,668
|
$
|
14,898
|
$
|
17,195
|
|||
State
and local
|
|
3,454
|
1,845
|
744
|
||||||
Total
current provision
|
|
34,122
|
16,743
|
17,939
|
||||||
Deferred
provision
|
|
(11,755
|
)
|
(4,101
|
)
|
1,747
|
||||
Total
provision for income taxes
|
$
|
22,367
|
$
|
12,642
|
$
|
19,686
|
|
2007
|
2006
|
2005
|
|||||||
Tax
provision at the U.S. federal statutory rate
|
|
$
|
22,273
|
$
|
11,754
|
$
|
20,085
|
|||
State
income taxes, net of federal income tax benefit
|
|
449
|
137
|
(938)
|
||||||
Tax
exempt investment income
|
(2,641
|
)
|
(640
|
)
|
—
|
|||||
Nondeductible
incentive stock option compensation
|
1,542
|
1,407
|
—
|
|||||||
Other,
net
|
|
744
|
(16
|
)
|
539
|
|||||
Income
tax expense
|
|
$
|
22,367
|
$
|
12,642
|
$
|
19,686
|
2007
|
2006
|
|||||||
Deferred
tax assets:
|
||||||||
Current:
|
||||||||
Medical
claims liability and other accruals
|
$ | 12,681 | $ | 7,383 | ||||
Unearned
premium and other deferred revenue
|
3,376 | 3,238 | ||||||
Unrealized
loss on investments
|
47 | 103 | ||||||
Federal
net operating loss carry forward
|
5,396 | 1,136 | ||||||
State
net operating loss carry forward
|
2,981 | 1,387 | ||||||
Federal
tax credits
|
188 | — | ||||||
Other
|
1,802 | 52 | ||||||
26,471 | 13,299 | |||||||
Valuation
allowance
|
(1,288 | ) | (1,337 | ) | ||||
Net
current deferred tax assets
|
$ | 25,183 | $ | 11,962 | ||||
Non-current
deferred tax assets:
|
||||||||
Medical
claims liability and other accruals
|
$ | 593 | $ | 330 | ||||
Unrealized
loss on investments
|
— | 635 | ||||||
Federal
net operating loss carry forward
|
5,652 | 5,153 | ||||||
State
net operating loss carry forward
|
3,979 | 1,053 | ||||||
Stock
compensation
|
8,671 | 5,491 | ||||||
State
tax credits
|
1,290 | 1,290 | ||||||
Other
|
1,147 | 519 | ||||||
21,332 | 14,471 | |||||||
Valuation
allowance
|
(1,038 | ) | (1,455 | ) | ||||
Net
non-current deferred tax assets
|
$ | 20,294 | $ | 13,016 | ||||
Deferred
tax liabilities:
|
||||||||
Current:
|
||||||||
Prepaid
assets
|
$ | 1,505 | $ | 1,923 | ||||
Net
current deferred tax liabilities
|
$ | 1,505 | $ | 1,923 | ||||
Non-current
deferred tax liabilities:
|
||||||||
Intangible
assets
|
$ | 5,012 | $ | 5,570 | ||||
Depreciation
and amortization
|
15,895 | 6,961 | ||||||
Unrealized
gain on investments
|
957 | 4 | ||||||
Net
non-current deferred tax liabilities
|
$ | 21,864 | $ | 12,535 | ||||
Net
deferred tax assets
|
$ | 22,108 | $ | 10,520 |
Balance
as of January 1, 2007
|
|
$
|
3,114
|
|
Additions
based on tax positions during the current year
|
|
106
|
||
Reductions
as a result of a lapse in the applicable statute of
limitations
|
(737
|
)
|
||
Balance
as of December 31, 2007
|
|
$
|
2,483
|
|
2007
|
2006
|
2005
|
|||||||||
Balance,
January 1
|
|
$
|
249,864
|
$
|
139,687
|
$
|
139,602
|
|||||
Acquisitions
|
|
—
|
1,788
|
—
|
||||||||
Incurred
related to:
|
||||||||||||
Current
year
|
|
2,340,716
|
1,569,082
|
1,010,656
|
||||||||
Prior
years
|
|
(16,230
|
)
|
(13,424
|
)
|
(16,139
|
)
|
|||||
Total
incurred
|
|
2,324,486
|
1,555,658
|
994,517
|
||||||||
|
||||||||||||
Paid
related to:
|
||||||||||||
Current
year
|
|
2,009,881
|
1,322,607
|
872,019
|
||||||||
Prior
years
|
|
228,613
|
124,662
|
122,413
|
||||||||
Total
paid
|
|
2,238,494
|
1,447,269
|
994,432
|
||||||||
Balance,
December 31
|
|
$
|
335,856
|
$
|
249,864
|
$
|
139,687
|
2007
|
2006
|
|||||||
$300,000
revolving credit agreement
|
$ | 5,000 | $ | 149,000 | ||||
$175,000
senior notes
|
175,000 | — | ||||||
$25,000
revolving loan agreement
|
8,359 | 8,359 | ||||||
Mortgage
notes payable
|
12,001 | 12,487 | ||||||
Capital
leases
|
7,017 | 5,771 | ||||||
Total
debt
|
207,377 | 175,617 | ||||||
Less
current maturities
|
(971 | ) | (971 | ) | ||||
Long-term
debt
|
$ | 206,406 | $ | 174,646 |
2008
|
$ | 971 | ||
2009
|
9,085 | |||
2010
|
11,275 | |||
2011
|
5,249 | |||
2012
|
260 | |||
Thereafter
|
180,537 | |||
Total
|
$ | 207,377 |
Shares
|
Weighted
Average
Exercise
Price
|
Aggregate
Intrinsic Value
|
Weighted
Average
Remaining
Contractual
Term
|
||||||||||||
Outstanding
as of December 31, 2006
|
4,835,963
|
$
|
17.77
|
||||||||||||
Granted
|
582,500
|
23.29
|
|||||||||||||
Exercised
|
(652,862)
|
7.29
|
|||||||||||||
Expired
|
(140,300)
|
26.15
|
|||||||||||||
Forfeited
|
(284,600)
|
21.08
|
|||||||||||||
Outstanding
as of December 31, 2007
|
4,340,701
|
$
|
19.60
|
$
|
34,977
|
7.0
|
|||||||||
Exercisable
as of December 31, 2007
|
2,440,470
|
$
|
17.23
|
$
|
25,454
|
6.1
|
Year Ended December
31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Expected
life (in years)
|
6.1 | 6.5 | 6.4 | |||||||||
Risk-free
interest rate
|
4.1 | % | 4.6 | % | 4.3 | % | ||||||
Expected
volatility
|
47.5 | % | 47.8 | % | 46.6 | % | ||||||
Expected
dividend yield
|
0 | % | 0 | % | 0 | % |
Year Ended December
31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Weighted-average
fair value of options granted
|
$ | 12.02 | $ | 13.42 | $ | 13.77 | ||||||
Total
intrinsic value of stock options exercised
|
$ | 9,847 | $ | 10,495 | $ | 32,425 |
Shares
|
Weighted
Average
Grant
Date
Fair
Value
|
|||||||
Non-vested
balance as of December 31, 2006
|
1,296,131
|
$
|
25.12
|
|||||
Granted
|
373,705
|
24.04
|
||||||
Vested
|
(78,647
|
)
|
27.11
|
|||||
Forfeited
|
(18,500
|
)
|
26.90
|
|||||
Non-vested
balance as of December 31, 2007
|
1,572,689
|
$
|
24.74
|
2008
|
$ | 19,046 | ||
2009
|
17,771 | |||
2010
|
14,741 | |||
2011
|
13,309 | |||
2012
|
11,128 | |||
Thereafter
|
56,932 | |||
$ | 132,927 |
2007
|
2006
|
2005
|
||||||||||
Earnings:
|
||||||||||||
Earnings
from continuing operations
|
$ | 41,269 | $ | 20,940 | $ | 37,701 | ||||||
Discontinued
operations, net of tax
|
32,133 | (64,569 | ) | 17,931 | ||||||||
Net
earnings (loss)
|
$ | 73,402 | $ | (43,629 | ) | $ | 55,632 | |||||
Shares
used in computing per share amounts:
|
||||||||||||
Weighted
average number of common shares outstanding
|
43,539,950 | 43,160,860 | 42,312,522 | |||||||||
Common
stock equivalents (as determined by applying the treasury stock
method)
|
1,283,132 | 1,452,762 | 2,715,111 | |||||||||
Weighted
average number of common shares and potential dilutive common shares
outstanding
|
44,823,082 | 44,613,622 | 45,027,633 | |||||||||
Net
earnings (loss) per share:
|
||||||||||||
Basic:
|
||||||||||||
Continued
operations
|
$ | 0.95 | $ | 0.49 | $ | 0.89 | ||||||
Discontinued
operations
|
0.74 | (1.50 | ) | 0.42 | ||||||||
Earnings
(loss) per common share
|
$ | 1.69 | $ | (1.01 | ) | $ | 1.31 | |||||
Diluted:
|
||||||||||||
Continuing
operations
|
$ | 0.92 | $ | 0.47 | $ | 0.84 | ||||||
Discontinued
operations
|
0.72 | (1.45 | ) | 0.40 | ||||||||
Earnings
(loss) per common share
|
$ | 1.64 | $ | (0.98 | ) | $ | 1.24 |
Medicaid
Managed Care
|
Specialty
Services
|
Eliminations
|
Consolidated
Total
|
|||||||||||||
Revenue
from external customers
|
$ | 2,673,930 | $ | 245,362 | $ | — | $ | 2,919,292 | ||||||||
Revenue
from internal customers
|
78,947 | 422,138 | (501,085 | ) | — | |||||||||||
Total
revenue
|
$ | 2,752,877 | $ | 667,500 | $ | (501,085 | ) | $ | 2,919,292 | |||||||
Earnings
from operations
|
$ | 31,307 | $ | 22,786 | $ | — | $ | 54,093 | ||||||||
Total
assets
|
$ | 936,311 | $ | 182,811 | $ | — | $ | 1,119,122 | ||||||||
Stock
compensation expense
|
$ | 13,974 | $ | 1,505 | $ | — | $ | 15,479 | ||||||||
Depreciation
expense
|
$ | 20,547 | $ | 2,677 | $ | — | $ | 23,224 | ||||||||
Capital
expenditures
|
$ | 49,996 | $ | 3,941 | $ | — | $ | 53,937 |
Medicaid
Managed Care
|
Specialty
Services
|
Eliminations
|
Consolidated
Total
|
|||||||||||||
Revenue
from external customers
|
$ | 1,770,019 | $ | 191,975 | $ | — | $ | 1,961,994 | ||||||||
Revenue
from internal customers
|
94,984 | 233,263 | (328,247 | ) | — | |||||||||||
Total
revenue
|
$ | 1,865,003 | $ | 425,238 | $ | (328,247 | ) | $ | 1,961,994 | |||||||
Earnings
from operations
|
$ | 19,024 | $ | 8,778 | $ | — | $ | 27,802 | ||||||||
Total
assets
|
$ | 723,698 | $ | 171,282 | $ | — | $ | 894,980 | ||||||||
Stock
compensation expense
|
$ | 13,820 | $ | 920 | $ | — | $ | 14,740 | ||||||||
Depreciation
expense
|
$ | 13,233 | $ | 2,377 | $ | — | $ | 15,610 | ||||||||
Capital
expenditures
|
$ | 46,420 | $ | 3,872 | $ | — | $ | 50,292 |
Medicaid
Managed Care
|
Specialty
Services
|
Eliminations
|
Consolidated
Total
|
|||||||||||||
Revenue
from external customers
|
$ | 1,171,871 | $ | 60,331 | $ | — | $ | 1,232,202 | ||||||||
Revenue
from internal customers
|
69,685 | 34,070 | (103,755 | ) | — | |||||||||||
Total
revenue
|
$ | 1,241,556 | $ | 94,401 | $ | (103,755 | ) | $ | 1,232,202 | |||||||
Earnings
from operations
|
$ | 54,919 | $ | (2,648 | ) | $ | — | $ | 52,271 | |||||||
Total
assets
|
$ | 601,740 | $ | 66,290 | $ | — | $ | 668,030 | ||||||||
Stock
compensation expense
|
$ | 4,714 | $ | 97 | $ | — | $ | 4,811 | ||||||||
Depreciation
expense
|
$ | 7,398 | $ | 411 | $ | — | $ | 7,809 | ||||||||
Capital
expenditures
|
$ | 23,974 | $ | 1,763 | $ | — | $ | 25,737 |
Year
Ended December 31,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Net
earnings (loss)
|
|
$
|
73,402
|
$
|
(43,629
|
)
|
$
|
55,632
|
||
Reclassification
adjustment, net of tax
|
|
(242)
|
218
|
138
|
||||||
Change
in unrealized losses on investments available for sale, net of
tax
|
|
3,064
|
285
|
(1,485
|
)
|
|||||
Total
comprehensive earnings (loss)
|
|
$
|
76,224
|
$
|
(43,126
|
)
|
$
|
54,285
|
December
31,
|
||||||||
2007
|
2006
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 14,291 | $ | 1,649 | ||||
Short-term
investments, at fair value (amortized cost $5,202 and $1,749,
respectively)
|
5,190 | 1,747 | ||||||
Other
current assets
|
70,279 | 22,950 | ||||||
Total
current assets
|
89,760 | 26,346 | ||||||
Long-term
investments, at fair value (amortized cost $11,658 and $8,344,
respectively)
|
11,972 | 8,194 | ||||||
Investment
in subsidiaries
|
492,706 | 443,689 | ||||||
Other
assets
|
6,236 | 1,244 | ||||||
Total
assets
|
$ | 600,674 | $ | 479,473 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
liabilities
|
$ | 5,527 | $ | 3,923 | ||||
Long-term
debt
|
180,000 | 149,000 | ||||||
Other
liabilities
|
100 | 127 | ||||||
Total
liabilities
|
185,627 | 153,050 | ||||||
Stockholders’
equity:
|
||||||||
Common
stock, $.001 par value; authorized 100,000,000 shares; issued and
outstanding 43,667,837 and 43,369,918 shares, respectively
|
44 | 44 | ||||||
Additional
paid-in capital
|
221,693 | 209,340 | ||||||
Accumulated
other comprehensive income:
|
||||||||
Unrealized
loss on investments, net of tax
|
1,571 | (1,251 | ) | |||||
Retained
earnings
|
191,739 | 118,290 | ||||||
Total
stockholders’ equity
|
415,047 | 326,423 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 600,674 | $ | 479,473 |
Year
Ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Expenses:
|
||||||||||||
General
and administrative expenses
|
$
|
(5,513
|
)
|
$
|
(3,709
|
)
|
$
|
(3,801
|
)
|
|||
Other
income (expense):
|
||||||||||||
Investment
and other income
|
913
|
755
|
743
|
|||||||||
Interest
expense
|
(13,627
|
)
|
(8,993
|
)
|
(3,117
|
)
|
||||||
Loss
before income taxes
|
(18,227
|
)
|
(11,947
|
)
|
(6,175
|
)
|
||||||
Income
tax benefit
|
(51,178
|
)
|
(4,504
|
)
|
(2,551
|
)
|
||||||
Net
earnings (loss) before equity in subsidiaries
|
32,951
|
(7,443
|
)
|
(3,624
|
)
|
|||||||
Equity
in earnings (loss) from subsidiaries
|
40,451
|
(36,186
|
)
|
59,256
|
||||||||
Net
earnings (loss)
|
$
|
73,402
|
$
|
(43,629
|
)
|
$
|
55,632
|
|||||
Net
earnings (loss) per share:
|
||||||||||||
Basic
earnings (loss) per common share
|
$
|
1.69
|
$
|
(1.01
|
)
|
$
|
1.31
|
|||||
Diluted
earnings (loss) per common share
|
$
|
1.64
|
$
|
(0.98
|
)
|
$
|
1.24
|
|||||
Weighted
average number of shares outstanding:
|
||||||||||||
Basic
|
43,539,950
|
43,160,860
|
42,312,522
|
|||||||||
Diluted
|
44,823,082
|
44,613,622
|
45,027,633
|
|||||||||
Year
Ended December 31,
|
||||||||||||
2007
|
2006
|
2005
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Cash
provided by operating activities
|
$
|
94,145
|
$
|
31,895
|
$
|
11,622
|
||||||
Cash
flows from investing activities:
|
||||||||||||
Net
dividends from and capital contributions to subsidiaries
|
(71,813
|
)
|
(43,100
|
)
|
(22,300
|
)
|
||||||
Purchase
of investments
|
(84,088
|
)
|
(4,521
|
)
|
(4,438
|
)
|
||||||
Sales
and maturities of investments
|
77,086
|
5,841
|
26,697
|
|||||||||
Acquisitions,
net of cash acquired
|
(38,532
|
)
|
(66,772
|
)
|
(55,485
|
)
|
||||||
Proceeds
from asset sales
|
14,102
|
—
|
—
|
|||||||||
Net
cash used in investing activities
|
(103,245
|
)
|
(108,552
|
)
|
(55,526
|
)
|
||||||
Cash
flows from financing activities:
|
||||||||||||
Proceeds
from borrowings
|
212,000
|
86,000
|
45,000
|
|||||||||
Payment
of long-term debt and notes payable
|
(181,000
|
)
|
(12,000
|
)
|
(4,000
|
)
|
||||||
Proceeds
from exercise of stock options
|
5,464
|
6,953
|
5,621
|
|||||||||
Common
stock repurchases
|
(9,541
|
)
|
(7,883
|
)
|
—
|
|||||||
Debt
issue costs
|
(5,181
|
)
|
(253
|
)
|
(413
|
)
|
||||||
Excess
tax benefits from stock compensation
|
—
|
3,043
|
—
|
|||||||||
Net
cash provided by financing activities
|
21,742
|
75,860
|
46,208
|
|||||||||
Net
increase (decrease) in cash and cash equivalents
|
12,642
|
(797
|
)
|
2,304
|
||||||||
Cash and cash
equivalents, beginning of period
|
1,649
|
2,446
|
142
|
|||||||||
Cash and cash
equivalents, end of period
|
$
|
14,291
|
$
|
1,649
|
$
|
2,446
|
||||||
|
|
|
INCORPORATED
BY REFERENCE 1
|
|||||||||
EXHIBIT
NUMBER
|
|
DESCRIPTION
|
|
FILED WITH
THIS
FORM
10-K
|
|
FORM
|
|
FILING
DATE
WITH
SEC
|
|
EXHIBIT
NUMBER
|
||
3.1
|
|
Certificate
of Incorporation of Centene Corporation
|
|
|
S-1
|
|
October
9, 2001
|
|
3.2
|
|||
3.1a
|
|
Certificate
of Amendment to Certificate of Incorporation of Centene Corporation, dated
November 8, 2001
|
|
|
S-1/A
|
|
November 13, 2001
|
|
3.2a
|
|||
3.1b
|
|
Certificate
of Amendment to Certificate of Incorporation of Centene Corporation as
filed with the Secretary of State of the State of Delaware
|
|
|
10-Q
|
|
July
26, 2004
|
|
3.1b
|
|||
3.2
|
|
By-laws
of Centene Corporation
|
|
|
S-1
|
|
October
9, 2001
|
|
3.4
|
|||
4.1
|
|
Amended
and Restated Shareholders’ Agreement, dated September 23,
1998
|
|
|
S-1
|
|
October
9, 2001
|
|
4.2
|
|||
4.2
|
|
Rights
Agreement between Centene Corporation and Mellon Investor Services LLC, as
Rights Agent, dated August 30, 2002
|
|
|
8-K
|
|
August
30, 2002
|
|
4.1
|
|||
4.2a
|
|
Amendment
No. 1 to Rights Agreement by and between Centene Corporation and Mellon
Investor Services LLC, as right agent, dated April 23,
2007.
|
|
|
8-K
|
|
April
26, 2007
|
|
4.1
|
|||
4.3
|
|
Indenture
for the 7 ¼% Senior Notes due 2014 dated March 22, 2007 among Centene
Corporation and The Bank of New York Trust Company, N.A., as
trustee.
|
|
|
S-4
|
|
May
11, 2007
|
|
4.3
|
|||
10.1
|
Contract
Between the Georgia Department of Community Health and Peach State
Contract for provision of Services to Georgia Health
Families
|
8-K
|
July
22, 2005
|
10.1
|
||||||||
10.1a
|
Amendment
#1 to the Contract No. 0653 Between Georgia Department of Community Health
and Peach State Health Plan
|
10-Q
|
October
25, 2005
|
10.9
|
||||||||
10.1b
|
Amendment
#2 to the Contract No. 0653 Between Georgia Department of Community Health
and Peach State Health Plan
|
X
|
||||||||||
10.1c
|
Notice
of Renewal for fiscal year 2007 between Peach State Health Plan, Inc. and
Georgia Department of Community Health.
|
|
10-Q
|
October
24, 2006
|
10.3
|
|||||||
10.1d
|
Notice
of Renewal for fiscal year 2008 between Peach State Health Plan, Inc. and
Georgia Department of Community Health.
|
10-Q
|
July
24, 2007
|
10.4
|
||||||||
10.2
|
Contract
between the Texas Health and Human Services Commission and Superior
HealthPlan, Inc.
|
|
10-K
|
February
24, 2006
|
10.5
|
|||||||
10.2a
|
Amendment
F (Version 1.6) to Contract between the Texas Health and Human Services
Commission and Superior HealthPlan, Inc.
|
10-K
|
February
23, 2007
|
10.4a
|
||||||||
10.2b
|
Amendment
G (Version 1.7) to Contract between the Texas Health and Human Services
Commission and Superior HealthPlan, Inc.
|
10-Q
|
July
24, 2007
|
10.2
|
||||||||
10.2c
|
Amendment
H (Version 1.8) to Contract between the Texas Health and Human Services
Commission and Superior HealthPlan, Inc.
|
10-Q
|
October
23, 2007
|
10.1
|
||||||||
10.2d
|
Amendment
I (Version 1.9) to Contract between the Texas Health and Human Services
Commission and Superior HealthPlan, Inc.
|
X
|
|
|||||||||
10.3
|
1996
Stock Plan of Centene Corporation, shares which are registered on Form S-8
– File Number 333-83190
|
S-1
|
October
9, 2001
|
10.9
|
||||||||
10.4
|
1998
Stock Plan of Centene Corporation, shares which are registered on Form S-8
– File number 333-83190
|
S-1
|
October
9, 2001
|
10.10
|
||||||||
10.5
|
1999
Stock Plan of Centene Corporation, shares which are registered on Form S-8
– File Number 333-83190
|
S-1
|
October
9, 2001
|
10.11
|
||||||||
10.6
|
2000
Stock Plan of Centene Corporation, shares which are registered on Form S-8
– File Number 333-83190
|
S-1
|
October
9, 2001
|
10.12
|
||||||||
10.7
|
2002
Employee Stock Purchase Plan of Centene Corporation, shares which are
registered on Form S-8 – File Number 333-90976
|
10-Q
|
April
29, 2002
|
10.5
|
||||||||
10.7a
|
First
Amendment to the 2002 Employee Stock Purchase Plan
|
10-K
|
February
24, 2005
|
10.9a
|
||||||||
10.7b
|
Second
Amendment to the 2002 Employee Stock Purchase Plan
|
|
10-K
|
February
24, 2006
|
10.10b
|
|||||||
10.8
|
2003
Stock Incentive Plan, as amended
|
8-K
|
April
26, 2007
|
10.1
|
||||||||
10.9
|
Centene
Corporation Non-Employee Directors Deferred Stock Compensation
Plan
|
10-Q
|
October
25, 2004
|
10.1
|
||||||||
10.9a
|
First
Amendment to the Non-Employee Directors Deferred Stock Compensation
Plan
|
|
10-K
|
February
24, 2006
|
10.12a
|
|||||||
10.10
|
Centene
Corporation Employee Deferred Compensation Plan
|
10-Q
|
April
24, 2007
|
10.4
|
|
|
|
INCORPORATED
BY REFERENCE 1
|
|||||||||
EXHIBIT
NUMBER
|
|
DESCRIPTION
|
|
FILED WITH
THIS
FORM
10-K
|
|
FORM
|
|
FILING
DATE
WITH
SEC
|
|
EXHIBIT
NUMBER
|
||
10.11
|
Centene
Corporation Amended and Restated 2003 Stock Incentive Plan
|
8-K
|
April
26, 2007
|
10.1
|
||||||||
10.12
|
Centene
Corporation 2007 Long-Term Incentive Plan
|
8-K
|
April
26, 2007
|
10.2
|
||||||||
10.13
|
Executive
Employment Agreement between Centene Corporation and Michael
F. Neidorff, dated November 8, 2004
|
8-K
|
November
9, 2004
|
10.1
|
||||||||
10.14
|
Form
of Executive Severance and Change in Control Agreement
|
8-K
|
May
23, 2005
|
10.1
|
||||||||
10.15
|
Form
of Restricted Stock Unit Agreement
|
8-K
|
April
28, 2006
|
10.1
|
||||||||
10.16
|
Form
of Non-statutory Stock Option Agreement (Non-Employees)
|
8-K
|
July
28, 2005
|
10.3
|
||||||||
10.17
|
Form
of Non-statutory Stock Option Agreement (Employees)
|
8-K
|
July
28, 2005
|
10.4
|
||||||||
10.18
|
Form
of Incentive Stock Option Agreement
|
8-K
|
July
28, 2005
|
10.5
|
||||||||
10.19
|
Form
of Stock Appreciation Right Agreement
|
8-K
|
July
28, 2005
|
10.6
|
||||||||
10.20
|
Form
of Restricted Stock Agreement
|
10-Q
|
October
25, 2005
|
10.8
|
||||||||
10.21
|
Form
of Performance Based Restricted Stock Unit Agreement
|
8-K
|
December
28, 2007
|
10.1
|
||||||||
10.22
|
Form
of Long Term Incentive Plan Agreement
|
8-K
|
February
7,
2008
|
10.1
|
||||||||
10.23
|
Credit
Agreement dated as of September 14, 2004 among Centene Corporation, the
various financial institutions party hereto and LaSalle Bank National
Association
|
10-Q
|
October
25, 2004
|
10.2
|
||||||||
10.23a
|
Amendment
No. 2 to Credit Agreement dated as of September 14, 2004 among Centene
Corporation, the various financial institutions party hereto and LaSalle
Bank National Association
|
10-Q
|
October
25, 2005
|
10.11
|
||||||||
10.23b
|
Amendment
No. 3 to Credit Agreement dated as of September 14, 2004 among Centene
Corporation, the various financial institutions party hereto and LaSalle
Bank National Association
|
|
10-K
|
February
24, 2006
|
10.22b
|
|||||||
10.23c
|
Amendment
No. 4 to Credit Agreement dated as of September 14, 2004 among Centene
Corporation, the various financial institutions party hereto and LaSalle
Bank National Association
|
10-Q
|
July
25, 2006
|
10.2
|
||||||||
10.23d
|
Amendment
No. 5 to Credit Agreement dated as of September 14, 2004 among Centene
Corporation, the various financial institutions party hereto and LaSalle
Bank National Association
|
10-Q
|
October
24, 2006
|
10.1
|
||||||||
10.23e
|
Amendment
No. 6 to Credit Agreement dated as of September 14, 2004 among Centene
Corporation, the various financial institutions party hereto and LaSalle
Bank National Association
|
X
|
||||||||||
10.24
|
Summary
of Board of Director Compensation
|
X
|
|
|||||||||
10.25
|
Summary
of Compensatory Arrangements with Executive Officers
|
X
|
|
|||||||||
12.1
|
Computation
of ratio of earnings to fixed charges
|
X
|
|
|||||||||
21
|
List
of subsidiaries
|
X
|
||||||||||
23
|
Consent
of Independent Registered Public Accounting Firm incorporated by reference
in each prospectus constituting part of the Registration Statements on
Form S-3 (File Number 333-119944) and on Form S-8 (File Numbers
333-108467, 333-90976 and 333-83190).
|
X
|
||||||||||
31.1
|
Certification
Pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Executive
Officer)
|
X
|
||||||||||
31.2
|
Certification
Pursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange Act, as Adopted
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Chief Financial
Officer)
|
X
|
||||||||||
32.1
|
Certification
Pursuant to 18 U.S.C. Section 1350 (Chief Executive
Officer)
|
X
|
||||||||||
32.2
|
Certification
Pursuant to 18 U.S.C. Section 1350 (Chief Financial
Officer)
|
X
|
||||||||||
1
SEC File No. 001-31826 (for filings prior to October 14, 2003, the
Registrant’s SEC File No. was
000-33395).
|
CENTENE CORPORATION | |||
|
By:
|
/s/ MICHAEL F. NEIDORFF | |
Michael F. Neidorff | |||
Chairman and Chief Executive Officer | |||
Signature
|
|
Title
|
/s/ MICHAEL F. NEIDORFF
Michael
F. Neidorff
|
|
Chairman
and Chief Executive Officer
(principal
executive officer)
|
/s/ ERIC R. SLUSSER
Eric
R. Slusser
|
|
Executive
Vice President and Chief Financial Officer
(principal
financial and accounting officer)
|
/s/ STEVE BARTLETT
Steve
Bartlett
|
|
Director
|
/s/ ROBERT K. DITMORE
Robert
K. Ditmore
|
|
Director
|
/s/ FRED H. EPPINGER
Fred
H. Eppinger
|
|
Director
|
/s/ RICHARD A. GEPHARDT
Richard
A. Gephardt
|
|
Director
|
/s/ PAMELA A. JOSEPH
Pamela
A. Joseph
|
|
Director
|
/s/ JOHN R. ROBERTS
John
R. Roberts
|
|
Director
|
/s/ DAVID L. STEWARD
David
L. Steward
|
|
Director
|
/s/ TOMMY G. THOMPSON
Tommy G. Thompson |
|
Director
|