Chief Executive Officer of Markets & Medicaid, Centene Corporation
Centene CEO on Q1 earnings: 'Very unusual time' for American businesses
Centene CEO Michael Neidorff discussed the health insurer's latest quarterly report and his outlook for a post-pandemic world.
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About David Thomas
In an April 2020 interview discussing Centene's first-quarter earnings, CEO Michael Neidorff described the period as "a very unusual time" for American businesses. He stated that the company's quarterly performance aligned with the forecast provided on March 3, reporting earnings of 91 cents per share. Neidorff attributed a five-cent shortfall to a loss of interest income, which he said resulted from the Federal Reserve's dramatic rate cuts, an event he described as unforeseeable. He noted that Centene had moved 66,000 employees to work from home in three days and that the company was "functioning today as well as it has ever functioned." Neidorff cautioned against measuring the company's performance on a quarterly basis, suggesting that observers should "look over the long haul" due to the pandemic's uncertainty. He expressed concern that a second peak of infections could occur if people returned to work too soon and predicted that unemployment could remain at 7–10% into the following year. He advocated for continued physical distancing, mask-wearing, and temperature checks in workplaces, and stated that a return to normal economic activity would be "choppy" until a vaccine is available.
Transcript (14 segments)
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Jim Cramer0:10
Better than managed care? Place see first. Bernie Sanders dropped out of the Democratic primary, no more Medicare-for-all worries. Then we start realizing that the pandemic might actually benefit these companies because so many elective procedures, oh those are not so good, are being postponed. Just look at Cramer fav Centene, which specializes in government sponsored health care plans. Here's stock that made a brand-new 52-week high less than two weeks ago, but earlier today the nerve got a little muddled. See, Centene just reported confusing quarters: a big revenue beat on top of a sizable earnings miss. The culprit: the company's health benefits ratio, it's the percent of premiums they spend covering claims. It was worse than anticipated. I imagine they were able to raise their full year revenue forecast, that's important, and maintain their earnings forecast. The quarter was seen as a negative development, stock hit down one to two.
To Michael Knight, or if the straight-shooting chairman CEO of Centene, find out more about the quarter, where the company's headed. Miss you're not, or you stay safe out there. We would. Damn, I hope you are too, safe and well. Well, that's I think the most important thing.
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David Thomas1:23
Particularly I was with what, 23 million people in America. 23, one out of every 15 Americans we cover.
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Jim Cramer1:36
Well, that's incredible. Tell people where you might have been say five years ago.
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David Thomas1:39
Oh, I think we maybe 10, 15, 20 billion, something like that. We've got five times bigger than we were then. So we'll do a hundred billion, 112 billion this year. So it was probably about 20 billion.
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Jim Cramer1:54
So if you raise your revenue forecast, that's another... I'm like okay, let's call it UNH.
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David Thomas2:11
Well, you know, I want to tell you that what we delivered today was exactly what we told everybody we were going to deliver on March 3rd when we talked about the combined forecast. We said that we would have a quarter and suggested somewhere in the high 80s, low 90s. We came in at 91 cents. Fine, last the five cents was the loss of interest income, was no way could forecast. Our growth is up there though, our balance sheets incredibly strong, a lot of liquidity in it, we're really well positioned. We're growing, the business is growing, we're managing the medical management, we're meeting and taking care of this.
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Jim Cramer3:11
The only thing that changed was that the Fed took rates down dramatically, which was not something anybody could foresee. But you use the word, I'm proud of you that you use the word. You've been around like me, we've been around. Okay, you said look, but we're a depression level. You use the word depression. Everyone's afraid to use that word, but when you're at unemployment that could be as high as 20%, thank you for using the word that is operative here. Thank you. But that's truly, I mean I've studied economics, you get 15-20 percent, that is depression level unemployment. So how do you get things back on track?
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David Thomas4:10
Well, these start to return a little and still have 7, 10 percent unemployment. It's going to take a while for things to come back. This is, you know, I tell people, experiences and some of experiences nobody's ever had this carving with a pandemic that hit this quick with the kind of ramifications. Until we have a vaccine, we're gonna have no certainty.
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Jim Cramer4:34
I think that is very true. I think people keep thinking that will be okay. I mean, if the NFL season will start up, fine. I think the stands will be empty. We need all these different things. I mean, I'm sure you're advising everyone mass physical distance. What do you think is key for staying healthy?
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David Thomas4:50
Oh, I think you need physical distance, you need the mask when you go back to work. You gotta do the temperature checking. There's a lot of... peak if people go back to work too soon and they get till they keep up some of the principles that are helping to plateau it and then see it come down. So we're in a very unusual time, Jim, and we're managing through it. We have the strength, the capabilities. We moved 66,000 people to work at home in three days, and this company is functioning today as well as it has ever functioned. We can't evolve the people as well who want to get them back home and in the off and back to the offices, but it's fully, it's just incredible. We saw the capability that was just fantastic.
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Jim Cramer5:50
Got one this question: are we open incorrectly state-by-state, different ways? Some places hair salons... asking people if we opened up all of New York City tomorrow morning, set it to, it's okay, open it up and you can go out tomorrow night for dinner. I or personalize it to you, but you who after somebody who go out to dinner tomorrow night and then would they want to go to a movie theater, a Broadway play and sit in a crowded theater? I think you know, it's one thing to say we want to open it up, it's something else to start to get the momentum behind it that will improve the economy.
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David Thomas6:39
Right, that's I totally agree. I think the people, a lot of people who feel that if you open it up everybody will come out, and the fact is that we all know that we all know people who are sick, we all know people who died.
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Jim Cramer6:52
Well, I gotta tell you, Michael, you put together an amazing company. I get what you were... Centene, they have monies back after the break. Don't miss a second of Mad Money. Follow at Jim Cramer on Twitter, have a question tweet Cramer hashtag mad tweets, send Jim an email to [email protected] or give us a call at 1-800-743-CNBC. Miss something? Head to MadMoney.cnbc.com.