On December 12, 2019 Centene Corporation (NYSE: CNC) reported its 2020 financial guidance (Press release, Centene , DEC 12, 2019, View Source [SID1234552330]). Total revenues are expected to be $78.6 billion to $79.4 billion, and diluted earnings per share are expected to be $4.17 to $4.33. Adjusted diluted earnings per share for 2020 are expected to be $4.64 to $4.84.

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For its 2020 fiscal year, the Company’s guidance is as follows:

Total revenues in the range of approximately $78.6 billion to $79.4 billion.
Diluted earnings per share of approximately $4.17 to $4.33.
Adjusted diluted earnings per share of approximately $4.64 to $4.84.
Health benefits ratio of approximately 86.0% to 86.5%.
Selling, general and administrative (SG&A) expense ratio of approximately 9.2% to 9.7%.
Adjusted SG&A expense ratio of approximately 9.1% to 9.6%, which excludes $15 million to $25 million of acquisition related expenses.
Effective tax rate of approximately 34.0% to 36.0%.
Diluted shares outstanding of approximately 422.5 million to 424.5 million.
"We are on track to close another successful year at Centene, as a result of strong execution across our product and market portfolio," said Michael Neidorff, Chairman, President and CEO of Centene. "We look ahead at 2020 well-positioned to continue to deliver on our growth strategy with strong top and bottom-line performance. It will be a transformational year for Centene as we look forward to completing the WellCare transaction and solidify our place as the premier government-sponsored healthcare enterprise. We remain focused on enhancing our ability to serve our members and improving their health, while creating significant value for our shareholders."

The Company’s 2020 guidance excludes the pending WellCare acquisition, associated one-time integration costs, the related financing and closing costs, and the impact of the previously announced divestitures. The acquisition is subject to regulatory approval and is expected to close in the first half of 2020. The Company’s 2020 guidance includes acquisition related expenses of $15 million to $25 million for legal and integration planning expenses. Additionally, our 2020 guidance reflects a delay in the North Carolina start date from February 1, 2020 to October 1, 2020, resulting in a reduction of revenues of approximately $500 million and diluted earnings per share of approximately $0.06.

The Company affirms its 2019 total revenues guidance in the previously announced range of $73.6 billion to $74.2 billion, updates its 2019 diluted earnings per share guidance to a range of approximately $3.01 to $3.18, and affirms its 2019 adjusted diluted earnings per share guidance of approximately $4.29 to $4.49. The 2019 diluted earnings per share guidance was decreased by $0.03 to reflect the net carrying cost of the $7.0 billion issuance of senior notes completed in December in preparation for the WellCare acquisition. The net carrying costs include the related interest expense and corresponding investment income. Full year 2019 earnings will be reported on February 4, 2020, at 6:00 AM, with a conference call at 8:30 AM (Eastern Time).

Investor Meeting

Centene Corporation will host an investor meeting tomorrow at the Pierre Hotel in New York City, including a question-and-answer session, to discuss the details of its guidance. The event will begin promptly at 8:30 AM (Eastern Time) and end at approximately 12:30 PM (Eastern Time). Investors and other interested parties who are unable to attend in person are invited to listen to the investor meeting via a live, audio webcast on the Company’s website and view a copy of the investor presentation at www.centene.com, under the Investors section.

Non-GAAP Financial Presentation

The Company is providing certain non-GAAP financial measures in this release as the Company believes that these figures are helpful in allowing investors to more accurately assess the ongoing nature of the Company’s operations and measure the Company’s performance more consistently across periods. The Company uses the presented non-GAAP financial measures internally to allow management to focus on period-to-period changes in the Company’s core business operations. Therefore, the Company believes that this information is meaningful in addition to the information contained in the GAAP presentation of financial information. The presentation of this additional non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. The Company references Adjusted SG&A Expense Ratio guidance, however the Company cannot provide a reconciliation of Adjusted SG&A Expense Ratio guidance without unreasonable efforts. As such, it has been excluded from the reconciliation below.

Specifically, the Company believes the presentation of non-GAAP financial information that excludes amortization of acquired intangible assets, acquisition related expenses, as well as other items, allows investors to develop a more meaningful understanding of the Company’s performance over time. The table below provides reconciliations of non-GAAP items per share:

Annual Guidance December 31, 2019

The amortization of acquired intangible assets per diluted share presented above are net of the income tax benefit of an estimated $0.14 for the year ended December 31, 2019 and $0.13 to $0.14 for the year ended December 31, 2020.

The acquisition related expenses per diluted share presented above are net of the income tax benefit of an estimated $0.07 for the year ended December 31, 2019 and an estimated $0.01 to $0.02 for the year ended December 31, 2020. Acquisition related expenses for 2019 include net carrying costs on the $7.0 billion senior notes issued in preparation of the WellCare acquisition of approximately $15 million, or $0.03 per diluted share, net of an income tax benefit of approximately $0.01.

Other adjustments for 2019 include the following: non-cash goodwill and intangible asset impairment of $271 million or $0.57 per diluted share, net of an income tax benefit of $0.08 and debt extinguishment costs of $29 million or $0.05 per diluted share, net of an income tax benefit of approximately $0.02.