DCFCentene Cash Flow ProjectionsHistoricalProjectedCentene - DCF Assumptions & Output2010201120122013201420152016201720182019

Revenue6632.007890.008012.007819.009715.00$10,743.69$11,882.52$13,142.07$14,535.13$16,075.85Effective Tax Rate:39.0%Growth0.18968636910.0154626109-0.02408886670.242486251410.6%10.6%10.6%10.6%10.6%Industry Average is 3.3percentDiscount Rate (WACC):10.0%EBIT967.001193.001179.001371.001931.001758.25494383881944.62996788572150.76074448162378.74138339672630.8879700367margin0.14580820270.15120405580.14715426860.17534211540.19876479670.160.160.160.160.16Perpetual Growth MethodRevenuetax rate0.10350.18880.1720.2070.30735.00%35.00%35.00%35.00%35.00%Premium4,1924,9487,56910,15314,198Less taxes EBIT*(1-t)866.9155967.7616976.2121087.2031338.1831142.86571349521264.00947912571397.9944839131546.18189920781710.0771805239Terminal Growth Rate:3.0%Service921041133731,469Terminal Value:0.0Premium and Service Revenues4,2845,0527,68210,52615,667Adjustments for Non-Cash ExpensesPremium tax164159428337893D&A85495799710021200PV of Terminal Value:0.0Restructuring, impairment and other charges1336771Sum of PV of Cash Flows:0.0Loss on retirement of debt26Stock compensation charges705458Enterprise Value:0.0Equity in earnings of affiliated companies-810-547-266Cash:1,640Dividends received from affiliated companies1,0906301,704Debt:881Deferred tax provision18189612Equity Value:759Restructuring payments-15-35-39Employee benefit payments (in excess of) less than expense17852-52Implied Share Price:$6.43Gains on translated earnings contracts-435-1,369Unrealized translation losses on transactions24196431Exit Multiple Method:Contingent consideration fair value adjustmentTotal 8549571928107323501,869.032,067.142,286.262,528.602,796.64Exit Multiple:27.0xmargin0.12876960190.12129277570.24063904140.13722982480.24189397840.17396504440.17396504440.17396504440.17396504440.1739650444Exit Multiple Value:0CAPEX-1007-2432-1801-1019-1076-0.1518395657Dicsounted Value:0WC68736580773971457914Enterprise Value:Changess in WC-2931159-594769Equity Value:0Free cash flow713.9155-800.23842262.212547.2033381.183Implied Share Price$0.00

WACC Calculation:Percentage Equity:66.4%Percentage Debt:33.6%Beta:1.12Risk-Free Rate:2.7%Market Return:9.0%Cost of Debt:5.0%

WACC:10.0%

O43*O39+(O41+O40*(O42-O41))*O38

CNOOC Sensitivity Table Valuation

WACC

Terminal Growth07.0%7.5%8.2%9.0%10.0%0.5%$72.37$68.58$64.07$59.77$55.351.0%$76.81$72.40$67.22$62.36$57.431.5%$82.05$76.86$70.85$65.30$59.762.0%$88.35$82.13$75.06$68.66$62.372.5%$96.04$88.45$80.02$72.53$65.343.0%$105.65$96.18$85.92$77.05$68.73

WACCExit Multiple07.0%7.5%8.2%9.0%10.0%14.0x$48.12$47.23$46.02$44.68$43.0817.0x$58.43$57.35$55.88$54.26$52.3120.0x$68.74$67.47$65.74$63.83$61.5423.0x$79.05$77.59$75.60$73.41$70.7727.0x$92.80$91.08$88.75$86.17$83.08

Income StatmentCentene Income StatementHistoricalProjected2010201120122013201420152016201720182019

Revenue$4,448.00$5,211.00$8,110.00$10,863.00$16,560.00Premium4,1924,9487,56910,15314,198Service921041133731,469Premium and Service Revenues4,2845,0527,68210,52615,667Premium tax164159428337893Total Revenues4,4485,2118,11010,86316,560Operatin Expenses Medical Costs3,5844,1916,7818,99512,678Cost of Services6478883271,280G&A expenses 4785786779311,314Premium tax expense165161428333698Health insurer fee expense----126Impairment loss--28--Total Operating Expenses4,2915,0088,00210,58616,096Earnings From Operations(EBITDA)157203108277464Other Income(expense)Investment and other income1513351928Debt extinguishment costs-8Interest expense-18-20-20-27-350.111111111100.350.2962962963Earnings from continuing operations, before income tax expense154188123269457Income tax expense (benefit)607147107196Earnings from continuing operations, net of income tax expense9411776162261Discontinued operations4-9-8743Net earnings (loss)98108-11166264(Earnings) loss attributable to noncontrolling interests-3313-17Net earnings attributable to Centene951112165271

WACC BetaDebtAmountrateproportionSenior notes4250.05750.4824063564senior notes3000.04750.3405221339interest rate swaps110.03060.0124858116revolving credit agreement750.01910.0851305335Mortgage notes payable700.05140.0794551646total881Cost of Debt0.0500052213BETAGoogle1.13Reutars1.12Nasdaq0.67yahoo 0.44mornign star0.44the street 0.89Equity Value1,7440.6643809524S

Sheet6Other StuffYoY Revenue Growth Rate-20102011201220132014-20102011201220132014Centene Centene Revenue$4.40$5.20$8.10$10.90$16.50Centene Revenue$4,448.00$5,211.00$8,110.00$10,863.00$16,560.00Growth RateEarnings Growth RateCentene 17%56%34%52%Centene 17%-11000%8800%64%WCG($4B)12%21%28%35%Molina16%26%88%63%MOH($3B)16%26%9%46%WCG12%21%28%35%UNT($1.5B)9%37%2%crashUnitedHealth8%9%11%7%MGLN($1.6B)-4%-8%4%6%Aetna-1%37%29%22%UAM($770M)-62%-4%-1%-5%Cigna-5%21%-12%41%HNT ($4.3B)-12%-5%-2%27%UnitedHealth($107B)8%9%11%7%Aetna($35B)-1%37%29%22%Rough Average8%-1814%1491%39%Cigna($31B)2%32%11%8%Centene17%56%34%52%Rough Average-1%20%13%22%Centene17%56%34%52%

http://amigobulls.com/stocks/UNH/income-statement/annual

Centene Total Revenues4448521181101086316560Revenue Growth Rate0.17153776980.55632316250.33945745990.52444076220.280.35RevenuePremium4,1924,9487,56910,15314,198Service921041133731,469Premium and Service Revenues4,2845,0527,68210,52615,667Premium tax164159428337893Total Revenues4,4485,2118,11010,86316,560Operatin Expenses Medical Costs3,5844,1916,7818,99512,678Cost of Services6478883271,280G&A expenses 4785786779311,314-2014 Q12014 Q22014 Q32014 Q4-20102011201220132,014Centene EPS0.290.40.67. 87Premium Revenue $4,192.00$4,948.00$7,569.00$10,153.00$14,198.00Medical Costs $3,584.00$4,191.00$6,781.00$8,995.00$12,678.00WCGMedical Loss Ratio85%85%90%89%89%MOHCurrent Price Price Target2014 P/E2015 Forward P/E0.29Centene52.727xWCG49.227xMOH

Sheet1-20102011201220132014Revenue$4,448.00$5,211.00$8,110.00$10,863.00$16,560.00Premium4,1924,9487,56910,15314,198Service921041133731,469Premium and Service Revenues4,2845,0527,68210,52615,667Premium tax164159428337893EPS