Apr 28, 2009
Executives
Michael Neidorff - Chairman & Chief Executive Officer Eric Slusser - Executive Vice President & Chief Financial Officer Jesse Hunter - Executive Vice President, Corporate Development William Scheffel - Executive Vice President, Specialty Business Unit
Analysts
Joshua Raskin - Barclays Capital Gregg Genova - Deutsche Bank Greg Nersessian - Credit Suisse Daryn Miller - Goldman Sachs
Operator
Good morning. My name is Jackie and I will be your conference operator today.
At this time, I would like to welcome everyone to the CNC Q1 2009 financial results conference call. All lines have been placed on mute to prevent any background noise.
After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions) I will now turn the call over to Ed Kroll, Senior Vice President of Finance and Investor Relations for Centene Corporation.
You may begin your conference.
Ed Kroll
Thank you and good morning everyone. It is Ed Kroll, Senior Vice President of Finance and Investor Relations at Centene Corporation.
Thank you for joining us on today’s conference call for our first quarter earnings. Michael Neidorff, our Chairman, President and Chief Executive Officer; and Eric Slusser, Executive Vice President and Chief Financial Officer, will host this morning’s call.
The call is expected to last about 45 minutes and may also be accessed through our website at www.centene.com. A replay will be available shortly after the call’s completion, also on our website at centene.com or by dialing 800-642-1687 in the US and Canada or 706-645-9291 from all other countries and the access code for those calls is 93132567.
Any remarks that Centene may make about future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor Provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements, as a result of various important factors, including those discussed in Centene’s Form 10-Q dated today, April 28, 2009, and other public SEC filings.
Centene anticipates that subsequent events and developments will cause its estimates to change. While the Company may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so.
With that, I would like to turn the call over to our Chairman and CEO, Michael Neidorff.
Michael Neidorff
Thank you, Ed. Good morning everyone and thank you for joining Centene’s first quarter earnings call.
I will briefly review some of the highlights of the first quarter and then turn the call over to Eric, who will walk you through the financial results in greater detail. Before I discuss another solid quarter for Centene, I would like to take a moment to briefly comment on three important and timely topics.
One, our first swine flu and its possible impact. Secondly, Centene’s position as a Medicaid Managed Care organization in the current economic environment, and thirdly, the impact on our business from possible federal healthcare reform.
While the recently ended regular flu season was significantly lighter than last year, the very recent outbreak of so called swine flu has become the main topic of healthcare news around the world. Swine flu is a respiratory disease of pigs caused by the Type A flu virus.
People do not normally get swine flu but human infections can and do happen. Swine flu virus has been reported to spread from person-to-person and is contagious.
The symptoms of swine flu in people are similar to the symptoms of regular human flu and include high fever, cough, sore throat, body aches, headaches, chills, fatigue, and gastrointestinal tract related issues. Centene has a detailed response plan in place that was developed in 2006 during the bird flu pandemic scare to manage major disease outbreaks which allows us to be proactive rather than reactive in our actions.
We communicate and coordinate with providers, state and local agencies and our members as we continuously monitor the disease incidents in our markets. Our NurseWise call centers are in invaluable resource in disseminating useful information on symptoms, treatment, and prevention, while there is no flu vaccine for swine flu.
Antiviral medications like Tamiflu and Relenza have proven successful as a treatment. These medications should be taken only on the advice of physician within 48 hours of the onset of symptoms.
In addition, Centene has a comprehensive business continuity plan to ensure that our operations are not significantly disrupted in the event of a pandemic. We have mobilized our team and our on alert to implement the plan if needed.
Right now, it is simply too early to predict the scope and implications of the swine flu situation. But we will keep you updated as necessary.
Switching to the economy, the downturn in the US economy has had a significant impact on state budgets, with the majority of the states now forecasting budget deficits for the full year 2010. Let me remind you, Centene’s business model is built to grow in both good and bad economic times.
We understand the strain this economic environment in places, on our state partners and we are committed to working with them to ensure we provide better health outcomes at lower cost. We will maintain our focus, dedication, and discipline in managing our business in 2009 and beyond and remain committed to our growth, the improvement of our profit margins and producing consistent and adequate returns for our investors.
Also, the fiscal stimulus bill passed in February includes $87 billion in additional federal funding for state Medicaid programs over a two-year period through the increase to add FMAP, with states eligible for additional funding based on their unemployment levels. We have previously described these funds as state budget stabilizes which will fill gaps from lower tax revenues and serve to dissuade states from cutting Medicaid Manage Reimbursement.
I am pleased to report that this money as of the end of March is now throwing to the states and almost $4 billion of these additional FMAP funds have already been remitted to the states where Centene operates health plan. On April 1st, the SCHIP Reauthorization signed by President Obama in February went into effect.
This reauthorization is for four and a half years and expands the 4.7 million children currently eligible by an additional 3.9 million. Almost 25% of these incremental children reside within Centene’s geographic footprint.
Furthermore, higher unemployment rates in our states increase a number of people who are eligible for Medicaid coverage. We will update you in the future on the likely impacts these events have on our business and we will consider them in future guidance.
Right now, we think it is still too early to try and fully quantify them. At the capital markets remain volatile.
We continue to stress the importance of being prudent balance sheet managers with a focus of liquidity and capital adequacy. Strategically, we will continue to build a multiline strategy, coordinating efforts between our health plans and specialty companies to drive productive innovation, a new product innovation; become a low cost producer, enhance our members in health outcomes and win new business.
However, it is essential that we maintain an abundance of conservatism and remain selective in our pursuit of new business opportunity. Moving to the subject of possible federal healthcare reform, all and any of us can do.
At this point, speculate on timing, cost, feasibility, and private sector impacts. Ultimately, budget realities will limit changes to those that are affordable.
But we do believe that we are well positioned as any managed care organization to work effectively in a post reform environment given our focus on helping unreserved, vulnerable populations gain better access to healthcare coverage cost effectively without wide array of products due to a unique multiline strategy. Our recent contract in Massachusetts offers evidence of our ability to meet the needs of different markets and customers in a dynamic fashion.
Our growing experience with the Massachusetts program which I will come in on later will serve as well. We are well versed in operating as a government contractor and while there are no guarantees it is difficult to imagine a type of healthcare reform under which our skills, flexibility, and focus will not be valued.
Stay tuned. Now, back to the first quarter results, the quarter’s performance demonstrates that the actions we began taking last year in an effort to produce more predictable earnings and to achieve financial strategies are working.
We had solid revenue growth in the first quarter, a 20% year-over-year and our list membership grew in all our states. The medical management and network enhancement efforts could in place in Ohio and other states continue to pay off as a consolidated HBR improved 160 basis points year-over-year, excluding the effect of the Georgia 2007 retroactive rate increase booked in Q1 of 2008.
We continue to expect the consolidated HBR to very between 82% and 84% range due to normal seasonality. Turning to our general administrative expense, the G&A ratio for the first quarter of 2009 was 13.5 a year-over-year increase of 50 basis points excluding the effect of Georgia 2007 retroactive rate increase booked in Q1 of 2008.
This increase is due primarily to expenses for additional facilities and staff to support our growth, the acquisition of Celtic and presentation of access as a consolidated subsidiary. Now, I would like to speak some of our newer growth drivers.
In February 2009, we began converting managed care membership in Florida from Access Health Solutions’ non-risk book to our new subsidiary, Sunshine Health Plan on an at-risk basis. The conversion process is going well and at March 31, 2009 we served 29,100 members on an at-risk basis while Access continued to serve 92,900 members on a non-risk basis.
In South Carolina, our organic growth ramp remained strong and in March 2009 we completed the previously announced acquisition of certain assets of AMERIGROUP Community Care of South Carolina. In combination with our previously converted membership in the state we served 48,500 at-risk members in South Carolina at March 31, 2009, compared to just 2,200 a year ago.
Note that we converted members in Florida and South Carolina to our risk plans during Q1. These converted members in both states have what is known as a choice period both before and after the conversion date.
Both states choice period will occur during Q2. There is potential for minimum membership volatility in Q2 before we stabilize at higher levels between now and the end of 2009.
Last but certainly not least, in March, we announced that our Celtic unit was awarded a contract to manage healthcare services for the working poor in Massachusetts with a strong local provider partner, Caritas Christi Healthcare. We operated joint venture called CeltiCare Health Plan commencing in July 2009.
This contract win is especially satisfying for us as it validates our strategic rationale for buying Celtic last year. We acquired Celtic in 2008 to allow us to expand our addressable market from Medicaid only to all of the uninsured.
Celtic’s individual health plan skill-set allows us to work with states in designing coverage solutions for uninsured individuals and families that do not qualify for traditional government sponsored Medicaid. CeltiCare will serve the Central North Boston and Southern regions of Massachusetts.
The Massachusetts Commonwealth program is a health insurance program for low income working adults up to 300% of the federal poverty level who are not eligible for Medicaid or employer sponsored insurance. There are approximately 165,000 members eligible under the program.
We anticipate membership will begin building up in July and expect the annual run rate of revenue of $100 million to $125 million by the fourth quarter of 2010. As a reminder, we will not comment on New Jersey transaction with AMERIGROUP, as it is our longstanding policy not to comment on active litigation.
Lastly, I would like to remind everyone that our Seventh Annual Investor Day will be held in New York City on Tuesday, June 2nd, 2009, beginning at 8 AM and we hope you can join us. More information will be forthcoming on this.
We appreciate your support and interest in our Company and with that I will now turn the call over to Eric for the financial details.
Eric Slusser
Thank you Michael and good morning everyone. Before I discuss the first quarter financial highlights, I would like to remind everyone of two important facts from 2008.
First, the 2008 first quarter results include the benefit of the July 1 through December 31st, 2007 rate increase for Georgia of $20.8 million of premium revenue or approximately $0.28 per diluted share. Second, beginning with the fourth quarter of 2008, the results of operations for University Health Plans, our New Jersey Health Plan were classified in the financial statements as a discontinued operation as a result of our intent to sell the business.
The financial results discuss throughout this call will be in the context of continuing operations unless noted otherwise. In addition, beginning January 1, 2009, we have presented our investment in Access as a consolidated subsidiary in our financial statements.
Access was previously in equity method investment and the earnings were recorded in other income in prior periods. For the quarter ended March 31, 2009, revenue net of premium taxes grew to $908.9 million which represents 20% growth compared to the first quarter of 2008.
Excluding the Georgia rate increase recorded in 2008 the growth was 23%. The revenue increase in 2009 was driven by the following items: Organic full-risk membership growth in each of our states; the acquisition of certain assets of AMERIGROUP Community Care of South Carolina on March 1st, 2009; third, the consolidation of Access as a subsidiary as well as the conversion of non-risk Florida Access members to the full-risk Sunshine State Health Plan model starting on February 1, 2009; fourth, the commencement of the Arizona Acute Care contract in October 2008; number five would be acquisition of Celtic in July 2008; six, the commencement of the Texas Foster Care Contract in April 2008; and finally, low single digit premium rate increases across our health plans.
Our consolidated health benefits ratio or HBR was 83.5% for the 2009 first quarter compared to 82.7% for the 2008 first quarter. The retroactive Georgia premium rate increase recorded in 2008 had the effective decreasing HBR for that period by 240 basis points.
Excluding the effects from Georgia in the prior year, the resulting 160 basis points improvement year-over-year was due primarily to a decrease in respiratory illness in the first quarter of 2009 as a result of a lighter cold and flu season. In addition, we experienced significant improvement year-over-year in our Ohio ABD HBR as a result of our ongoing medical and network management efforts in that state.
Sequentially, our HBR was 83.5% for the first quarter of 2009 compared to 82.3% in the 2008 fourth quarter. The 120 basis points sequential increase was a result of normal seasonality in the addition of a new state and acquired members.
Now, turning to our general and administrative expenses, G&A expenses in whole dollars in first quarter were essentially flatted sequentially from the 2008 fourth quarter. G&A growth for new businesses and Access in the first quarter 2009 was offset by G&A efficiencies across the business.
The G&A ratio for the first quarter of 2009 was 13.5% compared to 12.6% in the first quarter of 2008. The retroactive Georgia premium rate increase recorded in 2008 had the effective decreasing the G&A ratio for that period by 40 basis points.
Taking the impact of Georgia rate increase into account, the G&A percent was up year-over-year as a result of new business initiatives including the acquisition of Celtic and the consolidation of Access. In addition, we made a $1.4 million contribution to our charitable foundation in the first quarter of 2009.
Our first quarter investment and other income was $3.6 million, a decrease of $4 million year-over-year and a decrease of $2.4 million sequentially. The decline in investment and other income was due to an overall decline in market interest rates as well as a decline in earnings from equity method investee resulting from the presentation of Access as a consolidated subsidiary beginning in 2009.
Our 2009 first quarter effective tax rate was 35.5% compared to 31.5% in the 2008 first quarter. The decrease was primarily due to lower state income taxes and then increase in tax exempt interest.
We expect the income tax favorability to continue throughout 2009. Earnings per diluted share from continuing operation were $0.43 for the 2009 first quarter compared a $0.56 in the first quarter of 2008, or $0.28 excluding the Georgia retroactive rate increase.
Balance sheet highlights at March 31, 2009 include cash, cash equivalents and short term investments of $410 million and long term investments of $435.6 million including restricted deposits of $12.8 million. At March 31, 2009, our holdings in the reserve primary fund were approximately $7.6 million.
We also received the distribution from this fund this month leaving our remaining holdings in the reserve primary fund at approximately $4 million. At March 31, 2009, cash and investments held by our unregulated entities totaled $28.9 million while cash and investments held by our regulated entities totaled $816.8 million.
We have estimated our regulated capital and surplus to be in excess of 355% of risk based capital or RBC requirements. Our total debt was $290.3 million and debt to total capitalization was 34.6%.
Our medical claims liabilities totaled $372.5 million representing in 45.3 days in claims payable, a net decrease of 3.2 days from 48.5 days at December 31, 2008. This change was primarily driven by three factors.
First, at December 31st, 2008, we had approximately $15.7 million in claims checks printed but not yet process for mailing as compared to only $4.9 million at March 31, 2009. The checks at year end were unusually high due to the schedule of process in claims payments at year end around the holidays.
These checks represent claims checks printed prior to quarter end that were mailed subsequent to quarter end due to normal process in time, in accordance with generally accepted accounting principles we reclassified these amounts back into medical claims liability in cash at the period end. The net reduction in unmailed checks compared to year end decreased our days claims payable by approximately 1.4 days and our claims liability approximately $11 million from year end.
Second, during the first quarter of 2009, we experienced lower inpatient cost as a percentage of total medical expense. This change in our medical expense mix decreased our DCP by approximately 1.3 days due to the shorter payment cycle on our non-inpatient medical expense categories as compared to inpatient claims which have a longer payment cycle.
Third, we experienced a 6% increase in large dollar claims paid during the first quarter which reduced our DCP by 0.7 days. This increase in payment of large dollar claims was driven by an emphasis on processing high dollar claims to avoid interest on late payments to providers and as states have moved to more stringent timely claims payment requirements.
We have applied a consistent and conservative actuarial methodology to estimate our medical claims liability and believe our March 31, 2009 reserved estimate is consistent with our December 31, 2008 estimate. Given the three days sequential change and days claims payable, we thought it appropriate for this quarter to also reinforce the conservative nature of our reserving methodology with additional commentary in the reconciliation table in our press release.
We expect days claims payable to continue to fluctuate within our previously discussed range of 45 days to 50 days. All the quarter, cash flows generated from operating activities were $23.4 million approximately 1.2 times net earnings.
As a reminder, the first quarter is typically our seasonally weakest cash flow quarter due to lower earnings for the quarter compared to other quarters and the timing of certain payments. That concludes my comments on our first quarter results.
Before we open the call for your comments, I would like to update you on our 2009 guidance. We are adjusting the lower end of our guidance range upward $0.02 to reflect the favorable results from the lower effective income tax rate.
We expect the income tax favorability for the remainder of 2009 to be offset by the impact of start-up cost and early operating results for our new Massachusetts operation. Overall for 2009, we expect from continuing operations, revenues net of premium taxes in a range of $3.65 billion to $3.775 billion, earnings per diluted share of $1.84 to $1.94, a consolidated HBR range of 82% to 84%, and consolidated G&A expense ratio of 13% to 13.5%.
And with that, we can open the call up to questions.
Operator
(Operator Instructions) Your first question comes from the line Joshua Raskin - Barclays Capital.
Joshua Raskin - Barclays Capital
First question, if you can help us out in terms of the cash flow. Seasonally, you mentioned weakest but still obviously well about net income this quarter.
I was curious if there were any timing issues there specifically around the unearned premium. It is looks like that might have been affected maybe by state payment.
Will that reverse in the second quarter?
Michael Neidorff
Yes. The month of March, we had a couple of states that actually held payments.
You will see an increase from the balance sheet on the asset side related to that. So we had two that held their payments to a month later.
We had one that prepaid which is causing the change in unearned income. The other thing you will note in the cash flow is in the payables line that significant change and driver of the lower amount and that was driven mostly by the estimated federal income tax payment we made in the month of March related our finalization of ’08 earnings and taxable income.
Joshua Raskin - Barclays Capital
I guess just in terms of as expectations for the second quarter then would you expect the second quarter to be slightly lower on a year-over-year basis than previously expected?
Michael Neidorff
Well, we would expect our second quarter trend to be consistent with prior years and moving upwards in the range of 1.5 times to 2 times net income.
Joshua Raskin - Barclays Capital
Okay, perfect. And then, second question, just do you have for New Jersey the contribution?
I know you guys broke it out in terms of just continuing at last quarter but do you have a number of what the contribution was in the first quarter of ’08?
Eric Slusser
Hang on just a second. Yes, it looked surround almost a penny positive contribution.
Joshua Raskin - Barclays Capital
Okay, okay. And then just last question, there is a ton of moving parts and the top line of over 20% obviously is a big number, but just trying to figure out if it is possible to strip out sort of Foster Care and Arizona and maybe South Carolina acquisition, do you guys have what you think sort of the organic?
What is the organic rate of growth on revenues in the quarter?
Eric Slusser
We sometime ago said it is very difficult to comment on organic because of what is true organic if we add a new product in an existing state, is that organic? And one that we acquired, it gets too complicated.
So we indicated sometime ago in the concern to not mislead but do not do something we can do comparable period-to-period. We just will not comment on that.
Joshua Raskin - Barclays Capital
Yes, I guess I understand. I mean it is sort of impossible to even classify it.
Maybe if I ask you a different way, it sounds like you saw low single digit rate increases. In your existing state, what would you say the membership growth was in states were you saying population year-over-year?
Michael Neidorff
I think we showed you what the membership is in the tables in the news release. I cannot comment beyond that.
Operator
Your next question comes from the line of Gregg Genova - Deutsche Bank.
Gregg Genova - Deutsche Bank
Looking at the MLRs a little bit, it looks like the ABD and the Medicare MLR came in pretty low in the quarter while the Medicaid and SCHIP came in a little higher. Was there any negative or favorable development in either one?
And can you talk a little bit about how those kinds of work through the quarter?
Michael Neidorff
Eric, do you want to comment on that?
Eric Slusser
Yes. As I comment a little bit in my comments, the ABD is driven by improvement as I talk about we saw a decline in upper respiratory disease this year in the first quarter compared the last year particularly in Ohio.
There has been significant medical management efforts as I talked about, and really in all of our plans around that program as you have seen in our press release about ABD HBR was downed approximately 81%. We do not expect that that trend is going to continue with that level, but through management and efforts to improve that and again the change year-over-year in the upper respiratory disease which particularly impacts that group.
We saw favorability. We typically do not comment about positive or negative prior period development.
We tend to manage that process and as I indicated we serve conservatively but we show the table year-over-year development on press release and we do not comment about our quarterly over quarter development. But again, there has been significant management both network management and member management around that population and an attempt to improve it over that prior year where it was upwards of 97% HBR for the ABD.
Gregg Genova - Deutsche Bank
Okay, thanks. I guess shifting over to investment income and other, obviously that is lower because the reclassification of Access but still just the core investment income is if you annualize that it comes out more towards $50 million versus I think you guys have talked about lower to 20 and you talked about the lower interest rates.
So, is that being off so I would assume does that come down a little bit and has been offset by things there were in other direction? I guess you have at $0.08 a benefit from the tax rate offset by the cost from Massachusetts around $0.06 or so.
So, if you talk maybe just a little bit more about around the moving parts to the guidance now.
Eric Slusser
Yes. Well, let me talk about the tax rate first.
As we indicated in the first quarter that was about $0.02 of benefit which as I also indicated with the reason we took up the lower into the range. We expect the tax favorability will continue at approximately the same level of $0.02 per quarter.
So, but we are also estimating that the cost of Massachusetts both start-up and the early operations until it gets to a breakeven and accretive stage will offset that for the last three quarters of this year. So, net-net, the positive from taxes will be offset by the cost of Massachusetts netting no estimated change in our run rates around those two items and in guidance for the rest of the year.
Gregg Genova - Deutsche Bank
And on the investment come then, is that…?
Eric Slusser
Yes, investment income as the feds of continued to lower the rates in the first quarter, we have seen a decline in investment income. If I look at the rest of the year assuming all thing is being equal no more changes by them, looking at that line for the most part investment income and interest expense will just about net each other out to zero, and again, I will remind you that last year there was Access earnings in that other income there will be nothing in there this year related Access as we consolidate that entity.
Michael Neidorff
I would add also, we have to be cautious on that tax rate going forward and that if we move from some of the municipal tax rate investments we have and others that we move that around based on what we see in the current political economic environment, that too for change. So, we manage that very carefully, recognizing or attempting to minimize risks in any investment that we have.
Eric Slusser
Yes. And there was also an element of favorability driven in that tax rate through a job’s tax credit we are getting for growth and new employee additions.
So, certainly that also will be subject to our new job addition as we continue to the remainder this year.
Operator
Your next question comes from the line of Greg Nersessian - Credit Suisse.
Greg Nersessian - Credit Suisse
Just a couple of questions, first is on Florida. I see you converted about 21,000 lives this quarter.
Actually, we think about that ramping in over the rest of the year. There is sort of a monthly conversion figure we should expect or help us in modeling that out.
Michael Neidorff
Jesse will respond that. Jesse?
Jesse Hunter
Yes. The way that the Florida conversation any state version is county specific, so we are working through that conversion process right now, building out networks and in other regulatory approvals in terms of readiness, etc on a county-by-county basis.
So, we have been approved in four counties. That was what converted in the fourth quarter.
We have submitted additional counties to the state for approval so we expect those to come up obviously through the second half of the year. We do not expect based on the timing right now to do any conversions in the second quarter of 2009.
But we obviously expect throughout to continue to work through county-by-county conversions in the second of the year.
Greg Nersessian - Credit Suisse
If your penetration amongst that, it looks like this is about 90,000 non-risk lives. Is there penetration rate there that you expect or conversion rate that you can help us?
About what percent is that you expect to hold on through the year?
Jesse Hunter
Yes. We cannot really get into some of the specificity around that and obviously our objective can make the retention rate as high as you can and obviously to grow the business through both member choice and auto-assignment on an ongoing basis.
Greg Nersessian - Credit Suisse
Okay. And then next question on Massachusetts, it sounds like you have got the start-up cost built in the business or you have not changed the revenue, so assuming no revenue impact this year from next.
Can you just give us a sense of how the economics work there with your joint venture?
Michael Neidorff
I think if you look at the revenue line we have a range of revenues for the year so which within that range is we see it this year.
Greg Nersessian - Credit Suisse
Okay.
Michael Neidorff
Okay. And we have a joint venture with the hospital and a contract within.
We are managing the plan for them and we will share on equal basis as appropriate and some adjustments in there because of the nature at the hospital.
Greg Nersessian - Credit Suisse
When do you expect this start generating revenue in Massachusetts?
Michael Neidorff
We are hoping to start and grow slowly in July 1.
Greg Nersessian - Credit Suisse
Okay. And then just last quick question and you said you added about $20 million of short term then in the quarters are attempted to repay that in the second quarter?
Eric Slusser
Well, some of that was driven by timing of the items I indicated earlier in the period. We would expect to continue to keep that balance at a moderated level but at this point there is no intention to take it downwards significantly in the second quarter.
Operator
Your next question comes from the line of Daryn Miller - Goldman Sachs.
Daryn Miller - Goldman Sachs
Question on the accounts receivable or previous receive that increased during the quarter, what states was that related to?
Eric Slusser
Wisconsin and Indiana.
Daryn Miller - Goldman Sachs
I got you, and that will be also had a similar situation was like third quarter of last year?
Eric Slusser
Yes. We have had actually each quarter.
I do not have the specifics but each quarter we have had instances most of the time it has just been one state where they lag over the month in and into the next month. So you will see that volatility and we expect in some cases that would likely continue.
It is a timing issue but there are some states in this case that held them over to the first week of the following month and then the other side of that is like Ohio where it was essentially a fully paid in this time. So, net-net, they did not quite offset the two states versus the one but there was some offset in pure cash flow because of the prepayment and postpayment.
Daryn Miller - Goldman Sachs
Great and then can you comment on what you are seeing in terms of behavioral health utilization?
Michael Neidorff
Bill, would you like to comment on that?
William Scheffel
I think. It is just pretty steady between years.
We have added Foster Care overall which we classified by the Medicaid segment and we are here into that program and I do not think there is anything out of the ordinary at this point.
Daryn Miller - Goldman Sachs
Okay. And then one last one, the services revenue line increased $6 million.
I am sorry if I missed your comments on what was driving that.
Eric Slusser
That is the consolidation of Access.
Daryn Miller - Goldman Sachs
Okay.
Eric Slusser
The Access is the non-risk membership, ASO membership and that gets recorded in the service line.
Daryn Miller - Goldman Sachs
I got you, and that is what about $2 million-ish?
Eric Slusser
About $6 million-ish.
Daryn Miller - Goldman Sachs
Is that what was running about last year too? Because it was all of that in the other line of investment and other in revenue last year?
Eric Slusser
On the investment line, the other income is just the net earnings impact.
Daryn Miller - Goldman Sachs
I got you.
Eric Slusser
Percentage that is only our portion of the earnings, we now consolidated and under consolidation you show 100% and then you net out the minority interest impact.
Operator
(Operators Instructions) There are no more questions in queue.
Michael Neidorff
Well, we thank everyone and look forward to call again at the end of Q2, and we would remind you that we have our Investor Day coming up so look forward to seeing you there as well on June 2nd. Thank you.
Operator
This concludes today’s conference call. You may now disconnect.