Executive Summary

Q4 results were solid operationally: total revenues $40.81B, premium & service revenues $36.30B, GAAP EPS $0.56 and adjusted EPS $0.80; HBR 89.6% and SG&A ratio 8.9% .
2025 outlook stronger on top line: premium & service revenue guidance raised by $4B to $158–$160B on better-than-expected PDP/MA AEP and a Medicaid behavioral health program add; adjusted EPS floor remains >$7.25 and GAAP EPS floor >$6.19 .
Key positives: strong Marketplace execution (peak membership slightly above 5M expected in Q1), Medicare PDP strength into 2025 (~$16B revenue), and meaningful Medicare Stars improvement (55% of MA members in ≥3.5-star plans vs ~23% prior year) .
Watch items: Medicaid HBR elevated from acuity/rate timing in redeterminations, quarterly operating cash flow timing headwinds (Part D receivables, state premium receivables), and continued monitoring of ACA program integrity (FTR) checkpoints into Q2 .

What Went Well and What Went Wrong

What Went Well
- Raised FY25 premium & service revenue guidance by $4B on PDP/MA AEP outperformance and Medicaid program expansion; reiterated EPS floors (> $7.25 adj., > $6.19 GAAP) .
- ACA Marketplace momentum: “peak marketplace membership during the first quarter, slightly above 5 million,” with effectuation rates in line with historical norms .
- Medicare quality progress: “55% of our Medicare Advantage membership enrolled in plans rated 3.5 stars or higher – compared to approximately 23% in the prior year” .
- CEO on tech enablement: Centene will “modernize our platform, automate our administrative processes through the deployment of AI and leverage our unparalleled data” .
What Went Wrong
- Medicaid HBR elevated: Q4 Medicaid HBR 93.4% (FY 92.5%), reflecting higher acuity from redeterminations and rate timing; some expected late-2024 retro rate actions did not arrive .
- Quarterly operating cash flow negative: Q4 CFO $(587)M (timing of net Part D and state premium receivables); full year modest at $154M with pharmacy rebate timing and lower risk adjustment payables .
- Medicare Advantage still on multi-year path: MA improving but breakeven only targeted by 2027; segment HBR will seasonally slope up due to PDP/IRA dynamics in 2025 .

Financial Results

Headline metrics – sequential trend (oldest → newest)

Metric	Q2 2024	Q3 2024	Q4 2024
Total Revenues ($USD Billions)	$39.84	$42.02	$40.81
Premium & Service Revenues ($USD Billions)	$35.97	$36.90	$36.30
GAAP Diluted EPS ($)	$2.16	$1.36	$0.56
Adjusted Diluted EPS ($)	$2.42	$1.62	$0.80
Health Benefits Ratio (%)	87.6%	89.2%	89.6%
SG&A Expense Ratio (%)	8.0%	8.3%	8.9%
Adjusted SG&A Ratio (%)	8.0%	8.3%	8.9%
Cash Flow from Ops ($USD Billions)	$2.18	$(0.98)	$(0.59)

YoY snapshot – Q4 2024 vs Q4 2023

Metric	Q4 2023	Q4 2024
Total Revenues ($USD Billions)	$39.46	$40.81
Premium & Service Revenues ($USD Billions)	$35.34	$36.30
GAAP Diluted EPS ($)	$0.08	$0.56
Adjusted Diluted EPS ($)	$0.45	$0.80
HBR (%)	89.5%	89.6%
SG&A Expense Ratio (%)	9.9%	8.9%

Segment premium & service revenues ($USD Billions)

Segment	Q2 2024	Q3 2024	Q4 2024
Medicaid	$20.25	$21.32	$20.83
Commercial	$8.54	$8.69	$8.72
Medicare	$5.98	$5.64	$5.48
Other	$1.21	$1.25	$1.27
Total	$35.97	$36.90	$36.30

KPIs and operating metrics

KPI	Q2 2024	Q3 2024	Q4 2024
Total At-Risk Membership (000s)	25,710	25,893	25,854
Total Medicaid (000s)	13,140	13,069	13,004
Marketplace (000s)	4,401	4,501	4,382
Medicare (MA/Supp) (000s)	1,138	1,130	1,111
Medicare PDP (000s)	6,604	6,766	6,926
Days in Claims Payable (days)	54	51	53

HBR by product (Q4)

Product HBR	Q4 2023	Q4 2024
Medicaid	90.6%	93.4%
Commercial	82.1%	81.8%
Medicare (incl. PDP)	95.3%	86.7%

Notes: Q4 adjusted EPS includes a $0.29 net benefit from a Marketplace CSR settlement (prior years) . Q4 HBR uptick driven by Medicaid acuity; partially offset by lower MA PDR costs and a favorable Marketplace CSR settlement .

Versus Wall Street estimates: S&P Global consensus data was unavailable at time of writing due to API limits; beats/misses cannot be quantified.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Premium & Service Revenues	FY 2025	$154.0–$156.0B	$158.0–$160.0B	Raised by $4.0B (drivers: +$1.5B PDP AEP, +$1.0B MA AEP, +$1.5B Medicaid BH program)
Adjusted Diluted EPS (floor)	FY 2025	> $7.25	> $7.25	Maintained
GAAP Diluted EPS (floor)	FY 2025	> $6.19	> $6.19	Maintained
HBR	FY 2025	88.4%–89.0%	Not updated 2/4/25	—
SG&A ratio	FY 2025	8.1%–8.7% (Adj. same)	Not updated 2/4/25	—
PDP revenue context	FY 2025	—	~ $16B PDP revenue expected post-AEP (implied in commentary)	New color

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 & Q3 2024)	Current Period (Q4 2024)	Trend
Medicaid redeterminations & rates	Elevated Medicaid HBR; working with states; FY24 HBR guided high end; continued rate action needed	Medicaid HBR 93.4% in Q4; mid‑4% net 1/1/25 rates on ~40% of premium; expect 3–4% FY25 composite; some late-2024 retros didn’t arrive	Improving rate alignment through 2025; timing risk remains
Medicare Stars & MA trajectory	Stars improvement underway; footprint pruning into 2025	55% MA members in ≥3.5-star plans; MA breakeven targeted 2027	Positive quality trajectory; multi-year MA margin recovery
ACA Marketplace execution & integrity	Strong risk adjustment/segment growth (Q2/Q3)	Peak >5M in Q1; effectuation at historical norms; monitoring FTR into Q2; 2025 Marketplace margin 5–7.5% target reiterated	Strong start; integrity checkpoints less disruptive than feared (so far)
PDP/IRA dynamics	2024 IRA changes; risk-managed approach	PDP ended 2024 strong; >7.5M members entering 2025; ~1% PDP margin target in 2025; ~$16B PDP revenue expected	Upside to revenue scale; disciplined margin target
Cash flow & capital deployment	Robust Q2 OCF; share repurchases ongoing	FY24 OCF $154M on timing (pharmacy rebates, risk adjustment, state receivables); $3.0B buybacks in 2024; plan ~$2B buybacks in 2025 embedded in guidance	OCF normalization expected in 2025; continued buyback capacity
Technology/AI	—	“Automate… through the deployment of AI” to improve admin efficiency and insights	Continued modernization push

Management Commentary

“Centene is… stepping into 2025 with a clear strategy, compelling embedded earnings power and positive momentum… modernize our platform, automate our administrative processes through the deployment of AI and leverage our unparalleled data…” — Sarah London, CEO .
“We are lifting our full year 2025 revenue guidance by $4 billion… Our outlook for full year 2025 adjusted diluted EPS remains unchanged as greater than $7.25” — Sarah London .
“Our Q4 consolidated HBR was 89.6%… Our Q4 Medicaid HBR was 93.4%… expecting a couple of later 2024 retro adjustments that did not come in by year-end.” — Drew Asher, CFO .
“We expect to peak right above 5 million marketplace members during Q1… and need to see the pattern of membership… before we touch commercial revenue guidance of $34 billion.” — Drew Asher .
“Part D or PDP is positioned to be a larger business… expected to generate 2025 revenue of approximately $16 billion… target margin for the PDP business in 2025 [~1%].” — Sarah London .

Q&A Highlights

ACA program integrity (FTR) timing: effectuation rates consistent with history, impact appears more muted so far; potential effects could extend into Q2 around tax filing checkpoints .
Medicaid rates/timing: mid‑4% net 1/1/25 increases realized; FY25 composite 3–4%; some late-2024 retros did not hit, representing potential upside if realized in 2025 .
Seasonality/HBR slope: 2025 Medicare HBR expected to slope up through the year due to PDP and IRA; Commercial starts low then rises; Medicaid back-half better than front-half; ~60/40 EPS first-half/back-half split (or better) .
PDP strength and margins: 2024 PDP outperformance; entering 2025 with >7.5M members; still targeting ~1% PDP margin; each year stands on its own bids/assumptions .
Cash flow and buybacks: despite 2024 OCF timing headwinds, multiyear average ~1.3–1.4x adjusted net income historically; ~$2B buybacks embedded in 2025 outlook .

Estimates Context

S&P Global consensus (EPS, revenue, EBITDA, target price) for Q4 2024 was not retrievable at time of writing due to data access limits; therefore, quantitative beat/miss analysis versus Wall Street estimates is unavailable. We default to S&P Global for consensus when available.

Key Takeaways for Investors

Top-line momentum outweighs near-term margin timing: $4B raise to FY25 premium & service revenues on PDP/MA wins and Medicaid program expansion while EPS floors maintained — supportive for multiple/trajectory .
Medicaid is a 2025/26 earnings recapture story: elevated HBR due to acuity/rate lag should normalize as mid‑4% rate actions roll through and additional actions are negotiated; back half expected better than front half .
Marketplace remains a core earnings engine: effectuation healthy, peak >5M in Q1; integrity changes less disruptive than feared so far; margin framework (5–7.5%) reiterated .
Medicare quality progress de-risks 2026+: Stars improvement (55% ≥3.5 stars) aids funding; MA breakeven targeted for 2027 keeps the glidepath intact .
PDP scale/IRA execution a positive: >7.5M members entering 2025 and ~$16B revenue expected; disciplined ~1% margin target supports stability .
Cash flow should improve with timing reversals; buybacks remain a lever: FY24 OCF headwinds were timing-related; ~$2B repurchases planned in 2025 embedded in guidance .
Catalyst watch: sustained ACA membership/effectuation through Q2 (FTR checkpoint), updates on Medicaid rate actions, and any confirmation of 2026 MA rates (final in April) .

Appendix: Source Documents

Q4 2024 8-K/Press Release: key financials, HBR by product, membership, guidance update .
Q4 2024 Earnings Call Transcript: strategy, guidance color, membership and segment commentary, Q&A .
Press Release duplicate (PR Newswire): same figures and supplemental tables -.
Q3 2024 and Q2 2024 results for trend context - -.

CENTENE CORP (CNC)·Q4 2024 Earnings Summary