Centene Corporation is a leading provider of government-sponsored healthcare services, focusing on improving health and healthcare for low-income, complex populations. The company operates through various segments, offering a range of healthcare programs and services, including Medicaid, Medicare, Commercial health insurance, and other healthcare-related services **[0001071739-24-000037_cnc-20231231.htm:9]** **[0001071739-24-000037_cnc-20231231.htm:107]** **[0001071739-24-000043_a20240221s-3asr.htm:4]**. Centene provides access to healthcare for nearly 1 in 15 individuals nationwide, emphasizing a local approach to delivering healthcare services **[0001071739-24-000069_cnc-20240328.htm:5]** **[0001071739-24-000037_cnc-20231231.htm:9]** **[0001071739-24-000043_a20240221s-3asr.htm:4]**.

1. **Medicaid** - Offers programs such as Temporary Assistance for Needy Families (TANF), Medicaid Expansion, and the Children's Health Insurance Program (CHIP), among others.
2. **Commercial** - Includes the Health Insurance Marketplace and various commercial health insurance products.
3. **Medicare** - Covers Medicare Advantage, Dual Eligible Special Needs Plans (D-SNPs), and Medicare Prescription Drug Plans (PDPs).
4. **Other** - Encompasses pharmacy operations, vision and dental services, and behavioral health, among others.

cc03c93d9e8c3dd588291cd623d8974df00f7012cfd62cf45cc9f2e53800d6a8

| Metric [USD Million] | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Medicaid             | N/A     | **26,164**  **[0001071739-23-000116_cnc-20230331.htm:20]**  | **24,665**  **[0001071739-23-000183_cnc-20230630.htm:22]**  | **24,694**  **[0001071739-23-000209_cnc-20230930.htm:25]**  | **21,114**  **[0001071739-24-000018_a20240206ex991pressrelease.htm:3]**  | **25,530**  **[0001071739-24-000097_cnc-20240331.htm:21]**  | **24,113**  **[0001071739-24-000157_cnc-20240630.htm:36]**  | **26,440**  **[0001071739-24-000200_cnc-20240930.htm:25]**  |
| Medicare             | N/A     | **5,876**  **[0001071739-23-000116_cnc-20230331.htm:20]**   | **5,665**  **[0001071739-23-000183_cnc-20230630.htm:22]**   | **5,430**  **[0001071739-23-000209_cnc-20230930.htm:25]**   | **5,290**  **[0001071739-24-000018_a20240206ex991pressrelease.htm:3]**   | **5,935**  **[0001071739-24-000097_cnc-20240331.htm:21]**   | **5,978**  **[0001071739-24-000157_cnc-20240630.htm:36]**   | **5,643**  **[0001071739-24-000200_cnc-20240930.htm:25]**   |
| Commercial           | N/A     | **5,252**  **[0001071739-23-000116_cnc-20230331.htm:20]**   | **5,734**  **[0001071739-23-000183_cnc-20230630.htm:22]**   | **6,453**  **[0001071739-23-000209_cnc-20230930.htm:25]**   | **7,406**  **[0001071739-24-000018_a20240206ex991pressrelease.htm:3]**   | **7,751**  **[0001071739-24-000097_cnc-20240331.htm:21]**   | **8,535**  **[0001071739-24-000157_cnc-20240630.htm:36]**   | **8,693**  **[0001071739-24-000200_cnc-20240930.htm:25]**   |
| Other                | N/A     | **1,597**  **[0001071739-23-000116_cnc-20230331.htm:20]**   | **1,544**  **[0001071739-23-000183_cnc-20230630.htm:22]**   | **1,465**  **[0001071739-23-000209_cnc-20230930.htm:25]**   | **1,528**  **[0001071739-24-000018_a20240206ex991pressrelease.htm:3]**   | **1,191**  **[0001071739-24-000097_cnc-20240331.htm:21]**   | **1,210**  **[0001071739-24-000157_cnc-20240630.htm:36]**   | **1,247**  **[0001071739-24-000200_cnc-20240930.htm:25]**   |
| Total Revenue        | **35,561**  **[0001071739-23-000024_a20230207ex991pressrelease.htm:0]**  | **38,889**  **[0001071739-23-000116_cnc-20230331.htm:20]**  | **37,608**  **[0001071739-23-000183_cnc-20230630.htm:22]**  | **38,042**  **[0001071739-23-000209_cnc-20230930.htm:25]**  | **35,338**  **[0001071739-24-000018_a20240206ex991pressrelease.htm:0]**  | **40,407**  **[0001071739-24-000097_cnc-20240331.htm:21]**  | **39,836**  **[0001071739-24-000157_cnc-20240630.htm:36]**  | **42,023**  **[0001071739-24-000200_cnc-20240930.htm:25]**  |

b4a4f0376de86fbd457290335a09c25df64f5ae48942780cf2c8b17e791ecb48

| Metric / Quarter                                      | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|-------------------------------------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Managed Care Membership Increase                      | N/A     | **2,200**  **[0001071739-23-000116_cnc-20230331.htm:26]** **[0001071739-23-000116_cnc-20230331.htm:29]**  | **2,000**  **[0001071739-23-000183_cnc-20230630.htm:31]** **[0001071739-23-000183_cnc-20230630.htm:35]**  | **1,200**  **[0001071739-23-000209_cnc-20230930.htm:33]** **[0001071739-23-000209_cnc-20230930.htm:37]**  | N/A     | **-33**  **[0001071739-24-000097_cnc-20240331.htm:26]**  | **66**  **[0001071739-24-000157_cnc-20240630.htm:29]**  | **670**  **[0001071739-24-000200_cnc-20240930.htm:30]** **[0001071739-24-000200_cnc-20240930.htm:35]**  |
| Health Benefits Ratio (%)                             | **88.7**  **[0001071739-23-000024_a20230207ex991pressrelease.htm:4]**  | **87.0**  **[0001071739-23-000114_a20230425ex991pressrelease.htm:3]** **[0001071739-23-000114_a20230425ex991pressrelease.htm:3]** **[0001071739-23-000116_cnc-20230331.htm:30]** **[0001071739-23-000114_a20230425ex991pressrelease.htm:0]**  | **87.0**  **[0001071739-23-000182_a20230728ex991pressrelease.htm:3]** **[0001071739-23-000182_a20230728ex991pressrelease.htm:3]** **[CNC_3385138_4]** **[0001071739-23-000183_cnc-20230630.htm:37]**  | **87.0**  **[0001071739-23-000211_a20231024ex991pressrelease.htm:3]** **[0001071739-23-000211_a20231024ex991pressrelease.htm:3]** **[0001071739-23-000209_cnc-20230930.htm:33]** **[0001071739-23-000209_cnc-20230930.htm:38]**  | **89.5**  **[0001071739-24-000018_a20240206ex991pressrelease.htm:3]**  | **87.1**  **[0001071739-24-000098_a20240426ex991pressrelease.htm:3]** **[0001071739-24-000098_a20240426ex991pressrelease.htm:3]** **[0001071739-24-000097_cnc-20240331.htm:31]** **[0001071739-24-000098_a20240426ex991pressrelease.htm:0]**  | **87.6**  **[0001071739-24-000158_a20240726ex991pressrelease.htm:3]** **[0001071739-24-000158_a20240726ex991pressrelease.htm:3]** **[0001071739-24-000157_cnc-20240630.htm:29]** **[0001071739-24-000157_cnc-20240630.htm:34]**  | **89.2**  **[0001071739-24-000201_a20241025ex991pressrelease.htm:3]** **[0001071739-24-000201_a20241025ex991pressrelease.htm:3]** **[0001071739-24-000200_cnc-20240930.htm:36]** **[0001071739-24-000201_a20241025ex991pressrelease.htm:18]**  |
| Cost of Service Ratio (%)                             | N/A     | **77.2**  **[0001071739-23-000116_cnc-20230331.htm:30]**  | **78.0**  **[0001071739-23-000183_cnc-20230630.htm:37]**  | **77.7**  **[0001071739-23-000209_cnc-20230930.htm:39]**  | **79.9**  **[0001071739-24-000037_cnc-20231231.htm:84]**  | **82.8**  **[0001071739-24-000097_cnc-20240331.htm:31]**  | **81.6**  **[0001071739-24-000157_cnc-20240630.htm:34]**  | **88.3**  **[0001071739-24-000200_cnc-20240930.htm:36]**  |
| Risk Adjustment Receivable                            | **838**  **[0001071739-23-000047_cnc-20221231.htm:122]**  | **887**  **[0001071739-23-000116_cnc-20230331.htm:18]**  | **1,088**  **[0001071739-23-000183_cnc-20230630.htm:19]**  | **1,130**  **[0001071739-23-000209_cnc-20230930.htm:20]**  | **893**  **[0001071739-24-000037_cnc-20231231.htm:133]**  | **1,124**  **[0001071739-24-000097_cnc-20240331.htm:20]**  | **2,047**  **[0001071739-24-000157_cnc-20240630.htm:21]**  | **1,805**  **[0001071739-24-000200_cnc-20240930.htm:22]**  |
| Risk Adjustment Payable                               | **780**  **[0001071739-23-000047_cnc-20221231.htm:122]**  | **1,556**  **[0001071739-23-000116_cnc-20230331.htm:18]**  | **2,303**  **[0001071739-23-000183_cnc-20230630.htm:19]**  | **2,312**  **[0001071739-23-000209_cnc-20230930.htm:20]**  | **2,553**  **[0001071739-24-000037_cnc-20231231.htm:133]**  | **3,266**  **[0001071739-24-000097_cnc-20240331.htm:20]**  | **3,475**  **[0001071739-24-000157_cnc-20240630.htm:21]**  | **1,705**  **[0001071739-24-000200_cnc-20240930.htm:22]**  |
| Cost Sharing Reduction Receivable                     | **0**  **[0001071739-23-000047_cnc-20221231.htm:122]**  | N/A     | **2**  **[0001071739-23-000183_cnc-20230630.htm:19]**  | **2**  **[0001071739-23-000209_cnc-20230930.htm:20]**  | N/A     | **18**  **[0001071739-24-000097_cnc-20240331.htm:20]**  | **12**  **[0001071739-24-000157_cnc-20240630.htm:21]**  | **10**  **[0001071739-24-000200_cnc-20240930.htm:22]**  |
| Cost Sharing Reduction Payable                        | **99**  **[0001071739-23-000047_cnc-20221231.htm:122]**  | **89**  **[0001071739-23-000116_cnc-20230331.htm:18]**  | **87**  **[0001071739-23-000183_cnc-20230630.htm:19]**  | **104**  **[0001071739-23-000209_cnc-20230930.htm:20]**  | **114**  **[0001071739-24-000037_cnc-20231231.htm:133]**  | **113**  **[0001071739-24-000097_cnc-20240331.htm:20]**  | **111**  **[0001071739-24-000157_cnc-20240630.htm:21]**  | **68**  **[0001071739-24-000200_cnc-20240930.htm:22]**  |
| IBNR plus Expected Development on Claims              | **11,081**  **[0001071739-23-000047_cnc-20221231.htm:121]**  | **11,271**  **[0001071739-23-000116_cnc-20230331.htm:17]**  | **11,360**  **[0001071739-23-000183_cnc-20230630.htm:18]**  | **11,661**  **[0001071739-23-000209_cnc-20230930.htm:19]**  | **11,135**  **[0001071739-24-000037_cnc-20231231.htm:132]**  | **12,311**  **[0001071739-24-000097_cnc-20240331.htm:18]**  | **12,337**  **[0001071739-24-000157_cnc-20240630.htm:19]**  | **12,654**  **[0001071739-24-000200_cnc-20240930.htm:20]**  |
| Premium Deficiency Reserve                            | N/A     | N/A     | N/A     | **200**  **[CNC_3385138_5]**  | **250**  **[0001071739-24-000037_cnc-20231231.htm:94]** **[0001071739-24-000037_cnc-20231231.htm:113]**  | **300**  **[0001071739-24-000097_cnc-20240331.htm:19]**  | **335**  **[0001071739-24-000157_cnc-20240630.htm:20]**  | **245**  **[0001071739-24-000200_cnc-20240930.htm:21]**  |

fe3e6661297bb418b8bdf4793b365d24001f2492a0c3351ee605669d8e7ebcb0

9739177995f43a39f6b7cc973a083800af6dd24bd1f79360930dc01751f50bc9

1. Could you elaborate on the sufficiency of the Medicaid rate adjustments you've received so far, and what steps are you taking if rates are still misaligned with the higher acuity of your post-redeterminations member base?
2. Given the continued pressure on Medicaid margins from the mismatch of rates and acuity, how confident are you in your ability to grow adjusted EPS next year, and what are the key levers to achieve this growth?
3. With the Medicare Advantage business expecting down membership in 2025 but aiming for margin recovery, can you explain how the recent changes in Star ratings and contract portfolio will translate into financial improvement?
4. In your Marketplace business, you mentioned expectations for modest membership growth and mid-single-digit macro market growth; can you discuss the potential risks to achieving your target pretax margins given the program integrity enhancements and agent of record lock policies?
5. Regarding the underlying utilization trends in Medicaid, especially in areas like behavioral health and home health, are you seeing any new pressures or emerging trends that could impact your medical loss ratio beyond what you've previously disclosed?

fe40b7457080f8fc2ae1538979136f7c51b6f3b0f1130298b844456187d6104d

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from Debt [USD, Millions]

Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

4ef64f6f2dffa704cea707a6d4891baa76d7d091eb5966789b400debdbd7eb56

Medicaid

- Premium Revenue

- Service Revenue

Medicare

Commercial

Other

Managed Care Segment

Specialty Services Segment

Eliminations

Total Revenue

174260dd50680485eb3265c29a021dcd4cb95278a2760bd229ac6d0dbd6919d2

95d3dfed29ee339296eff207a27d441090938c3742cd5eff286467e918b2631f

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Adjusted Diluted EPS**: Greater than **$6.80**  **[CNC_3404015_7]** **[CNC_3404015_1]** **[CNC_3404015_6]** .
  2. **Premium and Service Revenue**: **$141 billion to $143 billion**  **[CNC_3394682_5]** .
  3. **Investment Income**: Over **$1.7 billion**  **[CNC_3404015_7]** .
  4. **Depreciation Expense**: **$550 million**  **[CNC_3404015_7]** .
  5. **SG&A Expense Ratio**: Midpoint **8.6%**  **[CNC_3404015_7]** .
  6. **Health Benefits Ratio (HBR)**: **88.3% to 88.5%**  **[CNC_3404015_7]** .
  7. **Medicaid Membership**: **12.9 million to 13 million**  **[CNC_3404015_6]** .
  8. **Medicare Advantage Revenue**: **$14 billion to $16 billion** for 2025  **[CNC_3404015_6]** **[CNC_3404015_3]** .
  9. **Medicare Advantage Stars Ratings**: 46% of members in plans at or above 3.5 stars for 2026  **[CNC_3404015_6]** .
  10. **PDP Revenue Growth**: Expected growth in 2025  **[CNC_3404015_6]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Premium and Service Revenue**: **$141 billion to $143 billion**  **[CNC_3394682_5]** .
  2. **Investment Income**: Over **$1.55 billion**  **[CNC_3394682_5]** .
  3. **Adjusted SG&A Expense Ratio**: **8.4% to 9.0%**  **[CNC_3394682_5]** **[CNC_3394682_13]** .
  4. **Cash Flow from Operations**: **$2.2 billion** in Q2  **[CNC_3394682_5]** .
  5. **Debt to Adjusted EBITDA**: **2.8x**  **[CNC_3394682_5]** .
  6. **Medical Claims Liability**: **54 days** in claims payable  **[CNC_3394682_5]** .
  7. **Health Benefits Ratio (HBR)**: **87.6%** for Q2, **87.3%** year-to-date  **[CNC_3394682_4]** .
  8. **Adjusted Diluted EPS**: Greater than **$6.80**  **[CNC_3394682_4]** **[CNC_3394682_5]** .
  9. **Medicaid Composite Rates**: **4% plus**  **[CNC_3394682_4]** .
  10. **Marketplace Risk Adjustment Benefit**: **$600 million**  **[CNC_3394682_4]** .
  11. **Medicare PDR**: **$125 million** PDR P&L hit  **[CNC_3394682_5]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Adjusted EPS**: Greater than **$6.80**  **[CNC_3381135_1]** **[CNC_3381135_4]** .
  2. **Premium and Service Revenue**: Added **$1 billion** of Medicaid premium revenue  **[CNC_3381135_4]** .
  3. **Medicare Advantage Revenue**: About **$16 billion**  **[CNC_3381135_4]** .
  4. **PDP Revenue**: Approximately **$4 billion**  **[CNC_3381135_4]** .
  5. **Marketplace Membership**: **4.3 million** members  **[CNC_3381135_4]** .
  6. **Investment Income**: Above **$1.4 billion**  **[CNC_3381135_5]** .
  7. **Share Repurchase**: **$3 billion to $3.5 billion**  **[CNC_3381135_5]** .

### Q4 2023 Earnings Call
- **Issued Period**: Q4 2023
- **Guided Period**: N/A
- **Guidance**: The documents do not provide information about the guidance metrics from the Q4 2023 earnings call.

1419270615afe93381c4d023a89f683b6b62822432b0a79335fc3fcba34441b4

Managed Care Membership Increase

Health Benefits Ratio (%)

Cost of Service Ratio (%)

Risk Adjustment Receivable

Risk Adjustment Payable

Cost Sharing Reduction Receivable

Cost Sharing Reduction Payable

IBNR plus Expected Development on Claims

Premium Deficiency Reserve

fa5dc53fd90020f08d8822c40351c3a90e838a3f10b0c1ce472e631cb881761d

bbafaa09ef8c581b6fcefda838cc5ff2f68801397dd0400a81ba1f9593a79cbf

Increase in managed care membership (members)

Number of Traditional Medicaid Members (members)

Number of High Acuity Medicaid Members (members)

Number of Medicaid Members (members)

Number of Commercial Marketplace Members (members)

Number of Commercial Group Members (members)

Number of Commercial Members (members)

Number of Medicare Members (members)

Number of Medicare PDP Members (members)

Number of at-risk members (members)

Number of TRICARE eligibles (members)

Total Membership (members)

09808521029c9b1802bedcb2b18d1acbdbde1b3c56d45a20084b5c5116f17294

| Name                  | Position                                                      | Start Date         | Short Bio                                                                                                                                                                                                 |
|-----------------------|---------------------------------------------------------------|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Sarah M. London       | Chief Executive Officer                                       | March 2022         | Sarah M. London has been serving as the **Chief Executive Officer** of Centene Corporation since **March 2022**. She previously held roles such as Vice Chairman and President, Centene Health Care Enterprises  **[0001071739-24-000037_cnc-20231231.htm:35]** **[0001071739-24-000069_cnc-20240328.htm:55]** **[0001071739-23-000075_cnc-20230324.htm:30]** .                     |
| Andrew L. Asher       | Executive Vice President, Chief Financial Officer             | May 2021           | Andrew L. Asher has served as the **Executive Vice President, Chief Financial Officer** of Centene Corporation since **May 2021**. He was previously the CFO of WellCare  **[0001071739-24-000037_cnc-20231231.htm:35]** **[0001071739-24-000069_cnc-20240328.htm:55]** **[0001071739-23-000075_cnc-20230324.htm:65]** .                                                            |
| Katie N. Casso        | Senior Vice President, Corporate Controller and Chief Accounting Officer | April 2021         | Katie N. Casso has served as the **Senior Vice President, Corporate Controller and Chief Accounting Officer** at Centene Corporation since **April 2021**. She was previously Vice President, Assistant Controller  **[0001071739-24-000037_cnc-20231231.htm:35]** **[0001071739-24-000069_cnc-20240328.htm:55]** **[0001071739-23-000075_cnc-20230324.htm:65]** .                  |
| Kenneth J. Fasola     | President                                                     | December 2022      | Kenneth J. Fasola has served as the **President** of Centene Corporation since **December 2022**. He joined Centene following the acquisition of Magellan Health, where he was CEO  **[0001071739-24-000037_cnc-20231231.htm:35]** **[0001071739-23-000047_cnc-20221231.htm:35]** **[0001071739-24-000069_cnc-20240328.htm:55]** **[0001071739-23-000075_cnc-20230324.htm:65]** .                                                |
| Christopher A. Koster | Executive Vice President, Secretary and General Counsel       | December 2021      | Christopher A. Koster has served as the **Executive Vice President, Secretary and General Counsel** of Centene Corporation since **December 2021**. He was previously Missouri Attorney General  **[0001071739-24-000037_cnc-20231231.htm:35]** **[0001071739-24-000069_cnc-20240328.htm:55]** **[0001071739-23-000075_cnc-20230324.htm:65]** .                                      |
| Susan R. Smith        | Chief Operating Officer                                       | January 2024       | Susan R. Smith has served as the **Chief Operating Officer** of Centene Corporation since **January 2024**. She joined the company in June 2023 and held various senior positions at Humana Inc.  **[0001071739-24-000037_cnc-20231231.htm:35]** **[0001071739-24-000069_cnc-20240328.htm:55]** .                                       |
| Thomas R. Greco       | Board of Directors Member                                     | August 9, 2024     | Thomas R. Greco was appointed to the Board of Directors of Centene Corporation, effective **August 9, 2024**. He was later assigned to the Governance Committee and the Compensation and Talent Committee  **[0001071739-24-000189_cnc-20240809.htm:0]** .                                  |

85522c97d8ad5cdd3533d85f64f9a89513e897c549346e8ebf20bdd03738e190

| Program Details           | Program 1       |
|---------------------------|-----------------|
| Approval Date             | November 2005   |
| End Date/Duration         | No specific end date  **[0001071739-24-000200_cnc-20240930.htm:51]** **[0001071739-24-000200_cnc-20240930.htm:43]**  |
| Total additional amount   | **$10.0 billion**  **[0001071739-24-000200_cnc-20240930.htm:51]** **[0001071739-24-000200_cnc-20240930.htm:43]**  |
| Remaining authorization amount | **$3.2 billion** as of September 30, 2024  **[0001071739-24-000200_cnc-20240930.htm:51]** **[0001071739-24-000200_cnc-20240930.htm:43]** **[0001071739-24-000200_cnc-20240930.htm:23]**  |
| Details                   | The program includes regular open-market purchases and may involve Rule 10b5-1 and accelerated share repurchases. The company reserves the right to discontinue the program at any time.  **[0001071739-24-000200_cnc-20240930.htm:51]** **[0001071739-24-000157_cnc-20240630.htm:48]** **[0001071739-24-000097_cnc-20240331.htm:43]**  |

23bc3dea6868f220c99146dcfa7b8e5863263993bdfadc36b55dc29fbe879ee4

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

SG&A [USD, Millions]

R&D [USD, Millions]

D&A [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

EPS - Basic [USD, Per Share]

EPS - Diluted [USD, Per Share]

c47a4a3667e5598541509c4737a885447f61a00ca0bfe6f311ce61023df05a4c

**Annual guidance for FY 2024:**
- **Adjusted Diluted EPS**: Greater than $6.80  **[CNC_3404015_7]** **[CNC_3404015_1]** **[CNC_3404015_6]**  (no change from prior guidance Greater than $6.80  **[CNC_3394682_4]** **[CNC_3394682_5]** )  
- **Premium and Service Revenue**: $141 billion to $143 billion  **[CNC_3394682_5]**  (no change from prior guidance $141 billion to $143 billion  **[CNC_3394682_5]** )  
- **Investment Income**: Over $1.7 billion  **[CNC_3404015_7]**  (raised from Over $1.55 billion  **[CNC_3394682_5]** )  
- **SG&A Expense Ratio**: Midpoint 8.6%  **[CNC_3404015_7]**  (no change from prior guidance 8.4% to 9.0%  **[CNC_3394682_5]** **[CNC_3394682_13]** )  
- **Health Benefits Ratio (HBR)**: 88.3% to 88.5%  **[CNC_3404015_7]**  (no prior guidance)  
- **Depreciation Expense**: $550 million  **[CNC_3404015_7]**  (no prior guidance)  
- **Medicaid Membership**: 12.9 million to 13 million  **[CNC_3404015_6]**  (no prior guidance)  
- **Medicare Advantage Revenue (for 2025)**: $14 billion to $16 billion  **[CNC_3404015_6]** **[CNC_3404015_3]**  (no prior guidance)  
- **Medicare Advantage Stars Ratings (for 2026)**: 46% of members in plans at or above 3.5 stars  **[CNC_3404015_6]**  (no prior guidance)  
- **PDP Revenue Growth**: Expected growth in 2025  **[CNC_3404015_6]**  (no prior guidance)  

eaf2cdd127edb7dfd7ae417ecc0caf291f0b44a19e8ca42b3e40128e00a02d95

| Name       | Start Date | End Date | Reason for Change |
|------------|------------|----------|-------------------|
| KPMG LLP   | 2005  **[0001071739-24-000037_cnc-20231231.htm:102]**    | Present  | Current auditor   |

39f7ec5a270b0fa57b7759c3d6d66005b152d21a3f8f9a8cf1e06b978853b15b

e99a11ab3f7024f8f0b0e64b166c574722768341ee2dca2af3529f445ce095b5

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- Total Revenue: $42.023B in Q3 2024 vs. $38.042B in Q3 2023 (**+10% YoY**)  **[0001071739-23-000209_cnc-20230930.htm:8]** **[0001071739-24-000200_cnc-20240930.htm:9]**   
- Medicaid Revenue: $26.440B in Q3 2024 vs. $24.694B in Q3 2023 (+7% YoY)  **[0001071739-23-000209_cnc-20230930.htm:38]** **[0001071739-24-000200_cnc-20240930.htm:25]**   
- Commercial Revenue: $8.693B in Q3 2024 vs. $6.453B in Q3 2023 (**+35% YoY**)  **[0001071739-23-000209_cnc-20230930.htm:38]** **[0001071739-24-000200_cnc-20240930.htm:25]**   
- Other Segment Revenue: $1.247B in Q3 2024 vs. $1.465B in Q3 2023 (-15% YoY)  **[0001071739-23-000209_cnc-20230930.htm:38]** **[0001071739-24-000200_cnc-20240930.htm:25]**   
- Operating Income: $665M in Q3 2024 vs. $735M in Q3 2023 (-10% YoY)  **[0001071739-23-000209_cnc-20230930.htm:8]** **[0001071739-24-000200_cnc-20240930.htm:9]**   
- Net Income: $713M in Q3 2024 vs. $472M in Q3 2023 (**+51% YoY**)  **[0001071739-23-000209_cnc-20230930.htm:8]** **[0001071739-24-000200_cnc-20240930.htm:9]**   
- Diluted EPS: $1.37 in Q3 2024 vs. $0.89 in Q3 2023 (**+54% YoY**)  **[0001071739-23-000209_cnc-20230930.htm:8]** **[0001071739-24-000200_cnc-20240930.htm:9]**   

1bd94bb14ace6ee52203f895d52208f040dbd15d7580040a7bfb1689033ad2fe

445b252a372fc17ab1a4739399303f863bf689f808c3dd7ec0e955b762ec8666

fe1b8231617bcdb7ab750ac5344143f84f30eb4ba6063865e98a0b89af1f8c5a

| Year | Amount Due (in millions) | Debt Type                   | Interest Rate (%) | % of Total Debt                                                                 |
|----------|------------------------------|----------------------------------|-----------------------|------------------------------------------------------------------------------------|
| 2024     | $111                         | Current Portion of Long-Term Debt | N/A                   | 0.6% = (111 / 17,605) * 100 **[0001071739-24-000200_cnc-20240930.htm:8]** **[0001071739-24-000200_cnc-20240930.htm:22]**                                       |
| 2027     | $2,500                       | Senior Notes                    | 4.25                  | 14.2% = (2,500 / 17,605) * 100 **[0001071739-24-000200_cnc-20240930.htm:22]**                                            |
| 2028     | $2,300                       | Senior Notes                    | 2.45                  | 13.1% = (2,300 / 17,605) * 100 **[0001071739-24-000200_cnc-20240930.htm:22]**                                            |
| 2029     | $3,500                       | Senior Notes                    | 4.625                 | 19.9% = (3,500 / 17,605) * 100 **[0001071739-24-000200_cnc-20240930.htm:22]**                                            |
| 2030     | $2,000                       | Senior Notes                    | 3.375                 | 11.4% = (2,000 / 17,605) * 100 **[0001071739-24-000200_cnc-20240930.htm:22]**                                            |
| 2030     | $2,200                       | Senior Notes                    | 3.00                  | 12.5% = (2,200 / 17,605) * 100 **[0001071739-24-000200_cnc-20240930.htm:22]**                                            |
| 2031     | $2,200                       | Senior Notes                    | 2.50                  | 12.5% = (2,200 / 17,605) * 100 **[0001071739-24-000200_cnc-20240930.htm:22]**                                            |
| 2031     | $1,300                       | Senior Notes                    | 2.625                 | 7.4% = (1,300 / 17,605) * 100 **[0001071739-24-000200_cnc-20240930.htm:22]**                                            |

206441d48c971e4c681f5067f3ff9dc81c496e0b490a40d79d7c66d5ac34c956

1. **Medicaid MLR Expectations**  
   **Q:** What is the outlook for Medicaid MLR this year?  
   **A:** Centene expects improvement in Medicaid Medical Loss Ratio (MLR) in the second half of the year, benefiting from a **4%+ rate increase** on about half of their premium revenue.  **[CNC_3394682_6]**  They anticipate that it will take until **2025** to return to equilibrium due to multiple rate cycles ahead.  **[CNC_3394682_6]**  The peak MLR pressure was **92.8%** in Q2, and they expect better performance in the back half.  **[CNC_3394682_15]** 

2. **Exchange Business Margins**  
   **Q:** Are exchange margins sustainable at current levels?  
   **A:** Centene is well within their long-term pretax margin target of **5% to 7.5%** for the marketplace business, excluding a **$600 million** risk adjustment benefit recognized in Q2.  **[CNC_3394682_9]** **[CNC_3394682_10]** **[CNC_3394682_12]**  They expect to maintain sound performance and have positioned for margin in 2025, anticipating market growth.  **[CNC_3394682_18]** 

3. **Risk Adjustment Favorability**  
   **Q:** Why was the exchange risk adjuster better than expected?  
   **A:** The risk adjuster on the exchange developed **$1.3 billion** better than expected due to strong execution and improved acuity data submission.  **[CNC_3394682_9]**  Centene executed effectively in capturing acuity data, resulting in a favorable impact on the risk adjustment payable.  **[CNC_3394682_9]** 

4. **Medicaid Rate Updates**  
   **Q:** How do Medicaid rate updates affect profitability?  
   **A:** Rate updates, including the **4%+ composite rate increase**, are expected to improve Medicaid profitability.  **[CNC_3394682_6]** **[CNC_3394682_10]**  Centene anticipates progressively better rates as more data supports rate adequacy, with rate cycles in **1/1**, **4/1**, and **7/1 to 10/1** in 2025.  **[CNC_3394682_6]** **[CNC_3394682_10]** 

5. **Part D Changes and Profitability**  
   **Q:** How will Part D changes impact profitability?  
   **A:** Centene expects Part D premiums to increase significantly in 2024 due to a higher federal subsidy, with a projected increase of over **$100** on top of the **$29** direct subsidy this year.  **[CNC_3394682_8]** **[CNC_3394682_11]**  They believe the Part D product must stand alone profitably and have taken a thoughtful approach to the bid process.  **[CNC_3394682_8]** 

6. **Medicare Advantage Strategy**  
   **Q:** What is the plan for Medicare Advantage in 2025?  
   **A:** Centene expects to shrink their Medicare Advantage business in 2025, focusing on aligning it with their Medicaid footprint and optimizing margins.  **[CNC_3394682_17]**  They anticipate reducing revenue to around **$14-16 billion** and do not expect to book a Premium Deficiency Reserve (PDR) into the 2025 P&L for 2026.  **[CNC_3394682_17]** 

7. **Operating Cash Flow Expectations**  
   **Q:** What are the expectations for operating cash flow?  
   **A:** Operating cash flow can vary due to timing of state payments. Centene had **$2.2 billion** positive cash flow in Q2, offsetting a negative **$400 million** in Q1, resulting in positive cash flow for the first half.  **[CNC_3394682_12]**  They expect capital deployment in the back half of the year consistent with prior statements.  **[CNC_3394682_12]** 

8. **SG&A Ratio Improvement**  
   **Q:** Can SG&A ratio improvements be sustained?  
   **A:** The SG&A ratio was favorable and on track within the guidance range of **8.4% to 9.0%**, with a midpoint of **8.7%**.  **[CNC_3394682_13]**  Centene continues to focus on cost reduction, aiming to take a couple hundred basis points out of their Medicare business over the next few years.  **[CNC_3394682_13]** 

9. **Medicaid Growth and RFP Success**  
   **Q:** What's the outlook for Medicaid growth and RFP pipeline?  
   **A:** Centene is optimistic about Medicaid growth opportunities, with recent RFP successes in Florida, Michigan, and Kansas.  **[CNC_3394682_14]**  They foresee active pipeline opportunities, including new states, markets, programs, and expansions.  **[CNC_3394682_14]** 

10. **MA Star Ratings Progress**  
    **Q:** How is Centene progressing on MA Star Ratings?  
    **A:** Centene expects a meaningful step-up in MA Star Ratings in October, tracking year-over-year improvements in key chapters.  **[CNC_3394682_16]**  They are confident in sustainable programmatic improvements, benefiting not just stars but overall quality scores.  **[CNC_3394682_16]** 

4c2cc99e03266e7785edc5366f8dd0e1c41bbd4b52394720fcf5569f094c6c65

- The **Medicare Advantage** business is facing challenges, including **higher-than-expected inpatient authorizations** and **elevated outpatient trends**, coupled with an **insufficient 2025 rate environment** and potential negative impacts from the **Inflation Reduction Act**, which may pressure profitability in Medicare.  **[CNC_3381135_4]** **[CNC_3381135_5]** **[CNC_3381135_11]** **[CNC_3381135_10]** **[CNC_3381135_14]**
- The **Medicaid Health Benefits Ratio (HBR)** was **90.9% in the first quarter**, **higher than expected**, as the company continues to work through appropriate matching of rates and acuity, which may pressure margins in Medicaid.  **[CNC_3381135_4]** **[CNC_3381135_5]** **[CNC_3381135_8]** **[CNC_3381135_17]**
- There are concerns about the **sustainability of margins** in the **Marketplace business** due to **rapid membership growth** and potential impacts from the **Change Healthcare cybersecurity incident**, which may affect claims visibility and margin durability.  **[CNC_3381135_3]** **[CNC_3381135_7]**

415335e38b052543421d854442d591cc4150b169927b6ec550f985aa21f0eb13

1. **Medicaid MLR and Rate Adjustments**  
   **Q:** What Medicaid rate increases do you need for MLR improvement?  
   **A:** Rate needs vary by state; we've seen high single-digit increases in small states ( **[CNC_3404015_10]** ,  **[CNC_3404015_11]** ). States acknowledge the need to align rates with acuity. Our composite rate adjustment is in the high **4% to 5%** range for the back half of the year, excluding pass-throughs ( **[CNC_3404015_8]** ,  **[CNC_3404015_11]** ,  **[CNC_3404015_19]** ). We continue to advocate for adequate rates to improve MLR going forward.

2. **Medicaid Utilization Trends and Rejoiners**  
   **Q:** How are Medicaid utilization trends and rejoiners impacting costs?  
   **A:** Core utilization trends are stable, with pockets of increased behavioral and home health services ( **[CNC_3404015_9]** ). Rejoiners return needing care, creating artificial MLR pressure since we didn't receive premiums during their coverage gap ( **[CNC_3404015_12]** ,  **[CNC_3404015_14]** ). This dynamic is slowing, which should be a tailwind into 2025 ( **[CNC_3404015_12]** ).

3. **2025 Earnings Growth Visibility**  
   **Q:** Is Medicaid MLR still a tailwind for 2025 earnings growth?  
   **A:** Yes, Medicaid HBR improvement is a tailwind for 2025 ( **[CNC_3404015_13]** ). We expect to grow adjusted EPS, and our headwinds and tailwinds remain as previously shared ( **[CNC_3404015_13]** ).

4. **Marketplace Growth Expectations**  
   **Q:** What is your outlook for Marketplace growth next year?  
   **A:** We expect mid-single-digit growth in the Marketplace due to stabilization post-redetermination and reinstated program integrity policies ( **[CNC_3404015_16]** ). We remain bullish long-term and aim to deliver margins within our **5% to 7.5%** pretax target ( **[CNC_3404015_16]** ,  **[CNC_3404015_17]** ). We'll provide more details at our Investor Day ( **[CNC_3404015_17]** ).

5. **Part D Business and IRA Impact**  
   **Q:** How will the IRA changes affect your Part D margins?  
   **A:** We're on track with PDP performance, anticipating a **1%** margin next year, consistent with this year ( **[CNC_3404015_15]** ). We accounted for IRA changes in our pricing and don't expect significant impact from specialty drug utilization shifts ( **[CNC_3404015_15]** ).

6. **GLP-1 Drugs Impact on Trends**  
   **Q:** How are GLP-1 drugs affecting Medicaid cost trends?  
   **A:** A few states cover GLP-1s for weight loss; we're sharing data to ensure rates reflect utilization ( **[CNC_3404015_12]** ). This helps align rates with the cost of these medications ( **[CNC_3404015_12]** ).

7. **Use of AI for Operational Efficiency**  
   **Q:** Can you quantify AI benefits and are projects ready?  
   **A:** Our AI initiatives are shovel-ready and part of ongoing efficiency efforts ( **[CNC_3404015_18]** ). While we can't quantify benefits yet, AI helps automate processes, driving EPS improvement from **1% to 2%** margin enhancement over time ( **[CNC_3404015_18]** ).

8. **G&A Expenses and Timing**  
   **Q:** Are there timing-related G&A spending items to note?  
   **A:** SG&A naturally rises in Q4 due to selling periods for Marketplace and Medicare ( **[CNC_3404015_18]** ). We'll bridge the 2024 midpoint SG&A of **8.6%** at Investor Day, considering business mix and PDP revenue growth ( **[CNC_3404015_18]** ).

9. **State-Directed Payments Effect**  
   **Q:** How do state-directed payments affect Medicaid PMPM growth?  
   **A:** Increased state-directed payments contributed to Medicaid PMPM growth this quarter ( **[CNC_3404015_19]** ). Our composite rate adjustment of high **4% to 5%** also supports PMPM growth ( **[CNC_3404015_19]** ).

10. **California Retroactive Rate Adjustment**  
    **Q:** Have you seen significant retroactive rate adjustments in California?  
    **A:** Yes, we received adequate information to record a negative retroactive adjustment in Q2 results ( **[CNC_3404015_16]** ).

11. **Visibility into 1/1 Rate Updates**  
    **Q:** What visibility do you have into January 1 rate updates?  
    **A:** We've started receiving some 1/1 rates and will update on 2025 outlook at our December Investor Day ( **[CNC_3404015_13]** ).

12. **Normalization of Rejoiner Utilization**  
    **Q:** Do rejoiners' utilization patterns normalize over time?  
    **A:** Yes, after rejoining, utilization normalizes, confirming the artificial MLR pressure due to coverage gaps ( **[CNC_3404015_14]** ).

170759239ae9aaa91cb6c68a89d116282a8308d808d76e567eef9c06e15b7000

- **Centene is successfully navigating Medicaid redeterminations, maintaining higher-than-expected membership levels at 13.3 million members**  **[CNC_3381135_16]** , **and capitalizing on growth opportunities in new contracts such as Oklahoma (commenced April 1) and pending Arizona LTSS win, positioning the company for future Medicaid growth**.  **[CNC_3381135_16]**
- **Centene's Marketplace business continues to perform well, demonstrating strong ability to manage rapid growth while improving margins**.  **[CNC_3381135_14]**  **The company maintains confidence in its overall Health Benefits Ratio and has implemented strong clinical initiatives, with potential upside if they can grow membership during the Special Enrollment Period**.  **[CNC_3381135_14]**
- **Centene is making progress toward improving its Medicare Advantage STARS ratings, which is crucial for increasing profitability in its Medicare business**.  **[CNC_3381135_17]**  **The company has maintained last year's progress and made additional advancements in administrative and operational metrics, expecting to see positive results reflected in future ratings**.  **[CNC_3381135_17]**

a1eb74c57b10204eeb3f5f277a28a8f0f000dfc2c88a8f54b7903f0760795836

- *1. Exceptional Growth in Marketplace Membership and Margin Expansion Potential:**
- Centene's marketplace membership grew to **just above 3.6 million members** in the third quarter, surpassing expectations and indicating strong performance in the exchange business.  **[CNC_3361661_11]**
- The company expects to expand margins into the target range of **5% to 7.5%** in 2024, leveraging the growth achieved in 2023.  **[CNC_3361661_11]**

27141ea0bd22fb4269fcf1b49a9ca65528d6dae3511cc66c27a38d1bbb918a34

- **Centene faces uncertainty in Medicaid rate adjustments, including an incomplete retroactive rate update that negatively impacted the Health Benefits Ratio by 40 basis points in the quarter, potentially affecting margins and future resolutions.**  **[CNC_3361661_19]** ,  **[CNC_3361661_11]**
- **The company expects a significant decrease of **$4 billion** in Medicare Advantage revenue in 2024 and acknowledges ongoing challenges in improving Star ratings, which are crucial for restoring Medicare earnings power.**  **[CNC_3361661_15]** ,  **[CNC_3361661_13]**
- **Centene increased its risk adjustment payable in the Marketplace business from **$1.5 billion** to **$1.8 billion**, reflecting higher-than-expected risk scores, and is still holding an allowance of **$314 million** for insolvent peers, which may impact earnings.**  **[CNC_3361661_8]**

76bfc884c85d6aa17f45ab533df4a4f7b5a81b809627751edab45ca965429e60

- **Improving Medicaid Health Benefit Ratio (HBR) expected in Q4 and beyond as rate increases take effect**, with Q3 being the high watermark for Medicaid HBR. Centene anticipates that the benefit of 9/1 and 10/1 rate updates will positively impact Q4 more than Q3. This suggests margin improvement in their largest business segment moving forward.  **[CNC_3404015_8]**
- **Significant revenue growth expected in the Part D business in 2025**, largely driven by the Inflation Reduction Act mechanics. Centene is pleased with its positioning, expecting to grow membership during the annual enrollment period. They are targeting a 2025 PDP margin of about **1%** on a much higher revenue base, which provides upside potential for earnings.  **[CNC_3404015_15]**
- **Progress in aligning Medicaid rates with increased patient acuity**, with all states acknowledging the need to match rates with acuity and taking action, leading to expected margin improvements. Centene has received rate increases in the **high 4% to 5% range** for the back half of the year, and they remain confident in further adjustments to achieve rate sufficiency.  **[CNC_3404015_10]** **[CNC_3404015_11]**

44574d6877eb58137b6c2ef878a1cc1332d0a24c2fe43fb5710afc87c4692d35

1. **Medicare Outlook and Stars Improvement**  
   **Q:** Any changes to MA enrollment/revenue expectations, the $200 million PDR in Q4, and the path to 85% members in 3.5 Star plans by Oct 2025?  
   **A:** No change; we anticipate Medicare revenue down **$4 billion** in 2024, focusing on lower-income complex population.  **[CNC_3361661_13]**  We're pleased with Stars results aligning with expectations but more work is needed to reach **85%** of members in 3.5 Star plans by October 2025.  **[CNC_3361661_13]**  We're investing in operational capacity, infrastructure, and tracking metrics like CTM and call center performance to improve member experience and care gaps.  **[CNC_3361661_13]**  We have a robust governance structure and aligned incentives.  **[CNC_3361661_13]**  Our guidance allows for a PDR in the mid-**$200 million** range; final calculation will be in December.  **[CNC_3361661_13]** 

2. **Exchange Performance and Margin Outlook**  
   **Q:** What's driving exchange membership growth, and how does this affect 2024 margins?  
   **A:** Our established brand, pricing discipline, and foresight into market trends like enhanced APTCs have driven strong exchange growth, reaching over **3.6 million** members.  **[CNC_3361661_8]** **[CNC_3361661_11]**  Currently, marketplace margins are just below our **5%-7.5%** target due to growth and first-year commissions, not HBR.  **[CNC_3361661_11]**  We expect to be well within that margin range in 2024; we've priced accordingly and focus on retaining 2023 growth.  **[CNC_3361661_11]** **[CNC_3361661_12]** 

3. **Medicaid Redeterminations and MLR**  
   **Q:** How are procedural disenrollments affecting utilization, and what's your path to 90.1% Medicaid MLR in 2024?  
   **A:** Leavers have lower HBR than stayers, as expected.  **[CNC_3361661_9]**  The rejoiner rate has picked up to about **25%**, with most rejoiners having no coverage gap, minimizing acuity impacts.  **[CNC_3361661_9]** **[CNC_3361661_10]**  Rejoiners' HBR is similar to stayers.  **[CNC_3361661_9]**  We're on track for our **90.1%** Medicaid MLR target for 2024, with **7** draft rates including acuity adjustments, boosting our confidence for 2024.  **[CNC_3361661_9]** 

4. **PBM Cost Savings and Margin Impact**  
   **Q:** Is there upside in PBM cost savings, and how does this impact margins?  
   **A:** Our PBM transition is on track, contributing to greater than **$660 million** in cost savings.  **[CNC_3361661_14]**  Many savings are guaranteed by our PBM, enhancing our confidence in margin improvement.  **[CNC_3361661_14]**  This positively affects our cost structure and helps us make our products more affordable.  **[CNC_3361661_10]** **[CNC_3361661_14]** 

5. **Behavioral Health Trends and Magellan Opportunities**  
   **Q:** What's the update on behavioral utilization and Magellan's outlook, and how will the California minimum wage law impact costs?  
   **A:** Behavioral health utilization remains an underlying factor but less pressure than before.  **[CNC_3361661_16]**  Substance use and opioid disorders are industry-wide focuses.  **[CNC_3361661_16]**  Magellan benefits from increased attention on integrating medical and behavioral care; governors cite behavioral health as a top issue, providing tailwinds and new opportunities, such as a recent win in Idaho.  **[CNC_3361661_16]**  The California minimum wage law doesn't apply to MCOs, but we're monitoring for potential provider cost pass-throughs.  **[CNC_3361661_16]** 

6. **Medicare Benefit Adjustments and Revenue Outlook**  
   **Q:** How will benefit reductions affect individual MA vs. D-SNP, and can you update the Medicare figure for this year including PDR?  
   **A:** We've heavily trimmed Part B giveback and PPO plans but invested in D-SNP, combining supplemental benefits into a simple spendables card to simplify for members.  **[CNC_3361661_15]**  We maintain our forecast for **$16 billion** in Medicare Advantage revenue for 2024, down about **$4 billion**.  **[CNC_3361661_15]** 

7. **Complex MA Population and Margin Strategy**  
   **Q:** What's the target margin for the complex MA population, and how does this align with your long-term strategy?  
   **A:** Managing complex MA populations aligns with our expertise; while reimbursement is higher due to higher acuity, through value-based arrangements, we can profitably manage this fastest-growing Medicare segment.  **[CNC_3361661_14]**  This focus is part of our long-term fundamental strategy.  **[CNC_3361661_14]** 

8. **Medicaid Rejoiners and Exchange Share Gain**  
   **Q:** Are you seeing 25% of redeterminations rejoining Centene, and are you gaining exchange members from other plans?  
   **A:** Yes, we observe a consistent **25%** rejoiner rate from April to August cohorts.  **[CNC_3361661_10]** **[CNC_3361661_9]**  We're recapturing about **10%-15%**, aligning with our target of **200,000 to 300,000** members.  **[CNC_3361661_10]**  We're also pulling share from other players in exchanges and tracking members coming from other Medicaid programs.  **[CNC_3361661_10]** 

9. **Marketplace Utilization and Margin Tailwinds**  
   **Q:** Do you expect higher Q4 utilization as deductibles are met, and how does this population contribute to margin tailwinds into next year?  
   **A:** Yes, we anticipate a healthy uptick in HBR in Q4 as deductibles are met.  **[CNC_3361661_12]**  For SEP membership, we're seeing increased retention due to enhanced APTCs and affordability.  **[CNC_3361661_12]**  With a full year of risk adjustment and early utilization behind us, this provides a margin tailwind for the retained SEP population into 2024.  **[CNC_3361661_12]**  Our focus is on retaining 2023 growth and expanding margins into the **5%-7.5%** range.  **[CNC_3361661_12]** 

10. **Retro Rate Adjustment Confidence**  
    **Q:** Why are you confident an incomplete rate update will be reversed?  
    **A:** A 40 basis point rate issue increased our HBR in Medicaid this quarter.  **[CNC_3361661_11]**  Based on negotiations and the construction of the incomplete, possibly rushed, retro rate, we expect a favorable outcome, potentially in Q4 but it might extend into 2024.  **[CNC_3361661_11]** 

11. **Medicaid Redetermination and Double Coverage**  
    **Q:** Have you analyzed leavers for double coverage, such as 0% MLR?  
    **A:** Yes, we saw duplicative coverage in Medicaid increase from **2.7%** in 2019 to **3.4%**, which informed our forecasts.  **[CNC_3361661_14]**  With over **40%** redeterminations completed, we're on track with our expectations.  **[CNC_3361661_14]** 

12. **PDP Strategy and PBM Transition**  
    **Q:** What's the strategy around low-priced PDP products next year, given PBM switching and changes in Medicare Advantage focus?  
    **A:** Our PDP business, a legacy WellCare asset, focuses on managing pharmacy spend and serving as a future feeder for MA-PD rather than generating earnings on **$2.5 billion** of revenue.  **[CNC_3361661_10]**  The change to a new PBM improved our cost structure just as rule changes (e.g., elimination of pharmacy DIR, insulin cap) impact PDPs.  **[CNC_3361661_10]**  This allowed us to offer affordable products while the direct subsidy increased significantly, benefiting our members and helping other businesses with pharmacy cost structure.  **[CNC_3361661_10]** 

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1. **Medicare Advantage Strategy and 2025 Bids**  
   **Q:** Will Medicare Advantage membership be flat or down in 2025?  
   **A:** We're focused on rebuilding our Medicare franchise, especially for low-income complex members, and remain committed to the business.  **[CNC_3381135_10]**  While the 2025 rate environment is more challenging, we can't discuss bid strategy yet.  **[CNC_3381135_10]**  We see volume as a lever and are making county-by-county decisions to improve profitability.  **[CNC_3381135_10]**  It's too early to comment on another PDR, but we're considering all factors.  **[CNC_3381135_10]** 

2. **Medicaid Redeterminations and Margin Outlook**  
   **Q:** When will you see the impact of redeterminations on margins?  
   **A:** We're about **90%** through redeterminations and expect the tail of membership to run through Q2 and Q3.  **[CNC_3381135_17]**  We've proactively modeled the shifting risk pool and addressed rate discussions with states.  **[CNC_3381135_17]**  We anticipate the tailwind of margin improvement to pick up in **'25 and possibly into '26**, aiming for **30 basis points** of margin expansion in Medicaid.  **[CNC_3381135_17]** 

3. **Exchange Margins and MLR Performance**  
   **Q:** How confident are you in exchange MLR outperformance?  
   **A:** We're confident in our Health Benefit Ratio, having tracked well over the last two cycles as our Marketplace book more than **doubled** in two years.  **[CNC_3381135_7]**  We expect our Marketplace margins to be within our target **5% to 7.5%** range in 2024.  **[CNC_3381135_9]** 

4. **PDP Strategy and Impact of IRA**  
   **Q:** How will IRA changes affect your PDP business in 2025?  
   **A:** The Inflation Reduction Act brings significant changes in 2025, including an increase in direct subsidy likely by over **$100**, driven by the catastrophic phase moving from **20% to 60%**.  **[CNC_3381135_9]**  We're underwriting this now, and while cautious, we have extensive data from our experience since 2006.  **[CNC_3381135_9]** 

5. **SG&A Leverage and Cost Reductions**  
   **Q:** Are you on track to reduce Medicare SG&A by 200bps?  
   **A:** Yes, we need to reduce SG&A by at least **200 basis points** over the next few years in Medicare Advantage, and plans are on track.  **[CNC_3381135_13]**  We're not concerned about being subscale, even with some expected attrition.  **[CNC_3381135_13]** 

6. **Investment Income Expectations**  
   **Q:** What's the outlook for investment income this year?  
   **A:** Excluding gains, we had a bit over **$400 million** in Q1.  **[CNC_3381135_16]**  We expect full-year investment income to be above the **$1.4 billion** guided at Investor Day, though you can't simply annualize Q1 due to potential rate cuts.  **[CNC_3381135_16]** 

7. **PBM Migration and Savings**  
   **Q:** Are PBM savings levers fully active, or ramping up?  
   **A:** We didn't want to wait for economics; we have a step-up benefit as of **1/1/24**.  **[CNC_3381135_20]**  We're constantly working with our partner ESI to deliver value and manage costs, expecting normal course improvements going forward.  **[CNC_3381135_20]** 

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- Centene is experiencing **pressure on Medicaid margins**, with the Medicaid Health Benefits Ratio (HBR) at **92.8%** in Q2, **running close to 0% margin** currently, due to increased acuity from redeterminations and a mismatch between rates and acuity. Recovery to normal margins is expected to take into **2025**, indicating prolonged margin pressure.  **[CNC_3394682_15]** **[CNC_3394682_6]**
- The **Medicare Advantage business faces challenges**, with the company expecting to **shrink** in **2025**, and currently having to **chip away at negative margins**, aiming to **push towards breakeven** before considering future growth opportunities. This indicates potential headwinds in the Medicare segment.  **[CNC_3394682_17]**
- **Dependence on state actions** to adjust Medicaid rates to match increased member acuity poses a risk. While all states have acknowledged the need to match rates with acuity, **sufficiency and timing of rate adjustments remain uncertain**, and the company continues to work on **influencing state partners** to achieve proper rate alignment, which may impact profitability.  **[CNC_3394682_1]** **[CNC_3394682_4]** **[CNC_3394682_15]** **[CNC_3394682_6]**

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- **Strong performance and growth prospects in the Marketplace business**: Centene's Marketplace segment continues to perform well, achieving margins well into the **5% to 7.5% pretax margin range**. The company expects to grow membership and maintain strong margins in 2025, positioning the Marketplace products for continued profitable growth.  **[CNC_3394682_18]** **[CNC_3394682_10]** **[CNC_3394682_12]**
- **Improving Medicaid margins through rate adjustments**: Centene is actively working with state partners to adjust Medicaid rates to match the increased acuity of the remaining membership after redeterminations. The company expects **Medicaid Health Benefit Ratios (HBR) to improve in the second half of 2024** due to rate actions, with further improvement anticipated into 2025 as additional rates align with acuity.  **[CNC_3394682_7]** **[CNC_3394682_6]**
- **Anticipated revenue growth in the Prescription Drug Plan (PDP) business**: Centene forecasts significant growth in PDP revenue in 2025 due to changes from the Inflation Reduction Act, including an expected increase in the direct subsidy. The company is optimizing its PDP product to capitalize on these changes and views PDP as a **tailwind for 2025**.  **[CNC_3394682_18]** **[CNC_3394682_8]**

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Centene Corp (CNC)

Financials