Q2 2024 Centene Corp Earnings Call

?? ?? ?? ?? ??

Operator: Good morning, everyone, and welcome to the Centene Corporation 2024 second quarter financial results. All participants will be in a listen-only mode. Please see no conference officials by pressing the star key followed by.

Unknown Executive: Good morning, everyone, and welcome to the Centene Corporation 2024 second quarter financial results conference call. All participants will be in a listen-only mode.

Speaker Change: Good morning, everyone, and welcome to the Centene Corporation 2024 second quarter financial results conference call.

Unknown Executive: Should you need assistance, please sing to a conference specialist by pressing the star key followed by zero.

Speaker Change: All participants will be in a listen-only mode. Should you need assistance, please signal to a conference professional by pressing the star key, followed by zero.

Unknown Executive: After today's presentation, there will be an opportunity to ask questions to ask a question.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on the touch-tone telephone. To withdraw your questions, you may press the star and... Please also note today's event is being recorded. Time I'd like to turn the floor over to Jen Gilligan, Head of Investor Relations. Ma'am, please go ahead. Thank you, Jamie. And good morning, everyone. Thank you for joining us on our second quarter 2024 earnings results conference call.

Speaker Change: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one using a touch-tone telephone. To withdraw your questions, you may press star and two.

Unknown Executive: You may press star and then one using a touch on telephone to withdraw your questions.

Unknown Executive: You may press star and two. Please also note today's event is being recorded.

Jennifer Gilligan: At this time, I'd like to turn the floor over to Jen Gilligan, head of Investor Relations.

Speaker Change: Please also note today's event is being recorded.

Speaker Change: At this time, I'd like to turn the floor over to Jen Gilligan, Head of Investor Relations. Ma'am, please go ahead.

Unknown Executive: Ma'am, please go ahead.

Jennifer Gilligan: Thank you, Jamie, and good morning, everyone. Thank you for joining us on our second quarter 2024 earnings results conference call. Sarah London, Chief Executive Officer, and Drew Asher, Executive Vice President and Chief Financial Officer of Centene, will host this morning's call, which also can be accessed through our website at centene.com. Ken Fisola, Centene's president, and John Dinesman, our head of External Affairs, will also be available as participants during Q&A.

Operator: Sarah London, Chief Executive Officer, and Drew Asher, Executive Vice President and Chief Financial Officer of Centene, will host this morning's call, which also can be accessed through our website at centene.com. Ken Fasola, Centene's President, and John Dinesman, our Head of External Affairs, will also be available as participants during Q&A. Any remarks that Centene may make about future expectations, plans, and prospects constitute forward-looking statements for the purpose of the Safe Harbor Provision under the Private Securities Litigation Reform Act of 1995.

Jennifer Lynch Gilligan: Thank you, Jamie, and good morning, everyone. Thank you for joining us on our second quarter 2024 Earnings Results Conference call.

Speaker Change: Sarah London, Chief Executive Officer, Andrew Asher, Executive Vice President and Chief Financial Officer of Centene will host this morning's call, which also can be accessed through our website at Centene.com.

Speaker Change: Ken Fasola, Centene's President, and John Dinesman, our Head of External Affairs, will also be available as participants during Q&A.

Jennifer Gilligan: Any remarks that Centene may make about future expectations, plans, and prospects constitute forward-looking statements for the purpose of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in our second quarter 2024 press release, which is available on the company's website under the Investors section. Centene anticipates that subsequent events and developments may cause its estimates to change. While the company may elect to update these forward-looking statements at some point in the future, we specifically display many obligations to do so.

Operator: Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in our second quarter 2024 press release, available on the company's website under the Investors section. It anticipates that subsequent events and developments may 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, and will also refer to certain non-GAAP measures.

Speaker Change: Any remarks that Centene may make about future expectations, plans, and prospects constitute forward-looking statements for the purpose of the Safe Harbor Provision under the Private Securities Litigation Reform Act of 1995.

Speaker Change: Actual results may differ materially from those indicated by those forward looking statements as a result of various important factors, including those discussed in our second quarter 2024 press release, which is available on the company's website under the investors section.

Speaker Change: Centene anticipates that subsequent events and developments may 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.

Jennifer Gilligan: The call will also refer to certain non-GAT measures; a reconciliation of these measures, with the most directly comparable GAT measures, can be found in our second quarter 2024 press release.

Speaker Change: The call will also refer to certain non-GAAP measures. A reconciliation of these measures with the most directly comparable GAAP measures can be found in our second quarter 2024 press release.

Jennifer Lynch Gilligan: A reconciliation of these measures with the most directly comparable GAAP measures can be found in our second quarter 2024 press release. With that, I'd like to turn the call over to our CEO, Sarah London. Thank you, Jen.

Sarah London: With that, I'd like to turn the call over to our CEO, Sarah London.

Sarah London: Sarah, thank you, Jen, and thanks everyone for joining us as we review our second quarter 2024 financial results. This morning, we reported second quarter adjusted diluted EPS of $2.42, a stronger than previously anticipated result. Our earnings power in the period was supported by mixed results in our core business line, with strong execution in marketplace partially offset by pressure and Medicaid resulting from redeterminations. Medicare continues to perform in line with our expectations. Taking a step back from the moving pieces of the quarter, our diversified platform continues to enable us to deliver earnings power consistent with our previous expectations as we navigate a dynamic health care landscape.

Speaker Change: With that, I'd like to turn the call over to our CEO , Sarah London. Sarah?

Sarah London: And thanks, everyone, for joining us as we review our second quarter 2024 financial results. This morning, we reported second quarter adjusted diluted EPS of $2.42. Stronger Than Previously Anticipated Results. Our earnings power in the period was supported by mixed results in our core business line, with strong execution in the marketplace partially offset by pressure in Medicaid resulting from redetermination. Medicare continues to perform in line with our expectations. Taking a step back from the moving pieces of the quarter, our diversified platform continues to enable us to deliver earnings power consistent with our previous expectations as we navigate a dynamic healthcare landscape. Given the importance of redeterminations to the Q2 results, let's start there.

Sarah London: Thank you, Jen. And thanks, everyone, for joining us as we review our second quarter 2024 financial results.

Speaker Change: This morning we reported second quarter adjusted diluted EPS of $2.42, a stronger than previously anticipated result.

Speaker Change: Our earnings power in the period was supported by mixed results in our core business line.

Speaker Change: With strong execution in marketplace, partially offset by pressure in Medicaid resulting from redeterminations.

Speaker Change: Medicare continues to perform in line with our expectations.

Speaker Change: Taking a step back from the moving pieces of the quarter, our diversified platform continues to enable us to deliver earnings power consistent with our previous expectations as we navigate a dynamic healthcare landscape.

Sarah London: Given the importance of redeterminations to the Q2 results, let's start there. As many of you know, and as we have been reporting on for well over a year now, this process has played out at an unprecedented scale and has driven a similarly unprecedented membership shift that we knew would require the rebalancing of rates to account for the acuity of the members we continue to serve on behalf of our state partners. While we are disappointed with the magnitude of the disconnect between Medicaid rate and acuity that we saw materialized in the quarter, our underlying analysis continues to suggest this is largely due to the mixed shift of the population, and is therefore a temporary and addressable dynamic.

Speaker Change: Given the importance of redeterminations to the Q2 results, let's start there.

Sarah London: As many of you know, and as we have been reporting on for well over a year now, this process has played out at an unprecedented scale and has driven a similarly unprecedented membership shift that we knew would require the rebalancing of rates to account for the acuity of the members we continue to serve on behalf of our state partners. While we are disappointed with the magnitude of the disconnect between Medicaid rates and acuity that we saw materialize in the quarter, our underlying analysis continues to suggest this is largely due to the mixed shift of the population and is therefore a temporary and addressable dynamic, and one that we are already actively addressing.

Speaker Change: As many of you know, and as we have been reporting on for well over a year now, this process has played out at an unprecedented scale and has driven a similarly unprecedented membership shift that we knew would require the rebalancing of rates to account for the acuity of the members we continue to serve on behalf of our state partners.

Speaker Change: While we are disappointed with the magnitude of the disconnect between Medicaid rate and acuity that we saw materialize in the quarter, our underlying analysis continues to suggest this is largely due to the mixed shift of the population and is therefore a temporary and addressable dynamic, and one that we are already actively addressing.

Sarah London: And one, that we are already actively addressed. The dialogue we established with each state's regulatory and actuarial counterparts early on in the lead-up to redeterminations has, in this phase, allowed us to profile the shifts we are seeing as they emerge and resulted in rates for the second half of the year that are very much a step in the right direction. As you will hear from Drew, this momentum is evidenced by an uptick in our expectation for the annualized composite rate adjustment. Ultimately, we still anticipate the Medicaid business will return to a steady state pre-pandemic HBR range once we are fully beyond the redeterminations impact, and each month and each right cycle gets us closer to a more normalized operating dynamic.

Sarah London: The dialogue we established with each state's regulatory and actuarial counterparts early on in the lead-up to redeterminations has, in this phase, allowed us to profile the shifts we are seeing as they emerge and resulted in rates for the second half of the year that are very much a step in the right direction. As you will hear from Drew, this momentum is evidenced by an uptick in our expectation for the annualized composite rate adjustment.

Speaker Change: The dialogue we established with each state's regulatory and actuarial counterparts early on in the lead up to redeterminations have, in this phase, allowed us to profile the shifts we are seeing as they emerge and resulted in rates for the second half of the year that are very much a step in the right direction.

Speaker Change: As you will hear from Drew, this momentum is evidenced by an uptick in our expectation for the annualized composite rate adjustment.

Sarah London: Ultimately, we still anticipate the Medicaid business will return to a steady state pre-pandemic HBR range once we are fully beyond the redetermination's impact, and each month and each rate cycle gets us closer to more normalized operating dynamics. In addition to right-sizing rates, we continue to improve on the underlying Medicaid operations and to innovate as we look to drive health outcomes. One example of this is our new HALO program, which leverages peer-to-peer counseling to support recovery for members diagnosed with a substance use disorder.

Andrew Lynn Asher: Ultimately, we still anticipate the Medicaid business will return to a steady state pre-pandemic HBR range once we are fully beyond the redetermination's impact, and each month and each rate cycle gets us closer to a more normalized operating dynamic.

Sarah London: In addition to right sizing rates, we continue to improve on the underlying Medicaid operations and to innovate as we look to drive health outcomes. One example of this is our new Halo program, which leverages peer-to-peer counseling to support recovery for members diagnosed with a substance use disorder. Innovations like this are well within our span of control and can help reduce mental costs for our state partners while driving improved outcomes for our members.

Andrew Lynn Asher: In addition to right-sizing rates, we continue to improve on the underlying Medicaid operations and to innovate as we look to drive health outcomes.

Andrew Lynn Asher: One example of this is our new HALO program, which leverages peer-to-peer counseling to support recovery for members diagnosed with a substance use disorder.

Sarah London: Innovations like this are well within our span of control and can help reduce medical costs for our state partners while driving improved outcomes for our members. As we work through an historic redeterminations process, we have not lost sight of the opportunities for long-term growth in Medicaid, which is dependent on our ability to successfully procure and re-procure contracts at the state level. On this front, our business development team and local state teams continue to deliver, with previously discussed wins in critical geographies like Florida, Kansas, and Michigan. We have reviewed the recently announced actions taken by the state to finalize our new Florida contract and feel good about the outcome.

Andrew Lynn Asher: Innovations like this are well within our span of control and can help reduce medical costs for our state partners while driving improved outcomes for our members.

Sarah London: As we work through a historic redeterminations process, we have not lost sight of the opportunities for long-term growth in Medicaid, which is dependent on our ability to successfully procure and repercure contracts at a state level. On this front, our business development team and local state teams continue to deliver, with previously discussed wins in critical geographies like Florida, Kansas, and Michigan. We have reviewed the recently announced actions taken by the state to finalize our new Florida contract and feel good about the outcome. We look forward to implementing that contract and to launching our new Arizona LTSS business with a targeted start date in Q4 this year.

Andrew Lynn Asher: As we work through an historic redeterminations process, we have not lost sight of the opportunities for long-term growth in Medicaid, which is dependent on our ability to successfully procure and re-procure contracts at a state level.

Andrew Lynn Asher: On this front, our business development team and local state teams continue to deliver, with previously discussed wins in critical geographies like Florida, Kansas, and Michigan.

Andrew Lynn Asher: We have reviewed the recently announced actions taken by the state to finalize our new Florida contract and feel good about the outcome.

Sarah London: We look forward to implementing that contract and to launching our new Arizona LTSS business with a targeted start date in Q4 this year. The strength of our local markets has been a key priority under the leadership of Dave Thomas, our CEO of Markets and Medicaid, who will be leaving Centene later this year after 25 years with the organization. Throughout that time, Dave has been influential in the company's success and has helped to build and support a team of exceptional mission-driven market leaders.

Andrew Lynn Asher: We look forward to implementing that contract and to launching our new Arizona LTSS business with a targeted start date in Q4 this year.

Sarah London: The strengths of our local markets has been a key priority under the leadership of Dave Thomas, our CEO of Markets in Medicaid, who will be leaving Centine later this year after 25 years with the organization. Throughout that time, Dave has been influential in the company's success and has helped to build and support a team of exceptional mission-driven market leaders. As we position the organization for our next chapter of growth and innovation in Medicaid, we will leverage one of those leaders, Nathan Landsbaum, who many of you now know from his role in Florida, to prepare to take a leadership role across the markets later this year.

Speaker Change: The strength of our local markets has been a key priority under the leadership of Dave Thomas, our CEO of Markets and Medicaid, who will be leaving Centene later this year after 25 years with the organization.

Speaker Change: Throughout that time, Dave has been influential in the company's success and has helped to build and support a team of exceptional mission-driven market leaders.

Sarah London: As we position the organization for our next chapter of growth and innovation in Medicaid, we will leverage one of those leaders as Nathan Landsbaum, who many of you now know from his role in Florida, prepares to take a leadership role across the markets later this year. Nate has been with the organization for more than 18 years and brings extensive experience ranging from corporate positions to health plan leadership roles in multiple markets.

Speaker Change: As we position the organization for our next chapter of growth and innovation in Medicaid, we will leverage one of those leaders as Nathan Landsbaum, who many of you now know from his role in Florida, prepares to take a leadership role across the markets later this year.

Sarah London: Nate has been with the organization for more than 18 years and brings extensive experience ranging from corporate positions to health plan leadership roles in multiple markets. I want to thank Dave for the significant contribution he has made to our organization, and we look forward to working with Nate and our market CEOs to harness the power of incomemency and serve more members in more programs. Turning to Marketplace, Centine's Ambitre Health demonstrated once again it is not only the undisputed leader in the individual market but also serves as a strategic complement to our Medicaid business, providing coverage continuity for members and a natural hedge as we navigate mix and acuity shifts from the market.

Speaker Change: Nate has been with the organization for more than 18 years and brings extensive experience ranging from corporate positions to health plan leadership roles in multiple markets.

Sarah London: I want to thank Dave for the significant contribution he has made to our organization, and we look forward to working with Nate and our market CEOs to harness the power of incumbency and serve more members in more programs. Turning to the Marketplace, Centene's Ambetter Health demonstrated once again it is not only the undisputed leader in the individual market but also serves as a strategic complement to our Medicaid business, providing coverage continuity for members and a natural hedge as we navigate mix and acuity shifts from redetermination.

Speaker Change: I want to thank Dave for the significant contribution he has made to our organization, and we look forward to working with Nate and our market CEOs to harness the power of incumbency and serve more members in more programs.

Speaker Change: Turning to Marketplace, Centene's Ambetter Health demonstrated once again it is not only the undisputed leader in the individual market, but also serves as a strategic complement to our Medicaid business.

Speaker Change: Providing coverage continuity for members and a natural hedge as we navigate mix and acuity shifts from redeterminations.

Sarah London: Ambitre is delivering strong performance in the core business and delivering on margin expansion in 2024. At the same time, the business has been able to capture in-year membership growth, contributing to this morning's increase in our full-year premium and service revenue expectations. And to date, through the re-determinations process, has exceeded expectations for serving members transitioning for Medicaid. From a macro perspective, the marketplace landscape continues to shift positively in our direction. With heightened awareness among consumers and the migration of micro and small commercial groups to the individual market, we see an increasing and increasingly accessible, addressable market, giving us exciting room to run in this business.

Sarah London: Ambetter is delivering strong performance in the core business and delivering on margin expansion in 2024. At the same time, the business has been able to capture in-year membership growth, contributing to this morning's increase in our full-year premium and service revenue expectations. And to date, through the redeterminations process, has exceeded expectations for serving members transitioning to Medicaid.

Speaker Change: Ambetter is delivering strong performance in the core business and delivering on margin expansion in 2024.

Speaker Change: At the same time, the business has been able to capture in-year membership growth, contributing to this morning's increase in our full-year premium and service revenue expectations, and to date, through the redeterminations process, has exceeded expectations for serving members transitioning from Medicaid.

Sarah London: From a macro perspective, the marketplace landscape continues to shift positively in our direction. With heightened awareness among consumers and the migration of micro and small commercial groups to the individual market, we see an increasing and increasingly accessible addressable market, giving us exciting room to run in this business. By executing well in the first half of 2024, we are harnessing the positive momentum we continue to gain with our members, providers, and distribution partners.

Speaker Change: From a macro perspective, the marketplace landscape continues to shift positively in our direction.

Speaker Change: With heightened awareness among consumers and the migration of micro and small commercial groups to the individual market, we see an increasing and increasingly accessible addressable market, giving us exciting room to run in this business.

Sarah London: By executing well in the first half of 2024, we are harnessing the positive momentum we continue to gain with our members, providers, and distribution partners. As we look to 2025 and scenarios around the enhanced advanced premium tax credits, we believe the benefits of enabling access to affordable healthcare for more than 20 million Americans are clear. Coverage has been a critical driver of economic stability for rural communities across the country, particularly in states like Texas, Florida, and Georgia. And mass adoption has finally made a long envisioned robust individual marketplace a reality.

Speaker Change: By executing well in the first half of 2024, we are harnessing the positive momentum we continue to gain with our members, providers, and distribution partners.

Sarah London: As we look to 2025 and scenarios around the enhanced advanced premium tax credits, we believe the benefits of enabling access to affordable health care for more than 20 million Americans are clear. Coverage has been a critical driver of economic stability for rural communities across the country, particularly in states like Texas, Florida, and Georgia.

Speaker Change: As we look to 2025 and scenarios around the enhanced advanced premium tax credits, we believe the benefits of enabling access to affordable health care for more than 20 million Americans are clear.

Speaker Change: Coverage has been a critical driver of economic stability for rural communities across the country, particularly in states like Texas, Florida, and Georgia, and mass adoption has finally made a long-envisioned robust individual marketplace a reality.

Sarah London: And mass adoption has finally made a long-envisioned, robust individual marketplace a reality. Rhetoric aside, we believe there is bipartisan alignment around the promise of this platform and that Centene is well positioned to build on this foundation to drive growth in 2025 and beyond. To this end, we continue to track momentum around affordable, customized, and portable coverage for individuals in the form of ICHRA. While this market is still very early, we believe it represents a compelling alternative to employer-sponsored coverage.

Sarah London: Rhetoric aside, we believe there is bipartisan alignment around the promise of this chassis and that Centene is well positioned to build on this foundation to drive growth in 2025 and beyond. To this end, we continue to track momentum around affordable, customized, and portable coverage for individuals in the form of ICRAs. While this market is still very early, we believe it represents a compelling alternative to employer-sponsored coverage. And as the thought leader in this space, with the number one brand in the individual market and without a commercial group business to protect, we see this as fertile organic hunting ground that can create upside to our story.

Speaker Change: Rhetoric aside, we believe there is bipartisan alignment around the promise of this chassis and that Centene is well positioned to build on this foundation to drive growth in 2025 and beyond.

Speaker Change: To this end, we continue to track momentum around affordable, customized, and portable coverage for individuals in the form of ICHRAs.

Speaker Change: While this market is still very early, we believe it represents a compelling alternative to employer-sponsored coverage. And as the thought leader in this space, with the number one brand in the individual market and without a commercial group business to protect, we see this as fertile organic hunting ground that can create upside to our story.

Sarah London: And as the thought leader in this space, with the number one brand in the individual market and without a commercial group business to protect, we see this as fertile organic hunting ground that can create upside for our story. Meanwhile, Centene's Medicare platform delivered an on-plan financial performance in the quarter and continues to make significant operational progress. We are, as many of you know, approaching an important milestone for this business as we prepare for the new Medicare Advantage Star Ratings to be unveiled in October.

Sarah London: Meanwhile, Centene's Medicare platform delivered an on-plan financial performance in the quarter and continues to make significant operational progress.

Speaker Change: Meanwhile, Centene's Medicare platform delivered an on-plan financial performance in the quarter and continues to make significant operational progress.

Sarah London: We are, as many of you know, approaching an important milestone for this business as we prepare for new Medicare Advantage star ratings to be unveiled in October. The pending star's announcement represents a critical step towards our previously established three-year goal of achieving 85% of our Medicare Advantage membership enrolled in plans rated three and a half stars or better, as published in the fall of 2025. We are pleased with the operational progress that we have made year to date and remain on track to deliver steady progress compared to the 19% achieved by last year's efforts, recently updated to 23% by CMS. Let me give you a sense for what has tangibly improved.

Speaker Change: We are, as many of you know, approaching an important milestone for this business as we prepare for new Medicare Advantage Star Ratings to be unveiled in October .

Sarah London: The pending STARS announcement represents a critical step towards our previously established three-year goal of achieving 85 percent of our Medicare Advantage membership enrolled in plans rated three-and-a-half stars or better as published in the fall of 2025. We are pleased with the operational progress that we have made year-to-date and remain on track to deliver steady progress compared to the 19% achieved by last year's efforts, recently updated to 23% by CMS Let me give you a sense for what has tangibly improved. At this time, we have good visibility into results related to admin and operations.

Speaker Change: The pending STARS announcement represents a critical step towards our previously established three-year goal of achieving 85% of our Medicare Advantage membership enrolled in plans rated 3.5 STARS or better as published in the fall of 2025.

Speaker Change: We are pleased with the operational progress that we have made year to date and remain on track to deliver steady progress compared to the 19% achieved by last year's efforts, recently updated to 23% by CMS.

Sarah London: At this time, we have good visibility into results related to admin and ops. Consistent with prior updates, in this cycle, we were able to hold on to the gains we achieved last year and build upon them. Our performance continues to improve with the processing of appeals, CTMs, and health risk assessments, and focus work by our call center and claims teams has driven improvements we would expect to see as part of scoring in October. On the heatis front, the significant increase in member outreach that you heard about in Q3 and Q4 drove improved physician access and successfully closed gaps in care for many of our members.

Speaker Change: Let me give you a sense for what has tangibly improved.

Sarah London: Consistent with prior updates, in this cycle, we were able to hold on to the gains we achieved last year and build upon them. Our performance continues to improve with the processing of appeals, CTMs, and health risk assessments, and focused work by our call center and claims teams has driven improvements we would expect to see as part of scoring in October. On the HEDIS front, the significant increase in member outreach that you heard about in Q3 and Q4 drove improved physician access and successfully closed gaps in care for many of our members. These are important lead indicators for improvement in our heat assessment.

Speaker Change: At this time, we have good visibility into results related to admin and ops. Consistent with prior updates, in this cycle, we were able to hold on to the gains we achieved last year and build upon them.

Speaker Change: Our performance continues to improve with the processing of appeals, CTMs, and health risk assessments, and focus work by our call center and claims teams has driven improvements we would expect to see as part of scoring in October .

Speaker Change: On the HEDIS front, the significant increase in member outreach that you heard about in Q3 and Q4 drove improved physician access and successfully closed gaps in care for many of our members.

Sarah London: These are important lead indicators for improvement in our heatis scores. We continue to invest in and strengthen these programs as we move through 2024, consistent with our commitment to and focus on quality enterprise-wide. We do not yet have final caps results or cut points, but as we sit here today, we are pleased with the progress against our internal expectations and expect this October 2024 milestone to be a meaningful step to our ultimate goal. Relative to 2025 Medicare bids, we remain focused on our product strategy of serving lower income, complex seniors. And despite a challenging rate environment, I'm proud of the work our team did to integrate a data-driven health equity lens into our supplemental benefits design.

Speaker Change: These are important lead indicators for improvement in our HEDIS scores.

Sarah London: We continue to invest in and strengthen these programs as we move through 2024, consistent with our commitment to and focus on quality enterprise-wide. We do not yet have final CAHPS results or cut points, but as we sit here today, we are pleased with the progress against our internal expectations and expect this October 2024 milestone to be a meaningful step toward our ultimate goal. Relative to 2025 Medicare bids, we remain focused on our product strategy of serving lower-income, complex seniors, and despite a challenging rate environment, I'm proud of the work our team did to integrate a data-driven health equity lens into our supplemental benefits design.

Speaker Change: We continue to invest in and strengthen these programs as we move through 2024, consistent with our commitment to and focus on quality enterprise-wide.

Speaker Change: We do not yet have final CAHPS results or cut points, but as we sit here today, we are pleased with the progress against our internal expectations and expect this October 2024 milestone to be a meaningful step to our ultimate goal.

Speaker Change: Relative to 2025 Medicare bids, we remain focused on our product strategy of serving lower-income, complex seniors. And despite a challenging rate environment, I'm proud of the work our team did to integrate a data-driven health equity lens into our supplemental benefits design.

Sarah London: We also took the opportunity in this bid cycle to simplify our contractual footprint, all part of a multi-year strategy to build back to a high quality, high performing, and profitable Medicare business aligned for growth.

Sarah London: We also took the opportunity in this bid cycle to simplify our contractual footprint, all part of a multi-year strategy to build back to a high-quality, high-performing, and profitable Medicare business aligned for growth. As we approach November, we are certainly keeping a close eye on election dynamics at every level and scenario planning for key policy themes across our states and lines of business. As we have said before, at Centene, we focus on policy, not politics.

Speaker Change: We also took the opportunity in this bid cycle to simplify our contractual footprint, all part of a multi-year strategy to build back to a high-quality, high-performing, and profitable Medicare business aligned for growth.

Sarah London: As we approach November, we are certainly keeping a close eye on election dynamics at every level and scenario planning for key policy scenes across our states and lines of business. As we have said before, at Centene, we focus on policy, not politics, and we operate day in and day out in a politically diverse ecosystem. We have demonstrated success over the past 25 years across multiple Republican and Democratic administrations. And this is because we focus on policy, not politics, and we operate day in and day out in a politically diverse ecosystem. We have demonstrated success over the past 25 years across multiple Republican and Democratic administrations.

Speaker Change: As we approach November , we are certainly keeping a close eye on election dynamics at every level and scenario planning for key policy themes across our states and lines of business.

Speaker Change: As we have said before, at Centene we focus on policy, not politics, and we operate day in and day out in a politically diverse ecosystem.

Sarah London: And we operate day in and day out in a politically diverse ecosystem. We have demonstrated success over the past 25 years across multiple Republican and Democratic administrations. This is because we focus on our mission first and thoughtfully partner at both the state and federal level on solutions that work best for each community we serve. In this role, I've had the honor of meeting with lawmakers across the country, including governors, senators, congressmen, and women, state legislators, and regulators, and leaders of major federal policy committees.

Speaker Change: We have demonstrated success over the past 25 years across multiple Republican and Democratic administrations.

Sarah London: And this is because we focus on our mission first and thoughtfully partner at both the state and federal level on solutions that work best for each community we serve. In this role, I've had the honor of meeting with lawmakers across the country, including governors, senators, congressmen and women, state legislators and regulators, and leaders of major federal policy committees. And while they have different views on many topics, there is one thing they all want to improve: the health of the communities they serve.

Speaker Change: And this is because we focus on our mission first and thoughtfully partner at both the state and federal level on solutions that work best for each community we serve.

Speaker Change: In this role, I've had the honor of meeting with lawmakers across the country, including governors, senators, congressmen and women, state legislators and regulators, and leaders of major federal policy committees.

Sarah London: And while they have different views on many topics, there is one thing they all want: to improve the health of the communities they serve. This is Centene's mission, and it is a vision we firmly believe has bipartisan support regardless of the electoral outcome in November. We are now more than halfway through 2024, and we are making good progress moving the organization beyond real but temporary headwinds, including Medicaid redeterminations and a well-documented Medicare Advantage STARS revenue challenge.

Speaker Change: And while they have different views on many topics, there is one thing they all want. To improve the health of the communities they serve.

Sarah London: This is Centene's mission, and it is a vision that we firmly believe has bipartisan support regardless of the electoral outcome in November.

Speaker Change: This is Centene's mission, and it is a vision we firmly believe has bipartisan support regardless of the electoral outcome in November .

Sarah London: We are now more than halfway through 2024, and we are making good progress moving the organization beyond real but temporary headwinds, including Medicaid redeterminations and a well-documented Medicare Advantage Stars revenue challenge. At the same time, we are still hard at work strengthening the underlying business, modernizing our processes and infrastructure, adding exceptional talent, and investing in innovation. We believe Centene's focus on government-sponsored healthcare positions is very well for profitable growth as we go forward, and we remain confident that we can deliver a value to our shareholders by delivering value to our members and keeping them at the center of all that we do.

Speaker Change: We are now more than halfway through 2024, and we are making good progress moving the organization beyond real but temporary headwinds, including Medicaid redeterminations and a well-documented Medicare Advantage STARS revenue challenge.

Sarah London: At the same time, we are still hard at work strengthening the underlying business, modernizing our processes and infrastructure, adding exceptional talent, and investing in innovation. We believe Centene's focus on government-sponsored health care positions us very well for profitable growth as we go forward, and we remain confident that we can deliver value to our shareholders by delivering value to our members and keeping them at the center of all that we do. We are pleased to reiterate our outlook for adjusted diluted EPS of greater than $6.80 during a dynamic year and look forward to furthering our progress in 2025 and beyond. With that, I'll turn it over to Sarah.

Speaker Change: At the same time, we are still hard at work strengthening the underlying business, modernizing our processes and infrastructure, adding exceptional talent, and investing in innovation.

Speaker Change: We believe Centene's focus on government-sponsored healthcare positions us very well for profitable growth as we go forward, and we remain confident that we can deliver value to our shareholders by delivering value to our members and keeping them at the center of all that we do.

Sarah London: We are pleased to reiterate our outlook for adjusted diluted EPS of greater than $6.80 during a dynamic year and look forward to furthering our progress in 2025 and beyond.

Speaker Change: We are pleased to reiterate our outlook for adjusted diluted EPS of greater than $6.80 during a dynamic year and look forward to furthering our progress in 2025 and beyond. With that, I'll turn it over to Drew.

Drew Asher: With that, I'll turn it over to Drew.

Drew Asher: Thank you, Sarah. Today, we reported second quarter 2024 results, including 36 billion in premium and service revenue and adjusted diluted earnings per share of $2.42, up 15% from Q2 of 2023. Results in the quarter, as previewed earlier in the week, were consistent with the dynamics we described in recorder in the May 29, 8-K.

Andrew Lynn Asher: Today we reported second quarter 2024 results, including $36 billion in premium and service revenue and adjusted diluted earnings per share of $2.42, up 15% from Q2 of 2023. Results in the quarter, as previewed earlier in the week, were consistent with the dynamics we described intra-quarter in the May 29th 8K. The quarter serves as yet another example of the benefits of a diversified enterprise, allowing for varying degrees of performance among the many parts of our business.

Andrew Lynn Asher: Thank you, Sarah. Today we reported second quarter 2024 results including $36 billion in premium and service revenue and adjusted diluted earnings per share of $2.42, up 15% from Q2 of 2023.

Andrew Lynn Asher: Results in the quarter, as previewed earlier in the week, were consistent with the dynamics we described intra-quarter in the May 29th 8K.

Drew Asher: The quarter serves as yet another example of the benefits of a diversified enterprise, allowing for varying degrees of performance among the many parts of our business. This Q2 result keeps us on track to deliver adjusted diluted earnings per share in excess of $6.80 in 2024. Our consolidated HBR was 87.6% for Q2 and 87.3% year-to-date. This positions us to achieve the high end of our previous full-year guidance range around 87.9%. As previewed in the May 8K, Medicaid medical expense was higher in Q2, largely due to the acuity of membership that remains as redeterminations wrap up. You may recall about a year ago we talked about needing from our state partners, one acknowledgement, two action, and three sufficiency regarding matching rates with acuity.

Andrew Lynn Asher: The quarter serves as yet another example of the benefits of a diversified enterprise allowing for varying degrees of performance among the many parts of our business.

Andrew Lynn Asher: This Q2 result keeps us on track to deliver adjusted diluted earnings per share in excess of $6.80 in 2024. Our consolidated HBR was 87.6% for Q2 and 87.3% year-to-date. This positions us to achieve the high end of our previous full-year guidance range, around 87.9%. As previewed in the May 8K, Medicaid medical expense was higher in Q2, largely due to the acuity of membership that remains as redeterminations wrap up. You may recall that about a year ago, we talked about needing help from our state partners. 1. Acknowledgement, 2. Action, and 3.

Andrew Lynn Asher: This Q2 result keeps us on track to deliver adjusted diluted earnings per share in excess of $6.80 in 2024.

Andrew Lynn Asher: Our consolidated HBR was 87.6% for Q2 and 87.3% year-to-date. This positions us to achieve the high end of our previous full year guidance range, around 87.9%.

Andrew Lynn Asher: As previewed in the May 8K, Medicaid medical expense was higher in Q2, largely due to the acuity of membership that remains as redeterminations wrap up.

Andrew Lynn Asher: You may recall about a year ago we talked about needing from our state partners one acknowledgement, two action, and three sufficiency regarding matching rates with acuity.

Drew Asher: All states have acknowledged the need and intent to match rates and acuity; all but one have taken action. We are still working on the sufficiency with more visibility now that we're largely through redeterminations. The acuity of the population that remains, the stares plus the rejoiners, is now more clear to us and our state partners than when we were working through large membership shifts of Q4, 2023, and Q1, 2024. We continue to have constructive conversations with our state partners on the sufficiency and the timing of rates as we present them with updated data from the latter part of the redetermination process.

Andrew Lynn Asher: Sufficiency regarding matching rates with acuity. All states have acknowledged the need and intent to match rates and acuity, and all but one have taken action.

Andrew Lynn Asher: All states have acknowledged the need and intent to match rates and acuity. All but one have taken action.

Andrew Lynn Asher: We are still working on sufficiency with more visibility now that we're largely through redetermination. The acuity of the population that remains, the stayers plus the rejoiners, is now more clear to us and our state partners than when we were working through large membership shifts, Q4 2023 and Q1 2024. We continue to have constructive conversations with our state partners on the sufficiency and the timing of rates as we present them with updated data from the latter part of the redetermination process.

Andrew Lynn Asher: We are still working on the sufficiency with more visibility now that we're largely through redeterminations.

Andrew Lynn Asher: The acuity of the population that remains, the stayers plus the rejoiners, is now more clear to us and our state partners than when we were working through large membership shifts

Andrew Lynn Asher: of Q4 2023 and Q1 2024.

Andrew Lynn Asher: We continue to have constructive conversations with our state partners on the sufficiency and the timing of rates as we present them with updated data from the latter part of the redetermination process.

Drew Asher: Pursuant to these efforts, we now expect the back half of 2024 Medicaid composite rates to be 4% plus relative to our original forecast of 2 to 2.5%. This 7-1-10-1 rate cycle will impact about half of our Medicaid premium, so this will help the trajectory of the HBR in the back half of the year compared to Q2's 92.8%. While we certainly have more work to do on rates in 2024 and 2025, we have no change in our long-term view of the ultimate proper matching of rates and acuity in our Medicaid business.

Andrew Lynn Asher: Pursuant to these efforts, we now expect the back half of 2024 Medicaid composite rates to be 4% plus, relative to our original forecast of two to two and a half percent. This 7-1 to 10-1 rate cycle will impact about half of our Medicaid premium, so this will help the trajectory of the HBR in the back half of the year compared to Q2's 92.8%. Well, we certainly have more work to do on rates.

Andrew Lynn Asher: Pursuant to these efforts, we now expect the back half of 2024 Medicaid composite rates to be 4% plus.

Andrew Lynn Asher: Relative to our original forecast of 2 to 2.5%.

Andrew Lynn Asher: This 7-1 to 10-1 rate cycle will impact about half of our Medicaid premium, so this will help the trajectory of the HBR in the back half of the year compared to Q2's 92.8%.

Andrew Lynn Asher: We have no change in our long-term view of the ultimate proper matching of rates and acuity in our Medicaid business. Meanwhile, our marketplace business continues to perform well, not just as we wrapped up 2023 risk adjustment with great execution, but also in our 2024 positioning and performance, including a little more growth in 2024 with 4.4 million members a quarter in. Let me hit the highlights of Tuesday's 8K.

Andrew Lynn Asher: While we certainly have more work to do on rates in 2024 and 2025, we have no change in our long-term view of the ultimate proper matching of rates and acuity in our Medicaid business.

Drew Asher: Meanwhile, our marketplace business continues to perform well, not just as we wrapped up 2023 risk adjustment with great execution, but also in our 2024 positioning and performance, including a little more growth in 2024, with 4.4 million members a quarter in. Let me hit the highlights of Tuesday's 8K. In the past decade, we've gotten pretty good at operating the marketplace business, including accumulation and submission of data to get paid the right revenue to match the acuity of our marketplace population. The result of that execution, which improved year over year, was a better-than-expected result as we wrapped up the edge server process in May and estimated the value of our submissions, as we referenced in the May 8K.

Andrew Lynn Asher: Meanwhile, our marketplace business continues to perform well. Not just as we wrapped up 2023 risk adjustment with great execution, but also in our 2024 positioning and performance, including a little more growth in 2024 with 4.4 million members a quarter in.

Andrew Lynn Asher: In the past decade, we've gotten pretty good at operating the marketplace business, including accumulation and submission of data to get paid the right revenue to match the acuity of our marketplace population. The result of that execution, which improved year over year, was a better than expected result as we wrapped up the Edge server process in May and estimated the value of our submissions, as we referenced in the May 8K. This was subsequently corroborated by Wakely Data, then ultimately by CMS's final notice published this past Monday.

Speaker Change: Let me hit the highlights of Tuesday's 8K.

Speaker Change: In the past decade, we've gotten pretty good at operating the Marketplace business, including accumulation and submission of data to get paid the right revenue to match the acuity of our Marketplace population.

Speaker Change: The result of that execution, which improved year over year, was a better than expected result as we wrapped up the EDGE server process in May and estimated the value of our submissions as we referenced in the May 8K.

Drew Asher: This was subsequently corroborated by Wakely Data, then ultimately CMS's final notice published this past Monday. The result was a net favorable pick-up expected in our 2024 P&L of approximately $600 million, as outlined in Tuesday's filing. Again, great execution in marketplace. Our Medicare segment continues to be on track with our expectations for 2024, and we look forward to continue to improve that business over the next few years as StarScore is improved, and we get the requisite revenue to drive better performance. Edwards, and despite redeterminations and divestitures, this company continues to outperform in premium revenue. You can see that in the year-to-date reported revenue.

Speaker Change: This was subsequently corroborated by Wakely Data, then ultimately CMS's final notice published this past Monday.

Andrew Lynn Asher: The result was a net favorable pickup expected in our 2024 P&L of approximately $600 million, as outlined in Tuesday's filing. Again, great execution in Marketplace. Our Medicare segment continues to be on track with our expectations for 2024, and we look forward to continuing to improve that business over the next few years as star scores improve and we get the requisite revenue to drive better performance. And despite redeterminations and divestitures, this company continues to outperform in premium revenue.

Speaker Change: The result was a net favorable pickup expected in our 2024 P&L of approximately $600 million as outlined in Tuesday's filing. Again, great execution in Marketplace.

Speaker Change: Our Medicare segment continues to be on track with our expectations for 2024 and we look forward to continue to improve that business over the next few years as star scores improve and we get the requisite revenue to drive better performance.

Speaker Change: And despite redeterminations and divestitures, this company continues to outperform in premium revenue. You can see that in the year-to-date reported revenue.

Andrew Lynn Asher: You can see that in the year-to-date reported revenue. Accordingly, we increased the 2024 full-year premium and service revenue guidance by $5 billion compared to our April 2024 earnings release. Approximately $1 billion in Medicaid, $2 billion in commercial, and $2 billion in Medicare segment revenue to a range of $141 to $143 billion.

Drew Asher: Accordingly, we increased the 2024 full-year premium and service revenue guidance by $5 billion, compared to our April 2024 earnings release. Approximately 1 billion in Medicaid, 2 billion in commercial, and 2 billion in Medicare segment revenue, to a range of 141 to 143 billion. That bodes well for the future, exiting 2024 with a higher revenue base upon which to drive EPS growth in 2025 and beyond. One other guidance update: we now expect over 1.55 billion of investment income in 2024, excluding gains on divestitures. Our adjusted SGA expense ratio was 8.0 percent in the second quarter, on track with our full year guidance.

Speaker Change: Accordingly, we increased the 2024 full-year premium and service revenue guidance by $5 billion compared to our April 2024 earnings release.

Speaker Change: Approximately $1 billion in Medicaid, $2 billion in commercial, and $2 billion in Medicare segment revenue to a range of $141 to $143 billion.

Andrew Lynn Asher: That bodes well for the future, exiting 2024 with a higher revenue base upon which to drive EPS growth in 2025 and beyond. As an aside, we now expect over $1.55 billion of investment income in 2024, excluding gains on divestiture. Our adjusted SG&A expense ratio was 8.0% in the second quarter, on track with our full year guidance. Cash flow provided by operations was $2.2 billion in Q2. Unregulated cash on hand at quarter end was $217 million.

Speaker Change: That bodes well for the future, exiting 2024 with a higher revenue base upon which to drive EPS growth in 2025 and beyond.

Speaker Change: One other guidance update, we now expect over $1.55 billion of investment income in 2024, excluding gains on divestitures.

Speaker Change: Our adjusted SG&A expense ratio is 8.0% in the second quarter, on track with our full-year guidance.

Drew Asher: Cash flow provided by operations was 2.2 billion in Q2, on regulated cash on hand a quarter end was 217 million. Consistent with previous comments, we expect the majority of deployable cash to be available during the second half of the year. In the first half of the year, we deployed $851 million on Centine shares. Our debt to adjusted EBIDA was 2.8 times at quarter end; our medical claims liability at quarter end represented 54 days, and claims payable up one day sequentially and up two days compared to Q2 of 2023. The diversified portfolio of Centine performed well as a whole in the first half of 2024.

Speaker Change: Cash flow provided by operations was $2.2 billion in Q2. Unregulated cash on hand a quarter end was $217 million.

Andrew Lynn Asher: Consistent with previous comments, we expect the majority of deployable cache to be available during the second half of the year. In the first half of the year, we deployed $851 million in Centene shares. Our debt-to-adjusted EBITDA was 2.8 times at quarter end.

Speaker Change: Consistent with previous comments, we expect the majority of deployable cache to be available during the second half of the year.

Speaker Change: In the first half of the year, we deployed $851 million on Centene shares.

Speaker Change: Our debt-to-adjusted EBITDA was 2.8 times at quarter end. Our medical claims liability at quarter end represented 54 days in claims payable, up one day sequentially, and up two days compared to Q2 of 2023.

Andrew Lynn Asher: Our medical claims liability at quarter end represented 54 days in claims payable, up one day sequentially and up two days compared to Q2 of 2023. The diversified portfolio of Centene performed well as a whole in the first half of 2024. And while we expect some continued pressure on our Medicaid HBR in the second half of the year compared to our original goal, we expect Medicaid HBR improvement relative to Q2 given the second half rate action.

Speaker Change: The diversified portfolio of Centene performed well as a whole in the first half of 2024.

Drew Asher: And while we expect some continued pressure on our Medicaid HBR in the second half of the year compared to our original goal, we expect Medicaid HBR improvement relative to Q2 given the second half rate action. And further rate action into 2025 would continue the improvement.

Speaker Change: And while we expect some continued pressure on our Medicaid HBR in the second half of the year compared to our original goal, we expect Medicaid HBR improvement relative to Q2 given the second half rate action.

Andrew Lynn Asher: Further rate action into 2025 would continue the improvement. On the topic of 2025, it's much too early to give 2025 guidance, but we can walk you through the tailwinds and headwinds that we believe today relative to 2024. In the category of 2025 tailwinds, we currently forecast one HBR improvement in Medicaid, as we expect to make continued progress on rates throughout 2025.

Speaker Change: And further rate action into 2025 would continue the improvement.

Drew Asher: On the topic of 2025, it's much too early to give 2025 guidance, but we can walk you through the tailwinds and headwinds that we believe today relative to 2024. In the category of 2025 tailwinds, we currently forecast 1, HBR improvement in Medicaid, as we expect to make continued progress on rates throughout 2025; 2, a return to Medicaid growth post-redeterminations; 3, growth in the overall marketplace market and in our membership; 4, the absence of a Medicare PDR in 2025. Recall we have a 125 million PDR PNL hit embedded in our current 2024 guidance, 5 revenue growth in PDP, 6 capital deployment in 2024, annualizing into 2025 and capital deployment in 2025, 7 continued progress on improving operational efficiency and SGNA execution.

Speaker Change: On the topic of 2025, it's much too early to give 2025 guidance, but we can walk you through the tailwinds and headwinds that we believe today relative to 2024.

Speaker Change: In the category of 2025 tailwinds, we currently forecast 1. HBR improvement in Medicaid, as we expect to make continued progress on rates throughout 2025.

Andrew Lynn Asher: A return to Medicaid growth post-redeterminations 3. Growth in the overall marketplace market and in our membership, or the absence of a Medicare PDR in 2025. Recall we have a 125 million PDR PNL hit embedded in our current 2024 guidance. 5.

Speaker Change: 2. A return to Medicaid growth post-redeterminations. 3. Growth in the overall marketplace market and in our membership.

Speaker Change: 4. The absence of a Medicare PDR in 2025

Speaker Change: Recall, we have a 125 million PDR P&L hit embedded in our current 2024 guidance.

Andrew Lynn Asher: Revenue growth and PDP, 6. Capital Deployment in 2024 Annualizing into 2025 and Capital Deployment in 2025. 7, Continued Progress on Improving Operational Efficiency and SG&A Execution. 2025 headwinds would include one, the annualization of the first half of 2024's final redetermination impact on 2025 premium revenue. 2. We wouldn't expect to repeat the $600 million prior year marketplace risk adjustment

Speaker Change: 5. Revenue growth and PDP

Speaker Change: 6. Capital Deployment in 2024 Annualizing into 2025 and Capital Deployment in 2025 7. Continued Progress on Improving Operational Efficiency and SG&A Execution

Drew Asher: 2025 headwinds would include 1, the annualization of the first half of 2024 final redetermination impact on 2025 premium revenue. Two, we wouldn't expect to repeat the $600 million prior year marketplace risk adjustment benefit, and three, Federal Reserve rate actions gradually impacting investment income.

Speaker Change: 2025 headwinds would include, one, the annualization of the first half of 2024 final redetermination impact on 2025 premium revenue.

Speaker Change: Two, we wouldn't expect to repeat the $600 million prior year Marketplace Risk Adjustment Benefit.

Operator: 3 Federal Reserve rate actions gradually impacting investment income. We will provide more insight as we get through 2024, and we expect to provide formal 2025 guidance at our Investor Day in December. Looking ahead, we are clearly focused on influencing our state partners to match rates with acuity, improving STARS, and we are continuing to position our marketplace products to produce strong margins. And we are planning to deliver on our 2024 adjusted diluted EPS guidance of greater than $6.80 and grow Adjusted EPS Thereafter.

Speaker Change: and three Federal Reserve rate actions gradually impacting investment income.

Drew Asher: We will provide more insight as we get through 2024, and we expect to provide formal 2025 guidance at our investor day in December. Looking ahead, we are clearly focused on influencing our state partners to match rates with acuity, improving stars, continuing to position our marketplace products to produce strong margins, and we are planning to deliver on our 2024 adjusted diluted EPS guidance of greater than $6.80 and grow adjusted EPS thereafter.

Speaker Change: We will provide more insight as we get through 2024 and we expect to provide formal 2025 guidance at our Investor Day in December .

Speaker Change: Looking ahead, we are clearly focused on influencing our state partners to match rates with acuity, improving STARS,

Speaker Change: Continuing to position our marketplace products to produce strong margins and we are planning to deliver on our 2024 adjusted diluted EPS guidance of greater than $6.80 and grow adjusted EPS thereafter.

Unknown Executive: Thank you for your interest in Centene, and we can open it up for questions.

Operator: Thank you for your interest in Centene, and we can open it up to questions. Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then one on a touchtone telephone. To withdraw your question, you may press star and two. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality.

Speaker Change: Thank you for your interest in Centene and we can open it up for questions.

Unknown Executive: Ladies and gentlemen, at this time, we'll begin the question-and-answer session. To ask a question, you may press star and then one. Using a touch tone telephone, to withdraw your questions, you may press star and two. If you are using a speaker phone, we do ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality. Once again, that is star and then one to join the question queue.

Speaker Change: Ladies and gentlemen, at this time we'll begin the question and answer session. To ask a question, you may press star and then 1 using a touch-tone telephone. To withdraw your question, you may press star and 2. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the keys to ensure the best sound quality.

Stephen C. Baxter: Once again, that is a star and then one to join the question. Our first question today comes from Stephen Baxter from Wells Fargo. Please go ahead with your question. Yeah, hi, thanks for all the color.

Speaker Change: Once again, that is star and then one to join the question queue.

Stephen Baxter: Our first question today comes from Stephen Baxter from Wells Fargo. Please go ahead with your question.

Speaker Change: Our first question today comes from Stephen Baxter from Wells Fargo. Please go ahead with your question.

Stephen Baxter: Yeah, hi, thanks for all the color. Let's hope that you can tell us what you're expecting from Medicaid, MLR, and the back half of the year, and any kind of bridging assumptions we should use to get there. And I guess, as we're thinking about the magnitude of MLR improvement that you get on a 4% plus composite rate, that would also be something that's helpful to know. And then if you could give us a sense of, for the states that have updated your rates inside that composite rate, where does this leave you in terms of normalized profitability?

Andrew Lynn Asher: I was hoping that you could tell us what you're expecting for Medicaid MLR in the back half of the year and any kind of bridging assumptions. And I guess as we're thinking about the magnitude of MLR improvement that you get on a 4% plus composite rate, that would also be something that's helpful to know. And then if you could give us a sense of, for the states that have updated their rates inside that composite rate, where does this leave you in terms of normalized profitability?

Stephen C. Baxter: Yeah, hi, thanks for all the color. I was hoping you could tell us what you're expecting for Medicaid MLR in the back half of the year and any kind of bridging assumptions we should

Speaker Change: And I guess as we're thinking about, you know, the magnitude of MLR improvement that you get

Speaker Change: on a 4% plus composite rate, that would also be something that's helpful to know. And then if you could give us a sense of, for the states that have updated their rates inside that composite rate.

Andrew Lynn Asher: Is there still more work to do on the second half rate states, or do you think this brings you back basically closer to your targeted level of profitability? Yeah, thanks, Steven. So I think you could take the, you know, we guided to effectively the top end around the top end of our HBR, consolidate a range of 87.9%, and come up with some estimates.

Stephen Baxter: There's no more work to do on the second half rate states. Or do you think this brings you back basically closer to in line with your targeted level of profitability?

Speaker Change: Where does this leave you in terms of normalized profitability? Is there still more work to do on the second half rate states? Or do you think this brings you back basically closer to in line with your targeted level of profitability? Thanks.

Stephen Baxter: Thanks.

Drew Asher: Yeah, thanks, Stephen. So I think you could take the, you know, we guided to effectively the top end, around the top end of our HBR consolidated range of 87.9%, and come up with some estimates. So I think you actually did in a report last Tuesday to come up with some estimates on where that Medicaid HBR might land. Certainly, we expect improvement relative to what we printed in Q2. And if you think about 4% plus in the back half of the year, and we do have half, just about half of our premium revenue in the back half of the year, you can sort of figure out the math of what, in isolation, that would benefit us from.

Andrew Lynn Asher: So I think you actually did in a report last Tuesday come up with some estimates on where that Medicaid HBR might land. Certainly, we expect improvement relative to what we printed in Q2. And if you think about 4% plus in the back half of the year, and we do have half, just about half of our premium revenue in the back half of the year, you can sort of figure out the math of what that would benefit us from.

Speaker Change: Yeah, thanks Steven. So I think you could take the, you know, we guided to effectively the top end, around the top end of our HBR.

Speaker Change: Consolidate a range of 87.9% and come up with some estimates. I think actually you did in a report last Tuesday. To come up with some estimates on where that Medicaid HVR might land, certainly we expect improvement relative to what we printed in Q2.

Andrew Lynn Asher: And of course, we've got trend built in, we've got seasonality, depending on, you know, month to month. So those are other factors to consider. But, you know, as we've said before, we think this will take into 25, for sure, to sort of get back to equilibrium. We've got 1-1 rates, which we don't currently have visibility on, but that's about 35%. 4-1 is in the zone of 15%. And then another bite at the 7-1 to 10-1 apple in 2025.

Speaker Change: And if you think about 4% plus in the back half of the year, and we do have half, just about half of our

Speaker Change: Premium Revenue in the back half of the year.

Speaker Change: You can sort of figure out the math of what in isolation that would benefit us from. And of course, we've got trend built in, we've got seasonality depending on month to month, so.

Drew Asher: And of course we've got trend built in, we've got seasonality depending on, you know, month to month.

Drew Asher: So those are other factors to consider, but, you know, as we've said before, we think this will take into 25 for sure to sort of get back to equilibrium. We've got one one rates, which we don't currently have visibility on, but that's about 35% for one is in the zone of 15%. And then another bite at the 7-1 to 10-1 apple in 2025. So we've got multiple rate cycles to continue to influence here, to get back, which we fully expect to sort of get back to that equilibrium of rates in a queue.

Speaker Change: Those are other factors to consider, but you know, as we've said before, we think this will take

Andrew Lynn Asher: So we've got multiple rate cycles to continue to influence here, to get back, which we fully expect to sort of get back to that equilibrium of rates and acuity. Our next question comes from Sarah James. Please go ahead with your question. Thank you.

Speaker Change: to get back to equilibrium. We've got 1-1 rates, which we don't currently have visibility on, but that's about 35%.

Speaker Change: 4-1 is in the zone of 15%, and then another bite at the 7-1 to 10-1 apple in 2025. So we've got multiple rate cycles to continue to influence here to get back, which we fully expect to.

Sarah James: Kennedy. Our next question comes from Sarah James.

Sarah James: Please go ahead with your question. Thank you. Can you help us get a sense of what your core, stayer book MLR looks like for Medicaid so far this year? So it's the full uptick in the first half, 24 versus 23, just related to what's going on with re-determination and rates; are there other factors in there?

Speaker Change: Our next question comes from Sarah James. Please go ahead with your question.

Sarah Elizabeth James: Can you help us get a sense of what your like poor stayer book MLR looks like for Medicaid so far this year? So it's the full uptick in the first half, 24 versus 23, just related to what's going on with redetermination and rates. Are there other factors in there?

Sarah Elizabeth James: Thank you.

Sarah Elizabeth James: Can you help us get a sense of what your core STAIR book MLR looks like for Medicaid so far this year? Is the full uptick in the first half, 24 versus 23, just related to what's going on with redetermination and rates? Are there other factors in there?

Sarah James: Yeah, let me get this at a high level, and then I think it'd be good for Drew to walk through some of the data that underpins our viewpoint on this. But the bottom line, as we both said in our remarks, is that the primary driver of the HBR pressure is the increased security of the membership post re-determinations and that mismatch between rates and acuity, which is, you know, we're confident, as a temporary and fixable dynamic. As we said before, there are always pockets of trend that we watch. We called out Behavioral Health. Obviously, heard from my remarks that we're very active in terms of developing programs to manage outcomes for that population.

Sarah London: Yeah, let me hit this at a high level, and then I think it would be good for Drew to walk through some of the data that underpin our viewpoint on this. But the bottom line, as you both said in our remarks, is that the primary driver of the HBR pressure is the increased acuity of the membership post-redeterminations and that mismatch between rates and acuity, which is, you know, we're confident is a temporary and fixable dynamic.

Speaker Change: Yeah, let me hit this at a high level and then I think it'd be good for Drew to walk through some of the data that underpins our viewpoint on this. But the bottom line, as we both said in our remarks, is that the primary driver of the HBR pressure is the increased acuity of the membership post-redeterminations and that mismatch between rates and acuity, which is, you know, we're confident is a temporary and fixable dynamic. You know, as we've said before, there are always pockets of trend that we watch.

Sarah London: You know, as we've said before, there are always pockets of trends that we watch. We called out behavioral health, obviously, you heard from my remarks that, you know, we're very active in terms of developing programs to manage outcomes for that population. And then here in there, state-by-state dynamics, you know, if there's a change to the preferred drug list or something like that. So again, very consistent with what we've called out in the past, I think, stuff that we're watching and actively managing, but the predominant driver was really that acuity shift. And then Drew, maybe you can talk about how we're able to isolate the underlying cohorts to support our view on that. Yeah, Sarah, you're right. And Sarah James, you're right.

Speaker Change: We called out behavioral health. Obviously, you heard from my remarks that we're very active in terms of developing.

Sarah James: And then here in their state-by-state dynamics, if there's a change to the preferred drug list or something like that. So again, very consistent with what we called out in the past. I think stuff that we're watching and actively managing, but the predominant driver was really in that acuity shift.

Andrew Lynn Asher: And then here and there, state-by-state dynamics, you know, if there's a change to the preferred drug list or something like that. So again, you know, very consistent with what we've called out in the past, I think, stuff that we're watching and actively managing, but the predominant driver was really in that acuity shift. And then, Drew, maybe you can talk about how we're able to isolate the underlying cohorts.

Drew Asher: And then Drew, maybe you can talk about how we're able to isolate the underlying cohorts to support our view on that. Yes, Sarah, you're right. And Sarah James, you're right. Stairs, we can isolate stairs, levers, rejoiners, and then the new members. And we can go one step deeper on stairs as we look for, you know, is there a trend here or is this really the remaining mix of business that we're left with post re-determinations. We can actually go into the continuous members. And so when we go into continuous members, which is a subset of the stairs, the trend looks pretty stable.

Andrew Lynn Asher: We can isolate stayers, leavers, rejoiners, and then the new members. And we can go one step deeper on stayers as we look for, you know. Is there a trend here, or is this really the remaining mix of business that we're left with post-redeterminations? We can actually go into the continuous members, and so when we go into continuous members, which is a subset of the stayers, the trend looks pretty stable. So lifting back up to stayers versus leavers and rejoiners, the spread between stayers and leavers has widened, largely due to a handful of states that went deeper. You can see that in our membership, we're a little bit lower than we expected, around 13.1 million members.

Andrew Lynn Asher: to support our view on that.

Andrew Lynn Asher: Is there a trend here, or is this really the remaining mix of business that we're left with post-redeterminations? We can actually go into the continuous members. And so when we go into continuous members, which is a subset of the stayers, trend looks pretty stable.

Drew Asher: And so lifting back up to stairs versus levers and rejoiners, the spread between stairs and levers that has widened. Largely, we believe, due to a handful of states that went deeper. You can see that in our membership, we're a little bit lower than we expected, around 13.1 million members. Therefore, you know, they were pushing out more lower utilizers out of Medicaid. And you saw that the administrative terminations. And then the other dynamic in one of those cohorts, the rejoiners, that's a growing population force, which is good ultimately. But obviously that's tilting towards those that are seeking care.

Andrew Lynn Asher: And so, lifting back up to stayers versus leavers and rejoiners.

Andrew Lynn Asher: The spread between stayers and leavers, that has widened.

Andrew Lynn Asher: Largely, we believe due to a handful of states that went deeper, you can see that our membership were a little bit lower than we expected, around 13.1 million members, therefore, you know, they were pushing out more lower utilizers out of Medicaid, and you saw that in the administrative terminations.

Andrew Lynn Asher: They were pushing out more lower utilizers out of Medicaid, and you saw that in the administrative terminations. And then the other dynamic in one of those cohorts, the rejoiners, that's a growing population force, which is good, ultimately. But obviously, that's tilting towards those that are seeking care, so that's contributing to the higher HBR as well, including, and this is an interesting dynamic, a widening eligibility gap in coverage where we're not getting premiums for a number of months, and that's widening. It used to be that 70% plus had no break in coverage.

Andrew Lynn Asher: And then the other dynamic in one of those cohorts, the rejoiners, that's a growing population force which is good ultimately.

Andrew Lynn Asher: But obviously, that's tilting towards those that are seeking care, so that's contributing to the higher HBR as well, including, and this is an interesting dynamic, a widening eligibility gap.

Drew Asher: So that's contributing to the higher HBR as well, including, and this is an interesting dynamic, a widening eligibility gap in coverage where we're not getting premium for a number of months. And that's widening. It used to be 70% plus had no break in coverage. Now we're under 50% with no break in coverage. And the number of months we're not getting premium for those ultimate rejoiners is impacting the results as well. And that'll wash out, you know, over the next year. But that's another dynamic that's, you know, pushing on the reported HBR.

Andrew Lynn Asher: We're not getting premium for a number of months and that's widening. It used to be 70% plus had no break in coverage. Now we're under 50% with no break in coverage.

Andrew Lynn Asher: Now we're under 50% with no break in coverage, and the number of months we're not getting premium for those ultimate rejoiners is impacting the results as well. That'll wash out over the next year, but that's another dynamic that's pushing on the reported HBR. Well, and I would just add, it's a dynamic that we can include in the data that we're sharing with states, and so, again, this was a dynamic that we've anticipated all along, which is precisely why we took an early and often approach to data sharing, and I think that has served us well throughout the process, but particularly in this quarter as we are able to bring forward data on these different dynamics, and obviously, that has favorably Please go ahead with your question. Thanks. Good morning.

Andrew Lynn Asher: and the number of months we're not getting premium for those.

Andrew Lynn Asher: Ultimate Rejoiners is impacting the results as well and that'll wash out, you know, over the next year, but

Sarah London: Well, and I would just add, it's a dynamic that we can include in the data that we're sharing with states. And so, you know, again, this was a dynamic we've anticipated all along, which is precisely why we took an early and often approach to data sharing. And I think that has served us well throughout the process, particularly in this quarter as we're able to bring forward the data on these different dynamics. And obviously that has favorably influenced the second half rate.

Andrew Lynn Asher: That's another dynamic that's, you know, pushing on the reported HBR.

Speaker Change: Well, and I would just add it's a dynamic that we can include in the data that we're sharing with states. And so, you know, again, this was a dynamic we've anticipated all along, which is precisely why we took an early and often approach to data sharing. And I think that has served us well throughout the process, but particularly in this quarter as we're able to bring forward the data on these different dynamics, and obviously that has favorably influenced the second half rates.

Unknown Executive: Dick.

Justin Lake: Our next question comes from Justin Lake, from Wolf Research.

Justin Lake: Please go ahead with your question. Thanks, good morning.

Speaker Change: Our next question comes from Justin Lake from Wolf Research. Please go ahead with your question.

Justin Lake: A couple questions. First, on MLRs, just wondering if you might update us on your MLRs by segment versus the original guidance that's going to get you to 87.9 and maybe even throw out some second half MLR seasonality between 3Q and 4Q. And then on Part D, you know, there's a lot of changes going on here. This has been a pretty big part of your book.

Justin Lake: A couple of questions. First on MLRs, are just wondering if you might update us on your MLRs by segment versus the original guidance. That's going to get you to the 87.9 and maybe even for out some second half MLR seasonality between 3Q and 4Q.

Justin Lake: Thanks. Good morning. A couple of questions. First on MORs, I'm just wondering if you might update us.

Justin Lake: on your MLRs by segment versus the original guidance that's going to get you to the 87.9 and maybe even throw out some second half MLR seasonality between 3Q and 4Q.

Justin Lake: And then on party, you know, there's a lot of changes going on here. This has been a pretty big part of your book.

Speaker Change: And then on part D.

Speaker Change: There's a lot of changes going on here, this has been a pretty big part of your book.

Justin Lake: I'm curious if you could help us understand how you think we should look at this year or every year. It looks like it should be a big increase in premium, given the federal subsidy is going to increase significantly. Is this profitable for you in 2024?

Sarah London: I'm curious if you could help us understand how you think we should look at this year over year. It looks like it should be a big increase in premium given that the federal subsidy is going to increase significantly. Is this profitable for you in 2024? How do you think about the risk-reward of how investors should approach it in 2025 given all the changes there? Thanks.

Speaker Change: I'm curious if you could help us understand how you think we should look at this year-over-year. It looks like it should be a big increase in premium.

Speaker Change: Given the federal subsidy is going to increase significantly, is this profitable for you in 2024? How do you think about the risk reward of how investors should approach it in 2025, given all the changes there? Thanks.

Justin Lake: How do you think about the risk of war? How about there should approach it in 2025, given all the changes there?

Drew Asher: Thanks.

Drew Asher: Yeah, maybe let me hit PDP, and then Drew can talk about seasonality of HBR. Obviously not at a stage where we can give specific 2025 guidance, but as you heard from Drew, the PDP revenue is a 2025 tailwind. I think the team has taken a really thoughtful approach to the bid process, leveraging frankly decades of experience and data that we have, and expect to see a first set of data from CMS next week. But whether, you know, volume is static or down, premium will increase, as you said, Justin, with the changes from the IRA. And as we've said before, we view this as a product line that has to be able to stand alone from a profitability standpoint.

Andrew Lynn Asher: Maybe I can hit PDP, and then Drew can talk about the seasonality of HBR. Obviously, we are not at a stage where we can give specific 2025 guidance, but as you heard from Drew, the PDP revenue is a 2025 tailwind. I think the team has taken a really thoughtful approach to the bid process, leveraging, frankly, decades of experience and data that we have. We expect to see a first set of data from CMS next week.

Speaker Change: Yeah, maybe let me hit PDP and then Drew can talk about seasonality of HBR. Obviously, not at a stage where we can give specific 2025 guidance, but as you heard from Drew, the PDP revenue is a 2025.

Speaker Change: Tailwind, I think the team has taken a really thoughtful approach to the bid process, leveraging frankly decades of experience and data that we have, and expect to see a first set of data from CMS next week. But whether volume is static or down, premium will increase, as you said, Justin, with the changes from the IRA, and as we've said before, we view this as a product line that has to be able to stand alone from a profitability standpoint.

Andrew Lynn Asher: But whether volume is static or down, premium will increase, as you said, Justin, with the changes from the IRA. And as we've said before, we view this as a product line that has to be able to stand alone from a profitability standpoint. Yeah, so on the MLR by segment, I think we're pretty disclosive. We give you guys a lot of disclosure, including the actual by segment. Not all our large peers do that.

Drew Asher: Yeah, so on the MLR by segment. I think we do; we're pretty disclosive. We give you guys a lot of disclosure, including the actual by segment; not a large peers do that. Hopefully, you enjoy seeing that detail.

Speaker Change: Yeah, so on the MLR by segment, I think we do, we're pretty disclosive, we give you guys a lot of disclosure, including the actual by segment, not all our large peers do that, hopefully you enjoy seeing that detail.

Andrew Lynn Asher: Hopefully, you enjoy seeing that detail. But we're not gonna give you detailed guidance by segment, though for the 87.9, I think you could probably do some math, piece together what we've told you historically to figure out the zone for each of those.

Drew Asher: But we're not going to give detailed guidance by segment, though the 87.9. I think you can probably do some math and piece together what we've told you historically to figure out the zone of each of those. And once again, it's a diversified portfolio. That's how we manage the business. The seasonality is such that typically commercial, you'd see tick up throughout the year. Obviously, we had the benefit in Q2 that kept us sort of flat to Q1, and then, you know, deductible wear off in the commercial business; you'd see that tick up. So that's that's one thing to take into account.

Speaker Change: But we're not going to give detailed guidance by segment, though the 87-9, I think you could probably do some math and piece together what we've told you historically to figure out the zone of each of those. And once again, it's a diversified portfolio, that's how we manage the business.

Andrew Lynn Asher: And once again, it's a diversified portfolio; that's how we manage the business. The seasonality is such that typically, commercial you'd see tick up throughout the year. Obviously, we had the benefit in Q2 that kept it sort of flat to Q1 and then. Thank you.

Speaker Change: The seasonality is such that...

Speaker Change: You know, typically commercial, you'd see tick up throughout the year. Obviously, we had the benefit in Q2 that kept it sort of flat to Q1 and then.

Speaker Change: You know, deductible wear off in the commercial business, you'd see that tick up. So that's one thing to take into account. And then just one more follow up comment on Part D or PDP.

Drew Asher: And then just one more follow-up comment on part D or PDP. I said multiple times Q1 at the conference in March, just trying to explain the fact that we expected the direct subsidy to go over $100 on top of the $29 direct subsidy this year. So obviously, that goes into the yield largely goes into the yield. So Sarah said, that'll be a pretty big step up in premium yield. We'll have to see where the membership shakes out. We'll know a little bit more next Monday about where we stand, but we won't know competitive in, you know, positioning until the landscape files come out in September.

Andrew Lynn Asher: I've said multiple times, Q1... Conference in March, just trying to explain the fact that we expected the direct subsidy to go up over $100 on top of, [inaudible] Transcripts provided by Transcription Outsourcing, LLC. Our next question comes from Josh Raskin from Nephron Research. Please go ahead with your question. Hi, thanks. Good morning.

Speaker Change: I've said multiple times, Q1 at the conference in March, just trying to explain the fact that we expected the direct subsidy to go up over $100 on top of.

Speaker Change: The $29 direct subsidy this year, so obviously that goes into the yield, largely goes into the yield. So, as Sarah said.

Sarah: That'll be a pretty big step up in premium yield. We'll have to see where the membership shakes out. We'll know a little bit more next Monday about where we stand, but we won't know competitive positioning until the landscape files come out in September .

Josh Raskin: Our next question comes from Josh Raskin from the Front Research. Please go ahead with your question.

Speaker Change: Our next question comes from Josh Raskin from Nefron Research. Please go ahead with your question.

Josh Raskin: Hi, thanks.

Joshua Richard Raskin: Why do you think the risk adjuster on the exchange has developed so much better than you expected? You know, the payable was $1.3 billion less than you thought. And what are the changing dynamics there?

Josh Raskin: Good morning. Why do you think the risk adjuster on the exchange has developed so much better than you expected? You know, the payable was the billion three less than you thought? And what are the changing dynamics down? I guess, more importantly, you know, do I appreciate the headwinds, tailwinds for 2025? But, you know, if you think about sort of that 80 cent hurdles that you've got to get over and I know you get back some from the PDR, but you know, you think about the consensus sitting at 7.53. I just be curious. To get your perspectives on, you know, is that directly in the right spot or, you know, should we be thinking about something different?

Joshua Richard Raskin: Hi, thanks, good morning.

Joshua Richard Raskin: Why do you think the risk adjuster on the exchange has developed so much better than you expected? You know, the payable was $1.3 billion less than you thought, and what are the changing dynamics there? And I guess more importantly, you know, Drew, I appreciate the headwinds, tailwinds for 2025.

Andrew Lynn Asher: And I guess more importantly, you know, Drew, I appreciate the headwinds and tailwinds for 2025, but, you know, if you think about sort of that $0.80 hurdle that you've got to get over, and I know you get back some from the PDR, but, you know, if you think about the consensus sitting at $7.53, I'd just be curious to get your perspectives on whether that's directionally in the right Yeah, on the risk adjustment.

Speaker Change: If you think about sort of that 80 cent hurdle that you've got to get over, and I know you get back some from the PDR, but if you think about the consensus sitting at 753, I'd just be curious to get your perspectives on, is that directionally in the right spot, or should we be thinking about something different?

Drew Asher: Yeah, and the risk adjustment. So, at year end, we're sitting there every year, trying to estimate. Not just where we sit for the current, let's say 2023 at 12.31.23. Not just what we believe the acuity of the population is in marketplace at that point in time. We also have to estimate what we're going to get done. Over the next four months and then get submitted into the edge server. And that's all the data; acuity data claims run out, encounter data from sometimes providers, sometimes vendors. And so a lot of data that we've got to accumulate and execute on and get that into the edge server.

Andrew Lynn Asher: So at year end, we're sitting there every year trying to estimate not just where we stand for the current, let's say 2023 at 1231.23, but also what we believe the acuity of the population is at Marketplace at that point in time. We also have to estimate what we're going to get done over the next four months and then get submitted into the Edge server, and that's all the data, acuity data, claims run out, encounter data from sometimes providers, sometimes vendors, and so a lot of data that we've got to accumulate and execute on and get that into the Edge server.

Speaker Change: Yeah, on the risk adjustment, so at year-end we're sitting there every year trying to estimate

Speaker Change: Not just where we sit for the current, let's say 2023 at 1231.23, not just what

Speaker Change: We believe the acuity of the population is in marketplace at that point in time. We also have to estimate what we're going to get done over the next four months and then get submitted into the EDGE server. And that's all the data, acuity data, claims run out, encounter data from...

Speaker Change: Sometimes providers, sometimes vendors, and so a lot of data that we've got to accumulate and execute on and get that into the Edge server.

Drew Asher: So there is, there are estimates that go into that year-end reserve. We've got some data from Wakely throughout the year to know, at least at that point, the relativity. But I'd say we just executed really strong. We get better every year at that. You know, we have to estimate the relativity. It's a zero-sum game in the industry. So you're estimating what other people are going to do as well. We try to be conservative, but realistic with assumptions says it is a zero-sum game. And while I would expect maybe a little bit of favorability, because we don't always book to a 50-50 proposition, this was good news.

Andrew Lynn Asher: So there are estimates that go into that year-end reserve. We've got some data from Wakely throughout the year to know, at least at that point, the relativity, but I'd say we just executed really strong. We get better every year at that.

Speaker Change: So, there are estimates that go into that year-end reserve. We've got some data from Wakely throughout the year to know, at least at that point, the relativity. But I'd say we just executed really strong.

Speaker Change: We get better every year at that. You know, we have to estimate the relativity. It's a zero-sum game in the industry So you're estimating what other people are going to do as well

Andrew Lynn Asher: It's a zero-sum game in the industry, so you're estimating what other people are going to do as well. We try to be conservative but realistic with assumptions since it is a zero-sum game, and while I would expect maybe a little bit of favorability because we don't always book to a 50-50 proposition, this was good news, and I would thank the... Our team's here for really strong execution.

Speaker Change: You know, we try to be conservative but realistic with assumptions, since it is a zero-sum game. And while I would expect maybe a little bit of favorability, because we don't always book to a 50-50 proposition.

Drew Asher: And I would thank our teams here for really strong execution.

Speaker Change: This was good news and I would thank our teams here for really strong execution.

Drew Asher: Consensus, yeah, we're not going to apply that consensus or give guidance this early. Hopefully, the headwinds and tailwinds helped. You know, you could sort of take some of that color on the execution part of risk adjustment. And getting paid the appropriate amounts for the acuity of our population of marketplaces, you think, through rolling from year to year. And hopefully that's pretty good color for now.

Andrew Lynn Asher: Yeah, we're not going to comment on consensus or give guidance this early. Hopefully, the headwinds and tailwinds helped. Just sort of take some of that color on the execution part of risk adjustment, and getting paid the appropriate amounts for the acuity of our population and marketplace as you think through rolling from year to year. And hopefully, that's pretty good color for now. Our next question comes from A.J. Wright from UBS.

Speaker Change: consensus yeah we're not going to opine on consensus or give guidance this early hopefully the headwinds and tailwinds helped you know

Speaker Change: You can sort of take some of that color on the execution part of risk adjustment and getting paid the appropriate amounts for the acuity of our population and marketplace as you think through rolling from year to year. And hopefully that's pretty good color for now.

AJ Wright: Our next question comes from AJ Wright from UBS. Please go ahead with your question.

A.J. Wright: Please go ahead with your question. Hi everybody. I guess I have two questions. One on public exchange trends. I think if you X out, it depends a little bit on what your assumptions are in the back half of the year, but if you X out the risk adjustment, true up. I know your official guidance was for MLR to be in the 78 and a half, 79 and a half range this year on the public exchanges. It sounds like maybe you're pretty close to that. I want to just confirm that.

Speaker Change: Our next question comes from AJ Wright from UBS. Please go ahead with your question.

AJ Wright: Hi, everybody. I guess my two questions. One on the public exchange trends. I think if you ex out, it depends a little bit on what your assumptions are in the back half of the year. But if you ex out the risk adjustment true of, I know your official guidance was for MLR to be in the 78 and a half 79 and a half range this year on the public exchange. It sounds like maybe you're pretty close to that. I want to just confirm that, and you didn't call that out, is that he had winter tailwind.

Andrew Lynn Asher: And you didn't call that out as any headwind or tailwind, so whatever you're at on the public exchange margin this year, you seem to think you can carry that X the risk adjuster, true up difference for next year. Is that the way to think about it? And then maybe just on Medicaid real quick, the rate updates you're seeing. There's been some discussion about how long state actuaries have to look back. Do they look back the full 12 months, or do they make adjustments based on a shorter period of time?

A.J. Wright: Hi everybody. I guess I have two questions. One on the public exchange trends. I think if you X out

A.J. Wright: depends a little bit on what your assumptions are in the back half of the year, but if you x out the risk adjustment true up.

Speaker Change: I know your official guidance was for MLR to be in the 78.5, 79.5 range this year on the public exchanges. It sounds like maybe you're pretty close to that. I want to just confirm that. And you didn't call that out as any headwind or tailwind. So whatever you're at on...

AJ Wright: So whatever you're at on public exchange margin this year, you seem to think you can carry that actually risk adjust or true up difference for next year is that the way to think about it.

Speaker Change: Public Exchange Margin this year, you seem to think you can carry that X, the

Speaker Change: Risk adjust or true up difference for next year. Is that the way to think about it?

AJ Wright: And then maybe just some Medicaid real quick. The rate updates you're seeing, there's been some discussion about how long state actuaries have to look back, and we look back the full 12 months, or do they make adjustments based on a shorter period of time. Are you assuming that the July one update this year, than the October, than the January, and then next year's July? The things get progressively better. Each one of those updates, on average, as they get the information, or are you assuming they have enough information. Those rate adjustments are all about the same.

Speaker Change: And then maybe just on Medicaid real quick, the rate updates you're seeing, there's been some discussion about how long state actuaries have to look back, if they look back the full 12 months, or do they make adjustments based on a shorter period of time?

Andrew Lynn Asher: Are you assuming that the July 1 update this year, then the October, then the January, and then next year's July, that things get progressively better, each one of those updates on average as they get the information, or are you assuming they have enough information, and those rate adjustments are all about the same? Yeah, thanks, AJ.

Speaker Change: Are you assuming that the July 1 update this year, then the October , then the January , and then next year's July ?

Speaker Change: Did things get progressively better, each one of those updates on average, as they get the information, or are you assuming they have enough information, those rate adjustments are all about the same?

Drew Asher: Yeah, thanks, AJ, you're right. There's sort of a natural look back in the process on Medicaid rates. But I think if you look at what we've seen, frankly, in the rate updates that we've had starting from the beginning of redeterminations, it would have been easy in a normal course for the state teams to say we're going to wait until we see a full normal complement of data. And so we saw early moves. I think we're seeing a continuation of that trend with maybe even a little bit more favorability relative to the speed of reaction to what we saw in Q2 materializing in the back half rates.

Sarah London: You're, you're right, there's sort of a natural look back in the process on Medicaid rates. But I think if you look at what we've seen, frankly, in the rate updates that we've had, starting from the beginning of redeterminations, it would have been easy, in a normal course, for the state teams to say they're going to wait until we see a full normal complement of data. And so we saw early moves; I think we're seeing a continuation of that trend with maybe even a little bit more favorability relative to the speed of reaction to what we saw in Q2, materializing in the back half rates.

AJ: Yeah, thanks, AJ. You're right. There's sort of a natural look back in the process on Medicaid rates. But I think if you look at what we've seen, frankly, in the rate updates that we've had, starting from the beginning of redeterminations, it would have been easy in a normal course for

AJ: the state teams to say, we're going to wait until we see a full normal complement of data. And so we saw early moves. I think we're seeing a continuation of that trend with maybe even a little bit more favorability relative to the speed of reaction to what we saw in Q2 materializing in the back half rates.

Sarah London: And so from here, really, what we're saying is that we have even more supporting data as we go forward. And so the active dialogue with the states, and I think our positioning relative to making sure that we have full sufficiency in terms of matching rate and acuity gets better and better each bite at the apple as we go through. So I think that accelerating momentum is something we feel. I think you're seeing it in the rates.

Drew Asher: And so from here, really what we're saying is that we have even more supporting data as we go forward. And so the active dialogue with the states, and I think our positioning relative to making sure that we have full sufficiency in terms of matching rate and acuity, gets better and better each bite at the apple as we go through. So I think that accelerating momentum is something we feel. I think you're seeing it in the rates, and we would expect in hope to continue that as we get through one one. And then, if there's additional work, we need to do for the second half next year.

AJ: And so from here, really what we're saying is that we have even more supporting data as we go forward. And so the active dialogue with the states and I think our positioning relative to making sure that we have full sufficiency in terms of matching rate and acuity gets better and better each bite at the apple as we go through. So I think that accelerating momentum is something we feel. I think you're seeing it in the rates and we would expect and hope to continue that as we get through one one. And then if there's additional work we need to do for second half next year.

Andrew Lynn Asher: And we would expect and hope to continue that as we get through one. And then if there's additional work we need to do for the second half next year. And then do you maybe want to talk about exchange performance? Yeah, so, AJ, you're right. We originally guided to a midpoint of 79%. On the full commercial book, that's now 32 and a half billion in revenue with the updated guidance. So, our next question comes from Kevin Fischbeck from Bank of America. Please go ahead with your question. Hey, thanks for the question. This is Adam Rahn. I'm for Kevin.

Drew Asher: And then Judy, maybe we want to talk about exchange performance.

Drew Asher: Yeah, so AJ, you're right. We originally guided to midpoint of 79% on the full commercial book. That's now 32 and a half billion of revenue with the updated guidance. So despite sort of growing. Yeah, we're generally on track, excluding the 600 million benefit. So that's that's good.

Andrew Lynn Asher: And then Drew, do you maybe want to talk about exchange performance? Yeah, so AJ, you're right. We originally guided to midpoint of 79%. On the full commercial book, that's now $32.5 billion of revenue with the updated guidance.

Andrew Lynn Asher: Despite sort of growing, yeah, we're generally on track excluding the 600 million benefit.

Drew Asher: And as we think about 2024 risk adjustment, I mean, we're always trying to be prudent with how we approach that. So that's also something to think about, but really pleased with the execution marketplace team, not just the 2023 benefit sitting in Q2. But the 2024 year as well, and that incurred year is tracking nicely.

Speaker Change: So that's good, and as we think about 2024 risk adjustment, I mean, we're always trying to be prudent with how we approach that, so that's also something to think about.

Speaker Change: But really pleased with the execution marketplace team, not just the 2023 benefit sitting in Q2, but the 2024 year as well, and that incurred year is tracking nicely.

Kevin Fishback: Our next question comes from Kevin Fishback from Bank of America. Please go ahead with your question.

Speaker Change: Our next question comes from Kevin Fischbeck from Bank of America. Please go ahead with your question.

Adam Ron: Hey, thanks for the question.

Kevin Mark Fischbeck: One of your peers appears to be saying that they're insulated from some of these Medicaid pressures due to having been pretty deep into risk corridors, and I believe that's something you've also called out as a benefit at some point. And so could you help size the growth amount before these corridors in trend that you're seeing that's higher versus what you thought and how it compares to the 4% composite rate you mentioned?

Adam Ron: This is Adam Ron on for Kevin. One of your peers appears to be saying they're insulated from some of these Medicaid pressures due to having been pretty deep into risk corridors. And I believe that something you've also called out as a benefit at some point. So could you help size what the growth amount before these corridors in trend that you're seeing that's higher versus what you thought and how it compares to the 4% composite rate you mentioned.

Adam Ron: Hey, thanks for the question. This is Adam Rahn. I'm for Kevin. One of your peers appears to be saying that they're insulated from some of these Medicaid pressures due to having been pretty deep into risk corridors, and I believe that's something you've also called out as a benefit at some point. So could you help size what the gross amount is?

Speaker Change: before these corridors in trend that you're seeing that's higher versus what you thought and how it compares to the 4% composite rate you mentioned and then if I could also ask one quick clarification you mentioned

Kevin Mark Fischbeck: And then if I could also ask one quick clarification. You mentioned that in Medicare, now that business has submitted, you'd be optimizing your footprint. So wondering if that includes market exits, and if you could help size, you know, the membership in those markets.

Adam Ron: And then, if I could also ask one quick clarification, you mentioned in Medicare now that business submitted, you'd be optimizing your footprints, so wondering if that includes market exits. And if you could help size, you know, the membership in those markets. Thanks.

Speaker Change: In Medicare, now that bids are submitted, you'd be optimizing your footprint, so wondering if that includes market exits and if you could help size the membership in those markets. Thanks.

Sarah London: Yeah, so relative to Medicare, I think the team has done a really good job in terms of thoughtfully defining the 25 bids consistent with the long-term strategy, even in the challenging rate year, but also, as I mentioned, being thoughtful about how to streamline that book and further align it with our Medicaid footprint because that's where the puck is going.

Sarah London: Yeah, so relative to Medicare, I think the team has done a really good job in terms of thoughtfully defining the 25 bids consistent with the long-term strategy, even in a challenging rate year. But also, as I mentioned, being thoughtful about how to streamline that book and further align it with our Medicaid footprint, because that's where the puck is going. And so, as a result of that, you will see us exit a handful of states with that longer-term strategy in mind.

Speaker Change: Yeah, so relative to Medicare, I think the team has done a really good job in terms of thoughtfully defining the 25 bids consistent with the long-term strategy, even in a challenging rate year. But also, as I mentioned, being thoughtful about how to streamline that book and further align it with our Medicaid footprint because that's where the puck is going. And so as a result of that, you will see us exit a handful of states with that longer term strategy in mind.

Sarah London: And so, as a result of that, you will see us exit a handful of states with that longer-term strategy in mind. Yeah, and risk corridors. It's sort of a part of our business. They're coming in a few different forms, whether it's a true risk corridor, a minimum MLR, profit sharing, depending on the state. I would say those peak during COVID, the COVID era, and now are more in a steady state.

Sarah London: Yeah, and risk corridors, that's sort of a part of our business. They come in a few different forms, whether it's a true risk corridor, a minimum MLR, profit sharing, depending on the state. I would say that those peak during COVID, the COVID era, and now are more in a steady state.

Speaker Change: Yeah, and risk corridors, that's sort of a part of our business, they come in a few different forms, whether it's a true risk corridor, a minimum MLR, profit sharing, depending on the state. I would say that those peaked during COVID, the COVID era, and now are more in a steady state.

Drew Asher: And just to give you a number, if you look on our balance sheet, you wouldn't be able to pick it out of the balance sheet necessarily, but for Medicaid specifically, we've got 2.3% billion as a payable on our balance sheet, a Q2 that's split between the line items, return a premium payable and current liabilities, and part of it's in other long-term liabilities. But that spans multiple years, because there's run out, there's years; sometimes it takes years for states to ultimately go through the machinations to collect and retrieve that.

Andrew Lynn Asher: And just to give you a number, if you looked at our balance sheet, you wouldn't be able to pick it out of the balance sheet necessarily, but for Medicaid specifically. We've got $2.3 billion as a payable on our balance sheet in Q2. That's split between the line items, return of premium payable, and current liabilities, and part of it's in other long-term liabilities. But that spans multiple years, work, run out, there are years, sometimes it takes years for states to ultimately go through the machinations to collect and retrieve that.

Speaker Change: And just to give you a number, if you look on our balance sheet, you wouldn't be able to pick it out of the balance sheet necessarily, but for Medicaid specifically,

Speaker Change: We've got $2.3 billion as a payable on our balance sheet at Q2. That's split between the line items, return of premium payable and current liabilities and part of it's in other long-term liabilities. But that spans multiple years.

Speaker Change: Because we're, there's run out, there's years, sometimes it takes years for states to ultimately...

Speaker Change: Go through the machinations to collect and retrieve that.

Scott Fidel: Our next question comes from Scott Fidell from Steven's. Please go ahead with your question.

Scott J. Fidel: Our next question comes from Scott Fidel from Stevens. Please go ahead with your question. Hi, thanks. Good morning.

Speaker Change: Our next question comes from Scott Fidel from Stevens. Please go ahead with your question.

Scott Fidel: Hi, thanks.

Andrew Lynn Asher: I just wanted to first ask on the exchange margins, obviously given a few different moving pieces here with the risk adjuster, how would you suggest that we think about sort of what's embedded in guidance now for your pre-tax margin for the marketplace when thinking against that 5 to 7.5% long-term target? And then just separately, it would be helpful if, you know, obviously there's been a lot of moving pieces to operating cash flow year-to-date across the industry and for Centene as well.

Scott Fidel: Good morning. Just wanted to first just ask on the exchange margins, obviously given a few different moving pieces here with the risk adjuster. How would you just sort of suggest that we think about sort of what's embedded in guidance now for your pre-tax margin for the marketplace when thinking against that five to seven and a half percent long-term target?

Scott J. Fidel: Oh, hi. Thanks. Good morning.

Scott J. Fidel: Just wanted to first just ask on the exchange margins, obviously given a few different moving pieces here with the risk adjuster, how would you just sort of suggest that we think about sort of what's embedded in guidance now?

Speaker Change: for your pre-tax margin for the marketplace when.

Speaker Change: Thinking against that five to seven and a half percent.

Drew Asher: And then just separately would be helpful if obviously there's been a lot of moving pieces of operating cash flow year-to-date across the industry and for Centene as well. I know there's been a lot of sort of timing dynamics with certain states who would Medicaid. So Drew, maybe if you had sort of some visibility that you could give us into your expectations for full year operating cash flow, that would be helpful as well.

Scott J. Fidel: [inaudible]

Scott J. Fidel: Heathurst.

Speaker Change: to operating cash flow year-to-date across the industry and for Centene as well. I know there's been a lot of sort of timing dynamics with certain states, too, with Medicaid. So, Drew, maybe if you had sort of some visibility that you could give us into your expectations for full-year operating cash flow, that would be helpful as well. Thanks.

Andrew Lynn Asher: I know there's been a lot of sort of timing dynamics with certain states too with Medicaid. So, Drew, maybe if you had sort of some visibility that you could give us into your expectations for full-year operating cash flow, that would be helpful as well. Thanks.

Drew Asher: Thanks. Yeah, cash flows, it's not really one of our guidance elements because, to your point exactly, in this business, they can swing, you know, from the last day of the quarter to the first day of the next quarter based upon, you know, when states want to pay us. But I think you could look at the first half of the year and we were negative 400 million or so in Q1. You know, we've got 2.2 billion positive and Q2. You know, the first half of the year, you can look at that. It's a reasonable depiction, but you're right, it's sort of a fool's errand to predict cash flow quarter quarter because of the government programs dynamic.

Andrew Lynn Asher: Yeah, and cash flows, it's not really one of our guidance elements because, to your point, exactly in this business, they can swing, you know, from the last day of the quarter to the first day of the next quarter based upon, you know, when states want to pay us. But I think you could look at the first half of the year and, you know, we were negative 400 million or so in Q1, now we've got 2.2 billion positive You know, the first half of the year; you can look at that. That's a reasonable depiction, but you're right; it's sort of a fool's errand to predict cash flow quarter to quarter because of the government program's dynamics.

Andrew Lynn Asher: Yeah and cash flows, it's not really one of our guidance elements because to your point exactly in this business they can swing you know from the last day of the quarter to the first day of the next quarter based upon

Andrew Lynn Asher: You know when states want to pay us, but I think you could look at the first half of the year and

Andrew Lynn Asher: You know, we were negative 400 million or so in Q1, now we've got 2.2 billion positive in Q2. You know, the first half of the year you can look at that.

Andrew Lynn Asher: That's a reasonable depiction. But but you're right. It's it's it's sort of a fool's errand to predict cash flow quarter quarter because of the

Drew Asher: What's important, though, is getting cash out of the subsidiaries and dividends up to the subs, and then capital deployment. So we're excited about capital deployment in the back half of the year that's consistent with what we've said here to four, and, you know, even the first half of the year, we're able to do 850 million of share repurchase on the margins on marketplace or let's stick to commercial segment. And I think going back to the discussion that we just had with AJ, you know, sort of the excluding the 600 million being on track for what we said originally well into that 5 to 7.5% pre-tax margin.

Andrew Lynn Asher: What's important, though, is getting cash out of the subsidiaries and dividends up to the subs and then capital deployment. We're excited about capital deployment in the back half of the year that's consistent with what we've said here before. And even in the first half of the year, we were able to do $850 million of share repurchase.

Andrew Lynn Asher: government programs, dynamic. What's important though, is getting cash out of the subsidiaries and dividends up to the subs and then capital deployment, so.

Andrew Lynn Asher: We're excited about capital deployment in the back half of the year that's consistent with what we've said here before. And even in the first half of the year, we're able to do $850 million of share repurchase.

Andrew Lynn Asher: I'm, margins on the marketplace, or let's stick to the commercial segment. I think going back to the discussion that we just had with AJ, you know, sort of the 600 million being on track for what we said originally well into that five to seven and a half percent pre-tax margin. And then obviously, the 600 million would be on top of that.

Speaker Change: On the margins, on marketplace, or let's stick to commercial segment.

Speaker Change: I think going back to the discussion that we just had with AJ, you know, sort of the excluding the $600 million being on track for what we said originally, well into that five to seven and a half percent pre-tax margin.

Drew Asher: And then, obviously, the 600 million would be on top of that. So just good sound performance and excited about our product positioning for next year. You know, we'll learn more and more as we get further into 24 about our positioning and expect the market to grow. You know, the ten years of experience of the marketplace team and all their supporting shared service partners across this entire company.

Speaker Change: and then obviously the $600 million would be on top of that.

Andrew Lynn Asher: So, good sound performance and excited about our product positioning for next year. You know, we'll learn more and more as we get further into 24. I expect the market to grow. With the 10 years of experience of the Marketplace team and all their supporting shared service partners across this entire company, we expect to have another good year in Marketplace in 25. Our next question comes from David Windley from Jeffries. Please go ahead with your question. Hi, good morning, thank you.

Speaker Change: Just good sound performance and excited about our product positioning for next year. You know, we'll learn more and more.

Speaker Change: As we get further into 24 about our positioning and.

Speaker Change: Expect the market to grow and, you know, the 10 years of experience of the Marketplace team and all their supporting shared service partners across this entire company, we expect to have another good year in Marketplace in 25.

Drew Asher: We expect to have another good year in marketplace in 25.

David Windley: Our next question comes from David Windley from Jeffries. Please go ahead with your question.

Speaker Change: Our next question comes from David Windley from Jeffries. Please go ahead with your question.

David Windley: Hi, good morning. Thank you. Your GNA ratio was favorable in the quarter. Some benefit from the exchange risk adjustment that you called out. But even with that, would have been below your full year range.

David Howard Windley: Your GNA ratio was favorable in the quarter, some benefit from the exchange risk adjustment that you called out, but even with that, it would have been below your full-year range. Wondering what other benefits you might have seen, if those are sustainable, and if you might direct us to, you know, a subrange in the range for the full year. Yeah, David, we're, we're, uh...

David Howard Windley: Hi, good morning. Thank you. Your G&A ratio was favorable in the quarter. Some benefit from the exchange risk adjustment that you called out, but even with that would have been below your full year range.

Drew Asher: Wondering what other benefits you might have seen if those are sustainable and if you might direct us to, you know, a sub-arrange in the range for the full year. Yeah, David, it was right on track in the quarter, the SGNA ratio. And I'd say we're still right on track for that eight four to nine point O range that we previously provided. So that, you know, that midpoint being eight seven, so it, you know, typically ramps up during the year. Q four is always the highest with all the open enrollment cost. You're right. We were aided a little bit in the quarter by having more revenue in the denominator because of the settlement from 2023 Risk Adjustment Marketplace.

Speaker Change: Wondering what other benefits you might have seen, if those are sustainable, and if you might direct us to a sub-range in the range for the full year?

Andrew Lynn Asher: It was right on track in the quarter, the SG&A ratio. And I'd say we're still right on track for that 8.4 to 9.0 range that we previously provided, so that midpoint is 8.7. So it typically ramps up during the year. Q4 is always the highest with all the open enrollment costs.

David Howard Windley: Yeah, David, we're, we're, uh...

Speaker Change: It was right on track in the quarter, the SG&A ratio, and I'd say we're still right on track for that 8.4 to 9.0 range that we previously provided.

Speaker Change: So that, you know, that midpoint being 87. So, you know, typically ramps up during the year. Q4 is always the highest with all the open enrollment cost.

Andrew Lynn Asher: You're right, we were aided a little bit in the quarter by the settlement from the 2023 risk adjustment marketplace. So I'd say we're right on track and pleased with the execution, but there's more to come. There's more we can do, said before. We got to take a couple hundred basis points of SG&A out of our Medicare business. Leadership in Medicare is working on that in conjunction with the rest of the company and just you know, multi-year initiatives that we set out to achieve when we launched the original value creation plan, and now that's sort of part of the fiber of the company. So we're not satisfied with that.

Speaker Change: You're right, we were aided a little bit in the quarter by having more revenue in the denominator because of the.

Drew Asher: So I'd say we're right on track and pleased with the execution, and but there's more; there's more to come. There's more we can do. I've said before we got to take a couple hundred basis points of SGNA out of our Medicare business, and our leadership and Medicare is working on that in conjunction with the rest of the company. And just, you know, multi-year initiatives that we set out to achieve when we launched the original value creation plan, and now that's sort of part of the fiber of the company. So we're not satisfied with that, you know, with what we're expecting to achieve this year in SGNA, but we're on track, so that's good.

Speaker Change: The Settlement from 2023 Risk Adjustment Marketplace. So I'd say we're right on track and pleased with the execution. And but there's more there's more to come. There's more we can do.

Speaker Change: I've said before, we've got to take a couple hundred basis points of SG&A out of our Medicare business.

Speaker Change: Our leadership in Medicare is working on that in conjunction with the rest of the company.

Speaker Change: And just, you know, multi-year initiatives that we set out to achieve when we launched the original value creation plan. And now that's sort of part of the fiber of the company. So we're not satisfied with that, you know, with what we're...

Andrew Lynn Asher: This is what we're expecting to achieve this year in SG&A, but we're on track, so that's good. We need to do more, and we will over the next few years. Our next question comes from Lance Wilkes from Bernstein. Please go ahead with your question.

Speaker Change: We're expecting to achieve this year in SG&A, but we're on track, so that's good. We need to do more, and we will over the next few years.

Unknown Executive: We need to do more, and we will over the next few years. Okay, thank you.

Lance Wilkes: Our next question comes from Lance Wilkes from Bernstein. Please go ahead with your question.

Lance Arthur Wilkes: I wanted to ask about the outlook for Medicaid growth. And in particular, I wanted to get kind of an update on the pipeline, what you're seeing as far as where you're being more successful and less successful, you know, RFP scoring, and what your rejoiner outlook is. And maybe as just a little clarification, over in the Part D book, can you also just give us a little background and description of the demographics of that book, kind of, you know, what's the age cohorts you've got going through there? And how much is LIS, which I imagine is most, but if you could, if you could describe that as well, that would be helpful. Yeah, thanks, Lance. Let me hit the RFPs.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Lance Wilkes from Bernstein. Please go ahead with your question.

Lance Wilkes: Great. I wanted to ask about the outlook for Medicaid growth and, in particular, I wanted to get kind of an update on pipeline. What you're seeing as far as where you're being more successful and less successful, you know, RFP scoring and what your rejoiner outlook is.

Lance Arthur Wilkes: Great. I wanted to ask about the...

Lance Arthur Wilkes: I'll look for Medicaid growth and in particular wanted to get kind of an update on pipeline what you're seeing as far as where you're being more successful and less successful.

Lance Wilkes: And maybe it's just a little clarification over in the Part D book. Can you also just give us a little background in description of the demographics of that book, kind of, you know, what's the age cohorts you've got to go through there and how much is LIS, which I imagine is both, but if you could describe that as well, that would be helpful. Yeah, thanks, Lance. Let me hit RFPs. I can give you a little bit of an update on the rejoiners. Maybe some of the numbers that are underneath what Drew was talking about in terms of trend, but obviously RFP results.

Speaker Change: You know, RFP scoring, and what your rejoiner outlook is, and maybe as just a little clarification over in the Part D book, could you also just give us a little background and description of the demographics of that book, kind of,

Speaker Change: What's the age cohorts you've got going through there and how much is LIS, which I imagine is most, but if you could describe that as well, that would be helpful.

Sarah London: I can give you a little bit of an update on the rejoiners, maybe some of the numbers that are underneath what Drew was talking about in terms of the trend. But obviously, RFP results, we put some great results on the board in the last quarter, including Florida, where we're very pleased to maintain our statewide presence and, you know, expect enrollment changes to the new contract to be, you know, very stable, as well as Michigan and Kansas.

Speaker Change: Yeah, thanks, Lance. Let me hit RFPs. I can give you a little bit of an update on the rejoiners, maybe some of the numbers that are underneath what Drew was talking about in terms of trend.

Sarah London: We put some great results on the board in the last quarter, including Florida, where we're very pleased to maintain our statewide presence and, you know, expect enrollment changes to new contract to be, you know, very stable as well as Michigan and Kansas. I think this performance really goes well as we look ahead to what we think are really exciting organic growth opportunities for Medicaid. And we've talked about these cohorts before, but think about new states, new markets, new programs, and then various expansion opportunities. And I think we've also demonstrated our ability in the last 24 months to capture these opportunities.

Speaker Change: Obviously, RFP results, we put some great results on the board in the last quarter, including Florida, where we're very pleased to maintain our statewide presence and expect enrollment changes to the new contract to be very stable, as well as Michigan and Kansas.

Sarah London: I think this performance really bodes well as we look ahead to what we think are really exciting organic growth opportunities for Medicaid. And we've talked about these cohorts before, but think about new states, new markets, new programs, and then various expansion opportunities. And I think we've also demonstrated our ability in the last 24 months to capture these opportunities. You know, Oklahoma is a new state. Delaware was a new market for Centene.

Speaker Change: I think this performance really bodes well as we look ahead to what we think are really exciting organic growth opportunities for Medicaid. And we've talked about these cohorts before, but think about new states.

Speaker Change: New Markets, New Programs, and then various expansion opportunities. And I think we've also demonstrated our ability in the last 24 months to capture these opportunities. Oklahoma is a new state. Delaware was a new market for Centene. Arizona, a new long-term care opportunity for us. And then recent expansion opportunities in North Carolina, both Medicaid expansion and the tailored plan.

Sarah London: Oklahoma's a new state; Delaware was a new market for Centine; Arizona, a new long-term care opportunity for us. And then recent expansion opportunities in North Carolina, both Medicaid expansion and the tailored plan. So I think we're really confident in our ability to leverage that local approach as a differentiator, the power of the experience that this organization has and our local teams have. And the access that we have by virtue of our incomemency to really understand the direction that the states want to take the programs, the priorities of the state leaders. And again, I think a unique ability to work with each community to design solutions that work for the health of those members.

Sarah London: Arizona, a new long-term care opportunity for us. And then recent expansion opportunities in North Carolina, both Medicaid expansion and the tailored plan. So, I think we're really confident in our ability to leverage that local approach as a differentiator, the power of the experience that this organization has and our local teams have, and the access that we have, by virtue of our incumbency, to really understand the direction that the states want to take the programs, and the priorities of the state leaders.

Speaker Change: I think we're really confident in our ability to leverage that local approach as a differentiator, the power of the experience that this organization has and our local teams have, and the access that we have by virtue of our incumbency to really understand the direction that the states want to take the programs, the priorities of the state leaders. And again, I think a unique ability to work with each community to design solutions that work for the health of those members. And I think we see that time and time again comes out in the RFP results. So feeling really good about the pipeline. We think the pipeline is active and continues to activate as we get through, obviously, the pandemic.

Sarah London: And again, I think a unique ability to work with each community to design solutions that work for the health of those members, and I think we see that time and time again in the RFP results. So, I'm feeling really good about the pipeline. We think the pipeline is active and continues to be active as we get through, obviously, the pandemic, and now through redeterminations, there's even more bandwidth for the state Medicaid offices.

Drew Asher: And I think we see that time and time again comes out in the RFP results. So feeling really good about the pipeline, we think the pipeline is active and continues to activate as we get through, obviously, the pandemic. And now, through redeterminations, there's even more bandwidth for the state Medicaid offices. So a lot of interesting opportunities there. Relative to rejoiners, again, Drew touched on this dynamic and how that's sort of playing through all of the numbers. But the rejoiner rate continues to tick up. It's now for most mature states in the low 30%. And again, he shared that that started with the vast majority of those members having no gap in coverage.

Speaker Change: through redeterminations. There's even more bandwidth for the state Medicaid offices.

Sarah London: So, a lot of interesting opportunities there. Relative to rejoiners, again, Drew touched on this dynamic and how that's sort of playing out in all of the numbers, but the rejoiner rate continues to tick up. It's now, for most mature states, in the low 30 percent.

Speaker Change: So a lot of interesting opportunities there.

Speaker Change: Relative to rejoiners, again, Drew touched on this dynamic and how that's sort of playing through all of the numbers, but the rejoiner rate continues to tick up. It's now, for most mature states.

Andrew Lynn Asher: in the low 30%. And again, he shared that that started with, you know, the vast majority of those members having no gap in coverage, we're now down to less than 50% of those having continuous coverage, which is creating that premium spread. And then Drew, do you want to talk about demographics for PDP?

Drew Asher: We're now down to less than 50% of those having continuous coverage, which is creating that premium spread.

Andrew Lynn Asher: And again, he shared that that started with, you know, the vast majority of those members having no gap in coverage. We're now down to less than 50 percent of those having continuous coverage, which is creating that premium spread. And then, Drew, do you want to talk about demographics for PDP? Yeah, PDP, you know, we're number one in 2024.

Drew Asher: And then Drew, do you want to talk about demographics for PDP? Yeah, PDP, number one position in 2024. That's a strategic business for us. I think we've said this before, but we've got about 50 billion of pharmacy spend across the company that we control. And about half of that is driven by the PDP business, and we'll see how that shifts in 25 and beyond. But that means we've got a leading position in Ottawa signs. So we've got three products: a low premium product, and then a higher premium product. And we've been thoughtful about, as I mentioned in the Q1 call, all the changes that are coming for the IRA, the second year of the Inflation Reduction Act for next year.

Andrew Lynn Asher: That's a strategic business for us. I think we've said this before, but we've got about $50 billion of pharmacy spend across the company that we control, and about half of that is driven by the PDP business. We'll see how that shifts in 2025 and beyond, but that means we've got a leading position in Ottawa signs, so we've got three products, a low premium product, then a higher premium product, and we're thoughtful about, as I mentioned in the Q1 call, all of the changes that are coming for the IRA, the second year of the Inflation Reduction Act for next year.

Andrew Lynn Asher: Yeah, PDP, you know, we're number one position in 2024. That's a strategic business for us.

Andrew Lynn Asher: I think we've said this before, but we've got about $50 billion of pharmacy spend across the company that we control, and about half of that is driven by the PDP business.

Andrew Lynn Asher: And we'll see how that shifts in 25 and beyond, but that means we've got a leading position in auto assigns, so we've got three products, a low premium product, then a higher premium product.

Andrew Lynn Asher: You know, been thoughtful about, as I mentioned in the Q1 call, all of the changes.

Speaker Change: that are coming for the IRA, the second year of the Inflation Reduction Act for next year. And, you know, to the extent if you want, we can slice and dice data a number of ways. We can get with you afterwards for any of that demographic or the buckets of the actual membership data.

Andrew Lynn Asher: And to the extent, if you want, we can slice and dice data a number of ways, and we can get with you afterwards for any of that demographic or the buckets of the actual. Our next question comes from Andrew Mok from Barclays. Please go ahead with your question. Hi, good morning.

Andrew Mok: And to the extent, if you want, we can slice and dice data in a number of ways. We can get with you afterwards for any of that demographic or the buckets of the actual membership data. Our next question comes from Andrew Mok from Barclays.

Andrew Mok: Please go ahead with your question. Hi, good morning.

Speaker Change: Our next question comes from Andrew Mok from Barclays. Please go ahead with your question.

Andrew Mok: Just wanted to make sure I follow the Medicaid margin progression from here. Sounds like you're saying this is peak Medicaid pressure this quarter with a 92.8% MLR. And when I pair that with an SG&A of, say, 7% or so, that suggests Medicaid is running close to 0% margin right now. Then you're getting a 4% rate on half your book in the second half.

Andrew Mok: Just wanted to make sure I follow the Medicaid margin progression from here. It sounds like you're saying this is peak Medicaid pressure this quarter with the 92.8% MLR. And when I pair that with an SGNA of, say, 7% or so, that suggests Medicaid is running close to 0% margin right now. Then you're getting 4% rate on half your book in the second half. So that should put you closer to 2% margin at year end, with the balance recovered in 2025. Is that the right way to think about the margin path of the Medicaid business?

Andrew Mok: Hi, good morning. Just wanted to make sure I follow the Medicaid margin progression from here. Sounds like you're saying this is peak Medicaid pressure this quarter with the 92.8% MLR. And when I pair that with an SG&A of, say, 7% or so, that suggests Medicaid is running close to 0% margin right now.

Andrew Lynn Asher: So that should put you closer to 2% margin at year end, with the balance recovered in 2025. Is that the right way to think about the margin path on the Medicaid system? I think certainly we expect, at 92.8%, to be Q2, then yeah, you'd have to allocate our SG&A out, which is probably lower than that on Medicaid, lower. We've got to remember our commercial business, pretty heavy with distribution and broker costs. I mean, that's embedded in the cost of goods sold for the products that we price. Thank you, and the High Sevens.

Speaker Change: Then you're getting 4% rate on half your book in the second half, so that should put you closer to 2% margin at year-end with the balance recovered in 2025. Is that the right way to think about the margin path on the Medicaid business?

Drew Asher: I think certainly we expect the peak at 92.8% to be Q2. And then you'd have to allocate our SGNA out, which is probably lower than that on Medicaid. It's lower. You have to remember our commercial business is pretty heavy with distribution and broker costs. I mean, that's embedded in the cost of goods sold of the products that we price. So you have to think about the distribution of our business Medicare as well as Medicaid as well because there's distribution cost there as well. So think about that when you look at our aggregate SGNA in the high seven.

Speaker Change: I think certainly we expect the peak at 92.8% to be Q2 and then yeah you'd have to allocate our SG&A out which

Speaker Change: You know, it's probably lower than that on Medicaid.

Speaker Change: You know, it's lower. We've got, you have to remember our commercial business.

Speaker Change: is pretty heavy with distribution and broker cost. I mean, that's embedded in the cost of goods sold of the products that we price.

Speaker Change: So you have to think about the distribution of our business. Medicare is well above Medicaid as well, because there's distribution costs there as well. So think about that when you look at our aggregate SG&A.

Drew Asher: So yeah, we expect that we expect to do better in the back half of the year if we continue to execute Medicaid and get that 4% plus rate impact on about half of our revenue and then carry that into 25 with more work to do.

Andrew Lynn Asher: So... Yeah, we expect to do better in the back half of the year as we implement Medicaid and get that 4% plus. [inaudible] Our next question comes from Michael Hoff from Baird. Please go ahead with your question. Thank you. Just a quick one, and then a real question.

Speaker Change: We expect to do better in the back half of the year as we continue to execute Medicaid and get that 4% plus rate impact on about half of our revenue and then carry that into 25 with more work to do.

Michael Hoff: Our next question comes from Michael Hoff from Baird. Please go ahead with your question.

Speaker Change: Our next question comes from Michael Hoff from Baird. Please go ahead with your question.

Michael Hoff: Thank you. Just a quick one.

Michael Hoff: And then a real question. One of your peers called out a negative retro rate adjustment from California. It appears how much of that impact your second quarter Medicaid MLR.

Michael Hoff: So one of your peers called out a negative retro rate adjustment from California. I'm just curious how much that will impact your second quarter Medicaid MLR? And then the real question, on MA Star Ratings, it sounds like you have more complete program data and a stronger sense of how you're progressing. So with all the information, you have an admin op, and those items sound strong, but how much of a swing factor do you expect, perhaps, in tough points would still be from now to October? And how much actual visibility right now do you actually have?

Michael Hoff: Thank you. Just a quick one and then a real question. So one of your peers called out

Michael Hoff: A negative retro rate adjustment from California, just curious how much does that impact your

Drew Asher: And then the real question. I may start writing for example, like you have more complete program data and that stronger sense on how you're progressing. So with all the information, you have an admin off and he is those items. I'm strong. But how much of a swing factor do you expect? And how much actually the ability right now do you actually have on. And any early thoughts on potential comment updates, notifies you expected there.

Speaker Change: Second Quarter, Medicaid MLR, and then...

Speaker Change: The real question on MAA Star Ratings, it sounds like you have more complete program data and a stronger sense on how you're progressing. So with all the information, you have an admin op and see those items sound strong, but how much of a swing factor do you expect?

Speaker Change: and how much actual visibility right now do you actually have on any early thoughts on potential CupPoint updates notified and expected there? Thank you.

Sarah London: and any early thoughts on potential cut point updates will be notified and expected there. Thank you. Yeah, thanks for the question. So on STARS, as you heard, the bottom line is we're very pleased with progress and the momentum we're seeing internally. We are tracking year-over-year improvements in each of the key chapters.

Drew Asher: Yeah, thanks for the question.

Sarah London: So, on stars, as you heard, bottom line is we're very pleased with progress and the momentum we're seeing internally. We are tracking year-over-year improvements in each of the key chapters relative to the results in October. We don't yet have those final cap scores, and obviously don't have cut points yet. So there's a range in our projection, but we feel good about that entire range and are tracking very nicely with internal expectations. And, as I said, expect a meaningful step. Up in the results in October. And all of this is really the result of the continued work by the team, our enterprise wide governance process, awareness and activation across the organization, board the frontline alignment, the qualities of top priority, and all of the investments that you've heard us talk about along the way and things like member outreach, call centers. We've organized differently around provider partnerships.

Speaker Change #100: Yeah, thanks for the question. So on STARS, as you heard, the bottom line is we're very pleased with progress and the momentum we're seeing internally. We are tracking year-over-year improvements in each of the key chapters,

Sarah London: Relative to the results in October, we don't yet have those final CAHPS scores and obviously don't have cut points yet, so there's a range in our projection, but we feel good about that entire range and are tracking very nicely with internal expectations and, as I said, expect a meaningful step up in the results in October. And all of this is really the result of, you know, the continued work by the team, our enterprise-wide governance process, awareness and activation across the organization, board-to-frontline alignment, that quality is a top priority, and all of the investments that you've heard us talk about along the way and things like member outreach, call centers, we've organized differently around provider partnerships, we've done a lot of work under the hood relative to digital data, and efforts to make our member onboarding experience best in class.

Speaker Change #100: Relative to the results in October , we don't yet have those final CAHPS scores and obviously don't have cut points yet, so there's a range in our projection.

Speaker Change #100: But we feel good about that entire range and are tracking very nicely with internal expectations. And as I said, expect a meaningful step up in the results in October . And all of this is really the result of the continued work by the team, our enterprise-wide governance process, awareness and activation across the organization, board-to-frontline alignment, that quality is a top priority, and all of the investments that you've heard us talk about along the way in things like member outreach.

Sarah London: We've done a lot of work under the hood or relative to digital data and efforts to make our member onboarding experience best in class. And so that also then accrues the visibility in terms of momentum in 2024. So think about the fact we're halfway through 2024. Dates of service that will drive the 2025 results and feel good about what we're seeing there. It's important to note as well that this work is accruing not just the stars improvement, but the quality score improvement in our other lines of business. And in Medicaid in particular, quality scores are really important factors.

Speaker Change #100: Call centers, we've organized differently around provider partnerships. We've done a lot of work under the hood or relative to digital data and efforts to make our member onboarding experience best in class. And so that also then, you know, accrues to visibility in terms of momentum in 2024. So think about the fact we're halfway through 2024 dates of service that will drive the 2025 results.

Sarah London: And so that also accrues to visibility in terms of momentum in 2024, so think about the fact we're halfway through 2024 dates of service that will drive the 2025 results and feel good about what we're seeing there. It's important to note as well that this work is contributing not just to STARS improvement but to quality score improvement in our other lines of business, and in Medicaid, in particular, quality scores are really important factors. We think about RFP success and how we are viewed by the state in terms of being able to deliver value to them and to members.

Speaker Change #100: and feel good about what we're seeing there.

Speaker Change #100: It's important to note as well that this work is accruing not just to STARS improvement but to quality score improvement in our other lines of business.

Speaker Change #100: And in Medicaid in particular, quality scores are really important factors. We think about RFP success and how we are viewed by the state in terms of being able to deliver value to them and to members. So all in, feel really good about the fact that we will be able to deliver sustainable programmatic improvement, not just in STARS, but in quality overall as we go forward.

Sarah London: We think about RFP success and how we are viewed by the state in terms of being able to deliver value to them and to members.

Andrew Lynn Asher: So all in all, feel really good about the fact that we will be able to deliver sustainable programmatic improvement, not just in STARS but in quality overall as we go forward. And then on your question, first, let me make sure I was crystal clear on SG&A in the last question. Our current guidance is 8.4% to 9%, so call that the high eight. And once again, Medicare and the marketplace or commercial as a whole are sort of into the double digits in terms of, think about that as in terms of the relativity of SG&A as you think about Medicaid.

Sarah London: So all in, feel really good about the fact that we will be able to deliver sustainable programmatic improvement, not just in stars, but in quality overall as we go forward.

Drew Asher: Yeah, and then on your question, first let me make sure I was crystal clear on SGA in the last question. Our current guidance is 8.4% to 9%, so call that the high AIDS. And then once again, Medicare and marketplace or commercial as a whole are sort of into the double digits in terms of think about that is in terms of the relativity of SGA as you think about Medicaid. And then yes, we operate in the same state as what was referred to yesterday. You know, at our size, there's pluses and minuses in every quarter, so we didn't feel the need to call that out.

Speaker Change #101: Yeah, and then on your question, first, let me make sure I was crystal clear on SG&A in the last question. Our current guidance is 8.4% to 9%, so call that the high 8s.

Speaker Change #101: And then once again, Medicare and marketplace or commercial as a whole are sort of into the double digits in terms of, think about that as in terms of the relativity of SG&A as you think about Medicaid. And then yes, we operate in the same state as what was referred to yesterday. You know, at our size, there's pluses and minuses in every quarter, so we didn't feel the need to call that out.

Andrew Lynn Asher: And then, yes, we operate in the same state as what was referred to yesterday. You know, at our size, there's pluses and minuses in every quarter, so I feel the need to call that out. Our next question comes from Ryan Langston from Cowan. Please go ahead with your question. Hi, good morning, everybody.

Ryan Langston: Our next question comes from Ryan Langston from Callen. Please go ahead with your question.

Speaker Change #101: Our next question comes from Ryan Langston from Cowan. Please go ahead with your question.

Ryan Langston: Hi, good morning, everybody. I appreciate the headwinds and tailwinds for 2025. I don't think I heard anything on Medicare Advantage unless I missed it.

Ryan M. Langston: Appreciate the headwinds and tailwinds for 2025. I don't think I heard anything on Medicare Advantage unless I assume the priority would be to have some margin improvement year on year. But can you maybe just refresh us on your view on that versus, say, growth of enrollment into 2025, even if it's just broadly or directionally? Thanks.

Ryan Langston: Hi, good morning everybody. Appreciate the headwinds and tailwinds for 2025. I don't think I heard anything on Medicare Advantage unless I missed it. I would assume the priority would be

Ryan Langston: I would assume the priority would be to have some margin improvement here on year, but can you maybe just refresh us on your view on that versus say growth and enrollment into 2025 even if it's just broadly or directionally? Thanks. Yeah, we've said before we expect a shrink in 2025 as we think about what business is going to serve this company well in the long run. And then we think about the convergence of Medicaid and Medicare with the duels and Heidi and fight the opportunities. You know, set a couple of times publicly, you know, 14, 15, 16 million, some more in that zone of revenue for 2025.

Ryan Langston: Can you maybe just refresh us on your view on that versus growth of enrollment into 2025 even if it's just broadly or directionally? Thanks.

Andrew Lynn Asher: Yeah, we've said before, we expect to shrink in 2025. Think about what business is going to serve this company well in the long run. We think about the convergence of Medicaid and Medicare with the dual and Heidi and Fide opportunities, so I said a couple of times publicly, you know, $14, $15, $16 billion, somewhere in that zone of revenue for 2025. And then I did mention in the tailwinds the fact that the PDR that we're booking this year is actually half of the PDR we booked last year. We don't expect to have a PDR booked into the 2025 P&L for 26.

Speaker Change #103: Yeah, we've we've said before we expect to shrink in 2025.

Speaker Change #104: as we think about.

Speaker Change #105: What business is going to serve this company well in the long run? We think about the convergence of Medicaid and Medicare with the duals.

Speaker Change #106: and Heidi and Fide opportunities. So, you know, said a couple of times publicly, you know, 14, 15, 16 billion, somewhere in that zone of revenue for 2025.

Sarah London: And then I did mention in the tailwinds the fact that the PDR that we're booking this year is actually half of the PDR we booked last year, and then we don't expect to have a PDR booked into the 2025 PNL for 26. So, you know, first we've got to chip away at the degree of run rate, negative margin, and push towards break even, and then we can talk about, you know, what the margin opportunity is in Medicare.

Speaker Change #106: And then I did mention in the tailwinds the fact that the PDR that we're booking this year is actually half of the PDR we booked last year.

Speaker Change #106: And then we don't expect to have a PDR booked into the 2025 P&L for 26.

Andrew Lynn Asher: First, we've got to chip away at the degree of run rate, the negative margin, and Push Towards Breakeven, and then we can talk about, you know, what the margin opportunity is in Medicare. So mathematically, it is a tailwind, or we expect it to be a tailwind, and you know, we're excited about it.

Speaker Change #106: So, you know, first we've got to chip away at the degree of run rate.

Speaker Change #106: Negative margin.

Speaker Change #106: and push towards breakeven, and then we can talk about, you know, what the margin opportunity is in Medicare. So, mathematically, it is a tailwind, or we expect it to be a tailwind. And, you know, excited about the STARS progress that Sarah referred to, and where that's going to lead us over a multi-year view.

Sarah London: So, mathematically, it is a tailwind or expected to be a tailwind, and, you know, excited about the stars progress that Sarah referred to, and where that's going to lead us over a multi-year view.

Andrew Lynn Asher: Star's Progress that Sarah referred to, and or that's going to lead us over a multi-year view. And our next question comes from George Hill from Deutsche Bank. Please go ahead with your question. Yeah, good morning, guys. Two quick ones for me, if you don't mind.

George Hill: And our next question comes from George Hill from Deutsche Bank. Please go ahead with your question.

Speaker Change #107: And our next question comes from George Hill from Deutsche Bank. Please go ahead with your question.

George Hill: Yeah, good morning, guys. Two quick ones for me if you don't mind. I guess you're on the exchange business you mentioned at the well into 7.5% long term margin. I guess is that the sustainable run rate was it prudent to kind of price for the midpoint in 2025?

George Robert Hill: I guess, Drew, on the exchange business, you mentioned the well into 7.5% long-term margin. I guess, is that the sustainable run rate, or is it prudent to set that kind of price for the midpoint in 2025? And then my follow-up question would be, There are a lot of changes in Part D for 2025. Are you guys making any significant changes to the Part D product? And really, what I'm most focused on is how you guys are thinking about pharmacy networks. Yeah, on the marketplace side, maybe I'll jump in. I think what we've said is that we're well into the five to seven and a half range.

George Robert Hill: Yeah, good morning, guys. Two quick ones for me, if you don't mind. I guess, Drew, on the exchange business, you mentioned the well into 7.5% long-term margin. I guess, is that the sustainable run rate, or is it prudent to kind of price for the midpoint in 2025? And then my follow-up would be, is there's a lot of changes in Part D.

George Hill: And then my follow-up would be is there's a lot of changes in Part D for 2025. Are you guys making any significant changes to the Part D product, and really what I'm most focused on is how you guys are thinking about pharmacy networks?

George Robert Hill: for 2025. Are you guys making any significant changes to the Part D product? And really what I'm most focused on is how you guys are thinking about pharmacy networks.

Sarah London: Yeah, on the marketplace I may be able to jump in. I think what we said is we're well into the 5 to 7.5 range, and as we think about positioning for 2025, we do expect to grow. We expect the overall market to grow, but we have positioned for margin in 2025, and of you that the marketplace product can continue to deliver strong, profitable growth.

Sarah London: And as we think about positioning for 2025, we do expect to grow, we expect the overall market to grow, but we have a position for margin in 2025 and a view that the marketplace product can continue to deliver strong, profitable growth. Yeah, they're not PDP.

Speaker Change #109: Yeah, on the marketplace side, maybe I'll jump in. I think what we've said is we're well into the five to seven and a half range. And as we think about positioning for 2025, we do expect to grow, we expect the overall market to grow, but we have positioned for margin in 2025. And a view that the marketplace product can continue to deliver strong, profitable growth.

Drew Asher: Yeah, then on PDP, you can go pull the Q1 transcript. Went really deep there, but let me hit the highlights. Obviously, we as payers are thinking about the underwriting of the catastrophic phase going from 20% to 60%. These are all IRA changes; the member out of pocket going down, and therefore it's hit earlier. You know, thinking about manufacturer behavior, thinking about the MPPP, effectively the Member Smooth and Cost Share Program. And we're always thinking about how to optimize network and balance access and cost a good sold, so that continues as we prepare for 2025.

Andrew Lynn Asher: You can pull the Q1 transcript, it went really deep there, but let me hit the highlights. Obviously, we as payers are thinking about the underwriting of the catastrophic phase going from 20% to 60%. These are all IRA changes, the member out of pocket going down, and therefore it's hit earlier.

Speaker Change #110: Yeah, then on PDP, you know...

Speaker Change #111: You can go pull the Q1 transcript, went really deep there, but let me hit the highlights. Obviously, we as payers are thinking about the underwriting of the catastrophic phase going from 20% to 60%. These are all IRA changes, the member out-of-pocket going down, and therefore it's hit earlier.

Operator: Thank you very much. And it continues as we prepare for 2020. And ladies and gentlemen, at this time, we'll conclude our question and answer session. I'd like to turn the floor back over to Sarah London for closing remarks. Thank you.

Speaker Change #111: You know, thinking about manufacturer behavior, thinking about the MPPP, effectively the Member Smoothened Cost Share Program, and we're always thinking about how to optimize network

Speaker Change #111: and balance access and cost of goods sold. So that that continues as we prepare for 2025.

Unknown Executive: And ladies and gentlemen, at this time, we'll conclude our question-and-answer session.

Speaker Change #111: And ladies and gentlemen, at this time we'll conclude our question and answer session. I'd like to turn the floor back over to Sarah London for closing remarks.

Sarah London: I'd like to turn the floor back over to Sarah London for closing remarks. Thank you. Thanks, everyone, for the interest this morning and the great questions.

Sarah London: Thanks, everyone, for your interest this morning and the great questions. You know, as we wrap up the call, I really just want to emphasize our excitement around the opportunities that lie ahead for this business. We are, as an organization, making significant progress, strengthening and modernizing the enterprise, and we feel really good about the performance of the core business. As a leadership team, we're also really energized by the markets we serve and the room we have to grow profitably as we go forward.

Sarah London: You know, as we wrap up the call, I really just want to emphasize our excitement around the opportunities that lay ahead for this business. We are, as an organization, making significant progress, strengthening and modernizing the enterprise, and we feel really good about the performance of the core business. As a leadership team, we're also really energized by the markets we serve in the room. We have to grow profitably as we go forward.

Sarah London: Thank you. Thanks everyone for the interest this morning and the great questions. You know, as we wrap up the call, I really just want to emphasize our excitement around the opportunities that lay ahead for this business.

Sarah London: We are, as an organization, making significant progress, strengthening and modernizing the enterprise.

Sarah London: and we feel really good about the performance of the core business.

Sarah London: As a leadership team, we're also really energized by the markets we serve and the room we have to grow profitably as we go forward. So appreciate again the time this morning and your interest in Centene and look forward to future updates.

Sarah London: So appreciate again the time this morning and your interest in Centine, and look forward to future updates.

Sarah London: I appreciate, again, the time this morning and your interest in Centene and look forward to future updates. Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do thank you for joining us. You may now disconnect

Unknown Executive: Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do thank you for joining. You may now disconnect.

Speaker Change #112: Ladies and gentlemen, with that, we'll conclude today's conference call and presentation. We do thank you for joining. You may now disconnect your lines.