CNC - Earnings call transcript Q3 2020

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Operator

Good morning. Welcome to Centene Corporation Third Quarter 2020 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to Jennifer Gilligan. ahead. go Please

Jennifer Gilligan

and risks for important remarks and us the of those Kate, conference everyone. you of Executive Thank XX-K Michael and to estimates also discussed and on in XXXX, factors, make Vice and Thank subsequent those including Actual XXXX. XX-Q may public about Financial described Chief our Centene good third harbor anticipates expectations, joining Officer differ Officer; plans Chief and call, on Chairman, may will host accessed results Centene's the indicated most Litigation its Schwaneke, developments Act recent our quarter the for Executive Neidorff, forward-looking materially filings, events today, Form COVID-XX a by of change. uncertainties Centene as President you, and Centene, impacts this President morning, Form October which XX, Jeff that and XXXX from respect Private call. morning's various of website including Reform and statements may SEC our that through of filed constitute the forward-looking potential operations. dated cause those provision and under statements prospects be with results of safe to results can other XX, business at purpose February the result centene.com. Any Securities future earnings

non-GAAP third obligation the available XXXX will do be to most call the elect company's directly measures. at on press section. centene.com found with we, so. release, may measures in GAAP company forward-looking comparable these certain is any the at refer measures point of Investors the these website under to to the A which also can quarter future, While statements our some specifically, disclaim update in The reconciliation

- December for virtual XXXX. for mark our place on Investor please XX, will which upcoming take your upcoming calendars Additionally, Day,

With we release, CEO, turn exhibits. call Michael? this available like Neidorff. morning's website slides connection are our in have I and earnings on over Chairman, These section. illustrative to shared Finally, President Michael with that, Investors would some our the to the under

Michael Neidorff

Jennifer. you, all integration. and the third this it - increase onetime XXXX the today. revenues are Adjusted and your diluted per we $X.XX thoughts platform, referenced growth when diversified that year. earnings is I COVID we shared income On on strong earnings to our the environment, provide also I today's operating will third guidance. in our be on in release. first $X.XX third solid execution. sorry, the $X.XX consistent previous in press our as of expected second items or half of well with as quarter the our quarter you that We earnings I from our of quarter share call, accounting $XX.X third of we billion, XX% an for the reported team's XX% This received of XXXX. was remind some you pleased results, third discuss thank quarter I'm safe Good you which quarter demonstrate Thank continued morning, WellCare will We update review our for hope Centene as and Centene's and families perspective success, and is call. on for underlying including quarter how joining with well. and an environment see call, performance the business positioned on of and strength our

provided Membership new introduced remains sequential November members. million was programs a million many roughly in in would by July. WellCare. of happens of XX% being We $XX.X and the which year's membership advised driven delivered our some states, by the we membership approximately addition strong that earnings, XX. year-over-year X.X be $X. largely driven XX%, the amount as end. third across organic This of accruals of growth, to to in guidance new peak the expect a quarter also XXXX COVID-related to of X% membership quarter represents well And to We the Membership as with at growth line continue growth with growth.

from reinvested back be of Our number the onetime items, a which benefited earnings will business. into

know, all we care you there earnings quarter-to-quarter Centene now a impacts As be enterprise, will is size our billion on and a $XXX basis. At enterprise. our scale, health expect to

settlement growth utilizing in to are We the risk reinvest initiatives. quarter

In care Charitable of making which communities be public onetime leading and portion experiencing accelerating programs food this earnings the of continued In community serve. towards that a have access support improved settlement insecurity. at Centene to contribution to environment, allocated virtual will address of health, and used individuals to Foundation. support our programs research such addition, a approach we with towards significant we to the a The medical we that the care determinants Social

Turning now year. the to and we the how the operating view of rest environment

for the remains XXXX to exclude our favorable at provided what increase our you Day. quarter, $X.XX third settlement June with If consistent address in the tax Investor guidance we earnings the

is including typical present effective year constructive well throughout X our continues lead in taken approximately for discussions Our place State Texas, in setting counterpart this continued strength we stage strong our year, X.X% partnerships, confident of The the increase remain operating to opportunities in our partnership the relationships. business and increase our as to October Florida, The we state landscape. process provide as with to today’s ability underscore a rate and have the in X.X% September rate value effective that X. partners. has

with related setting our We continue and rate discussions hold risk to state adjustment mechanism. to partners

key with to access we line and our the medical include we partners utilization risk evolving provide term in are to membership members have our These to We our to state sharing state COVID-XX. the certain pandemic specific be short also landscape mechanism expect nature. Overall, place expectations. have in the process them in continue continue factors as and to [ph] additional we outside Other that navigate work normal critical track care. with with to related put growth

We And uncertainty, have continued positioned to there to While we on we week's manage duration the election. we them strategy. business the based evolve. against execute facts pandemic. of grow next and as outcome believe to the continue to deliver today. well We size scale of and are see is as our environment including the And and the intensity the continues results

consider provide provide time. also our you updates at with continue transparent We thinking things we Jeff XXXX some give mind, best will that you earnings and factors particular to you power. our in in how about to as point see assessments with to when a With

provide As is we details at our December practice, day. our

delivering I'll we attractive continue for want the WellCare and pipeline an opportunities by growth, we're to accretion. both However, to here that on in organically to are uptick your known highlight for times, that see and models. deal these factors you ensure we RFP considering unusual driven, in through them

In well. and investment for addition, potential our it's see integration consistent disciplined with on track we The progressing M&A opportunities process. remains WellCare

and XXXX. intend solid to and and our integrated XXXX, detail to accretion platform. demonstrate healthcare quarter results strength will we're into organic growth. seamlessly Virtual New strategy integration completed finance third well our with underlying transform At are Investor demonstrate of a summary, growth HR plan We our which by [ph] systems Routine Our the in driven to was integration as Day, technology. line our In continue state's and WellCare in activities the regarding more sharing as Centene business timely pleased we York diversified forward upcoming outlook, throughout the expectations. with look deal

to So healthcare we look longer things manage a growth needs. as solution significant continue the see care for term, additional opportunities as to to

our and at capabilities, uncertainty with size capacity remains some success. scale, well is our and While continued positioned for Centene

while to I, we again during to Jeff. people Stay recognize is The and support because Before to accelerating to and that, over I that times, the continue been dedication wear turn able and Jeff, let your hand employees. well. continue themselves. mask of want that focus, prove system investing the serve to our our of who safe, me relentless of to also our mic commitment and in have members over and stay continued With it their are these the programs thank It value communities.

Jeff Schwaneke

Difficulty] [Technical

Jennifer Gilligan

is Gilligan. there Jennifer Hi,

do event take that the ask Hi, to and the following comment is the What We’ll the webcast there trouble was on with We’re we is some webcast call, there I have we while will can to that, make will in his were with start ahead link. portion. on the go of Jeff Jeff the Michael’s With to link. webcast moment, line folks one this just time remarks, Back Jen. check it away. into. you you any going transcript folks hold we post the missed to think

Jeff Schwaneke

finally, we've of And Thank our XX% $X to compared revenues walk our some results Jenn. XXXX delivered increase Overall, morning, third share strong over off third to Okay, Michael. per results quarter earnings consider of XXXX when the updated This quarterly with of everyone. adjusted the thinking diluted of offer review good I last the of $X.XX about start around earnings quarter XX And an year. some XX.X and through details morning, financial you, XXXX trajectory. billion, with you, outlook. and great. will factors Thank I'll

items quarter per million of last our outlined Medicaid Total March, total charitable by press pandemic and have in Our attributable diluted our XX.X states. have marketplace in three the when up commitment an billion the approximately diluted growth grew corridor receipt benefit, the specifically a that businesses consistent a with to our earnings year. earnings we the adjusted adjusted acquisition third release. expectations Medicaid excluding share to membership insurance added the our as impact quarter, share in issued WellCare, a of in are in of $XX.X insurance would When COVID-XX. XX% we of health $X.XX items, included increased of programs the these guidance of of began result Since and XXXX, risk Total from many QX and unrelated a primarily health expansions July, the favorable totals non-operational foundation million over settlement, contribution marketplace members, and largely tax in to $X.XX. net per membership new compared in X.X been to revenues

this adjustment Cash insurer costs. was medical was rebound levels in This With X and the cash quarter COVID, in ratio, in of to occurred of HBR in Our the quarter. for the million costs risk adjusting utilization, cash year. the third million, $X.X as by third third quarter XXXX traditional the toward included year's of quarter insurance last X.X times associated treatment retroactive approximately $XXX of utilization in months COVID-related used ratio higher health the net flow in marketplace third earnings. to $X.X billion X receipt largely HBR receipt quarter impacted geographies. of third fee flow in of in The lower billion the by in second was and by $XXX also settlement. million, from HBR, was the combination premium XXXX, $X.X risk health programs. and with flow cash The a operations the with XX.X%. most in The normalized or adjustments a from associated and well aided through for Utilization testing quarter trended the we HBR risk-sharing HBR XXXX activities operations the first business, revenue XX.X% payment XX.X% the the quarter a as traditional which offset and used the in When of was of this corridor due operating approximately expect third was compared of our between state both quarter quarter the of XX.X% health payment and operations benefits of XXXX.

international $XX.X We end. continue on includes quarter at at $XX credit which balance strong our million billion, our borrowings a quarter Debt position of liquidity are cash $X.X in The denominated hedge euros on to our borrowings unregulated on to was sheet maintain revolving the facility. in revolver end of billion investments.

XX.X%, ratio X% the compared our quarter XX. of to excluding debt, second Our XXXX. non-recourse was debt-to-capital in

our basis Our with XX.X% debt-to-capital point netting decrease represents at XXX debt cash since was March. which our when a ratio unregulated end, quarter

quarter by days integration. XX pandemic, and the and mentioned paid On comfortable with growth liability end claims impacted at the efforts. quarter end, significant $XX.X integration with the synergy the in as to claims second XXXX. represents which COVID WellCare, the make totaled days we The to progress payments of DCP of track, quarter, was continue of received Michael on payable Our compared remain medical and in be were pass-through to at billion out continues the October, payments. in capture our we early membership earlier, timing XX

XXXX Turning now to our expectations.

our billion. of and the corridor guidance This previous this is $XXX.X higher the For within now risk settlement expect to billion $XXX full million quarter. we recorded revenue than be a reflecting midpoint, year, range $XXX.X predominantly

benefit earnings represents $X.XX guidance $X.XX, $X.XX increase of press diluted changes A release guidance to share of midpoint, reconciliation we is $X.XX, our tax provided at adjusted driven issued and recognized per $X.XX from up the of quarter. range third the our by that revised a this Our a the morning. during to in

strong Our the the items outlined business the We XXXX year financial major year-to-date These during third influenced reflects lines, that factors quarter. the as as non-operating our that full previously of occurred of mentioned impact performance guidance guidance. from well a COVID-related our unchanged. remain number previously

expect growth November by year. million of to membership $X.X We of peak continue this

with we $XXX during associated paid second to claims. spikes In to expect regional quarter and we to of utilization COVID on the the government of have quarter, Through September, terms call. infection discussed gradually local million trends $X responses. compares increase approximately fourth on trends, billion depending we This continue end our

have quarter third With with and as has to includes claim line year rates, codes our with modeling. touched active to methodology and note XXXX state consistent quick expectations. risk rate mechanisms guidelines. all already we Michael figure on sharing CDC continue our versus and dialogue be the COVID-related quarterly adjustments Our of continue partners applies full received respect in consistent A on, with

weighted the closing full of result will guidance the substantially quarter, quarter In to And year full trajectory. modeling range. count sum earnings per comments a than WellCare impact the to This on with average will guidance. a fourth results the in fourth the As last, year quarterly second quarters. EPS few year acquisition the share is lower earnings the to respect our XXXX not full adjusted share first short,

guidance provide December our As will Investor we full in XXXX we year have done historically, Day. our

can However, you want model of discussion, as at few as environment, this the slide much significant a you items we in order included have consider and to light begin website provide we on our give the uncertainty as facilitate XXXX. we In to visibility a to to centene.com. in

going We of to And forward, typical we early stages are in still the process. planning intend to our our practice. return

April recall, First, we have $X.XX midpoint XXXX a X, There earnings including XXXX, from you moving provided share of diluted name implemented an costs guidance that the a effective may a for parts been higher COVID and membership revenues, the and continuing utilization to treatment incremental just the testing May, medical of adjusted with significant we on initial per this states, and in in our and for March few. year, programs by lot reduction risk-sharing basis.

If recorded pandemic we you per reflects exclude earnings net from the began tax in adjusted XXXX the $X.XX our and March, share the $X.XX. quarter, $X.XX this for diluted benefit benefit where guidance

included will a from XXXX, look moving long are are we today. our top continue history are of and here. There to Second, bottom as forward expect sharing that we line growth and we a lot few supplemental to of slide in I parts, the highlight

and to the underlying single-digit integration indicated. the earlier, our we upper WellCare in mid operations transaction, we from and generate remain ability confident as to previously the have we the commented are As accretion on track,

by trajectory growth my the to factors And achieved represents the number pleased clarity dependent confidence finally, and of over expansions unknowns the adjustments Third, business. the generated December contribute organic our Day. utilization year-over-year our such reiterating our our with Investor risk-sharing that the remarks be carry this the we expect significant these better Medicare year. into a of mechanisms of in conclude year. COVID programs, to of more anticipate through on I'll solid programs We're existing growth next earnings around we've provide positioned and traditional rate the Medicaid to during We'll trajectory. new some we marketplace, and Fourth, strength pandemic. and as will of

meet comprehensive virtually a outlook forward December. questions. for now remains in Our operator, look delivering when the against our to And year open believe strategic strategic we concludes you my balance to next focused and remarks. That committed strong, have shareholder needs. the on and we We value. executing to We sheet and operational our line providing remain meet for plans ample liquidity we are may

Operator

of [Operator Instructions] Our question Fischbeck Bank Kevin ahead. Go from America. is from first

Kevin Fischbeck

Okay, great. Thanks.

commentary. follow Just on up rate to wanted the Medicaid

you I your then, things And so far Michael, for maybe of guidance guess, mentioned in pressures? thought quantify built and you've rate your you might that nature. as temporary year could kind into I corridors be first, what the these think, far in of risk I some think this you comments, as that

wanted of kind kind to rates just would type perspective? should state that you be understand these Or issues? is this about the if of So expect Thanks. be of we to kind way onetime billing thinking as

Michael Neidorff

think had. on the state depends It we've some both. negotiations of and I the

and have it's give-and-take some rate and increases in can process built we now, Some a with that And you've give some given agreed right really we've contemporary that have with. specific risk are more Others, numbers. you comfortable Jeff negotiated seen, us corridors where Kevin. and as just are,

and turn to we to COVID we've expense with of dealt want a he and dealing there's factors. And make reduced it so some there's what him, give utilization, we've you you can are because had I'll do two other There the that? it, over and may that things. be Jeff, rates, how also but the with sense

Jeff Schwaneke

is this Kevin, Yes, Jeff.

far been this inline that where number full we been, say for as that And comments it's continued in year, make got would risk-sharing forward, our year, expectation. expect a our and things. think that that really to use these process develop us What's the traditional to in and of and setting with we The addition I always you've be that I say, mechanisms heard of risk I couple so has, million encounters $XXX have rate it process, rates move has. corridors we've is and what around states so considered, guidance. think our

we've that in So there had estimate time. some for

was quarter, $XXX the On number million. that roughly

that again, next look expire. So be as lower forward into year, because to perspective. that definitely we we as some next year from do than impacted the HBR that we the programs $XXX to these head And of expect million

are think them as a I of state years, not they carry January the the lot is to December. fiscal are reason by forward you are which, driven why next through year aware,

a it's So calendar year. not

Michael Neidorff

then that indicate the do if accurately we rates the just as the utilization, recognize we we've hasn't might seen sound. I And the states with work state. to have reduced, be where it

really it's without take of guidance, work. it’s and the constructive a case give with been So pleased a out. lot it very we're and of Obviously, maintaining worked where

Kevin Fischbeck

Okay. just a being maybe the And question around then second guidance.

You have way time base the and you - I you else would had you kind guidance know maybe if appreciate don't to tailwinds maybe guidance setting I any guess, time that the of the stage know I the you kind of around WellCare EPS the the of what a transaction. anything color provided the WellCare highlight is. negative… the there's for also guys I if But, give and about headwinds some at the to did transaction? don't positive

Michael Neidorff

the as with said, we it's gave that I we guidance think, time. consistent at that

Jeff Schwaneke

Yes. kind deal guidance Kevin, the right are in the March? provided after we we you of referring to specifically that closed

Kevin Fischbeck

exactly. Yes,

you'd changed or of back the wonder plus guess, accretion talked business if how around business tailwinds, So to in have that, thought guys headwinds the about from there's about at all? I March? or you highlight you anything else that So you're minus just that as kind and I hasn't the saying would core

Michael Neidorff

think I'll and start can add I to off, Jeff it.

have of But from that's of of very was - not seen still their anything pleased all Florida, what because and it. the proven it past are working will that it's consistent. in XXXX, the accretion highlighted It's we support the plan schedule. on in out be recognize until the well. combination we to We integration capability program. were of with as Medicare The and is because delayed issues the delayed, some with been and the the think we Georgia I

calling at we're mean, - comfortable level, it expectations where it's it the every it's I So not is. and

Jeff Schwaneke

Yes. agree I with Yes. Michael. Kevin,

exactly the think what I expected. line with transaction we is in

those right. things, other the state things. are The COVID variables the are, rates, think re-determinations variables all I

I a with line think in what it’s exactly transaction from anticipated. perspective, we

Kevin Fischbeck

Okay. Thanks.

Operator

Justin Our Wolfe next from Go is question ahead. from Lake Research.

Justin Lake

specifically all on think point. I just XX% the appreciate is XXXX given And so go morning. you discussion SX earnings we of only X.XX plus and SX. thing tie starting I the first the have about to Good Thanks. up wanted us The standalone to on back a here, basis growth kind had – to the and follow accretion.

different, is about the being a to me the to assume reasonable SX is year? could that XX% the So at? Or you we EPS plus about about starting gets in beyond just with anything the growth for starting accretion level next X.XX reasonable ballpark that that Would that same point be [ph] was to want number… of me XX% think it there

Michael Neidorff

am of to mean, - letting it. respond you at we're – give to the - let the get and everything find we’ll on I here, mind, to what not or December trying some and trying you in we’re to I But full the give we’re guidance people guidance try themselves going is keep XX. bridge there sense, is ahead strike we'll But Jeff the a this but balance not trying point. number, us. real not

want to… So do Jeff, you

Jeff Schwaneke

you from what just to consider XXXX I we’re is I mean, to as into give Yes, you’re just here trying think key do you XXXX. to about think right. factors Michael, some bridge

The think certainly York that and challenge people the I the was a ago. and that built with challenge try I also back is pretty rate appreciate number. use SX, is New year And with to over can that and half pre-COVID. go changes

bridging from to think we this from more believe So appropriate our perspective year is start. place I

Justin Lake

Okay.

Jeff Schwaneke

our you for The in December Day. Go the ahead. full we’ll numbers, Investor full numbers have

Justin Lake

fair say specific with point might starting number… X.XX it relative that [ph] to the number optimistic be consensus maybe optimist to around the Is

Michael Neidorff

And the get I of our in to. to appreciate am not to wait. trying stages AOP. But we’re what you early I going

of more, the get you year guidance we’re to we tell is. when we and say because cadence to - We the in not range of what have tried this we a trying did

December, As Justin. done in long that we’ve – we probably

not, So it’s the you worth we have point, full December given come but a have you so as starting bridge.

Justin Lake

Thank much. All you right. very

Michael Neidorff

Thank you.

Operator

from from next Ralph ahead. Citi. Giacobbe question is Go Our

Ralph Giacobbe

Thanks. Good morning.

wanted of and back, that the Is sort risk adjustment, COVID the premium rate the of out you sharing quarter could cited, make buckets. I higher to to then the Just if anyway those cost break third the sure three got go Jeff, numbers. split impact you out versus

Jeff Schwaneke

mean number million, you risk risk we state premium, when I premium the $XXX was adjustment XXX. Yes, the the gave changes, corridor as and quantified the

So that state take had when an impact utilization was on the you HBR. COVID into have And you to I I guess backs, perspective, the is, have those really the account, at slightly look take way lower lower overall, account say the would I quarter. all to investment would the these driven below think historical by, about items it all take you into pandemic, income,

what that hopefully gets you you need. So

Ralph Giacobbe

HIX Okay, noted MA enough. then investments quarter and you're around quick a just all right. Fair in And fourth the sort follow [ph]. making up, you of

growth recently both, sense us thinking essentially you I in how Just the both you're in file know those for can I a just XXXX. enrollment just both was Thanks. yesterday? sort if exchange, out give for think maybe of about of landscape segments

Michael Neidorff

with a speculate, footprint earlier results. stages the WellCare the point Well, we're and to a time. we've as few this we forward capabilities going in And points of that to we on this I'm looking comfortable the based I And have a it's to think said, in at we've highlighted. enrollment. I'm point expanded it's area, not have of geographic But

Ralph Giacobbe

Okay.

Operator

ahead. is question A.J. from from next Suisse. Our Rice Credit Go

A.J. Rice

Not Justin I started the first place, seer as a the and – re-determinations. you the questions year to But XXX, everybody. XX% for is end open the at WellCare for add questions. slide, of $X.XX two what then you sharing, have risk the I the up I guess midpoint about Hi, rates, you've then XXX sort accretion saying for of range. XXX. dead quick you're growth with growth. dealt incremental [ph] to same all beat Relative XXXX and think But increase about to the I accretion, return or gets WellCare relates into was potential organic the to outlook, your to organic are highlighting of and add state XX% next And of

your around it's On year? of that an and a out your on revenue still arms way that state the over to in to and we about plus And you've pressure, course of way some that - basis, can incremental the there… figure $X next that's the and then around sharing, anticipating it annualized annualizing arm risk re-determinations, rates your headwind is the how might any guess I any put that's come billion there stuff seen crack any year thoughts

Michael Neidorff

we'll the Day recognizing things more one we And said. us, do that everything things get is me will of FMAP, some policies Investor December to a there's undefined those and Let influences re-determination what hope affects that they hopefully, behind variable, any still to continuing that understand some have it actually that stimulus you've better just And out that view on are. there. that's freezes come

effect So are factors lot of things. everything what other there saying, you're but you I said, rates, can re-determination, understand affects affect a that

of but a yourselves, we view clearer have give try XX. ahead get you December we come to also we'll said that So don't enough you

A.J. Rice

Okay.

enrollment. my in On you're to the what – other question seeing relates

peak So you think were second peak you at November. you that like I in It get you call, thought enrollment. that that to guys Is you see going about with this confirm you're you lives peak in want quarter where track. just on see in you'd And the incremental incremental And sounds I think still a see said also November a at would versus you'll to X.X. consistent be is in QX. the and had you'd that ultimate what X.X dip dip think you exchange thought to the then there's the point? - there's and million

Jeff Schwaneke

our And the Yes. We're with consistent yes, attrition still expectations. Yes, exchange X.X it is. by November. saying is

A.J. Rice

Okay, a lot. thanks

Operator

next is from Matthew Our Capital question BMO Markets. Borsch from Go ahead.

Matthew Borsch

this could year? the if the normalized was you going do were thinking you see with next Obviously, of you how year? environment? the maybe And what this first the you're Yes, comment on half think exchanges in of your disrupted? year for of back terms in You what anything, margins about half for - competitive

Michael Neidorff

Yes.

many first, do So really and five said the that the like I've to the really over very I you, It small space. think the times. are last competitive largest others the we work you goods. from [indiscernible] life When the environments, it, all I've environments, more helps you're packaged grow that to leader grows. it And well. very my that seen to environment, get competitors, all tends much competitive grow And business consumer and grow in but

we're stages, competitively that to and normalized well the we planning comfortable positioned we're see work. in So margin. We're

Jeff Schwaneke

we're Yes, to I XXXX far our have obviously, obviously, obviously, we planning ‘XX. to we're to what going it's next be that And in going and cycle to process annual year. looking of COVID, because as with into into it's, still the early be utilization still, expect hard compare, year, next think as

we early part And know we're for as we're of still land, in that's again, of directionally stages are mentioned things you earlier, you just to details trying why full December. then where have in the give Michael think So to the today, we'll you going and enrollment.

you for more get on we have once December, in think that, I comments. which data so better we'll we'll have And

Matthew Borsch

does you sure in gives outlook that anything… one the enrollment, November? Medicaid for when ask - what next Why why month, that If are on I year, peak just talk enrollment could a so or that's confidence peak you about more the this in for November, the you

Jeff Schwaneke

Yes, helps. certainly enhanced the FMAP extension I mean, the of

eligibility So the driven by suspension bulk the for of re-determinations been the is it. it's really of what's happened

see, I I we'll we're in And the X.X November. just mean, holding comfortable think so

have but higher? expectation. to I the it. extend to It's certainly And think see we'll go could they stimulus, our get we'll there. That's if possible it continue

Michael Neidorff

the X.X. are tracking we you, numbers gave on we And the

Jeff Schwaneke

right. That's

Matthew Borsch

Okay, thank you.

Operator

Go from question Sarah from is ahead. Piper Sandler. next James Our

Sarah James

Thank you.

Is year-to-date last So And I've almost been in HIX. looking was year, lower you back of at go the this years, effect if it compressed churn flat. off was time fall I couple X%. it same year? had And HIX Last having it guys this margins. it year about the X%, it's a

Jeff Schwaneke

to all, extend pandemic. actions I grace longer the took keeping we periods, first year think of the to a order intentional as of I result was think that this due in Yes, members

then in really year-to-year with versus pandemic, And from We're unique And this judge, to profitability compare again, that attrition hard thing just a comment would any other environment. so I you COVID of I other year really is, perspective. an on year. it's the the extension think can't

Sarah James

Okay. exchanges, overhead And thinking about structure operational then and the leverage the there.

You guys that needle XXX that you the How more think the and leverage? states impacting do overhead about in operate getting in. dense into you're going just you for existing announced Is density counties pretty states guys? that moving you

Jeff Schwaneke

one, I I Yes, on think leverage. I business that - scaled. we're always number I think is overhead mean, focused And mean, we're

to continue to And so find the efficiencies try to we platform. exchange ways order get in and

there the I the to we heading on that's think more that business. get can focused what we're work And of into of XXXX. do efficiencies there's still scale that

Michael Neidorff

the start at think not benefits every it's in we the to I if fair to scale, our one about there. market budget said time our and of that meeting, talking But you growth, on, I just look it. say it with we're businesses, realized every of

Sarah James

you. Thank

Operator

Our Go next from Josh ahead. Research. Nephron is question from Raskin

Josh Raskin

morning. Good Thanks.

Michael Neidorff

Good morning.

Josh Raskin

back, like know bit the growth commented part long has like future major may a a in as little you've a company on Medicare been past. larger Medicaid forward. time, a a growth it Morning, And seems obviously of for Michael. rest that the that factor more for feels on going it Taking step the I

market? about the can ratings what So seeing from positioning and talk your your and improve do what you can other in star you competitive you're to competitors

Michael Neidorff

getting basis Josh, within longer very over expect for we a measured will we it's a that star aggressive a one, it, points were we program, the period time. of increase Yes, have couple rating,

going the a there improving understand But it for clearly excuse it is responsible get for achieving not there. that to So no people takes time it forward. little

that and it longer So about ladder is a that term. the for growth I pressure I've past a the continued emphasis am is in talked on that. us - Medicare

give position I grow, in a which Medicare. record a mass on lives. of we We're to moving re-contracting was combined providers, translating you think us million had total, business. to think at X from good which WellCare with growth basis. to proportionately number a lot four in for our That's We're of beneficial. a And we're critical well doing

open basically. started in we're it's So the enrollment just -

for. we’ve achieve to that finally comment it. goals on a optimistic some that of for, little So will it looking it's But been I am the early looking been cautiously I've

Josh Raskin

perfect. Okay,

Michael Neidorff

I might And add, growth. might profitable add also I

Josh Raskin

of of optimistic growth? comment Got in was some realize you. And terms XXXX that cautiously a around starting to

Michael Neidorff

Yes.

Josh Raskin

medical are then just Got trends you. headwinds, from to do pre tailwind indicate environment? But away for sort specifically, the a utilization trend And about continued think of assuming Do second the consensus. on what and levels question, you're recommending actions I'll normal as in maybe below XXXX? states that back thinking you you XXXX. more And that conversation think were stay state's rate pandemic more

Michael Neidorff

pretty they while gone obviously, Well, now to I really But and with know fallen what that assuming we procedures pandemic pandemics off, think have have seen that it's some costs the either hard that discussion. don't have right doing, have are is up. elective I

not an reasons, one has for to tends to bounce has area in room. is and out - emergency back of bounce it one tends interest fallen the that So quick that obvious the off been The other. to transparency,

Okay.

talking But this mean, I aspects and out right when I biggest fall staying the and of And are this time they issue to it's to going reaching winter. it's new far that gone. all now has purpose in times that through So the dropped pandemic But about as be talk single when is could off. not that's the going some high rebuild call. there the and over are is, States little will is off

Josh Raskin

it. Thank Got you.

Operator

Our question is from ahead. Go next from Rhyee Cowen. Charles

Charles Rhyee

a question slightly I different Michael, maybe taking here. ask for question. Thanks can the

about is of, As means the talk to manufacturers? state on kind ensuring pharma Can members the really of terms process sense this access in for get potential sort Centene Maybe would logistics with works? or how a you approvals. function and how of about a it you that vaccine of that us give we making decisions for think about think your what logistics

Michael Neidorff

I you one, computer have some some Phase XXXX. takes more The is saying, of, helps think do hearing look there's forward X I X is very term My And they'll late pharmaceutical the background. what modeling side of the in a that amount couple I we're just effects. X, think that former Phase a likely And long you That [ph] accelerate. are ‘XX, time. scientists can first of and but biologic. half given miles

Okay.

Now, I have had some discussions Washington. at very in senior political levels

and And proven. to even that to investments some build are before talking give the XXX have you it's doses, them scientists the money will said, we million of made

Okay.

prove that it have does whenever So vaccine. we

that available, vaccine late next in. have really QX, the people I'm of becomes and believe when Now, have that I confidence that anticipating year, we'll QX maybe something

parents people Our ensure doubts still that throwing those. have some to good be that the others were parenthetically PSAs are here. We normal vaccines, that [indiscernible] were about some to for And would not and saying doing starting the giving chart.

of think risk, orderly That's ensure the are were in have to of doing of thing. think there. - work risk, most, need I the But to the people some And at people of type healthcare we're very hard working vaccine we're and it. be hard to that people that get pushing when we'll the lot individuals treating environment, other transition So it. we have because that to is, what ensure at they a population higher the I our will or nature it, early, things it there'll it, the an people and there's so it happen they going need

to and in work to we've gives help? on them. thought there slots to So you that get clear a to now working the to And Does in we're so others, is a pharmaceuticals. But a us done. opportunity a huge scientists long how I want with I that it's be talk the And mean, progress. winded. a about with enter a scientists, this. plan, to lot sense, manufacturers of purchaser of it don't how kind an give I mean

Charles Rhyee

it And follow of, kind I in think timelines does. that discussed. could if an pathway issue, Yes, terms just about that just we the you sort of of

we about suggests kind think going As of also that conservatism going about assume of because as fair some as you're build ‘XX to COVID well, we of pace the of it next when is to is ‘XX. think your we year itself, The as think kind thoughts in the factors. Is to that right? on we it COVID about

Michael Neidorff

think I is vaccine of I the I COVID. There pace issues. two mean, pace of the the there's and is think Yes,

announced we're will very thought of our treat aggressively vaccine. I the I if were come end just is working mean, can treatments, to employees back of epidemiologists, to be as I next with developing be to you I to worked Now, what therapeutics on We've which of doing April the as far sense a the break, expect be. - would it, not want before while our transparent the COVID, year. I give I spring that the

get at not it's till do effectively when to it kinds want I happen all back said June. also very regularly may have working and we're on And Okay. possible productivity people of I the get home, work. reports I've to

temperature monitoring, know, spent have and we Plexiglas putting of a So offices, you lot money the the in people the as walked in.

emulate. It's - a So new. the of pandemic basis back - still starting how release people ready development and the others on to But planned we're bring to are people unfolds. the very

X. sound and markets lives. off, our thousand mentality, And hundred [ph] Kong that our we that and the sound way. difference. match people lost during always one Hong will don't was X.X Japan I epidemiologist make XXX I I so - with you back they there's said, put Hong goes Japan time the and lost has first Asian look will that This people, want a had - XXs been a So XXs to in, and know if at the in political. and was million the when to we XXX we Masks epidemic Kong million it cold

a Let's math say understated they XX, XXX%, difference. the makes so they lost it by

and go here will get we of sustainably, all - can get mentality kinds lives. if So XXX,XXX that people if we save massively

lot think do to going. has where a that I with So

Charles Rhyee

you. Thank Certainly with you. agree

Michael Neidorff

hit a That mean for tell, hotkey button you've hot can't case you a you in it. hit just

Operator

The Goldwasser next question Stanley. ahead. is from Morgan Go Ricky from

Ricky Goldwasser

now? confident Yes. the do in Court Michael, outcomes about the you're ACA you think Supreme potential about morning. Hi, good ruling. the past, How very

Michael Neidorff

relatively still I'm think Well, confident. I

I is two things. there think

it's there is a everything, If that factor cases to - you be eliminate the acts. has they're congressional Court, one Severability factor. one, that's it used look the cabinet, the and now. others. other and thought such one now Congress a as it I even one But Supreme And piece said there's more right one that at I to in [indiscernible] I weeks, it, around considering is to severability agreed written some it really normal. be still that and become could six practice four. go human resource one, at were suspected, could seven just be it's still point, maybe But five, would

have the on Now, happens they in I whole that if make to And they the you makes on $X. case what that want election, to means, participating mute. just remind depending case not put it want is to the line also says penalty the for one

comfortable it. very not with still I'm So

the street I think, with people the during really they push a I shove to these believe no height comes don't pandemic on want when put to all of insurance.

Ricky Goldwasser

QX. a implies sounded it COVID just $X than It then I in Thank for That's you on And QX, about $X.X costs. that. like the think high cost. up follow meaningfully direct COVID billion billion

that in talk what business. seems about you've drove impact of hospitalization, you therapies acuity different your so about shorter before. stays on much just that versus terms of than because we're the hospital and increase book lower or it can seen and hearing about So But a acuity

terms and maybe costs these Thank you. increased about QX, we're in what of how seeing color given some into cases? So you on think that in

Michael Neidorff

can Maybe you you want have… to start,

Jeff Schwaneke

think thing is that's the about number, one, paid the Yes, I talk dollars. first to number

pay obviously, the delay we provider. have between the, inpatient when inception had of and to dollars, stay pay the have dollars happens, to And a, you the XX when to so we there's because lot pandemic, of paid XX at the a actually the day remember, the wouldn't usually

of an I think, in acceleration I think really perspective. so you've seen, And timing that effect is It's just, I you're dollars. a that's why the guess, stating what from

from we've seen expense stated, that So we expense, below COVID we've and certainly reported, historical what slightly quarters Day, utilization, higher is when an talked that you lower what about in traditional seen. has - two, the the perspective And just have we've our and utilization, aggregate average. Investor those what Michael that's but in is

Operator

call Stephen question next our Tanal SVB next from Leerink. Our from Go ahead. is -

Stephen Tanal

or Thanks I prepared rates in a clarify $XXX I just as you the risk than you that's rate programs want your impact headwind the remarks for million negative. embedded ‘XX. question, on showed XXXX initial guys guys. said state expected slide, But, was think to the you've that outlook Jeff, less in

that's Just wanted different of assumed $XXX the what's item? than to see how made in the clarify could if comment you outlook and sort the on million you

Jeff Schwaneke

revenue. are obviously, Yes, think, those mean, I reductions of I

I including as would $XXX had, next is look But again, in Is that's million be factors of obviously it point, And there's was you than the think right? year. our that it had utilization we head into said that medical you at, if expense, changes, was correct. year, think expectations multitude I significantly lower revenue on our April here lower today rate a I year. were XXXX. you're still setting we've What in negatives May. something this this expectation overall state less And in

initial to So there March. our gave in out back items guidance lot of factors to that offsetting we are all get back back effectively these a other

Stephen Tanal

Got it.

utilization, in that have normal. Then helpful. the produced guys That’s and Okay. above so chart certain a early run implied year XQ you

sort you of sort in expect actually chart. ‘XX? levels into QX QX, wallets I you of a and the I'm thinking think in still how and like QX about normal of deferred happened it's deplete in what occurred. guys excess that's care daily you're It But do here how that doesn't sound wondering frame

Jeff Schwaneke

think just And below ago net expect mention cost cost, COVID QX what a the bit what remarks, below, COVID utilization, prepared obviously, slightly. to QX versus lower in not is little in that would utilization. we've a utilization seen higher that much, increase traditional the bit indicated, what little on I Yes, a I bit little is my we is historical

on continues again, the But to and basis, traditional continue different. total back that's total, So The we right. a The fourth mix in as is expect normal in is to towards quarter. lower, utilization back trending levels historical what mix trend to higher COVID.

Stephen Tanal

follow you in guess of just you from and November, playing if line enrollment whole I could just and by I how last I And sneak Okay. growth peak peak idea out one why. the that business asked enrollment maybe of up, see

Medicaid… So

Jeff Schwaneke

mean, Medicare open Yes. obviously, enrollment an an, for I marketplace. both and there's

changes we're you any, at So given look X, that. that early on any commentary why we in things And that January cycle. obviously as haven't amount. That's

that we'll of to to we think second Medicaid And with have with long into But is next information Day. more stimulus extension you for the year. it FMAP Investor the see we're to happens gets potential as enhancement as far head As or, how we going extended, ultimately, I that the have said what that's helps. a concerned, why December

Michael Neidorff

the it's in less the reached it's suddenly. than have things we we new With That's kind going some more the a of for things it get, we've on we more why more heights years, another to to have seen this In And pandemic that not background. granular think very be. gross [indiscernible] March, basis. try XXX to the accurate,

Operator

Our next ahead. question is from JPMorgan. Taylor from Gary Go

Gary Taylor

is higher fourth expectation deck from to – the is do I revisit the wanted your be would the earnings opportunity wanted year? now just didn't I quarter summer. to MLR. morning. fourth estimate take year MLR yet to for slide But good on up with up things. your your I the I a guidance, pull think quarter Hey, implied couple over

Jeff Schwaneke

have we've right. had guess I we to today, the I just we provided MLR be you a we reinvest quarter. we and $X.XXbenefit that $X.XX, given to fourth thought estimate, in quarter, this one, the going before fourth don't what of We would were from about is, Yes, kind then from at number where think we're going quarter talked what look if the I

would the obviously direct reduction fourth previous that to be quarter number. a So

Gary Taylor

was and they the deferred can… about sort COVID in you your on recovering, thinking I just that fourth one costs had that I showed care deck of line intersected chart But Yes, in expectation thought your I quarter.

Michael Neidorff

now And is than and We – talked many severe I bit a getting Gary peaks during about the course earlier I have thought. and more originally people this this what say of the various peaks year. little how we

Gary Taylor

the look back Yes. question, of the, state sharing, just the the almost we back help my bit. the little guess, if at in numbers, was look those spring, their going spring. performance state's improve versus rates me seen the risk it state in rates, from state at - state to where other some I budgets, par When versus My we've and with a peoples latest dramatically we budget thinking to

getting So that to be better. seems

Of worse course, perhaps the economy it like next could getting get year. But seems that's better.

basis. You mentioned decent a your of states, rate on your two combined increases largest

to seems starting COVID like and relatively higher diminishing. sharing would sharing stable. be would seem to the be risk that on of costs the in deferred risk term And normalize liability with near the sort So moving care

the in fiscal during July is is maybe just I there guess the is for of happen rate any risks for question back side, these plausible on might So or you're leaving rate of get more state the some half that state room what updates reassessed ’XX? year their

Michael Neidorff

I new think things They money. we’re looking at also through significant products, But save totality. don't talking they it state about we'll run expanded, in SSI. them have to don't that

And time, more counting mean, on I experienced we different clear. having visibility more so should XX. more So that's that there's just December factors I'm come a and many the little because the

right takes and be we’re It collect to on various happen going I states, at a so same the dark, drop won't the working benefit think ‘XX it's the XX really now, time to of we're the speculate the markets to ALP half in versus but having try in, and what's back So all. it in of that on.

XX, visibility. us more we’ll So a give December have

Gary Taylor

more That's just I fair. maybe to a mark, to and question bit. maybe And guys in understand mind minus a minus. - thought you have that line I try I just that plus my little wanted was of a

Michael Neidorff

and and politics trying it. posted some I'm it to the the timing. I it of the understand COVID when to But –

Gary Taylor

Right. Understood. you. Thank

Michael Neidorff

Thank you.

Operator

next question from ahead. Scott Go Stephens. from Our is Fidel

Scott Fidel

Hi, thanks. Good morning.

pieces First impacts. the and different to relates enrollment as on question COVID just the on

that you much re-determinations. the about So like have seemed yet. to play has the the that And impact the of of majority one and unemployment growth has rising piece really suspension the others from the out the hasn't been puzzle of the it been from just talked really, just seems vast

just the about in give from in So how far that just sort us can puzzle, crisis, been of how thoughts guys interested, some you're the of into thinking XXXX? Obviously, much so unemployment. on, so that's during and of XQ more rising Medicaid, enrollment piece - seen if down coming you the recently, trending you've that sort

Michael Neidorff

continue, start, it's there's if originally, seen I’ll where benefits, been where kept And some people Well, furlough, they're bouncing layoffs. marketplace. things have that, Medicaid, you they on they're the not moving the the and going we've wherewithal, And Because to they're had around. they getting benefits. then more into then

So it's just such swinging a barrel.

I'm it's out sort of so be not too we that the trying And in factors, granular. and to to out. day trying it's, look you to hard at to trying many just be things it evasive, day give I'm but

Scott Fidel

to the question second of just No, back it, a question and well, rate asking why the as then just too. That's I sort I was get get definitely. And discussion.

have few you and about have you've of states you the talked So in Texas corridor how a increases, then about a puzzle, you risk play. given Florida talked the us pieces number rate do of that

I the whether where the are that into third headlines interested, Because, number these us that we if of implemented have in cuts piece, you states of your want that discussed? Or just corridor to give does reflect seen to risk dynamics cuts understand actually have actual, base you've been those the some that. of more for visibility FY as ‘XX, implemented. cuts And read Just just could just haven't rates? states terms a sort of

Jeff Schwaneke

process we've where what think is done. before the that you those. the what all cetera, say aggregated et I and that reductions guess sharing rate on data of I rate would cetera, go board, turn et of kind gather X.X% the I continues I mentioned like cetera, is mechanisms, have that encounter setting that traditional risk Yes, et I states additional cetera that process factor is is normal. still some say et to some -- these or would

contained mentioned general, in in million, year. in $XXX accumulated we this that, had for the that we've that guidance so I And that's and our all

Scott Fidel

Got All Okay. right. it.

that the $X.X that within So, are cuts rate headline... that, inclusive billion

Operator

Wilkes Lance from question from Our next ahead. Go is Bernstein.

Lance Wilkes

in Given Yes. providers, rate of and just bailout it corridors? talk if on wanted opportunity if couple like to a of money, kind question the the contracting there. be you the of ask of contracting risk the financial talk a side a pressures should dabbling care or situation, items be status with the to instances near are seems a there focused could position I What's delivery here in as where [indiscernible] in One see to term aspect your then how value secondarily, back looking perhaps a you're, into provider term. would lot if on long they long stronger term initiatives, a well getting could strategy? a for more XQ? of based as XQ, it contracting And make little you care that's

Michael Neidorff

strong. in a a have And they're if - works. that a cash way, - there's rate, capitation the flow month how through, some I know on day providers it should that one value think we so you based, like play three couple

understand some And forward. become it there's relations and with think them now. others should be all means having we also we will and it. introduce introducing look going they But know some, provider successful, I think want as we we contracting. success to and that successful, what through to trepidation good the I trying It work value it, based are as work

So we're way the real we have in support very can responsible can that time with. we trying a we it to reports, with do now reports it support

It delivery, some care a getting deal into or We starting not growing, providers has in to charter get to limited of appropriate it, see do our model to [ph] put that market see it we help So we're a we the the capability, OB-GYN relative is involved there. great absence that in and our and a has the value is access. something. to to there a clinic capability have population

to case of So there out basis, providers. it's are a not by lot we but case a trying buy grossly

Lance Wilkes

the finding contracting financial situation Or this on environment. Are to, rate in the a the getting provider back with rates so providers, you that at COVID state on kind point? is of And you're this if providers, of just able you're level? push at cuts tenuous

Michael Neidorff

they it we've copays we've what Well, is be able they, not because to their may done collect members. from things

So to those things what the we're - we things doing support same. But all them. preview into calculations, give we what the

– want And And that we're continue support support help able successful. do become them, and results them so we demonstrating we providers. our is program, more to down to

that. that systems have We do

seconds. test can Now now we minutes, XX can have a system do pre it now that three optimization that was in we

intelligence artificial do for is the things providers can focus, of things ahead the that's and have going can and be we they digitalization how So do they what moving streamlining it. the real fast to

to way one than more there's them. help So

Lance Wilkes

you. Got Thanks.

Michael Neidorff

you. Thank

Operator

concludes question-and-answer like session. I to the for conference would This to back closing remarks. Neidorff turn now the Michael over

Michael Neidorff

right we We the thank you continue to one wherewithal to say We do as see - meet It's in recognize way. you. reasonable an encourage I work to everybody we mask. and we stay should and to want I we’ll it has expectations. have And the your well do environment think the safe, enterprise to can that wear

So Take stay well. care.

Operator

you Thank presentation. concluded. today's now has attending for conference The

You may disconnect. now

Centene (CNC) 27 Oct 202020 Q3 Earnings call transcript