CNC - Earnings call transcript Q3 2021

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Operator

Good day and welcome to the Centene Corporation Third Quarter 2021 Earnings Conference Call. [Operator Instructions] Please note today’s event is being recorded. I would now like to turn the conference over to Jen Gilligan, Senior Vice President, Finance and Investor Relations. Please go ahead, ma’am.

Jen Gilligan

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

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

December held your mark on be please calendars Additionally, XX. to XXXX for upcoming meeting our guidance

to virtually. and York to that, Michael like invite our ask will I We side participate over Michael? participate CEO, the in analysts sell With Chairman call Neidorff. turn and person to others to in New would

Michael Neidorff

for today. Good earnings third Jennifer. quarter Centene’s morning joining Thank and thank you you, call

him pleased but notice Layton our could and me have not avoided, to Brent we you joining today. be future expect to today, streamline am Sarah join has and facts presentation calls. us will that to a on version format commentary. and London Asher can evolving I you Drew As with essential a are conflict

adjusted fact an that noise. quarter, and HBR pleased First, a earnings quarter, amounts billion, were utilization, normal costs, the the minimum towards still covering Drew were Overall, on we additional matrix we to of will provide the the August. $X.XX. context. of results the reflect generated $XX.X revenue of return XX.X% straightforward per have and numbers with share COVID seemed with while the peaked in which of In reasonable

creation would a the margin appointing like the to of our and supporting members. Importantly, do personal interest. to to provides value to retired Directors of Chief Layton X a We refreshing series plan our veteran Board as continue announced of as Operating business of committed for President also Officer. Directors, company’s David acknowledge to we XX-year replace Board of work the to XX an board Further size performance plan not strong Vice and quarter, and streamlining Brent to Steward, organizational we goals. we of I position changes, a that the on during pursue as his Chairman progress strategic our foundation remain London including our and our Sarah

details. the growth continued the portfolio position our continue in to in We further Medicare, current we in increase the stay is Sarah overall, membership to Medicaid, well. marketplace. Turning strong a for provide will landscape, and delivered performing course

until redetermination, of time. working the on at been We so with X months closely opportunity for are which states January additional extended has with far a extensions the timing

doing states resume, the will time. I that you so be not redeterminations all would remind like As at same to

enroll product. addition, the qualify we in marketplace to look Medicaid In longer to offering members for forward who no opportunity our

leads provider will credits to relationships, opportunity higher care and line support, the care, continuity these value the we that premium costs preserve of is long-term much for advanced more effective. in cost tax quality expect and We keep which which members in

the several the Looking and marketplace are XXXX, continue additional in launches COVID to include overall. These as evaluate. to monitor improvement opportunity the landscape there as RFP we of well Medicare, pipeline, in the pace factors for ahead ongoing growth

full impact these Investor on factors at We December. will and detail as provide and headwinds potential their in Day tailwinds our

we priorities, an business, addition, are In consideration framework share disciplined repurchases. management in achieving into grade committed rating our a takes to and debt investment investing allocation and that our capital including

stopping COVID a been I yet safely a like protecting close, getting this condition access to closer, those mandating as still vaccine leader on and vaccine who and of inoculations, the critical of young would in the children receive particularly pending. employment. of I highlight vaccinations Before whom importance for issue immunologically is but compromised mandates cannot transmission has the Centene

for and the to one closing, for Fame past and NASCAR. I indicating place. vaccines members Pro is executing national remind this in to of our In momentum quarter the value been assessing also have across and remain are with to vaccines in creative support platform you results playbook continue development. sustained the the the safest like of the on focused XX we We across under creation years the campaigns our We third and likely as in participation, and development scientists outreach that pleased are we enterprise. has Football vaccine such also Hall would

we at forward progress we look to I continue intend initiatives Investor many seeing December through provide our updates to Day. and of our always, as As transparent to you

Sarah. thank over Thank and all times. Finally, service would their the these continued for Centene. throughout employees to interest unwavering unprecedented our I for commitment your in And you call like to I’d turn

Sarah London

I early around the you, creation value our our touching Good before line we progress provide performance of plan. Thank to everyone. on morning, product am highlights are making Michael. going

subsidy, in build well. our continued business our million, business our good we by redeterminations experiencing During aided are Carolina. the go-live end of quarter, and third continued the our our focus affordability and as position our Medicaid, more maintain and members. and XX% progress initiatives form In we and $XX.X North growth Marketplace income are to low membership to receiving to the of clinical we our membership increased quarter. with fourth X.X pleased healthcare head we Marketplace, of market million was quarter, providing on commitment with our At into of the outcomes. to than perform of access to Membership the and continues of our suspension some In leading solid the

consumers. Marketplace our Looking offerings XXXX ahead, our of the evolving needs and reflect diverse Ambetter

access a group and to products are optimize We introducing affordability. flexibility, new of designed

our we entering new In to addition, plan products. with Marketplace map X coverage states by grow

Marketplace for to support with both Medicaid the Advantage, compelling As continue coverage we options we continue continuity. our Centene around plans redeterminations, In believe enhanced to Medicaid that position and for company. well members and growth monitor of the to our return we a opportunity footprints policies Medicare see within

are We adults Today, than Centene Medicare-eligible Advantage and counties, serves Medicare Centene’s in including members million representing XXX offer a and increase beneficiaries. Nebraska XXXX, XX% to more country, Massachusetts, XX footprint across the is which XX reach eligible to in of new plans states. expects expanding states, X.X more company Oklahoma. Beginning across X XX% million than the new

drive embarked and leverage we plan, Centene’s value June, size scale margin SG&A Now, deployment. initiatives and outlined expansion have strategic management we turning past to medical our to through efficiencies, on capital this as strategy creation and our

track very generating has on that from the our given the on an achieve believe and this goal. I business forward our focused have early, are to and enterprise-wide functions. to Brent, seeing we leading effort growth structure the in and we we are across place Drew and now outset And this organizational is margin are We confidence me still drive sustained commitment it expansion. right although

opportunities have be It’s company, we cost-cutting. for we more This front, we believe On long-term the about where across isn’t SG&A identified company the the efficient. about success. positioning can

within piloted This yielded technology now rolled enterprise-wide. in by for centers our be trial cycle call times we example, use Centene out new will technology significant and reductions For employees.

mentioned have value as a Another pharmacy. opportunity creation is target we

June, are providing overall alluded to we work We this look platforms rationalizing view taking as to PBM in a toward single QX in now program nonessential. forward in we began more and steps detail this consolidating around those down As December. and platform we to

to very and And our In levers continue taken the value of are to few are scale focus a as as just plan. the are creation target an are the early and X.X%. in achieve margin non-core we sale on part size portfolio of certain potential our the addition, on many net we progressing pulling leverage as at optimization of part these income to increased stages. has least assets which adjusted our we Again, we benefit, our of review of process,

Let our particularly other and that anticipate these greater goal. impact and XXXX you progress a as through XXXX, me in remind we pushing us toward we seeing initiatives,

quick Drew, let to Before on handing transaction. the me call the update Magellan a provide over

of regulatory deal final California close expect one XXXX. to awaiting the We by are still continue to in end and the approval

continue regulators work the to the move to We with to transaction completion.

over the Drew to to turn on more updated let Now, me provide and third performance our quarter outlook. our call details

Drew Asher

diluted third Revenue the billion to ago. of results, to quarter total year Thank third revenue and million, morning, quarter This you, increased to we compared share compared XXXX membership third a including per up of XXXX increase $XX.X $X.XX. X% the XX% billion $X.X an and quarter of earnings of Sarah. in XX.X XXXX grew reported of adjusted compared by

the insights webcast XX.X%, full on Our a QX At HBR track we months mid-September, with of into was first quarter. provided our right X the guidance. consolidated year in presentation

in dropped Delta costs COVID continues drop in October. a As in our a September with in demand followed late saw COVID spike in throughout July, due we and in to our costs variant. August, Consistent Marketplace COVID the reminder, August pent-up sharp data, national subsidence of in by cost peaked business, the

had the quickly. XXXX, as variant were given of the it since January able peak, in and manage the are through shrinking and this in measured peaked XXXX, range to HBR performance our fell diversified our to authorizations just we Delta the steady Accordingly, rather are three midpoint While year. higher through width our we of compared With quarters consolidated the enterprise, Medicaid we range a maintaining for Medicare.

compensation SG&A the QX the positive variable trajectory given quarter, X.X% of ratio was expense the in compared Our to higher third business. short-term adjusted with incentive costs

has on on an enterprise England the While XXXX, on to has execute next rate SG&A a item to approximate on as an the standpoint quarter respect fee getting $X.X partially years SG&A is a end, we which This borrowed quarter billion. at in $X.X we there ASC-like value strong out With the fund $X.X approximately unregulated are was $X.X to transaction. to XXs the in basis the plan. billion. includes in our on more operations Magellan point Continuing growth XX a XXXX QX some billion we third we had at consolidated One few over quarter, the by our service revenue cash, mathematical hospital going of billion from forward. creation provided come highlights leverage the of cash for circle flow and mix in point impact lot SG&A well-positioned rate

billion expect billion. to fourth unregulated at need to quarter. in $X.X We of close quarter approximately cash the end was $XX.X Debt Magellan

non-recourse inclusive our Our excluding Magellan debt-to-cap debt. and ratio XX.X%, of was financing

$XX.X Our payments, medical was represents compared changes. driven claims schedule to claims in increase X-day totaled in state days of state-directed XX and quarter This by payable liability end billion claims at payments QX. fee and XX timing the

of EPS the remaining are will RxAdvance You million and operations. early in of we of our GAAP adjusted are a result the write-down items our acquisition simplifying Circle as one-time couple of our of reconciliation, in XXXX a our of gain $XXX items. a as these Both in a see July quarter non-cash $XXX pharmacy investment of in million XX% to

to Before Medicare get XXXX updated rating XXXX year announced scores. we to I revenue. the on want comment Star XXXX This guidance, will drive recently

with results expectation quality provisions XX% those due some benefited has subsequent investment providing year we expect fungible XXXX. by We of XXXX Rating followed X-star scores. With in-process pleased of upon essentially of calendar to the sunsetting the rating an our jump XXXX COVID. from over XXXX for and the of dollars scores are and our effect to a reviewing This program, in drop disaster year and year contracts certainly year continuation first X-star membership contract. provisions of rating

the XX.X% range year Circle expected our a billion including a $XXX of to updated pass-through ratio the payments increased It within basis XX.X% full have Circle with X.X% $XXX.X inclusion and the We This billion, range of incorporates of $X.XX the by XXXX of of to $XXX.X narrowed mixed XX HBR state-related than includes of adjusted EPS outlook, and X.X%, math as higher to SG&A an million. $X.XX. guidance outlook on we revenues driver being to expected just guidance, an discussed. points prior largest

we have we us we in creation more value volatility you around September, December While will EPS growth next next during look resulting providing and going This public Day. years. long-term creation manage a through comments of more over XXXX, regards drivers demand in enabled of COVID, as Marketplace improve the your to continue XXXX still forward open pressure. questions. modest on our the up line into our to to for our expect for interest, enterprise to execute finish with year. the to and quarter pent-up XXXX the few strength diversified and strength the expectations Thank go XXXX, to you only plan depth details the XX Investor We enterprise now operator, With value can consistent has adjusted

Operator

Please, ahead. comes Today’s Raskin from first at Research. go Nephron Instructions] [Operator Thank you. Josh question

Josh Raskin

morning, thanks. Hi, everyone. Good

Michael Neidorff

morning. Good

Josh Raskin

top how morning, talked billion, I’m Good about Investor number the we’re you I see think the of environment know point. And MA stale starting June sort in period think for sort line. XXXX exchanges next a Question enrollment top to to the as $XXX open about specifically, for at directionally just little of year? But I curious, of you specifically that both Michael. Day, next bit competitive a as this pretty year line on and and

Michael Neidorff

– our and think the strength Investor the others walk doing Days Marketplace. Medicaid have I will we’re today, you see we and this in we our product, full to as continued holding give results. Drew you own see bridge room But across Well, indicated and the in and in better we Medicare that

on balance, line growth line, bottom top and So obviously, the see we to modest from growth in the some that. coming

Josh Raskin

Got it.

of what if the about top similar about so and sort of line, we are talking of follow-up, in you that on as kind is bottom guys growth? mid-single-digit thought modest growth terms something a that Just line very

Michael Neidorff

be good a That’s to place Yes. now. right

Josh Raskin

Okay. Perfect. Thanks.

Operator

Thank you.

ahead. Borsch BMO Markets. Capital next of go Please, Our question today from comes Matt

Matt Borsch

was you come XX going if headwind isn’t of And Medicaid sort guidance I’m tailwinds could the there expect sort I particular there, is revisit Yes. redeterminations? at and not a headwinds just least the of the obviously, event. December you year? hoping for next maybe from directionally your focus the magnitude looking, maybe to until of

Michael Neidorff

of be going we see a that additional a Yes. I’ll it saw relationships headwind vary give as things their not start, December, will which closer, But physicians, we mitigating we In that some fact can with get on you individuals depending be tax we’ve the time, will case But network, move over that and developing. timing. things detail. And where will others to there the state able the it’s it hope see the be factor. X of are, by we but Sarah maintain all to the and how be precised their and and And credits with there, mitigated to continued the at the our said jump Marketplace we’re economy could state. in. to is able by supporting we sure months advanced a market timing. to so It we’re on not be

Matt Borsch

Okay.

Operator

our you. from Thank Okay. Credit appears go question Rice next will Please, A.J. today It at ahead. Suisse. come

A.J. Rice

commentary restructuring, non-core Hi, savings? XX the to I Or know what something management long-term a that now idea pharmacy before everybody. Is you’re renewal. still for you’ve ‘XX? up that two impact got review? will near think I on about happen of going probably on looking were on more of guys Is near-term have more about that but will – reviewing contracts restructuring. more do we PBM intermediate just Thanks. curious, talked And you realize explicit relevant as say that would non-core coming is sense over maybe benefit timing? Or is something a the be this opportunity not making well term? something today I for ‘XX doing you’re is a that based your sort this as today, announcement of to quarters and assets, you at have the to about that assets of talked the

Michael Neidorff

we tuned, it we’re stay in, – later. thing. we get can see and something to we’re in results Drew sure It’s well. you’ll it. how again, time. – we value maximize expected future, the in expect doing you and and with individuals others it’s it’s can sooner It’s and at start any the assets achieve doing as to from involved I starting how once not start, but than happen – but And and the but that non-core ongoing what we’re protect evaluation I’ll jump Sarah, the the we’re And what not not fast, an

– this sooner. – It could to not – Sarah, we’re in it’s that what’s you of add do happening should be ‘XX, you something? expect for but something look indications it’s not So want talking some ‘XX.

Sarah London

I of would said, process. think an I just of echo will the more there information the because discipline and part is on And that basis ongoing in this the the be we’re at looking short-term both actively overall. coming in as portfolio Michael

front, microcosm On a as before, I in we’ve as think, on long-term. XXXX short-term have rationalization more focused would of logical And the and creation an I we consolidation the This, say non-core great the we opportunity. on about is RFP focused as of example that’s talked launching well value said platforms. very we’re pharmacy of sort as

is And of study understand detail actually December, so to case go the in can through our moving in a all parts. in you this plan so

A.J. Rice

a Thanks lot. Great. Okay.

Operator

Kevin question Fischbeck Please, next America. ahead. at today go from our comes And of Bank

Kevin Fischbeck

like next but And bit and seeing the more for seeing you saying reflect Can I performing far a cost we you’ve utilization. a the exchange next yet? been exactly have pricing what Medicaid that like it perspective? little you’re normal hasn’t MLR and businesses feel your margins sounds Or about then that? been comment to caught reason believe well, what understand Medicare you If pressure. still you around year? Thanks. are from is everything? Should It there how Great. year Have structure would relatively expect so reflected been fully an businesses

Drew Asher

of Thanks, With X.X we Kevin. the This to marketplace year, sort quarter, to make of that is for hardest Drew. Delta Marketplace our certainly in next we mentioned, to towards it goal I which direction. demand was August X sort to pretax and long-term see. We respect expect move progress quickly. in but variant COVID, of spike as Actually, the the to retreated the pent-up pretty in saw July, terms subsidence price in it of took good in

there pressure still and tailwinds that quarter But forward and portfolio you’re Medicaid we of were as products Sarah the to in So some that of the Marketplace. as mentioned year the on of the some to the expansion into carried And was of expansion competition. strength And through a whole. right, Medicare next expect make XXXX. one in the Marketplace margin in address going the will Marketplace progress we look new

Kevin Fischbeck

Yes. was enrollment special adjustment lower and year of this next? I your because maybe and this there that guess the I the normal than that risk how into visibility quarter period. your of the exchanges that year on this feel visibility do you signaled in one about competitors guess

Drew Asher

place. Marketplace the subsidies, the plus, managed and renewal four of Yes, special cohort, the and were enhanced we period, enrollment when in then you’re SEP the AEP, pre-May right. tracked May SEP, the cohort the We in business, of the new APTCs cohorts sort the

into cost members, of limited adjustment the But acuity the having of the them months. opportunity. the those you’re to year both med right, next that new more XX then full them adjustment in risk can of less risk terms we it’s and a because partial year opportunity, have And expect a year we with just than so drivers. in And you track reflected calendar roll having for

Michael Neidorff

were is subject some also to There not COVID-related adjustment. risk costs that

that an So impact well. on has it as

year. a It So atypical in of a ways. it’s typical not lot really was

Kevin Fischbeck

Great, Okay. thanks.

Operator

Please, from ahead. next Justin at go And Research. our Lake comes Wolfe today question

Justin Lake

Thanks.

a you be MLR year? follow-up update end the noticed your Or I kind that kind payable. bit quick I on think you of about cost least the on trying over question, take – talked assuming a for the give accruals had the set mechanical was an Is range, there? pretty First, conservative relative like this that us at just Look Drew, then And on Drew, significantly little you’re fact how of of quarter you premiums. can view Can kind grew Thanks. – high reserves Kevin’s the there? breakeven might exchanges one to more – that? there you of that something medical in you taken at thing

Drew Asher

Yes.

last there the But a to And more sequentially. is get an a I sheet timing their of point, expansion are clearly, margin priced important increase X-day balance some as off you’re that and And invoices need was X-day we it mechanical. on our Marketplace, mechanical bit pass-through business. of mean, the things, there sequential payments that to of little right, reserve of running sort outlined that’s we increase other pharmacy is strength On good then factor for that this homes. sitting ultimate year. driving then is on

Michael is earlier choppy CMS portfolio, across is QX difficult and the guidance. pent-up our in various great this Marketplace with risk look, maintained As We’ve said, year. news impacts, HBR including good a businesses. the this and that portfolio the adjustment diversified the in But made a COVID we changes demand got year the a

were in we headwinds withstand expect flip able Marketplace into to tailwinds So into the to that business. in we XXXX XXXX those going

Operator

comes go next Giacobbe with today go with question ahead. sorry, Randy our Ralph from And you. – Please, Giacobbe Citi. Please, I’m Thank Citi.

Ralph Giacobbe

view about talked Thanks. both sort I want if state lives, recapture profitability Medicaid just around last sense timing about us HICCS and sort think to year, the give of of of those that? question. Again, of then little the terms how where you the guess? give redetermination, first? economics that, so we Can it, how you this And Thanks. And bit should PH. a can generally, guess, a of I then you margins exchange second, morning. understand of discretion to I between that Good around they are us in and you Justin’s a do piece just of you sense

Drew Asher

Yes.

obvious question, our you’re then On this there the and an right, respect that in towards to XXXX That’s progress And year, we’re to target. opportunity. is need we with margin Marketplace. make below

in of was in September July. summertime the thereafter, of sort you’re this got consistent footprint redetermination come state-by-state process be mentioned, redetermination that of for going that the we the as but have conference to the mentioned in webcast that XXXX. the price and CBO’s We’re to are of pegging attractive members it’s in of XXXX sure them. great Michael Marketplace of Marketplace. to products timing. expanded duration sort those sort But update for We have we That’s an in determination it’s with baseline need – into we And right, a to make business

Michael Neidorff

going to I to I of, something. they to state I do determine are just add will in when get try want one how a terms am to question, mean, going and not

it’s to a enough that that director, hat on. it’s is can know that so not science it an just different now, we do We be there individual where experience variables, besides and have hang new not could our judgment that that it’s just predictable a many it

Ralph Giacobbe

you. Okay, fair enough. Thank

Operator

Please, And next comes question our Fidel ahead. Stephens. from go you. Thank at Scott today

Scott Fidel

that? then pressures clarify adjustments to Josh’s about you contracting on just market? XXXX, want influencing current actually as any think revs just provider whether any businesses? I having how I now. of any EPS in actually Hi, say need the a can for just Yes. a good to staffing make – think to And bit that a And you that’s placeholder And on then the just that’s follow-up, you wonder question, your healthcare you for Michael, whether and that? did mid-single-digit talk morning. wanted to impact broader – is that if and you for I clarify wanted that on good

Michael Neidorff

others start part, that’s together we to for feeling take Yes, placeholder in Relative in. place pressures. yes, we’re staffing, a a can I’ll get to jump now December. until good

reasons, we’re use is some our all. are some that solutions AI other not for have making more we that us will And expansion. of term think also work, capabilities – for contributing We updating done and it’s we’re work and it the going we’re our competitive but we’re – thing to, have the and systems becoming to which I’m longer so of will benefit accelerating our margin efficient, disclose

and developing and so others activities others and some And of are to these nurses it’s the up case freeing and do using techniques team, and Sarah higher-value management.

we’re some facing same So the of issues.

Just we’re have the deal be to able and to fortunate scale to versatility it. size, with

Drew Asher

On it’s of annualization that for XXXX question, piece Magellan again, Circle. the probably best of the because bridge it, to once wait

of Medicaid wait bottom remind as well mention I in mean So of insignificant the again, make in which reversion on and once probably the In all said our the we of then and better of what to conferences line rather impact. past terms carve-outs in pharmacy a to couple of to as being states, tailwinds see the a you headwinds, pieces on And on of of MBR, the HBR are mentioned I not guys couple XXXX. revenue improvement to want broad of than estimate to a one want – margins. Marketplace I fairness,

assessment all of those for So into adjusted modest are factored our next EPS year. growth

Operator

Please next today our question And at comes you. Lance from Thank go Wilkes Bernstein. ahead.

Lance Wilkes

money I Yes. just value-based as improvement kind margin investment for for maybe something, businesses? of and like you, the plan. had sort Sarah, was of of and it CapEx the use for overall to the losing your be digital divestitures, strategic care. a of benefits expenditures, are strategic investment? question related of can the you rid I are And non-core investments benefits or the a in Thanks. component interested on really the What of implications and spending of was that priorities then And that would then magnitude for proceeds or getting lower-margin that

Sarah London

Lance. Yes. Great Thanks, question.

creation as piece value it of big So, has our in driving think is as Michael a touched efficiency on, plan, about we the already operations.

And on leveraging focused Intelligence, so towards and obviously, working automation. agility and Artificial data

We that’s is about fruit we and a of think there. there lot lot huge priority, have low-hanging talked a a

talent others. there right ourselves. that, and we So, pieces making are Obviously, of a we think right is piece have we Apixio have we that, but there are tools. the are developing And sure that of the that

positioning the this. real to of being So value And plan. I is on basis. they beneficial we be those with a some answer of cases, we part to core also to I around – the of areas, domains varies the a tools think then relative of value-based of the think in creation benefit all reinvest foundational to that broader or we enablement, different And important that as will to then the will greater in industry. that, the continue And that from we are assets have such think longer term piece vary will whether is we a think do savings move has get further sort to arrangements flywheel that in able that’s that to strategy think efficiencies provider a divestitures, case-by-case way

basis. that it as really a we decision-making. of get on So, case-by-case rationale our for a And those, broader would is to through be provide intention all

Michael Neidorff

in yesterday We a sitting now request.” member think will place a because I Think to done nurse chart this there technology. it before you talking about one a the typing and preauthorize the at to say, of Think approving AI Now there. are some about to human to it XX we not approved can example through extent. been we I it’s doctors on It systems in be and two-thirds average. things be But going second. The takes that. I same have that have I out. that go that to a on going goodness, AI. am satisfied in the using minutes is rolling cases are give decision have fact And AI one who we talking could we finish Probably was that. approved these no, “My are still in have were and will intervention if about

states rolled have out or six it We to states five now.

that’s But tested. well an it’s example. So,

used the that more take as that So to case we from environment. that issues. to example doing sudden, I reading and in – makes things an the a have to Thank managing, routine of charts nurse her all a creates overcoming are we just labor as the a monotonous ability the how move much real productive it you. from now and

Operator

you. Thank

Our go today ahead. Please at Goldwasser Ricky next comes Stanley. from question Morgan

Ricky Goldwasser

Good Hi. morning. Yes.

Michael Neidorff

Good morning.

Ricky Goldwasser

here. Sir, a of questions follow-up couple

First be also but mid-single is to one, XXXX you Drew, then just heard growth I clarification, you I heard say EPS going digits. say modest, for both

So, about I modest we make me, sure versus to wanted To are thinking just mid. it is low-single correctly. digit

into been Secondly, the an you But timeline think products for that? have you you what I are if just are then in give I saying And exciting market, you around question that you give us marketplace? are that? if work a that, I you past. platform, is I to new that. of the the the to things can some examples new clarify talking that assuming I some you Sarah, launch in PBM us about that CVS putting can new introducing with think also the in are details RFP would consolidation you on and going just And XXXX? that in heard the the want that am be new

Drew Asher

Hi Ricky, Drew. this is

me here EPS into everything with next The your growth year account we sitting today. adjusted know modest Let first takes start question.

sort And think maybe are on was to to think question I you referring That’s Investor earlier two. the goes I digit revenue. reference was June – mid-single revenue conflated mid-single organic our digits. Day, that’s the asked of to long-term a that back

opportunity, On the Sarah? PBM

Sarah London

Yes.

XXXX then award in in that I we existing would said, So are been we have short-term, have correct, our on XX/XX/XXXX. as are with focused you RFP launching external vendor. consolidating the And an

goal partners the are we benefit external sharp are core is greatest there so the And to economic that capability. external staying our and an leveraging make where partner our for we sure relative getting to

Drew Asher

for a in who of an me loves sometime because launch guy ‘XX doing going I to would the the services. opportunity for that’s Yes, we in PBM these our RFPs am the huge at and contract PBM. jump XX/XX/XX, for end ends for Let external XXXX – be

Michael Neidorff

the I On marketplace. effective the systems we and little takes broad our it But would say it have. it networks the hits tight am new capability be lift I products, going a of advantage until to on

will to without following joint competitive a the put it in us think I place bottom. the race

Ricky Goldwasser

you. Thank

Operator

go our And Wells from Baxter Stephen at Fargo. comes ahead. question today next Please

Stephen Baxter

the discussion to Hey. follow-up I XXXX. on exchange for Thanks. wanted

market you in whether is data than perhaps consistent, XXXX? available you others the a about are think what the could And as comments, in growth about reached seeing It stage? was lot so hoping across there like obviously, Thanks. you you become discuss that you much are with you of couple at this a for conclusion the think outlook seems of membership the So past days. marketplace. on has more focused margin, I your more

Drew Asher

Yes.

to little to You of too still our the but a Thanks number we we posture, well AEP are some think little. out And roll positioned we now. a call maintain tough are of provide whether in expansion But that eligible and bit terms and are just new have margin and a we advanced more thing is products an a than we margin to in we the will – is in in premium look, past to it’s drive shrink the the right excellent It’s important grow credits. growing the pricing exchanges. these tilted for towards tax period what to little point enhanced markets. or base of the we and out test the special proposition enrollment as population value

Michael Neidorff

remind we period did that a tax the that We fact. enrollment you I may doing advantage credits have. well very to the well, tended special advanced have minimize in And pricing

the that I we cautiously be optimistic say on And will results will achieved. that so, balance, with be will we to pleased be people – want I

Stephen Baxter

follow-up. provides with the cost related a partnership there? in a you And you first the the about strategy you. exchanges just difference announcement longer Teladoc. virtual Thanks. talk also plant on Any you the that a Thank wanted term give us traditional quick I to little can sense bit launched and And offerings? maybe just about ask that recent versus

Michael Neidorff

Pardon me? Go ahead.

Drew Asher

on you call. Counihan, the Kevin are

Michael Neidorff

Kevin there? is

Kevin Counihan

two virtual have products. care We

we have marketplace. in the First,

in access have management, as care, Virtual providers, common dollar Teladoc the our product XX/X employers. that are access to that virtual First have product cost four our things prevention, for and the via that also which in-network care is they are Ambetter in you referring needed. for I and And virtual to, zero think we piloting states. urgent one, screenings, We for second access piloting network The we the are care is

we price So, products. And we point each their excited introduction. are for – lower are of there is a these about

Operator

you. Thank

today Taylor Our from comes next at Gary question Cowen. Please go ahead.

Gary Taylor

good morning. Hi,

the out? about questions. about you state retro year-to-date kind that the from million. think sort have had Just think $XXX normalizing or we of thinking a of MLR adjustments Medicaid couple beginning year of potential do to the mean, of Thinking returning I be called the Drew. How headwind the was would

just underlying of know larger in retro quarter, think I like guess year it the those we you those – I Michigan, this just last was the medical to million, than but is expense benefit some expiring $XXX up do is to that we adjustments? Medicaid still conclusion

Drew Asher

Yes, off. those are starting tail to

it fiscal some because risk state’s coincides You was of largely year, are and to At QX, QX. is into full we year, of And right, corridors end year COVID mechanisms. with risk of half it corridors $XXX the million. carry sunset million the era expect our in first the $XXX calendar forecast other while the those, next those

right. utilization the Medicaid the That’s it. governor the pandemic in are coming stronger So, on performance underlying been and during of out you

look But a will Medicaid. in sort mutes be of do the little reversion to a forward impact. bit that obviously, there So HBR we higher think ahead still as we

assume that. it’s think to I responsible

Gary Taylor

or but – and some that your see outlook also? you across ‘XX like the potential the MLR? not that of we also of you year-to-date seems would look and you place performance And when where there, to Is at deferred same care a resetting Medicare contemplate the industry could the something some same say normalization Advantage the degree, in

Drew Asher

at if COVID Medicare above were you and of the high the Medicaid quarter, because the Not peak COVID, vaccination actually Delta so much rate in terms Advantage that of Delta Actually whereas in was the Medicare the impact below the look Advantage. That’s in seniors. January January, – marketplace peak.

look Advantage. steadiness I would for in Medicare So, more

future expansion expect looking at think as as business. those calendar We can grow then Investor call, and on ‘XX opportunity QX stated, those impact we margin that for I And becomes the years. the and that at June ‘XX a Day bids, to have I

Michael Neidorff

good of to next want for cast information your things don’t we clarity, of ourselves. of These don’t I would the have months, we talk much We – models. hope want give to you couple Yes. are kinds to our about at too everybody. will will really we Day. the Investor can have more far And get we ahead over some

Gary Taylor

won’t but I was ask guess I I Well, to guidance because…? going next, XXXX about

Michael Neidorff

Thank same I asking not you won’t say thing for again. because the

Gary Taylor

you. Perfect. Thank

Operator

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

George Hill

great, around morning appreciate one. about And just frame on good PBM the sense to taking there. And follow-up you Drew, very net below kind what’s swing I if a about should we or just That’s there one, to? free margin RFP. that Drew. Ricky’s of cash you I savings Hi, It wanted just quarter. I kind of see quick you the guess willing if maybe the expansion catch-up, the and know guess, question of reversion guys look is a in to here, I that can would be free of talk or I follow-up sustainable forward this to questions cash a guess performance any was then would kind for as flow you flow question. opportunity, be see don’t magnitude be the the do I opportunity income you

Drew Asher

Yes.

well a RFP, And and PBM you to look in out, if actually our have you grows. business we the point across $XX pharmacy at And have number On of performance right as value the from year business. the a spend despite push conference pharmacy it’s the costs improve market with and one slides obviously, the products. XX/XX/XX, opportunities we to of every the stair-step times, stated billion sort that’s on certainly are the of got over fact that in our we creation checks benefit grown of September, do

So, go see the process to that we through value. will and have wait to

Michael Neidorff

purchases. the Yes. you combined basis, at our And purchases, scale the PBM of look the when drug

Sarah London

also non-core the potential I it’s that from result of would and in we are think just right, RFP that go that again, fact terms this December. detail are it’s add, platforms, in when through great we And Yes. I we vendor just streamlining you in SG&A about process, rationalizing in will will savings, partner not a which savings. think But

lot process then a within the through there We opportunities automation space. have we that got model of will operating go opportunities and PBM

value to you can work drive – it is inclusive it that. value goes but creation the think when So, that the obviously PBM beyond think RFP, program, about I the it’s the of

Drew Asher

ahead. the then And – go sorry, statement on cash flow

George Hill

besides the I in a important be phrase about then are RFP? say jump with different you think to what going you way. a PBM to the as on it wanted process guys to in factors follow-up, cost, quick to I maybe other

Drew Asher

always sort quality critical Execution, as Centene, top operating Well, of customer I pretty complexity the of at a the complex such well. that’s is list. of the as mean

George Hill

Thank you.

Drew Asher

the question. And then in am going changes sorry is driven sheet. I on cash the cash flow obviously The cash by to – balance flow

the so the DCP on are that there by three-day some increase in in And future. be balance things sheet represented paid out that will

cash statement. take a to our have you take flow consideration you So, at that into when look

Operator

for And Thank Neidorff to and conference gentlemen, closing would like over Michael remarks. the question-and-answer you. ladies our this turn to any back session. concludes I

Michael Neidorff

from has member the have X I which is a dropping I team we to XX down are the to misspoke at XX, when be XX, here – the said going XX. from X now. indicated I Thank actually Board of number That you. Yes, current is to

clarify to So, that. wanted I

more stay – I you. Investor certainty. our more good Thank detail the to in and And we answer when of we can the a December thank Day with So, healthy, look have people quarter. forward for questions and

Operator

attending today’s This thank you sir. today’s conference you, call. for all concludes Thank presentation. We

have disconnect and day. You may now your wonderful a lines

Centene (CNC) 26 Oct 212021 Q3 Earnings call transcript