Earnings call transcript Q2 2023

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Operator

Good day, and welcome to the Centene Second Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded.

I would now like to turn the conference over to Jennifer Gilligan, Senior Vice President, Investor Relations. Please go ahead, ma'am.

Jennifer Gilligan

Thank you, Rocco, and good morning, everyone. us second joining conference earnings for call. you on quarter our results Thank Executive Asher, this and and London, through Officer; Sarah Chief centene.com. at Drew also be Officer Centene, our website which Chief of Executive will call, host morning's can accessed Financial President Vice Fasola, will available also Ken as Q&A. during participant Centene's President, be a

Securities of safe materially Any Centene about a from make constitute Actual may remarks under harbor prospects public purpose other provision for most February factors, discussed those statements differ Act on indicated statements the by and Centene's future forward-looking result Litigation including SEC forward-looking the results those filings. may in recent as Private that filed XXXX, important XXXX. of Form expectations, the XX-K of various XX, Reform those plans and

Centene events subsequent change. its developments cause may anticipates that estimates to and

these elect in obligation company may the While we to to specifically future, point the statements any disclaim update at some so. do forward-looking

is also quarter non-GAAP comparable GAAP will to is the a measures reasonable unable the directly range. be measures within The a in found section. certain predicting provide website the call XXXX of difficulty Investors certain can company's press most company reconciliation second release, the unreasonable efforts our measures. of measures, available which the of measures, refer of amounts under to The items various reconciliation GAAP XXXX these corresponding with to the to without due timing on and A

turn CEO, London. Sarah like would our to Sarah? I the call that, to over With

Sarah London

earnings Thank Centene's call. you Thank for you, joining QX morning. Jen, for and good us

We guidance. reported to the of dynamic of expect deliver lifted for to at compared service $X.XX adjusted to XXXX quarter healthcare increase premium EPS forecast $X.X adjusted Centene's deliver diluted Our landscape. second a performance demonstrated $X.XX April for billion. solid another results by quarter year amid revenue and now full our least and XXXX, EPS a $X.XX We ability

the the we operational respect to of on execution strategy, to progress proud of commitments are our with financial made the We are delivering achieving our we've while making milestones, shareholders.

core balanced growth Importantly, running of of and both second expectation. portfolio slightly quarter our with delivered ahead businesses Medicaid Marketplace financials, performance strong

progress updates provide share on me a to few value line, our then related creation each our the and business in latest Let work.

with start Medicaid. Let's

Since QX and in The well kicked around redeterminations states. our support as one to establishing time active over as positioned Medicaid reaching to well enrollment our provide partners, our the has spent shared team call, months and workflow have to XX process off options. formally our XX last for state exchange out information every directly redeterminations us timely education preparing of members

ability These have our million also early community than contribute X indications efforts, to we members, inclusive as member of even if more higher-than-normal recapture outreach made initially disenrolled attempts, of events, Year-to-date, with outreach XX,XXX engagement. part of to redeterminations.

tracking expect members of this actively disenrollment are number to unfolds. that we are the We as advance the post-procedural percentage process meaningfully recapturing and

At consistent an net Medicaid expectations. is enterprise membership with level,

processes. their from and to refine We month have states to as evolve ebbs continue flows month and seen

and slope Given impact any that closely who news may pause the few to states dropped on this were requiring certain is have procedural be the tracking we redeterminations reinstate recent the CMS will reasons, -- months. next membership states for members over

including acuity around and XXXX and partners, our lists member ahead, member and informed most Much monitor our rate, on continue analysis and remains redeterminations' projections we from recent levers, journey Based unchanged. of for the expectation remains membership. to our acuity the acuity major state by

April. first we Medicaid constructive. call As the to in quarter discussed on continue we staying leaving, conversations who with assess tracking is are rate versus be modeling consistent our we acuity

track on expectations at And take consistently states in we consideration seeing an acuity their updates. into remain rate for our are with enterprise XXXX. adjustments We level,

are has unnecessary states CMS not us the scale redetermination the in we the we as the states and to leadership helping serve for coverage trust Overall, this gaps through for by do Medicaid and shown experience members us unprecedented work partnership with process. ensure of placed grateful that eligible

program, care. standpoint, winner for child From care a RFP our This statewide to the win strong team to involved The the Foster was chalked our Medicaid systems, and an and in including Plan programs. Children's Healthcare as state business SoonerSelect and was and Authority XXst sixth exciting Centene's provide a the development Specialty by team foster we the Source represents designed children Sole and Oklahoma serve June, the response in business source new contract. Oklahoma in Specialty welfare selected sole SoonerSelect Children's contracts families juvenile managed delivered for Care for

partners redeterminations Medicaid, against our second and to the members results coming continue prove months local strong largest longest-running approach, continue and quarters. delivered and market Overall, demonstrating in business, execute as and our in the we state the quarter, to of value support our comprehensive for and the teams innovative

Turning to Medicare.

arrangements, value-based membership approximately VBC associated was basis-point key to network. our partners with million, Investor quarter-end with lives Our we've XXX increase of care added a Advantage Medicare from X.X XX% Day as

guidance bid in XXXX but worth Second of our occur. our well pockets quarter more of incorporates experience is outpatient some half adjusted it results during should that EPS for back and year reflect on the month as noting provide May. the the claims view as latest of detail trend Medicare our XXXX, of slightly increased Drew higher posture Medicare within higher will slightly that utilization this

efforts expect are in update year-to-date on inform our Given we around what seeing Stars' Stars, results. future I'd that around in discussion we provide improvement will QX see October and to like to an what

strong QX expected complete the solid in have our minimal made. I that operational have our thanks in in With progress and some results, but X-star this reflecting April, pharmacy which progression, we we show but cycle. that ops on data, projection we on more reminder, admin overall first in plans, to our improvements a pressure solid investments focus overall expecting been call and still contract shared As improvement, more X-star program anticipated are contract we measures,

end in X-star current variability contracts contract to points members. the close contracts single our could no of we cut means bubble, representing to compared X.X% with several the cycle With

is and and year-over-year this Medicare bands do we see to X/X XXXX Pulling to movement up and of our X- underperforming beyond. improvement. roughly we showing represents October, expect economic in to are X.X-star plans delivering our meaningful look disappointing, contracts in in While as members value these tangible progress in

in to As XXXX Star bids. we strategy and complex simply, focus strategy with reset to quality reach consistent on our members beginning contracts Put our with serving that our renewed a maximize threshold, the X.X-star when duals reminder, X.X these QX, Strong and dual-eligible member give different and target you're complex the multiyear performance managing mix business will is our support at performance well economics Centene's necessary populations. stars Medicare goals. populations serve our with

reaching X.X mind, a With members revised target October of plans we XX% in of have set of by star XXXX. this in

We provider member or our new in-year call redesigned of Star to A self-service; providers and first and digital the as a the with markers call look to levels sustained options performance and target Medicare consistent ops QX satisfaction few members. are consistent with remarks of above XX,XXX for our physicians at features brokers mid-XXs; ensure in network in resolution volumes closely members, we monitoring member process the reduction examples robust metrics on call. our see broker resulting include: improvement, service and and in addition our in and year-to-date year-over-year call continue outreach that admin core from the onboarding X-star XX% metrics; across center important scores member year-to-date access mid-XXs; for a

opportunity an program. also as of low-income medically opportunity performance with represents significant Centene seniors. complex Medicare and Advantage we and to long-term our provides important overall serve the a earnings trajectory strengthen It

Marketplace. to Moving

with Health exceeding outperform. unique This projections. previous X.X and We for creates asset ended Our term. Centene, continues the franchise both to million Ambetter lives Marketplace differentiated long truly our opportunity near growth a quarter

Our were and design, driven strategic product market broker growth. overall strong and membership long-standing relationships results differentiated by

coverage well during tools Marketplace networks and and members Medicaid to platform transition. beneficiaries we is eligibility are from engagement losing positioned and growing this to our support provide to large leveraging Our redeterminations,

Where for order likely Medicaid predict with proactively Marketplace states to educating in are we of communicate to allow, our preserve continuity eligible will who about are members working coverage. options be Marketplace and we members

with of our part May successfully Health to Ambetter During June, as digital outreached efforts. XXX,XXX members than touch SMS and more potential redetermination just e-mail or via points

We year the dynamic in fuel will growth and into to of expect this the continue Marketplace remainder XXXX. throughout

Finally, are advancing our value-creation initiatives well.

and operating Centene model, the focus to in SG&A while to standardize to that we organization includes for care the local additional our maintaining future. rigorous streamlining fortify work the as take We hyper the differentiates continue a approach market. core This

to forward as track, first XXXX. new in and contract all The look dates our milestones implementation on our half PBM first of we've early XXXX achieved go-live remains

we owner. continues. to example view Apixio's transaction Apixio New positioned well that closed to review for the divestiture of June, the maintain position long-term while innovate This an great continued reposition healthcare minority value a of Mountain Apixio in investment, influential believe rapidly technology. maximize assets. proven because contract ownership portfolio And this is structured we are noncore a as Our and We allow moment New to long-term intelligence an thoughtful our with partnering artificial also through work Capital. efforts our uniquely that customer of we tools to as We will in Mountain as as continue

to value-creation build to as for M&A parallel, growth efforts In operating our emerge. capital pipeline diversifying continue inorganic and as bandwidths, our forward we deployment our strategic opportunities look create

results, robust of are transformative as realign another half partners Star move leadership work momentum Marketplace, position leverage throughout of our positioning quarter long-term our momentum we state our profitability. Centene Overall, positive to delivered our and our solid to products in a the building in initiatives maintain against of Medicare list to around forward. for executing duration books, of Advantage our we growth and the redeterminations, and With company strategically excited support business, XXXX while financial

the confident of earnings improved than our we a our in shareholders share our and organization alike. focus XXXX earnings is to power strategic work across XXXX greater day members, remain ability in creating per We continue execute single is framework, every our for as direct to that and hard of customers markets. demonstrating against result Centene's in $X.XX adjusted achieve value

call that, like the I'd more and the review to Drew over turn our Drew? outlook detail. financial in to quarter With to

Drew Asher

XXXX $X.XX $XX service and results second XXXX. we in Today, and share per of Sarah. over quarter XX% billion QX you, earnings $X.XX, revenue up premium in adjusted of reported diluted of Thank from

expectation HBR XX.X%, rates with our with the mentioned on consolidated Medicaid from acuity, far range. favorable the matching first redetermination was and at item process. QX full the we little Our in so a though track was that with early still call, it so our on consistent and quarter on guidance XX.X% good year is

it quarter the the largely planned as in Medicare May we outpatient is continue. trend down previous January at HBR April was July to saw than came through June. not higher guidance XX.X% With June. favorability was with higher claims QX our respect incurred outpatient steady surgery. Inpatient track, in so outpatient a than also April, would and far was then higher a little May assumed on Medicare already progression, than period, in

doesn't commercial HBR proven in XX% following members XXX,XXX Recall part for attractive. and to our was conditions. of enrollment risk strong expectations, special with SEP members, The has continued the HBR consistent where full profile the to inclusive members health higher a adjustment shorter lower year credit full that of the year, start cohort of retained for duration margin with the due if in quarter. be period mechanics, growth Though than get therefore, Marketplace

Our QX. of approximately peak X.X members in guidance growth to contemplates a million

are finalized risk risk this no XXXX recently and view item and was to be cumulative rights of the revenue the risk between On And hit, CMS, Wakely CMS estimates absorbed our topic first June already of To the our adjustment by XXXX we have for data was condition risk June biggest have quarters, clear, of XXXX have $XXX July. lowered Marketplace June Overall, our this million in on the past was couple what received from this to financial the Marketplace Marketplace booked and XXXX. we books XX, and for over on published revenue we a given million of the five adjustment surprises risk amount $XXX as of adjustment. competitors. in we prior the a Though we our owed owed adjustment. by of what reconciling plan us of to fully asserting prudent we collect adjustment our made each to adjustment,

other P&L Moving and items. to balance sheet

flow with payments compared Our adjusted the was earnings business. primarily year, partners. SG&A from our and the provided billion state X.X% mix in timing second in the Cash by consistent net of last ratio of driven second premium operations quarter, by expense our $X.X X.X% quarter updated to was

and was Our end cash domestic million. quarter at unrestricted on unregulated $XXX hand

through million have July, Year-to-date, repurchased repurchased During common the million. XX.X and we $XXX our for XX.X we shares for million second quarter shares stock $X.XX of billion.

We EBITDA of quarter also the million achieved X.Xx. to and $XXX in debt by reduced adjusted debt

state-directed medical to The XX totaled payments $XX XX sum and quarter million payments, prior 'XX we XX to Our sequentially. collected driven related California compared in days or QX quarters decrease was and in billion that payable claims of of end claims and X.X in largest in liability Hospital days at out Prop 'XX. lump QX, paid over the in QX by representing and XX a $XXX represents

quarter, divestiture real also quarter, of initiatives. consistent $X.XX, and the a Outside of estate $X.XX impairments in activity ongoing estate optimization the produced real adjusted second gain with additional we net recognized earnings, during our

Now full year of the to XXXX. let's turn

performance are XXXX. the with the outlook and increasing first in $X.XX to least half the We company of pleased EPS year for adjusted our the of are at of

are and Marketplace and $XXX million additional well by service as revenue progression year. to XXXX Medicaid of as reflect an in premium premium We refinement throughout state-directed $X.X increasing payments billion the revenue

The XXXX to continues billion gain in Deficiency guidance as guidance excluding we QX discussed million little over a losses. the investment approximate XXXX Reserve PDR also Our Medicare, QX include divestiture $X call. in $XXX an XXXX. on and of recorded be income, includes would Premium for

supported XXXX, quarter we first call, during little a that forward related our of deeper our for bit assumptions discussed redeterminations many in projections. Medicaid our go to To

we with member that tracking and We we April. the actual monitor forecast July, have are provided by subpopulation. continued updated projections our to data against in as consistent that state And of

of the to navigate rates year. XX for rate us those which continues states a of provided company our acuity of the important XX/X be as each redeterminations updates adjustments. to between XX acuity we all rates, lever of matching XX The and include provide very process. have X/X

And we are two include rate updates. other expect based The upon still adjustments. acuity to on working those also discussions,

in and has our examining our be Advantage color XXXX, confidence for forecasted XXXX assessing little bid or Beyond Medicare than XXXX, continually we whether we adjusted performance redetermination words, embedded current breakeven analyzing and XXXX, from assumptions Medicare $X.XX greater actions, our In continued ballpark on XXXX give our $X.XX $X.XX. of of you XXXX, To floor rate assessing $X.XX. loss positioning other are EPS in against Advantage. continue a in were Marketplace. data bit Accordingly, growth if more $X.XX have data, would that an approximately merely we in Medicare that to

months. the few heard Let concerns addressing some by me Number I've the redeterminations. one, of close past over

execution adjustments that Our assumptions, early of but ahead, have results is out are a plenty our on compared playing good understand to to states soundness, being and in actuarial acuity well start. necessary. order track Still are

by our XX% our XX% any of Medicare, the better year business XXXX, the the the did under others. again PDR and XXXX compared in certain to of And get as booked or expect so Based are is to double-digit you XXXX and approximately revenue quarter Medicare current worse Medicare or for flexes as margin XXXX. forecasts, we for we came know, premium up service our And trend. down. XXXX outpatient Medicare we We in XXXX, products in of fourth in back current investing into pulling our in Number we assuming in upon and segment the quarter. in view produce change construction merely two, to time trend,

both of Medicaid couldn't the Oklahoma with broad in look be we and and We our Medicaid implementing the performance care, Carolina growth. more three, to forward for North foster State pleased RFP Number expansion.

grow to Marketplace, continue our position to We Marketplace where execute has overall year-over-year. membership well industry-best in enabled XX% us

of Stars, we to a yes, like work redeterminations, have here. while get and still we And the execute there's years initiatives have through on lot creation of upon rest to value ahead to we have

M&A create acquire on to So us XXx pipeline to Centene XXx and earnings, we the market trades as up we'll building executing, our while shares at capacity. operational buying keep

you Rocco, for in can questions. the Operator, open up line Centene. interest Thank you for your

Operator

Fargo. Instructions] Stephen Wells Baxter Today's at [Operator first from comes question

Stephen Baxter

I bit quarter. on talking a there you confusion there's still break could about in the adjustments think maybe little a just Maybe the you're out assess of can exchanges those adjustments further, the about bit down performance. so we little core really

in that payers related to guess $XXX the of in XXXX, just that related of trying underlying year the components saw And potentially, I you figure Is the the better? guess XXXX, to was related some of or what that potential the think, you're benefit quarter? then you some I booked combination to little to financial understand about plan the also I lowering conditions talking cited bit revenue, both? market. the million a or XXXX of

Sarah London

I but the the for growth growth, Ambetter takeaway to your understand. only there's to we not that through to I'll and but mechanics the experience sure dynamic think And our of I sure which all strength important team, let one overlay that ensuring is of testament don't address walk Drew question. demonstrating prudent lose, that adjustment through that's of profitable risk is let to sort and tremendous the planning. important question, walks want is obviously thanks mechanics. me all but that and of it. Stephen, it an Drew do that through appreciate make This this, were make a is I point

Drew Asher

it's define complicated. difficult heretofore. these to information with public it's And And a Stephen. little some numbers Yes, of understandably,

clear. try let me So to it make

$XXX and books our million final had back that did announcement could CMS and was look we $XX you our And XXXX So on XX-K see let's start at were The that year-end. owed you others, at with as adjustment. million. risk we

a So difference. it's million $XXX

You $XXX to item, heard year. related that's million-plus almost XXXX the completely the

bit was those a for certain year out this exchanges of have the We in in that markets little as year of for be appeared one half to now. a and 'XX competitors about

over item. XXX the XXX largest is So reconciling --

yesterday of And then my one from is on similar heard margin to you what there estimates. peers,

IBNR, to margin XX-XX exact never an Just like estimates want on because to outcome. you you book in put

every rolls margin $XXX million. about that so And That's year.

reestablished. contracts. So minimum doesn't we're bottom where It well of to then the that MLRs for some gets breakage line. really performing drop in And our

accruals. We have RADV

to of in all down through get the and are benefit $XX of would P&L you quarter. -- issuance so for recognized second final what that 'XX by have first and the that, over for recognized you CMS, owed get And been we million was

we of how let on July And me for including that million acuity Now And But a population, to shifted year. by estimates, payable shifted jump excellent shakes margin June to expect receivable. sign. always look booked growth out. got the demonstrates consistently XXXX. strength we've the that you and XXXX, we with this the informed as to our where see to you can our see XXXX the we of population that Wakely the we relative of -- $X.X be at data XXXX, of peers. we've books and billion some for in and got which $XXX year-to-year, good about in net have to we'll see also the tandem with partially acuity We've about that our our

Operator

Josh from question next Research. at comes Raskin Nephron our today And

Joshua Raskin

year rise? this bucket from redeterminations? lower a loss digits. from the a from earnings adjusting How sort from and us you going to PDR, help much if much EPS I Medicaid How call -- benefit be year be the for think it sized year, down, would XXXX EPS strokes? mid-single headwind share G&A you just Is is How next I'm would it, of broad sure There's moved buyback. at there. Can next exchanges? looking Just that dollars. there's to MA? is much is you

the of Advantage Medicare any takes? directional us just cover Just and doesn't the why commentary the understand that the lastly, And help and for PDR understand to loss sort us next entirety of then, help year? puts

Drew Asher

Yes, Thanks, start. Josh. let me

PDRs. with Let me Yes, rules start the around it's question. accounting your last

SG&A. loss pick really think and distribution administer in up You can't cost PDR costs, the it a -- but contract, as the you a of marginal lot that direct to necessary only there's like pull including into

have -- call rolling XXXX, into So of a loss that's embedded or the $X.XX $X.XX it, loss we 'XX. still despite that projected $X.XX why in we're PDR in the or, an so $X.XX $XXX fact ballpark million

about all guidance back information, About we and We've typically, a a that. at of 'XX. -- given try $X built a in Day while, me revenue step of given in of into But XXXX. incremental that's that we've lot number summarize about Medicaid, so stream we though, of think in you revenue of $XX these we've known 'XX figures out even let If 'XX, billion elements QX. billion the and December to Investor for some gave a headwind. and Medicare premium a give

in volume. So a there bit of little of a terms headwind

if then and 'XX as recall projected through our as inclusive benefit you'll pressure from potential rates a from And between arrangement. in of mismatch going the we an PBM XX.X HBR, bridge allowance some well and some in for walked acuity of a to that QX XX.X,

there's a couple of So Medicaid. in headwinds

the $X.XX expect little we we just we're Medicare about making this to. a talked it's not is Obviously, $X.XX, but headwind, which -- year, bit the

you're right. push this period mentioned margin that in is the Marketplace, in on year continued absolutely members that the into next matures swing. growth year, script. enrollment and special year as Not of just the but it's I So sophomore how the Marketplace, attractive,

elements got of other share we've the right, like you're then buybacks. year's annualization this And

the So the those of that, that over that's we to recover $X.XX to get the expect headwind you pieces are the embedded next which few in $X.XX, years. couple inclusive

Operator

comes And Research. our next at question Lake Justin Wolfe today from

Justin Lake

rattle questions, of what number you here off you few, and I'll I've see got answer. a can we'll to hopefully, simple

say, or XX% now at in star -- plans. one I've is, got of Advantage I first you members Medicare your The X.X about right X should

in to be where able you've you given appreciate star for October to plans? I So ballpark 'XX expect hoping give be a XX% for might you the X.X there was 'XX. us I

for of membership the XX% of Drew, revenue the X% getting in Medicare. you're think increases guys that the typical versus in MA rate on rates X% talked And about? how then said you to I just you revenue imply quarter, does are that -- coming year? XX% overall third What lastly, next Then Medicare in

Sarah London

turn the over a We're for bit questions, I'll cut first Drew. Thanks to the it still relative little then Justin. and early take one, to points.

that of again, as moving your in year for then target in point, So XX% our revenue we're X/X 'XX, 'XX, really pointed improvement October membership of terms seeing solid of I to to contract improvement year-over-year.

it's not Directionally sitting about numbers you -- still just we or above. to if and year, again, this the sense, are X are a XX% final, that give in plans but -- in we're star of

or to We X-star around be better October. in of expect XX% come that members

so understand exact we really fall sort just don't that but of directional points numbers that yet, on X.X the And magnitude in have depends or cut that of those you we're so X the tracking. improvement

Drew Asher

to I for let some you do -- you. math give to but you all Justin, me inputs, the tried

that we said for refine we quarter, last as next So billion Obviously, through the $XXX get revenue. year's we'll year.

So XX%, by billion. if multiply that's $XX you that

Our Medicare of of the billion. and MA couple in zone segment PDPs a PDP, includes

billion we'd be get revenue. in for if zone in you down exercise this So MA the MA revenue. you of can about to $XX $XX billion same did the And year, of

to into -- the going Yes, payable a expectation. board recalibrate a sort the we're they're third then then quarter corridor And they're of consistent ultimately, rates over to They're you're that. in -- the risk was all our part deep they're because state, if with rates. X when

in Although net there's the to if no impact company corridor. we're the

But back with states level So states. we And go and normal with just and on rates we've it's working course. non-acuity let instructive of the up by state. been call state well and forth that say not me through, our a never step typical higher parts the to and go to that

Operator

And today Wilkes with comes Lance our from Bernstein. next question

Lance Wilkes

Great.

of Just capital. capital a questions of and deployment kind couple on raising

portions direction the far sell little that would about pipeline. maybe business, mentioned as is, And whatnot? of business, the talk part to lower of opportunities there obviously, performing bit And I variability could or related of you be, guess M&A As you profitability geography? by off in MA are a portions other that

are in deploying looking as interested the at Just you're what priorities capital?

Sarah London

Yes. Thanks, question. for Lance, the

think Advantage, our a that take at we to relative looking to approach is, Medicare I geography-by-geography view So your portfolio. to point,

constructed on is at through this less big look out the 'XX QX call, are there. less we very as pruning. 'XX on where we we've we where talked Our profitable we of and products, are products but sort profitable that we've there as And there lens bids less this construction 'XX idea that put aggressively focused and or are that's been aligned and about

on rightsizing of that lens complex So the provides focus and but aligned, not with divestiture, that the create lens more through book platform the for directionally through solid realigning growth of and synergy MA income the to lower overall footprint. to it the and members our Medicaid

think provides relative and competencies. are to retail think right our what is pipeline, -- fairway, those be how to own on ICRA are we important focused sort workers, of in growth down that we Marketplace relative strong from about important focus, that are but burdening M&A distinctive seeing core which businesses, sort and we lines, platform of we're have we long-term business be going to that again, terms then two three primary individual Marketplace, consider the the gig what continue of our for we to to think Marketplace Medicare contract opportunities capabilities acknowledging that also and the And that we some being workers, of the and

the the M&A pipeline. so part consideration of in also And overall are those

Operator

comes next question our today Suisse. at A.J. And Rice Credit from

A.J. Rice

spillover everyone for a states to Just back having this of like herculean sort to task any reverifications. it Have like circle on It but process. it's RFPs seems any the that up? the couple It stood to system things ask Is either working you Obviously, seem impact -- it or on any the it that? go Medicaid on RFPs being be are seen doesn't awarded, of through the impact? through of I'll involved. question

a adjustments. acuity on follow-up Drew’s comment on just the then And

in? rolls the quickly latest how thinking are out adjustments data may you anticipating help Just change?" acuity as "Hey, states prospectively that And give saying, are some those us on there any we'll happen

Sarah London

but have A.J. constructive as number we about -- to just I'll we Drew let and a Yes. Thanks, very -- rates, conversations. the important had of renewal saw a talk had reminder, it X/X a that that is states

have All that specific but seeing acuity forward, trend adjustments. carry I'll of states And let that. we're on get those him included

we've you Relative that we've trend an of offer. of in overall to really we this states sort the pleased that partnership is partnership and level general, the scale to effort. are that that unprecedented the of seen in a of been landscape, with the are redeterminations leaning Medicaid value public-private And right states

with But our talking our Ken's months. been directors and over Medicaid last very the weeks closely and governors out

little and I'll So kick a color let the that, bit talk rate bit provide it over him just discussions. a about to then to on Drew more

Ken Fasola

Yes. A.J. Thanks,

XX through the In counsel multiple eye opportunity one, genuine fact, governors appreciation week, the we we by members an and nearly last up to that's Republican came had, for we more have we redeterminations across throughout view available methods to best what virtue spin in are provide Association. Governors informed with with were seeing to And every of markets, reach. had conversation opportunity an towards,

into a departments, in we've the decision. opportunities disenrollments the Marketplace. members or the we're with And folks clearly that procedural towards seeing get make to either provide spot, millions give there's in mentioned the had, the to eye Sarah the the interactions informed right move Medicaid it's to to quickly doing best an to opportunity when whether those of collaboration chance an

going reprocurements. Finally, the no to to with indication your about Drew? procurement that it's respect and slow to of pipeline, point whether there's

Drew Asher

of the redeterminations. in -- partners over we've their putting of Yes, of and in with the our commencement A.J., acuity, state really, working front them over data and the anticipation year, collaboratively been past on actuaries

on rates, the really often, of So all in Marketplace associations in within the working state behalf we're the and in we not of think but payers Medicaid, the influence component just rates. for the acuity appropriate what to is terms with

have redetermination so impact. By maybe with couple sold definition, gotten rate the by of And focus our redeterminations. those all XX/X, that two acuity had the the so X/X for except on outstanding have then X/X and that XX we months definition, far prospective, but belt and adjustments the are in a we've under between far, of which we increases,

to our pleased with partnership start. A.J., pretty work do, a plenty state So And of but with it's good partners. the

Operator

Kevin today Bank our question next America. Fischbeck, from And of comes

Kevin Fischbeck

the I in, kicked read follow little as faster. want seems news are going expected. off that the like is going you stepping maybe a that things bit It on things comment fielding which the administration faster. redetermination implies going -- when are up is that to of Obviously, some articles

dramatically? go this administration is the the change it of slowdown the Is how things just that to have timing to year? enrollment? of this is see pushing? do how number that the people more about it exactly this And your who of rest the to pace view you think expect of enrollment get it of often Or have will ultimately, year? love redetermined pace means you the about you're We'd through What Would the Or to of it? kind losses delay? thinking change hear about changed you

Sarah London

moving Thanks, upfront just Kevin. ratable of of others more always were were that than that a approach. because and Yes, anticipated certain fact faster had the states others that there had bolus taken we redeterminations

So helpful, data amount that is a upfront idea of is there big but I think unexpected. not the

then data might that In causing higher our the said, also into than of there are sort disenrollments been states procedural though, expectations. as given some with where us visibility has membership And may originally we aggregate, that is track our or expecting. are issues the have be on --

fell the recapturing successfully again, to those do outreach all to we And program. them. and making, that bring And members reenroll able we're we're over of fact back we're off, are efforts on of who number expect to but that the grow track members the course have the because able eligibility. We still of

Relative pause but to to the to the on other states, whether go intervention, that to Obviously, relative in recent too a members to states stronger of for that view grace still period a a they're they've a weeks, a looking will enrollment extend to little to month replying early see asked Obviously, requests. CMS have slope. major of states, flexibility certain CMS bit the for slower. the our in has they've impact provided to great bit certain taken a relative stance cohort states is it's

so slope slowdown that's pace to slows continue to quick are And gate, a that the the what next over they so months. of it out states going and or say does overall we're right, can obviously them closely those of very down whether that's make couple hard that something line, but be to tracking the at whether to that the again, process states sure for getting that

Drew Asher

And hasn't our last sort of roll-off the view of grew just the The Still Yes. onset since point. pandemic. have X.X what members redeterminations, one data ultimate of the about would XX% we changed. growth. million of then been

cumulative So X.X $X.X XX% off $XX that be billion of to million million about billion rolling revenue. members, of to X.X would

already we Medicaid billion, in the factored gave instance, numbers that's for premium. of QX, the So $XX forecasted into

Operator

Fidel And Stephens. our next Scott from question with today comes

Scott Fidel

up what of details appreciate be I $X.XX? level guide of in the May sort in bring the at least in then now floor XXXX share, helpful of to the high us and on to if of wanted you that gave to to embedding Marketplace. you're XXXX type all some it the just the the you commercial dynamics MLR sort of

there? guess, just sort it of, from terms some be these give Or And $XXX that is of develop insight how your conservatism condition. willing you between a million the appreciate these that are methodology breaks you're how of bright? building sort of to in of and of just that Would tough definitely just I a out then around how sort you Friday level some works there conservatism maybe that, reduction in plants into inside that down a little in of general us receivables of

Drew Asher

lot The Scott. are work that thanks, balance sheet mine peers -- on team capital balance reserves to their team and at our the looking assets backing does what sheets. of potential out statutory Yes, a difficulty, positioning of are financial in

doing the approach carrier right, and And on hopefully a depending then conservative taking on you're that different situation. that

that's hope fight out. that will to money. of because we get nickel be see we'll to for how I every plays and So it that trying prudent, $XXX shareholder but realistic but million,

got Marketplace business. posted group sort we On SEP business, includes runs And than better than and bit do Last meaningfully membership the commercial full about expect year. higher with Commercial commercial, for both commercial. of the little we little structurally an XX.X. HBR a rolling to last HBR, about our bit year. still billion Marketplace, of But a which for in, a thinking year, $X higher we've now not that's

natures commercial from standpoint progression we the of So total the business, But that sort but slope expect. of you expect a like HBR, sort that deductible what track because to should tick you have to of ongoing through. an it's commercial on up of

Sarah London

And important that just remember allowing growth. of is to core performance again, the and business absorb in more year. members profitable us become to tend the And SEP Marketplace to that their those sophomore

next retention, building we're that incremental assuming will book So good this the year have contribution year.

Operator

our And with Ha today question comes Michael Morgan next Stanley. from

Michael Ha

better came plans you're guide? your if embedded first XX% understand 'XX? then Maybe adjustments X-STAR+PLUS just trying difficult. I Or MA just I'm key changed last Investor or where some not to might cut you sounds on Day? to have for yet, composite received on these you even exactly about Medicaid to X%. far assumptions? upside Was to to XX% and to than adjustments. from last represent members quarter your of XX% quarter, did, Now now maybe it influence at get now deletion? Wondering that does Star, mid-year outlier what more these and the your they're now? quickly targeting in that tracking for changed increase that two 'XX? guide since are understand insight acuity like X.X% renewals assumed believe are growth originally driven wrong, It And what Trying more I'm down I'm actually last to rate 'XX quarter? your you And trying on by points in

Sarah London

Yes.

So hit let sort Stars rebate. me of and

Investor So looking X at XX% -- we at in did stars. Day, were we

On our environment, duals of the for fact which XXXX what the Medicare what is year, a planning low-income changes duals saw right, that the the through increasingly rate we bid made for complex point the walked QX coming call, and and construction stars that focus population, forward, we focal and to members, overall Star into relative for of in to terms of do that we strategy. our to target on we more appropriate had because going going is the X.X be some were

success Star. so is how, in cycles, the really X And over next X that at to looking we're

is this were pharmacy on in bubble were and were that which that progress seeing and had contracts pointed cycle, that I so also measures number at the those X-star that visibility approach which a we on taking measures, of and core call, And first had admin that point, minimal into ops but were we that focus conservative our in out progress. the actually and that a assuming we we

we're today from mix, view and more don't points, QX we additional want the that and in sort X-star of conservative and What assumptions. bit but used of the because little So very be takeaway too that HEDIS call have is X.X% baseline. progress transparent, pressure very to of with say some there's that a cut case CAHPS to in we X-star. minimal Again, early it's we saying degree was off

know thought what multiyear an we does not at and was of already revenue XXXX, certainly looked about as terms This but for we input the the we in the right, targets XXXX, bid book. XXXX, impact XXXX of construction, sort to it because for Medicare relative performance XXXX

into economic relative of X.X largely there's dual-based band. get X% where important start as we to into of economics contracts profile are pointed that X% in underperforming our X-star, X.X QX folks all the taking and the moving star to this work very we economics. important again, that heavily And solid up but population, on really underlying there's comes associated which the approach to well a by a lift to when seeing the And Drew that note chapter or with -- looking know that that actually economics for. you out moving band, improvement with program call the is star really well performance we're chapter the with to those combine that

Drew Asher

what of laid we at would for Day thought we adjustments. December But that rate into forecasted for out at first remember, of I composite X.X% you'll because have the we lot the the acuity basically Investor the necessary quarter time forward say forecasting of that a of sort XXXX. got of as in our pulled acuity 'XX, on view the reflected couple be the Michael, is reason might partially partially of of And we next years

there's tune in up, to but So continue of calendar forecasting to we be what billion well, we with Medicaid. year XXXX to in that states especially sort number also of of the push now $X.X about the paybacks paybacks, that a know perform to in XXXX would we're as counterbalance where for

rates to counterbalance looking of risk participants a be by at ultimately payback. in and corridor the adjust that would states Medicaid pool because That the their positioning in

of that So at a factors those would up that push it's stale sort two and but are number number. pull point, this

Operator

next our Fitzgerald. today And question Sarah comes at from Cantor James

Sarah James

the about the you any XX- states and that if quarter? quantify information talk of April But a And like cohort. wondering information response what that could April and get? redetermination only gotten success cohort? sort April looks of rate their who XXX-day couple period, if impact you I on know in you have little you a the guys up bit know coming May to you towards then in responding of was And for was is cohort, a what we're the I especially end what of members? thinking could about Do is of you your have sort

Drew Asher

the the impact, with what impact. track Medicaid, the look question from progression. that's on Sarah, at X/XX/XX terms membership down XXX,XXX in of Yes, members in of on of right We're can about the we expected and you sort sort the

that to back. which few to a those members on of July, good a look some I'm at there's can to actually we there be for we're because, monthly number point, question. -- see a at with opposed we members your much could April of months as it's at runway each independently, boomerang And month so looking lower out but rate sort higher still cohorts because would from incurred boomeranging what a back then the

any -- XX% the that in which far, so eligibility lost of two lost members, regained very who they early. are have percentage are being But that There's April. is or the in month But XXs it eligibility. other without activity break members back There after a of importantly, period. to coverage it's terms month of redetermination in a of seeing we're of not reinstated XX% in what without now some maybe lot

next will So that members of it be to getting interesting reinstated. dynamic see over the few months

Operator

Gary Taylor with And comes Cowen. our next from question today

Gary Taylor

I have two not your costs the questions for you. -- related a results One, competitors couple to second court California quarter for settlement bore MLR of COVID immaterial of that period. headwind mentioned out from the

reflect So did just -- quarter your that had booked wondering this did if or quarter you if already that?

the about commercial I this down to of sort to in then looking XXX. just And of MLR year-over-year, was question, MLR But back sort exclude just seasonality. just want the first again. your And commercial coming to at deductibility quarter, ask Scott's secondly,

A of it's quarter, that, portion true-up. SEP. accrual portion is year-to-year that RAF XXX. think, up is I of A small the This small smaller

the but think to where expect seem year to did I you're and really it to it on line, you still going in think felt was saying, is you land I MLR. So you know deteriorate, commercial come

from movement better your just I to XQ a little that XQ So wanted understand view? and between

Drew Asher

which think quarter bit explained little information, is QX. is then we on in Yes, at call we a really XXX that on this we in also high XX.X, that a in QX were good SB and California, when QX I the we why had we booked got --

So we're Medicaid. in good looking year-to-date,

commercial. you're right on then And

You've having insolvency of have 'XX, didn't QX good guy. calendar a the dynamic We year. issues 'XX any sort the really a of got from

the as settlement quarter like wasn't quarters, so that including CMS five is last over at the chipping And away this final from it well.

And swing near puts our while the last bit of with is of that growth So on tremendous thrilled that's year, item. a sort year. little the #X little this will pressure show current excellent we're bit. We're was And to the that a and brand. up XXXX our term, it period, market power able earnings in the that for grow a position, HBR give which Ambetter us leveraging year, does lot this beyond. But

Operator

today question Calvin Sternick next our from And comes JPMorgan. with

Calvin Sternick

Just clarification. a

retention up that of end reenrollment planning But X/X at windows, I sort you another these rate, a up quarter second given 'XX? it to number, with. expect before sort where will month have expect Medicaid terms there XX, end land Or know quarter In I is maybe X/X that couple we about of take of be X/X? the guess, do that to of you terms of timing, of going to just XXX-day you lag in

Drew Asher

in depends XXXX. on to time that XX-month on might or And whether part what get not knows time period. going people QX be QX or Well, of by that of who finish the we

the predict predict when gave, month ultimate hit numbers tough end. trying exactly outcome, So exactly we that, without that's to the that's -- But the and that we to state we think each we changed. will hasn't think

Sarah London

those recapturing span all in outreach efforts eligible and up eligibility, but also includes, physicians dropped the direct showing are designed who's they're that is care relying still again, we're mentioned recapture. And someone when I outreach, folks not an general, that that so the minimize department. obviously, emergency to at to in primary try providers but the on between And

also outreach that has months. And at be proven early think successful, so these least I to in

Operator

Barclays. Steven And our from next question today Valiquette with comes

Steven Valiquette

theories still helpful. same trend is elevated for commercial there on why cost particularly your lot and side the not shift moment, different seeing out are in specifically, to just as the There's Medicaid in 'XX around elevated Maybe gears while a were Medicare a really cost and seeing outpatient, the definitely trends of comments Medicare to trends.

just curious in year? this any to think and this specifically thoughts So color additional get I happening is you your was on why Medicare

Drew Asher

to here mean composition years XX are and XX% the speculate our think but don't probably could members it's I on Medicaid of in about of members. tough our under it, Yes, plan you old.

probably not is ortho, what seeing a the lot Medicare of or on cardiac, cataract, we're there's which or So side.

you is explain Medicaid pop it is other what higher around little saying Medicare noise expected saw was stable HBR the and the I the alarming, we that, given not a of guys, to Other but than figured for helpful Marketplace can't a than we're May, in be bit really relative industry fact which that seeing commentary some in the in than our and second the pretty we would quarter.

Operator

Sachs. next question Goldman comes today our And Rich at Nathan from

Nathan Rich

just I'd to expecting magnitude you're half Drew, you how of could this saw down June that step kind couple sticking of frame cadence? play that be maybe last Maybe about of of you on you're in that curious the a question. if of over thinking the when clarifications. Just And the kind monthly out back year?

then And margins next on follow-up Marketplace and for a quick year. expectations the

SEP the margin into plans seeing, what the pricing next improvement you're type as just growth the 'XX? enrollment, as expect commercial you'd we of as 'XX, see think business both for kind to progression well of year in Given about

Drew Asher

elements of the that We'll into for Investor we XXXX. Well, progression have detailed. guidance as have give more priced get an to margin 'XX definitely year at Day we of get expect update and more you as for specific we towards the end

to for related question guidance said 'XX of Sarah your continuation accommodation got our adjusted in on her $X.XX then trend, as EPS And we've at some this. least in script,

a the development. in holding their your we step with to and way but all May incurred we point, sort the Although saw with step a second of to not down in back respect June did April, that down, July from to relativity see of month through what

Operator

concludes Sarah this London back question-and-answer to I'd turn remarks. gentlemen, like the And conference for and session. closing our over ladies to any

Sarah London

and half on all as great We I appreciate questions. forward everyone. the all 'XX. interest the Thanks, we to providing our Rocco, the you back progress updates great and a have look of We thanks, through additional move day. hope

Operator

We you. for presentation. thank This today's call. today's Thank concludes you attending all conference

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

Centene (CNC) 28 Jul 232023 Q2 Earnings call transcript