CNC - Earnings call transcript Q1 2024

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Operator

Good day, and welcome to the Centene First Quarter 2024 Financial Results 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, Finance and Investor Relations. Please go ahead.

Jennifer Gilligan

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

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

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

available XXXX website of release, also found The reconciliation measures. in A can most measures first GAAP with certain under the our the quarter non-GAAP Investors will refer directly is be company's to which comparable call on these the measures press section.

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

Sarah London

us discuss first our results. we for as Thanks, Jen, thanks, joining everyone, and quarter XXXX

ahead of This our morning, we $X.XX, expectations of for reported EPS adjusted period. quarter previous the first

quarter Drew in moments. start EPS the and to outlook increasing a full adjusted our this cover guidance updated detail As are further financial a $X.XX. year than result to few the our strong we year, in of greater XXXX will

momentum quarter the pleased do, we are is through more as move we harness results, positive generating balance still the the first year. of While to we our in businesses we'll look to core and there are work with the

of infrastructure the to members, to the to our our necessary our people, streamline providers, assemble and tools state Centene's processes experiences underlying focus work and on remains best-in-class XXXX, and partners. company regulators In modernize and deliver to

a here. share couple me Let examples of of progress

an improves During simplify of source simplification both timeliness providers. care authorization important ensuring authorization initiative the the process real-time process we and members the data. decisions, quarter, for automating need by prior and the overall This our they friction removing get first our completed members quickly from to our

QX also Oklahoma. of of accumulation saw the in and months thorough preparation thoughtful go-live

statewide from thrilled Our team April of and we X. obtained perfect as review readiness scores our state, serving be the in Oklahomans are to

also the our that agility CMS quickly Marketplace, disproportionately allowed and Change for provider those represent to Centene support appreciate clinics support included rural HHS Healthcare in provider health members high-quality spans health through as network from and access national to operational critical care. Medicare net and behavioral providers improved support by and last-mile all of process provider incident. We Centene's which the outreach products, wake campaign impacted outage, a in providers. a Medicaid, infrastructure focus our across hospitals, on including included of has targeted the throughout clinicians safety component these health the partners mobilize This Finally, the efforts cybersecurity and launching members of and this FQHCs, our

Now to on business our lines.

this as our roughly through of to Medicaid unprecedented XX% process. franchise and redeterminations, resilience the complexities we navigate way the are We continues of demonstrate

the we to a Overall, continue more built state refine from we we quarter Day redeterminations release, continue in to by slightly you projection our be at December. can with state ago membership than today's we by move see as respect to tracked the and guided process. and than well through expectation our membership year As higher rate Investor first model that

an high-quality blocking represents state for are acuity XXXX and to partners before, ensure and our tackling provide our rate for we year shifts positioned discussions services to As through we've with members. corresponding important noted

We with are actively ahead. far engaged in that process and results solid are still opportunities seeing thus

of to dialogue remainder we the increasingly normal each we year, through regular move we our in these program back-and-forth course managing the discussions the the represent expect maintain partners Medicaid state we individual dynamics of around As the with serve.

important positioning to of a At awards early post-redeterminations continued points. the of world. state the Florida. have Medicaid generate are executing growth of delivered reprocured the by announcement reprocurements, largest key recent the XXXX public, we contracts been with time, RFP intended notable of Most our us same the well months data on results in Centene one and now of

protest among those Although that is state. Centene value best well based Health positioned ongoing, is determination that is Sunshine the the Florida's period provide to will on

In grow. thrilled existing with to to we were Michigan, serving our with be opportunity to And vast selected we forward some state. of the continue membership to our collaboration majority the continued look

ongoing. remains protest our Texas, In

intend honored XX care in Lone defend Superior ability and to to state. health members are access high-quality Star served to provide and Texans for our affordable have years We to the for Health's

more innovation proud experience Medicaid We support communities, so services X we and approach an remains this far powerful decades team value plans cycle members. during Centene in unwavering way serving than health of delivered and to critical the commitment a our of bring the to reprocurements. proposition local have are development of and our built a one, The business on

We are of improve community-based states those XX care well access in provide support the the country. as honored to across lives as to serve we to

Medicare. see medical some XXXX as provide general funding to Consistent insufficient to expectations. Advantage navigate to as prior in Medicare Medicare Moving result. respect with trend our Drew strategy macro we around commentary will XXXX cost landscape challenging. early remains levels a The with our final view,

vital the a lever drive Advantage and across single ratings priority Medicare continue to this the remain represent business STAR most powerful performance top organization. in to

to see we our in progress October. stability results drive goal in those performance X.X XX% improved to be in As of and by reflected STAR continue our come to October our we of members of and expect contracts XXXX,

tracking And forward care. aligned into as on we We in as teams support our positive our as carrying momentum are improvements year-over-year we our clearly quality. and core they XXXX are in focused are ways receive well operations the as members this

Medicaid. the important D-SNP, from positive growth. decade, this the XXXX. milestones Centene momentum end term, be link The Medicaid call. is to participation Medicaid rule-making and with CMS Longer bond between prerequisite a special plans, better to between Medicare for gain Advantage of Centene. a in more business growing Recent earnings will remains or strategic footprint final only and to perfectly positioned since requirements beginning Medicare needs last By an D-SNP become has coordinate dual important explicit our included Medicare

against size compared XXXX. to and Finally, by for X.X% opportunity. X within the just membership power margins Marketplace. market lives and teams in With Marketplace segment for exceptional as Centene's enable than the us X.X growth million in our accompanied to more powerful pretax This ago. of deep Centene, approximately forecast business continues to Marketplace has This represent short product doubled to has our of executing years knowledge range end been the quarter, a well and expansion staying are X% consistent at our margin unique first the growth targeted well

offerings Medicaid health Based to membership generating additional growth open of We see overall. traction we XXXX, products widely Ambetter is from This our diversified. enrollment, and survey identify on are after XX% our reach source in uninsured. previously us plan. conducted carrier, an room selected the pleased losing coverage. XX% addition In new the Approximately is expand Insurance access of nearly approximately of XX% those are to members a who employer-sponsored with the and Marketplace following Health as Marketplace to members losing joined after another Ambetter Ambetter chose

insurance. be member by accessible expect an evolution of uninsured increasingly addressable consider Marketplace, alternative and occurring As options to as the we driven look growth to population providing future for employers the we new and employer-sponsored

organization has years. over been as an last rapidly X Centene the evolving

We have for assets future the creating focus, been trimming give core us strongest that organization growth. to the platform down strategic in the resolute

our executing for Americans. millions and access health our strategic of plans, to are high-quality care fortifying and successfully against We affordable, delivering modernizing infrastructure

first capital growth. to invest the and long-term our we earnings Our our as maintain financial power commitments, diversified quarter results deployment deliver on to support our continue disciplined of strong demonstrate of drivers posture

want nationwide day improving we transforming ultimately for CenTeam the of health nearly communities showing powers to amplifies up This lives that is of thank always, committed every XX,XXX workforce the members serve. and our and our As we to our our the impact. engine results the of

performance Drew more XXXX. for the that, our our around and the details outlook let's for updated With first in financial Drew? quarter over call to turn

Andrew Asher

QX share $X.XX are of than Thank by in higher to year adjusted premium This you, we in was results, increasing the result diluted than X% full than adjusted billion and reported XXXX including we Sarah. and service our and guidance revenue quarter EPS quarter, XXXX expectations, greater per first of $X.XX $X.XX. Today, earnings better XXXX. $XX.X

This the results. is example with a to a quarter diversified good drive business of levers benefit multiple of

QX guidance. on year which for full HBR Our consolidated XX.X%, is our was track right

or the as of transparency circumstances appropriate getting acuity for components. such and process, the into quarter was expected of and states states. example in of Redeterminations matching we we rate we center but pharmacy short with front are an business a handful benefit the programs the of term. the the initiatives than important behavioral rates higher the you health match also in practices acuity Here's since certainly through to diversification that in are line in work match changing continue little Medicaid provide as XX.X% other of at right a

a strength had XX.X% on And in segment HBR Medicare at the our driven commercial in our Marketplace business. XX.X% the quarter little other was continued we the by our right On was better track hand, at than quarter. of the planned

to this result. netting out XX.X%, of good a All

the we substantial sloping added the membership and higher bit than Investor -- including XX.X deeper was forecasted than Drivers return of and our of at months. of of slight we the next X two, bit Upon redeterminations little planned, of growth for a of dynamic; as of for members the into as QX revenue X QX year being $X slightly markets million LTSS; of membership reforecasting plus lines. Medicaid the billion QX membership wind-down to redeterminations the as XXXX, over complete, Day. XXXX membership running we better referenced, our rejoiners our of, members three, to rate visibility have such into revenue member is the we wins X.X% a of guidance. Oklahoma Arizona XX% are a Going month one, million include, new XX.X overall year. for net over once little composite the Medicaid in The little premium business above calendar each last the XXXX the and remainder rate

And we our business our The as be a cannot look we rates the to over covered, still X pleased things XXXX remains of to All play Texas and year return temporary are the recent goal Medicaid in of with work Medicaid XXXX, to to out long-term performance Florida frame. we HBR redetermination performance into and as Regardless considered, RFPs. our needs process pretty high the time pleased complex match process. the acuity, Michigan protest more Sarah out. with very XXs

Our previous commercial with Consistent terms grew the well QX. in million of HBR. X.X both very quarter in end at performed of to the members X.X from comments, at business million year-end we Marketplace growth and

improving have consistently delivered past growth, of a coupled For we with years, the combination X margin.

been special we enrollment guidance X be service upside If our there X.X at the that XXXX. to million would period, rest revenue Marketplace we the the we've of Our members for grow can guidance. do to in and which premium past years, assumes during able stay

tuned. So stay

Advantage still lower though saw we in outpatient reasonably QX at higher approximately March Our being conference than and Medicare first Medicare And steady. service about authorizations ended inpatient the and Medicare January of expected billion guidance elevated representing PDP from up elevated current and of previously revenue $X revenue, assumes of level were revenue. in at authorizations trend XXXX a QX. continues premium February. I guidance, total billion than XX% though mentioned of that $XX February, XXXX,

segment levers. Medicare We changed. expectations, operating was had cost full performance has the not line structure executed and and our new with pharmacy in our other performance year view the with in quarter the Nonetheless, good well for our on

levels trends, As and open: Reduction I like an ahead, Act, being are rate and wide model religion is from environment outpatient XXXX should insufficient given risk a full partial making final Inflation sustainable notice changes XXXX that and many we headwinds. these upon of beginning decisions the pharmacy setting It in phased to duals. seems also rate in our at with in based eyes like have we feel look inpatient the our complex XXXX punitive benefits peers more

to at said Medicare business, strategically in a it strategic I What the the of Medicare mic decisions, with the alignment Advantage if We're Medicare billion, heading county-by-county important we'll our finalize pulling off is is doesn't what process we conference $XX on goals populations of To we with Medicaid serve, March. the closer Medicaid and matter at especially billion our $XX duals or and puck given want still revenue. ultimately early in $XX repeat those complex accomplish and and together. submit with I'll where Advantage XXXX level making bids billion is June. in regulations

call. So more our we'll on with you QX XXXX provide commentary Medicare

SG&A deliver to and and STARS a an years, efforts track. for We over important Medicare it's our few next part clinical good to be improvements, and expect those portfolio. long the levers actions in remain need run, of overall the business on We on us

P&L balance items. other sheet and to Going

expense Our including primarily SG&A corridor from risk first by Cash January we used was the quarter, receipt in by our of than net ratio April XXXX. early to in state PBM driven more million of partners received subsequently in consistent the in flow payments, our of in new earnings, $XXX one growth large mix March's a adjusted of updated Marketplace. X.X% as for in premium QX, third-party slower rebates offset operations with timing was transitioned a and payment pharmacy of delay business,

of repurchased for million. X.X From shares our X $XXX through January mid-April, stock common we million

unchanged to billion. billion $X.X is at Our $X goal XXXX for share repurchase

Our debt end, maintain QX, S&P EBITDA And we to were consistent year-end. during pleased updated S&P under rating our X.Xx was quarter model. at with to adjusted BBB- the rating

end lower XX at pharmacy X then Healthcare quarter end. claims an Our delays, medical of acceleration Change was to payments up to to from actually state-directed DCP QX due and invoices payable, at down in receipt outstanding liability back and represented XXXX. days claims claims of down due QX day providers quarter

progression in see in seasonality quarterly Advantage Medicare that Advantage. and million to for Medicare the in $XX XXXX the PDR due reserve XXXX in You'll This is quarter. our table up expected PDR was planned the

Though $X.XX in of the guidance. year, and adding premium service we our billion $X EPS comfortable adjusted early XXXX are and of it's to revenue

You'll to GAAP mechanical Circle to divestiture. also effective taxes revenue by and the total see tax rate driven due some changes pass-through the premium

forecast a a expect few bit investment We also little be billion XXXX. $X.X income while to in rate for still previous above cuts providing our of

put contracts QX us. momentum. was a another put quarter one of reprocured the We and We X strong enrollment customers our positioned We executed quarter conversion, behind structure. on January benefiting largest growth a of and improved an cost annual We are in of margin. quarter businesses period PBM well of the up Marketplace in are and Florida. and redeterminations well from delivered and our both

XXXX results Centene We continues And improvements, and in to and QX operational resulted increased strong multiyear our to this of guidance. all talent. continue advance attract

achieve, While to off good a XXXX. there is are we plenty start more in to

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

Operator

comes with Bank Instructions] first question Fischbeck Today's of from America. [Operator Kevin

Kevin Fischbeck

time. had I a I receipts. exchanges go on wanted our potentially that's just the in I claims bit too, always from you And at the change visibility same into commentary which to little of the obviously, fastest-growing business, on guess, it part into margin your your lowered the came going better. expectations a because, guess

rather I growth points and So some issue look change than disruption? you to guess, around true that -- that, rapid I or outperformance mean, membership is you comfort or what MLR potentially give are you at do how comfortable durable

Sarah London

Yes. Thanks, Kevin.

I seen important the overall just think in last there. I the and, we over X the the as we more confidence back very growth our points HBR in obviously, One that. I in we've market than the overall of cycles, the growth doubled X And And implications last in book. It's tracked well rapid look have is HBR. think years. X to think

understanding consistent that year expectations. the that year then out effect have in fact play accumulated So pressured our growth the may is with of sophomore growth SEP we to this starts but that margins year, where last

So performance around think book. moving about us We've of confidence initiatives. track has a in again, the ability gives implemented I that really a the as also, past, really solid clinical team parts, the strong talked which we've the demonstrated to in program

has to And helps so book. I that continued mature, think which also overall the of management

a of think operational the And then proud member and way and change, remarks, fast broadly just And in them course, reconnected because members, getting probably visibility need. out they to hit demonstrating incredibly possible relative around I lines to and get support the that could which can paid possible applies access as that to we our as is how so to every I across maybe visibility in push agility we care teams of finding they huge response, on said of providers #X. I'll of then sort have as mobilized just our business, can here question that and prioritizing my that get the priority then,

on And talked a at which point, that OPPS Drew we Centene from process, also disturbed practice perspective inpatient solid because any during an ] long-standing not of about had process. visibility has throughout were that claims, before. paid, not received using very has point that [

that to a catch incident so visibility being on up And coming reconnected. then outpatient of providers was basis as a quickly and result good into relative able

percentage claims. highest missing the So our mid-teens of point, we were

and quarter, by closed in the that processes. we So impact our modest, we the very was financial the for time accounted

Operator

Stephen question at Fargo. next our from comes Wells And Baxter

Stephen Baxter

$XXX you what to first that ask versus I of annualize in $XXX saw guidance you'd seems revised revised quarter something wanted around the revenue on billion closer premium based to like and about It billion. service the guidance to first. the

mind. if be in anything we there's keeping should So wondering

another kind premiums Just model. the the call of were well quarter above our as Medicaid in out,

So that's anything I it. don't if there's influencing there know

MLR are MLR that? Medicaid about perspective, And then and progression thinking the that factors through you the starting point the influencing from Medicaid are how from the year

Andrew Asher

a Stephen, amount we QX, state-directed have of did fair Yes, payments. in

believe, relative to Medicaid In the expectations normal XX-basis-point number had our our response accelerated in also actually state-directed fact, states, impact about level a of of That some a HBR we Change QX on incident, those. a payments. to of

So revenue. our premium up in showed that also

So you can't quite QX. annualize

little through side, bit flip got the there attrition bit could a growth redetermination into maybe And coming a expect we've then we QX. bit a well. more on But in more little be -- some little as QX,

Medicaid So of that the the the of would progression be revenue year. throughout rest

Medicare, little want XXXX we're attrition to going probably states, to the bids and a prepare emphasize, where throughout more want make terms of for as we for decisions PBPs, products, the bit in year age contracts 'XX. to we bid deemphasize where we our

will we planned a So in Advantage throughout have bit the year. little probably attrition more as Medicare

the things of So to those think through. are some

X.X during Marketplace, guidance. service assuming your we're Hopefully, we want flat in the SEP. bet to million upside grow some point, at there that But revenue in we on there, is just if can members. to and didn't premium

HBR. down the expectations. about payments sort We above our so in of XX.X% XX/X time You We've also rates that the Medicaid do. our But we state-directed we've half of by Yes, XX got level. asked quarter. of came on in pressed for to X/X from expect initiatives being frame. definitely at to HBR work Remember that that some show half up of -- the about QX to rates our got the drive

Medicaid. a think broadly there that's cases. bit a so far, in in distribution than I of so good the little number higher industry But

state getting that, behavior normal whether the or where we're changes but we've states to that practices we're presenting make that course a there's for sure costs got paid more stuff. And always it's that's and health in carve-out PBM data,

that to So drive of throughout the year. do expect XX.X% the we rest down

Operator

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

Justin Lake

you of this right, strategy, X% here. First, wanted margins your lot expect And given I of a coming target? ton on here, do in to XXXX. X.X% then to changes to There's exchange just in PDP ask to a your year your come more they're broadly, where update relative getting your questions

you're premium kind premium? things And about much going even us you for think parts in how more you just do XXXX. would membership much in to lot have? so would order -- in D understand premium of then could Just to you you could price how would to if how membership. Can magnitude your of Drew, love we up a didn't see the have like for Like, if liability, to moving how flat maybe change, 'XX? tell bad going take if at you're us you of terms debt. more And have the tell XXXX you much have Part on

Sarah London

will XXXX. before, to within not our range That Justin. as is that be has we for expectation said X% our Thanks, Marketplace Yes, we well changed. in target X.X%

Drew And into details then PDP. on I'll let get the

Andrew Asher

Yes.

available. -- So impact good I this coming conference, you're this to -- at hit had Act, in the of which for is PDP, year the of Barclays real go me But question. XXXX. a of this Inflation And and let right, some point, But your is because which Justin. 'XX it's replay 'XX, over really change the the larger Reduction we the that more

the yield point, went because the that the to based government bids. the direct first And your subsidy the to federal payers' upon to XXXX, is drives payer 'XX, pays since and what for it $XX. all revenue direct from up for time $X went the subsidy So

we to XX%. to to we amount through rip member phase get more 'XX, of conference, the think, $XX. that that pocket, that's increase can for And it's of XX% the that maximum likely mechanics to going so driven by, catastrophic scores how $XXX your can And from since than cost point, members now the around the share by March changes quickly risk actually the and we've gotten

this we've business data. the is So underwriting And since been got now. that all We've XXXX. we're good the news in

been just of that we've administering we're slice So risk a anyhow. taking

I mentioned the member out pocket. of

thinking the people essentially any MPPP where members are program, and the bad that, the smooth the behavior Very good debt. changes cost share. think had can out about point through You on that in the to Hopefully, members.

yes, Marketplace that we're where then thinking assume, triangulate You to might debt. bad changes IRA impacting with And that do We've some manufacturers, bid. their to what about data got with all have they from to the be do behavior business using should some behaviors. our manufacturer of we the think

all the goes going and drive And into will membership the upon it subsidy about yield significantly, Naturally, should think up. amount that in drive standpoint that revenue the bid of the right, is from PDP retention based process, a you're between direct which business direct fair because up. up subsidy we will right. you're So balance the going to grow a

So thanks that. for about asking

Operator

next today our Raskin question And Josh Nephron. comes from with

Joshua Raskin

another to I your billion $XX Medicare that an to strategy would wanted XXXX that based another bid allusion to for suggestion Advantage months a couple to be to you're go you where going you billion, of you billion book know $XX expect back of terms sort with would of be for next and expect would not in think here. understanding you $XX bids And membership or do then to on year? flat PDR today? to margins submit down But what

is heard large I I Advantage not the the understand Medicaid sort lastly, where to commentary. a advantage to justify important before, for enough even is business more where scenario depending revenues is But becoming then a the with earnings Centene? heard I important. operating footprint just and still there And infrastructure? core contribution MA not an the segment. is there Medicare is of idea think scenario a some don't that we've But this

Sarah London

compelling. and Yes. we terms Maybe we the Thanks, that produces between growth the in say take question long-term the very and today and landscape Josh. see look I'll last what that tie at again, first of Medicare -- opportunity, as the as Medicaid

landscape we're the to very drive but And to lines across that focused the of then growth Medicare for business. both rebuilding committed in and so on see earnings we're franchise members longer-term our always business. growth that and using evaluating complex opportunity contribution Obviously changes, how low-income

things focused the as which we're is expected. remain high-quality and remain challenging have can clinical shifts. durable the I us But track. are of X/X focused Medicare for to improvement really to and XXXX, will biggest certainly said, might Relative think lever us that environment hasn't franchise a again, we and control landscape a for changed SG&A and being as rate on we on -- that Drew most the building What initiatives, more allow of STARS, agile sort are then on performance than

said, as to bid too early, the decisions profitability. do the support book, Obviously, as quality see we make to strategy. But volume efforts focus the improve lever position to we continue to as discuss county-by-county improvement and you of sharpen those

but X X weigh I of taking also weeks. account on to we're the those early guidance the think next in think and as year too the to that as it's of we the obviously a we the PDR, about come into of all factors set balance we sort finalizing through over decisions

Operator

Mok Andrew next question comes Barclays. our from with today And

Andrew Mok

the how follow MLR. that trends of the on strong in sense MLR? year balance Medicare combined just on a impact underlying that's Medicare PDP And the strong MLR for can with growth the the business, you the give of to up to us wanted supposed and Just given seasonality there

Andrew Asher

Yes.

right PDP Medicare the in our seasonality business of segment. on You're

the got the commercial business and the So where unlike goes year a you year, beginning up deductibles opposite your HBR in through in it's of the PDP.

still range the for around segment good year. our for we full feel XX% about HBR Medicare So the

relative as in in relief tick-up still of bit a earlier, of little elevated but Inpatient, higher said embedded outpatient with January, we've 'XX. but in level bit got throughout I our February, trend, QX And still QX. see to forecast. consistent to good a in a Underneath of It's February. little that to that authorizations elevated assumptions 'XX of March perpetuating that relative since

forward So well. we've as thought about that going

well Medicare. as been And paid clinical some then able in that have inpatient we've There's revenue of the amount of on curtail right other of to good authorization. execute that got sort and getting that helped initiatives performance we've

feel and expect pretty I the So good about sort on carry year. QX of through that to

Operator

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

Nathan Rich

on membership your are guess, now, duals on wanted changes you made terms you that that Medicare that right Advantage. longer to nonduals you're if could us maybe guess obviously, sense to in I when term? -- prioritizing I you're of need be there. and stick of where give highlighted population thinking are margins serving I opportunity the the a population relative of population approaching given think X/X design and for to about about XXXX, this I and how currently bid

Sarah London

Yes, thanks the for Nathan, question.

and really population, redesigning year, little into population in bit pleased this of loyalty it's And is low-income cycle came reach really drives And talked earlier mind. but complex more experience team among being again, those that our this members what we best intentionally product how we AEP. the we population. -- XXXX the So that distribution we're that about the really during product with executed the duals also with channels a design, but broadly thoughtful about offerings and inclusive

we were And of resources in so our Medicare think the to across synergy matter population in duals concentration ability local population in with of serving the in our population health these saw that terms leverage those and team's driving local And of knowledge an uptick that have this that terms and in to for. understand community in that we outcomes. overall looking really Medicaid AEP, what members, the consistent bodes I well that

think I continue to drive population the focus we're that like to able So into the all feel long we the best XXXX to we in in being to products the well going book terms it term. those go say, yield further is cycle to over members deliver to and that bodes on whom value as of design

Operator

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

Sarah James

Medicare. I wanted to to back go

the SG&A for Medicaid still it framework that higher the given targeting, business scale a your being hundred run your that ballpark given out I-Day. of of around you rolled evolving you where the the and basis Medicare I typically, would out unit? I business overall? how you think do points think still point? do the percent that leverage think think So on guys then SG&A for Medicare Because would goal costs strategy for you're couple But is that a where footprint, rates about couple run. is And overlapping of than overhead about at came fair

Andrew Asher

Yes.

the get million million well to And came out, basis we Centene X of the well to and of plans So when that. the SG&A get below And over Advantage. to you're combination. be track WellCare need to members at had want on are points We -- X scale next in WellCare WellCare to and efficiently. effectively do -- below right. years into where few members, sort I operating said, least take XXX at Medicare to about Think to was

predominantly attrition as tie-in prioritize -- even a the scale strategic of as really and we're to Medicare bit scale the Medicare issues about with we Medicaid, your to clinical in STARS up SG&A initiatives. levers we more about So recovery well not margin prioritizing other the point, next being goals matching expect as but the we're talking driven footprint few little here concerned and by years, the over as that like

a And So itself. little it's distribution than SG&A because got costs higher things higher open bit ratio Marketplace actually much you've Medicare a like is Medicaid and that. and than enrollment certainly costs

that way our mechanically rate. its into So does SG&A work

So through concerned side later side Advantage. the with Medicaid XXXX, about by the in of and subscale power if even seize sit business want we're we'll business Medicare that We some to decade, attrition. to future in means that the our being on not opportunities

Operator

today TD Gary question comes next our Taylor from And at Cowen.

Gary Taylor

of even or guess, those line. just the last total employees are just in We're of to second. XQ of ] trying sequentially. kind MedEx follow comment a the down that might what I into employees to G&A for just through X,XXX I on medical think Actually, sequentially, sequentially looking just terms some wanted XX% be support XQ, up, implications at in [ I was

to then $XX -- see and the And quarter is we XX-Q, for when PDR and that reported weighed million on the just the quarter? EPS my Medicare in the the that ran the question be Medicare through reported this MLR additional $XX would impacted clarify second P&L additional just on an million this

Andrew Asher

pretty Great questions. employee-intensive the base in Britain. of That was is Good of the the Yes. Most change employee Circle. in divestiture

a of that was So result divestiture.

of efficiently the But move and was Although have that taxpayers, we business that and and job on governments, to that managing amount big behalf are do resources resources, the trying to, matching federal of divestiture. with due effectively. to we of on behalf it's constantly state managing right the our efficiently,

PDR was a maybe expected in relative ratio segment. the it pushing has the Medicare it But did while it million wasn't the to make It hit QX out we us. QX, in you're it exactly planned, little did completely Medicare the more QX, surprise year, as being $XX the was the as for its million, way and mapped XXXX the bit And -- loss to P&L. policy of during that little right, so the sort as up we relieved of year $XX in bit seasonality into a a and that then

Operator

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

Calvin Sternick

had I clarifications. of couple a

the in did color than was higher the rate? you Medicaid, membership curious and guided Just to. see the how to that give members of if Or number reconnect relative you developing on were see on higher previously in year quarter? you quarter over drivers you anticipated disenrolled more the of membership those could do the a little there you First, million fewer what a the rest XX.X

is on second, on X.X% core you the of X.X%, Medicare then is expected? that little composite Or better the Medicaid payments? running want bit than is inclusive accelerated the that And -- rate, to the clarify, the state a just

Andrew Asher

Yes. mid-XXs that On expect to still membership, in year-end. be by we

tail that as out direction, on And stretched probably QX into But the right it's QX. call few so states that timing off carry XX luckily, XXX,XXX-member year-end, growth And redetermination then high well the too which operationally. win, by membership to seized, as process. mid-XXs in X/X. is Arizona of of opportunities protest, nice And Oklahoma, revenue. that couple the low includes really that LTSS remarks, went subject all there's some redeterminations, XX.X heard think into some membership commenced around of a rounding, of million, will But more I will a the and which right? rounding they've but -- Sarah's difference even to may estimate it's precision of in point we in that but you And

question rate, trend. acuity, that. rate, to just whether little sort composite on then a to that's rate relates the an And of bit yes, we're the composite the view general rate relates X.X%, whether or above all-in of a your redeterminations And

Operator

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

Scott Fidel

the investment couple cash income. in Just would walk as know us that sort flow, modeling then balance helpful. just reasons was for view towards second you on income, noisy of obviously also year. if investment quarter sort on there questions what had I the a first quarter of the and for you of rate be can One, of the included you the for were first quarter a few the operating that And in the gains mentioned. run

did given giving year update If full wouldn't and thinking CFFO quarter you the about an then us you maybe that April. in, in state came payment the how you're on just expectation that mind second get

Andrew Asher

Yes. we the those Q, Investment income, we just which disclosed if you throughout peel filed. gains, away

ripped you through understandably, So yet. haven't that

You little million in X. the can't by that quarter. just get bit But multiply a you over $XXX

rate our annualizing that be We expect Maybe is those the conservative, difference between guided but the the that -- that. to we Federal will Day. play we've forecast. Reserve multiple be to billion $X.X just But the cut full decide got little year and bit Investor built above into to a out above scenarios at

our saw in quarter. relieved sheet, the that of balance behalf we our You lot of had payments We a lot state-directed payables we on at payables. Look accelerated of also a providers.

well. -- to that above pleased on up payables billion. So has investment in that impact $X.X in building we going obviously, you're pharmacy expect rebate bit and that a we're little come receivables, when you relieve to income But an as come

bounces On A decides flow, quarters. this in business the between X/XX, you operating bit. us have that on cash X/X state a flip versus quite you big a large as know, pay around and

timing rebate of Just receivables mentioned some invoices. payable things that or impact cash pharmacy flow as well, the

can quarter-to-quarter to fool's predict that What that the only but of is matters sort maybe to such not and share -- subs, our And play as it's from cash cash few that deploy the of cash you'll buyback subsidiaries year that we see how in we GAAP pick business capital. capital the debt little in the parent will that will in for this statement errand deployment So quarters. to the terms up, some expect from comes later in well. out. Q, next debt that dividends drive flow, try bit the a really reduction as flow a And of over to

to. what looking that's So forward we're

Operator

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

Albert Rice

pool? and Day, once Is at I on risk in still wondered, in could XX quarter, the still thinking of the for disenrollments has on process of thought your all little largely -- Investor said margin think the Medicaid. improvement third you're impacted think do you get A that whole the quarter, XXs basis Appreciate target points if when you you you visibility And the the couple that finishing reiteration think second and of of high long-term maybe 'XX get how quick things in point? here. I and for are HBR. 'XX this you the Medicaid spills redeterminations that a up you at your

Sarah London

A.J. Thanks, Yes.

You're right.

XX% point. And tail little that sort QX roughly and months QX of of that of membership member the bit. -- cumulative Obviously, impact we're be standpoint. So that the a through we the sort by will way of complete do largely a X think through redeterminations from membership trails and run

X/X of nice process preparation the We've the seen that we've had say have talked of that with mirroring think don't this that watching would rate updates did Drew pool. process leading over that we're I shifting I year. cycles partners and the And that last we as wait through same we to through a thing ago, which not conversations modeling been in the us closely, risk have to really part year to our XX/X. the about the sort team proactive that's allowed and is into between -- of state see move the rate those

point dislocation that 'XX and tailwind of of And that recovery a any back the that possibly that's the sort and margin picked open, terms said up trailing bit get we where will of we into basis 'XX. see on margin. in little in really acuity between so address bolus to rate as leaving And of obviously the some in of idea that the trying before, but cycle,

Operator

next Jefferies. question from comes Windley our today Dave with And

David Windley

a So brief one that point. last comment, just on maybe last

the visibility, On called think out rate XX%. you I

of about you commented hoping -- to expecting that of being is up, rate getting rate visibility payments the Sarah, where do. XX% about you matching talked that on. just yet? catch-up that actually in from think acuity retro I'm states have kind had already mix of don't of of some you is which, You kind understanding the Or and Is matching we the acuity you remaining are those should amount what squared just on And discussions? have

Sarah London

Yes -- okay.

Andrew Asher

Okay.

means period sort match high we're of in have rates XXXX view get shake and to limited know business. but would Sorry. -- mix be upon rates going XXXX need macro and expect X/X of for may there's cycle, month based or To we don't time what rates, the into we year. to expect when the of XX% the the perfect calendar have this calendar know The XX% acuity, out. year they know. ultimately, point, impact that X/X XXs don't be need certainly we today's We is to months, the the XX/X member we a we not which that to would -- rate member a It on back XXXX is XXXX,

a the the couple state So might "Hey, on couple of different retros. seems we mark be missed different like It last of be companies might waiting retro. going time. retros. forward of their realizes there and a actuaries, where have adjustments only There definitions We're

this forward." retros of we fix the Day expecting about me Let going still QX talked call. are Investor But on as we a at couple and

And well may creates that's 'XX. largely some 'XX, a expansion a take that we capacity rate on opportunity. look or But basis, for it's in performing at not forward. XXs Medicaid the cycle a we're getting the matching does margin so. actually immediately. a acuity going that back -- to consolidated But that's expansion move into high margin On and rates company remain expecting as It the correct why into

Sarah London

and very with collaborative only teams state the drivers. the step with have built would of we've we stepped been really a targeted I've they up impressed add, those I to this really process that And Yes. our that those the solid through of the really dialogue. encountered dialogue how have sort as There on work team clarity into They've dislocations, is are data-driven just how our conversations. in solutions-oriented watched approach. complexity clearly thing It's where partners which just is

so through think get this that again of as And I partners get state building to I our we matching sort the to has tailwind process been consistent framework work opportunity. creates state credibility and and, think, with throughout back a

Operator

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

George Hill

and Just talk towards be for I XXXX, I the talk about high you XXXX, X quick Part kind all just revenue guess strategy and D new could in how STARS model achieving talking the about interested you about would the were ones to Drew, me. would for progress ability in of the D kind think hear of that business. comments for risk risk could on you about didn't goal. new of the goals if make part if I D impacts you talked I model. you you Part a level, drive Part kind progress just the the quick as the to of love, changes at the as that And

Sarah London

George. Thanks, Sure.

We're leveraging of obviously we in the engagement trajectory. across for line great that of Medicare underway, a of a at the So of quality, focused because for has a top business. on the initiatives But work priority and us on impact comprehensive STARS the remain given organization very detailed regardless Very it terms with governance has level. progress process, pleased visibility the organization.

what the We're that first have of focus which, you'll in in and this advancements progress days. in XX will we most we maintained ops in admin on today, CAHPS HEDIS and next and year's the wrap past was Those cycle. remember, cycle, in And processes. XX those of us. to believe made Based and last we additional then were metrics, sort for middle know focus the up the on programs

in still that's TTY flight. have also We

us of look a the confidence rerun allow to QX the degree those land with pieces October. higher So then of will and last projections we here towards are end degree high of that to of as -- sort

of how in detail organization more and team on priority. show we're the a expect overall, in looking pleased this critical across the call. the for But what really alignment so just up, is QX again, with that And to terms October continues

Andrew Asher

for risk And but mention were risk all needs rips that's through you're out the pocket, to bidding I MOOP. scores and the that able for cautiousness not model about. the the right. is by cycle. the why mechanics and did Yes. industry and I member as to into scores cost be that bifurcation share of or And to just for really, the how -- to reason between absolutely PDP a there's run members things the think we message that factor The worked MAPD, well the also in XXXX. And getting that's think maximum Those the with and of -- PDP timing risk important are bid

Operator

And our Bernstein. next Lance question with comes from Wilkes

Lance Wilkes

about with that Can turned question, there et a on that? and in the you course adding over if just of formulary talk interested are January might looking any coverage cetera, I dialogues that at broader like how GLP-Xs into kind year And and maybe the with to the a particular, the on, alignment, PBM spill levers on 'XX. of as then things ongoing states, And of ramp a of your was they if X, should little migration? all if savings in bit be

Sarah London

our think X. well how who's Thanks, massive and before the talked because significant you think team phenomenal the that I But through for undertaking. can Lance, just day. about next that drop something about I don't the such everybody question, that did pharmacy We've went, in the I they brag a mostly job don't January enough been mic knows

folks sure of collaboration process our work that last make with that, tirelessly for over ESI. months great And smoother We've had gets these to continued the members. couple have smoother just so to and

really on trajectory just front that so And positive. continues be to

talk economics step-up let a some little the in I'll And activity. the bit then Drew about the of and GLP-X

Andrew Asher

Yes.

wait So to we want for economics. didn't

our members ESI we're But as ways federal deliver benefit manage to constantly state figure to on our So value we and at of do working X/X/XX. to and and our customers our stairstep out with of costs. have customers partner behalf a

point we to So we'll improvements to expect in that ecosystem. the normal and forward, continue try sort of efficiencies drive pharmacy from course

through lot can but states company formulary, to and that that's control make and the that where preferred just administer rates the to we the need it's make the whole. they to they data then decisions states as the the we states the And drug of There's sure not to a loss plans. take And the list that for diabetes the allow match that there's could choose it's material of risk the by have so the their with for. GLP-Xs a Obviously, there. GLP-Xs we the cost where a in indication, allow not we're the loss see yet weight coming decided uptake for -- to indication, a GLP-Xs, couple quick share have for states. On and couple, weight indication. But data go them volume to costing them only benefit with show what them,

Operator

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

Sarah London

we're that progress thanks, and powering everyone. landscape we how morning. Rocco, and Overall, Thanks, demonstrated and time with pleased this through a are so dynamic Appreciate with the interest we've far. the

and us, next joining you appreciate So see we'll you quarter.

Operator

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

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

Centene (CNC) 26 Apr 242024 Q1 Earnings call transcript