See which workplaces made this year's list.

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Employees say:"I have a People Leader that does not micromanage but is available to provide assistance when I need it. I love the guidance and training that People Leaders receive from Corporate. I enjoy the people I work most closely with, who are from all over the country. I also love working remotely and, as an introvert, think that I work best that way. I also love Centene's focus on work/life balance. "

Best Large Workplaces in Health Care

The corporations on our annual list of the world's 500 largest companies combined to generate $41.7 trillion in revenue over the past year.

Fortune Global 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Fortune 500

The 300 companies on this year’s list brought in over $12.6 trillion in revenue for the latest 12 months, with the median revenue figure at $22 billion.

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The companies on this annual list make a conscious effort to be supportive, inclusive workplaces.

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Employees say:"I appreciate that the company has responded to feedback from employees and implemented/modified areas that truly make a difference to those working here. I believe that this has led to a better morale overall and results in more commitment and dedication from employees."

100 Best Large Workplaces for Women

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Employees say:"I love our mission and each day I see how our team and all the employees from within the organizations strives to achieve the upmost of our mission. I love what I do, what we do for our community and our members. Always going above and beyond, the recognition of each staff member speaks volumes to myself and others."

The corporations on our annual list posted aggregate revenues of $41 trillion for the second year in a row.

Industries included in the sector are insurance and managed care, medical products and facilities, pharmacy services, and pharmaceutical companies.

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The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

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The 25th Fortune World’s Most Admired Companies list suggests that tech giants’ peers respect them as much as ever.

The corporations on our annual list of the world’s largest companies delivered a record $41 trillion in aggregate revenues.

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The 300 companies on this list are transforming industries from the inside out.

GPTW Health Care Large 2023-Centene Corporation

Employees say: 
 
"At Centene Corporation, new, innovative ideas are encouraged. We constantly strive to work with community partners and invest in the communities we serve. We are constantly evolving and are flexible to handle change."

GPTW Women 2023-Centene Corporation

Employees say: 
 
"The leadership 'talk the talk and walk the walk.' They say what they want to do, then they do it. Mission and business focused. Support for the 'sandwich' generation mom, like myself, has been great."

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

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The health care company, led by CEO Sarah London, focuses on insurance plans offered through Medicaid and the Affordable Care Act. Revenue was up 15% in 2022 from the previous year. 
<ul> 
 	<li>Centene’s $2.2 billion acquisition of behavioral-health specialist Magellan Health, completed in January 2022, was cited by the company as a major factor in its revenue growth for the year.</li> 
 	<li>Elsewhere, Centene has been divesting itself of “noncore” subsidiaries in an ongoing review of its portfolio. Divisions that it has sold off include Magellan’s pharmacy and specialty-health units. In May 2023, Centene announced it would divest its A.I.-powered health care analytics company Apixio.</li> 
</ul>

Just as it dominates our economy, Big Tech now dominates Fortune’s annual ranking of corporate reputation.

Aggregate sales hit $37.8 trillion last year—an increase of 19%, the highest annual growth rate in the list’s history.

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Employees say: 
 
“Yes, we operate as family. Everyone has the same goals and that is to take care of our members and each other. Executive leadership is very personable and accommodating. This company does its very best to reward their employees and accommodate them the best way that they can. I love my company. Everyone is very friendly, family oriented and considerate of one another. I would recommend Centene/Superior Health Plan to anyone that I feel would be a good fit for the company.”

This year’s Fortune 500 marks the 68th running of the list.

A global health crisis continued to drive revenue growth at Centene, a health insurer with considerable exposure to the Medicaid and Affordable Care Act marketplaces. Revenue increased 13.4% in 2021, to $126 billion, and as of early 2022, Centene’s managed care membership had increased by 1.9 million over the previous year. In January 2022, Centene acquired Magellan Health for $2.2 billion, expanding its behavioral-health offerings. The company is also coping with a loss in the corner office: In April 2022, CEO Michael F. Neidorff, who headed Centene for more than 25 years, passed away after a long illness. Sarah London, formerly vice chairwoman, is now chief executive.

After a year in which humanity leaned more heavily than ever on tech giants, see which companies topped Fortune's ranking of corporate reputation.

Total revenue for the world’s biggest companies fell 4.8% to $31.7 trillion this year—the first decline in half a decade.

G500-2021-057-Centene

A couple of strategic bets paid off for Centene over the past year. The health insurer dug in to the Affordable Care Act’s marketplaces even when the Obama-era health law’s future was far from certain, and through April 2021 it had added 320,000 new members under the Biden administration’s expanded special enrollment period for those individual insurance exchanges. Centene’s 2020 revenues exceeded $111 billion, after executives accurately predicted that the COVID pandemic would bring about a windfall, with growing demand for coronavirus-related services across the nation. The question is how long that win streak can last. “This a year with unique drivers,” said CEO Michael Neidorff in late April 2021, “which we cannot be certain can continue throughout all of 2022.”

This year’s Fortune 500 marks the 67th running of the list.

F500-2021-24-Centene

For an astounding 13th straight year, Apple claims the top spot in Fortune’s annual ranking of corporate reputation, based on a survey of almost 3,800 executives, directors, and analysts.

This year's Fortune Global 500 generated $33.3 trillion in revenues and $2.1 trillion in profits.

Centene has at times been an oddity among its health insurance peers. In the past few years, the company has remained steadfast in serving the Affordable Care Act’s individual insurance markets, despite what would seem like never-ending legal and political uncertainty surrounding the government program. Well, it seems the skeptics lost that bet. Centene's strategy, coupled with acquisitions that focus on government-affiliated health plans like Medicare and Medicaid, propelled the insurer to 24% revenue growth in 2019, compared with the previous year. And it may benefit from another financial tailwind to come: The firm reportedly expects billions of dollars in revenue growth this year, due to the coronavirus crisis.

This year's Fortune 500 marks the 66th running of the list.

Centene has at times been an oddity among its health insurance peers. In the past few years, the company has remained steadfast in serving the Affordable Care Act’s individual insurance markets, despite what would seem like never-ending legal and political uncertainty surrounding the government program. That strategy, coupled with acquisitions that focus on government-affiliated health plans like Medicare and Medicaid, propelled Centene to 24% year-over-year revenue growth in 2019—not to menition a steady, decade-long rise on the Fortune 500. And the insurer may benefit from another financial tailwind to come: The firm reportedly expects billions of dollars in revenue growth this year, due to the coronavirus crisis.

As we face unprecedented collective challenges, cooperation has become a business superpower.

50.CTW20.Centene

This insurer’s 24 million members, the vast majority of whom belong to Medicaid, Medicare, and Health Insurance Marketplace plans, are disproportionately vulnerable to harm from the pandemic. Centene has leaned into the challenge of keeping them healthy by plowing money into infrastructure that helps Medicaid members access telehealth, and by removing barriers (like prior authorizations) to COVID-19 testing and care.

Change the World

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This year's Fastest-Growing Companies marks the 19th running of the list. In our annual list of public companies with the most stellar three-year profit, revenue, and stock growth, Facebook makes its first appearance.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Centene Corporation is the largest Medicaid insurer in the U.S. as of 2024. The company works with programs in the public and private sector to provide healthcare services to the underinsured and uninsured, military veterans, and commercial organizations. Programs it serves include Medicaid and Medicare members, Medicare Prescription Drugs Plans, Health Insurance Marketplace, and the TRICARE program. It also operates its own health care and dental clinics and pharmacies. In 2024, Centene pledged to help build nearly $1 billion of affordable housing and drive better health outcomes for its members.

Q2 2025

Q1 2025

Q4 2024

Centene (CNC): Company Profile, Stock Price, News, Rankings

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Centene

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Please note, today's event is being recorded. I would now like to turn the conference over to Jennifer Gilligan, Investor Relations.

Thank you, Rocco, and good morning, everyone. Thank you for joining us on our first quarter twenty twenty five earnings results conference call. Sarah London, Chief Executive Officer and Drew Asher, Executive Vice President and Chief Financial Officer of Centene will host this morning's call, which also can be accessed through our website at centene.com. Any remarks that Centene may make about future expectations, plans, and prospects constitute forward looking statements for the purpose of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by those forward looking statements as a result of various important factors, including those discussed in our first quarter twenty twenty five press release, Centene's most recent Form 10 ks filed on 02/18/2025, and other public SEC filings, which are available on the company's website under the Investors section.

Centene anticipates that subsequent events and developments may cause its estimates to change. While the company may elect to update these forward looking statements at some point in the future, we specifically disclaim any obligation to do so. The call will also refer to certain non GAAP measures. A reconciliation of these measures with the most directly comparable GAAP measures can be found in our first quarter twenty twenty five press release. With that, I would like to turn the call over to our CEO, Sarah London.

Thanks, Jen, and thanks everyone for joining us as we review our first quarter results and updated full year 2025 outlook. This morning, we reported first quarter adjusted diluted EPS of $2.9 consistent with the expectations we shared with investors last month. Our full year 2025 adjusted EPS expectations remain unchanged at greater than $7.25 We have increased clarity on the components of our 07/25 floor and have moved some of the underlying metrics as a result. Drew will cover these and other details of the quarter in a moment.

Uncertainty and change are not new to Centene, and we are managing the business well while navigating a dynamic policy landscape. Relative to the active national dialogue around health care policy reform, we believe a few things are important to note. First, we do not see broad support for benefit cuts in Medicaid from either the White House or from Congress. In fact, over the last few months, we have witnessed an increase in bicameral Republican members objecting to major Medicaid reforms. While there is building momentum around work requirements within the expansion population and opportunities to drive better efficiency in the system for beneficiaries and the states, we believe that large scale benefit cuts and significant policy changes would present challenges for the reconciliation process.

Second, there is growing bipartisan recognition in Congress that the expiration of the enhanced premium tax credits must be addressed before they expire at the end of the year. Recent survey conducted by leading Republican pollsters found that 78% of swing voters support extending health care premium tax credits for working families. The criticality of these tax credits for Republican voters, small business owners, and our existing rural health care infrastructure, as well as the potential of the individual marketplace to serve as a platform for ICHRA growth, has taken root for many Republican congressional leaders. Congress is scheduled to return from recess next week, and we expect activity focused on driving the contours of a reconciliation bill as the first order of business. Republican lawmakers are targeting Memorial Day for a reconciliation bill, but much will depend on the consensus building process.

Beyond reconciliation, the next big order of business will be government funding due to expire at the end of q three. We anticipate this could be another vehicle where health care issues are addressed. Amid this backdrop, we continue to execute on our strategic initiatives while advocating for sound healthcare policy. We have demonstrated the ability to be successful under multiple administrations and expect nothing less as we navigate the next four years. Turning to the core business, Medicaid took important steps forward in the quarter as we continue on our path of margin recovery, including better alignment of rates and member acuity in more geographies.

As we noted back in February, approximately 40% of our Medicaid revenue received refreshed rates at the start of the quarter with an average increase of 4.5%. These rates contributed to underlying improvement in the performance of the book. However, the full impact of this improvement was masked in the quarter by a more active flu season than we anticipated. Medicaid, flu and ILI drove 130,000,000 of incremental medical expense in the quarter beyond our initial expectations, largely offsetting the underlying MLR improvement we experienced. On the rate front, our discussions with state partners continue to be constructive and to benefit from increasingly complete data, demonstrating the acuity shifts the industry has seen over the last year as a result of the tailing redeterminations process.

We continue to believe that Medicaid will ultimately return to pre pandemic margin levels as we work through the coming rate cycles and engage with our members to deliver high quality, low cost outcomes. On the business development front, we delivered several key Medicaid contract wins since the start of the year, underscoring the strength and competitiveness of our unique service model. Centene was selected by the state of Illinois to continue providing Medicare Medicaid services for dually eligible members through a fully integrated DSNP. The DSNP program will provide services and support statewide for members who qualify for both Medicare and Medicaid, as well as dually eligible MLTSS members. In the state of Nevada, our Silver Summit Health Plan has once again been selected by the Nevada Department of Health and Human Services to serve its Medicaid managed care program.

For the first time, the program will include expansion of Medicaid managed care into rural and frontier service areas, allowing us to grow our footprint across the state. These wins are testimony to Centene's expertise in both high and low acuity populations, making us a partner of choice in states across the nation. Our Medicare segment performed in line with expectations during the quarter as we advanced our Medicare Advantage business on a path toward breakeven in 2027 and managed the evolution of Medicare Part D amid significant program changes due to the Inflation Reduction Act. As you saw from this morning's press release, we have added $1,000,000,000 of annual revenue to our outlook for 2025 as Medicare Advantage membership is shaping up to be a little stronger than we previously anticipated. This better than expected membership is being driven by improved retention, and we are pleased to be able to attract and retain lives through our strengthening Medicare value proposition.

As we plan for 2026, we were pleased to see the inclusion of more recent claims data in the final 2026 Medicare Advantage rate calculation, resulting in rates that better reflect the medical cost trend we've seen in MA over the last two years. There will still be gaps to close between rate and cost across certain geographies, but this step forward was important as we look to deliver valuable benefits to seniors and return our business to breakeven in 2027. In addition to rate, the critical levers we are pulling to drive to breakeven in Medicare Advantage are STAR's results, value based clinical initiatives, and operational efficiency through SG and A reductions. On the STARS front, we continue to see momentum. And while a number of components remain outstanding, we are projecting underlying improvement across chapters.

That said, we are conscious of the fact that cut points or the relationship between absolute scores and corresponding star ratings have become more difficult due to recent methodology changes and variability in competitor performance. With that in mind, we took on the challenge to de risk our STARS outcomes for 2027 and to build a plan that supports our 2027 breakeven trajectory across the range of projected outcomes expected this October. Through the identification of cost saving opportunities and operational levers, we have increased confidence in our ability to generate breakeven results in 2027 with our current star ratings, or 55% of members in 3.5 star plans, with improvements on those results giving us increased flexibility and potential upside in our breakeven path. As always, rates for 2027 will be an important input, and we will continue to advocate for program funding that supports the critical health care needs of Medicare Advantage beneficiaries across the country. Finally, our Commercial segment, which includes our Marketplace business, grew nicely during the first quarter, as new enrollment and retention were both stronger than previously anticipated.

The impact we experienced relative to the reintroduction of integrity programs like Failure to Reconcile, or FTR, was more muted in the period than we originally forecasted, contributing to better than expected member retention. This membership strength is reflected in the full year revenue increase we issued earlier this morning. Recent CMS guidance suggests that ultimate STR notifications and actions won't be taken until this summer, suggesting we won't see the full impact of this member shift until Q3. As a reminder, we have these and other seasonal member attritions already baked into our full year forecast. In other policy news, CMS issued the Marketplace Integrity and Affordability proposed rule last month, including standards for the health insurance marketplaces, as well as for health insurers, brokers, and agents who connect millions of consumers to affordable individual coverage.

We are engaging with CMS on these policy proposals and working to model the potential impact of each component. The only major provision that would impact 2025 would be the discontinuation of the continuous SEP for members below 150% of the FPL. The rest, depending on what gets finalized, would influence market and membership dynamics beginning in 2026. With respect to enhanced ABTCs, we remain optimistic that legislators will act to preserve these tax credits given the value they create in health outcomes and market stability, but we are preparing for a range of potential outcomes as we establish plans for marketplace pricing and product positioning in 2026. While there are a number of factors that could impact the marketplace operating landscape over the next year, as a category leader in this business, we look forward to navigating the near term dynamics from a position of strength and recalibrating our book with a focus on margin and long term profitable growth.

Stepping back, as we survey the performance of our diversified portfolio, we are pleased to reiterate our full year 2025 adjusted EPS outlook of greater than 7.25 amid sector volatility that is unmatched in recent history. With three months under our belt, we are prudently guiding with an element of conservatism to acknowledge at this early stage in the year the many moving parts we are managing. We remain excited by our long term trajectory, including the attractiveness of our end markets, our positioning to capture meaningful market share and the associated earnings power, and the exceptional SEN team that is mobilized and executing against these opportunities, committed to delivering value to our shareholders and to transforming the health of the communities we serve one person at a time. With that, I'll turn it over to Drew to cover the quarter and full year view in more detail.

Thank you, Sarah. Today, we reported first quarter twenty twenty five results including strong premium and service revenue of 42 and a half billion dollars and adjusted diluted earnings per share of $2.90 in the quarter, a good start to 2025. While we manage the company as a diversified portfolio, let's go segment by segment for some insights of how we've been able to manage various tailwinds and headwinds to yield a strong aggregate result so far in 2025. Medicaid membership was stable and right in line with our expectation of 12.9 to 13,000,000 members. The Medicaid HBR, excluding excess influenza related costs, was approximately 93%, showing some progress compared to 93.4 in q four of twenty twenty four.

You'll see the print at ninety three six, including about a hundred and 30,000,000 of q one influenza related costs above our expectations. At a conference in March, we had also cited a hundred and 30,000,000 of excess influenza costs through February. And consistent with CDC data, influenza settled down as we got into March. Fundamentally, we continue to make progress matching rates and acuity, the keyword being progress, not completion. For instance, a four one rate cycle representing about 11% of Medicaid revenue yielded an approximate 5% rate increase.

Those still inadequate for that four one cohort in areas such as MLTC, home and community based services, and emerging high cost drugs. So progress, but more work to do as we get through 2025 and into 2026. On our entire Medicaid book, we are projecting a full year composite rate increase at 4% plus. Medicare Advantage and PDP both outperformed on membership. We retained more membership than expected during the Medicare Advantage open enrollment period, which bodes well for long term earnings power.

This is contributing 1,000,000,000 to our 2025 premium and service revenue guidance increase. PDP ended the quarter at 7,900,000 members, strong growth from 2024. Medicare segment HBR was 86.3% in the quarter, which as we covered in past discussions is expected to follow an inverted slope line compared to 2024 due to the inflation reduction act program changes. So a lower Medicare segment HBR and higher earnings early in the year and a higher HBR and lower earnings later in the year. Within the Medicare segment, both Medicare Advantage and PDP businesses were on track in the quarter.

And you'll see an intra year increase in the Medicare Advantage PDR, premium deficiency reserve. That was planned for and is solely related to the sloping of earnings during 2025. So no change in our view of Medicare Advantage earnings for 2025. Commercial membership was very strong in the quarter, not just during open enrollment for one one, but also in February and March. Q '1 commercial segment HBR at 75% was a little higher than last year's 73.3, driven by 1,900,000 new marketplace members in q one.

These members are utilizing a little more than last year's new members, but because it's so early in the year, we are not yet recognizing a matching offset for risk adjustment. We'll know more when we get the first weekly file in late June, early July. Given top line performance in q one and even as we forecast net membership attrition throughout the rest of the year, we are adding 5,000,000,000 of premium revenue to 2025 guidance related to marketplace. Moving to other consolidated P and L and balance sheet items, our adjusted SG and A expense ratio was 7.9% in the first quarter compared to 8.7% last year, which decreased due to continued leveraging of expenses over higher revenues and good discipline. Cash flow provided by operations was $1,500,000,000 for Q1, primarily driven by net earnings.

Our debt to adjusted EBITDA was 2.8 times at quarter end. Our medical claims liability totaled 19,900,000,000.0 for Q1 and represents forty nine days in claims payable, a decrease of four days as compared to the fourth and first quarters of twenty twenty four, driven by significant revenue growth in the PDP business. The decrease in days was expected given the mix impact of our PDP business, which will be a $16,000,000,000 plus business in 2025 versus 5,200,000,000.0 last year. As I'm sure you know, pharmacy claims complete much faster than medical claims causing the mix related mathematical reduction to DCP. Looking at the full year, we are pleased to reiterate greater than $7.25 of adjusted diluted EPS.

As you've heard, the theme of the quarter was strong premium revenue growth and stronger than expected membership. Accordingly, we are increasing premium and service revenue guidance to a midpoint of a hundred and 60 5 billion, up from a hundred and 50 9 billion. We are also recalibrating the consolidated HBR to reflect this growth and a couple of other items. 50 basis points is driven by one, incremental q one growth in market place with that growth assumed for now to be at a lower than average margin level. Two, a full year Medicaid HBR in the mid to high 90 ones inclusive of flu from q one.

And three, very high utilization of specialty drugs in non low income PDP members. While most of this is covered by the PDP demo risk corridor,

it makes it to our p and l. When coupled with s g and a outperformance in PDP, we are still on track for a PDP pretax margin in the one percents. We're also lowering the consolidated adjusted s g and a ratio midpoint by 45 basis points given strong performance in Q1 and based upon our 2025 growth and mix of business. And we lowered investment income by $100,000,000 as we reforecasted cash balances and calibrated potential rate cuts. So on track for 2025 at this early point in the year with a very strong top line creating attractive long term earnings power.

Now a few educational comments on 2026 since much of what we do in 2025 sets us up for success in 2026. On marketplace, there are two items that, if finalized, would impact the 2026 market size and risk pool that need to be reflected in 2026 pricing. Potential expiration of EAPTCs is one that we've discussed heretofore. The second item, as Sarah mentioned, is the new marketplace integrity and affordability proposed rule released in March with provisions that would impact 2026. Looking at actuarial studies, these two items combined may cause high single digit price increases, and that's before before any baseline trend adjustments, pricing forward trend for 2026, and potential tariffs.

While the proposed rule changes seem likely to get implemented, we are still optimistic about lawmakers seeing the merits of continuing EAPTCs. And over half of our states have agreed to accept two sets of rates, one with enhanced APTCs and one without, in case there's clarity by July. So rest assured, we are on top of adequately pricing for these matters. PDP, the high specialty drug trend, being partly driven by pharmacy industry behavior will need to be reflected in 2026 bids along with the assumption that demo risk corridor will not be repeated at the same protective level. And we'll also be thinking about potential tariff impacts when making bid decisions.

Remember our discussions last year about the PDP direct subsidy substantially rising in 2025 due to forecasted IRA dynamics? That landed right where we thought it would. Well, we expect another year of a large direct subsidy increase, maybe to over $200 compared to this year's a hundred and 42 because of the intentional and maybe unintentional cost consequences of the IRA. So again, we are focused on making adequate pricing moves coupled with a higher PMPM yield as we think about being responsible in our twenty twenty six decisions being made in the next month or two. We are very pleased to deliver a strong q one and more earnings power for the future.

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

Yes, sir. Our first question today comes from Josh Raskin with Nephron Research. Please go ahead.

Hi, thanks. Good morning. I was wondering if you could just give some more details about the flu related costs that you cited specifically, if you're seeing more physician visits, I'm assuming primary care and maybe even a specialty. And how confident are you that these are flu related and not related to some uptick in trend that could lead to downstream utilization? And I want to make sure all of that was contained in Medicaid.

You're not seeing any of that in the Medicare book, correct?

Hey, Josh, good morning. Thanks for the question. So, the $130,000,000 that we saw above expectations in Q1 in Medicaid is a result of very closely tracking, so we have definition for flu and what we call ILI or influenza like illnesses, and that is what drove the $130,000,000 Again, it's a consistent code set that we've used over the last eight years. We also look at flu related illnesses, we don't include that in the calculation, but it does support the view that obviously CDC reported this was the most acute flu season the country seen in the last fifteen years, and we saw both in core flu utilization and then knock on effects, but again, that one hundred and thirty million is isolated to our standard flu definition. We did see some flu in Marketplace and in Medicare, but not the same as one hundred and thirty million that we saw in Medicaid, and then obviously saw that trail consistent with the national trajectory pretty hard down in March, and so we think that is isolated to a Q1 item.

Got you. And I could just sneak in. I didn't hear a commentary around the long term embedded earnings. I think you've talked about $3 to $4 in the past. I just wanted to make sure that was consistent, especially in light of your comments around MA getting to breakeven even without the STARS improvement.

Yeah, no, clearly there's still opportunity to expand Medicaid margins. That's clear based upon the current HBR and what we're forecasting for this year. Still excited about and even actually probably more optimistic about the ability to get to breakeven and depending on the leverage we can pull, the STARS results, and then the 2027 Medicare revenue, maybe even beyond that. So that, that still holds. And then PDP, we're still on that 1% ish area in in pretax for this year.

Even with a little bit of pressure or a fair amount of pressure in non low income specialty cost, we're making that up in SG and A, so that still presents an opportunity for margin expansion. On top of that, we've just added 6,000,000,000 more in revenue, which is exciting to think about the earnings power of that over the next few years.

Thank you. And our next question today comes from AJ Rice at UBS. Please go ahead.

Hi, everybody, and thanks for the question. Maybe just ask a couple of the Washington related questions. I know at the Investor Day, you guys had sized your estimate of what the headwind would be if the public exchange subsidies, enhanced subsidies were to go away at about a dollar a share. You've mentioned some new things today, and I really wasn't clear whether the tariff comment was related to public exchanges somehow. But, is that dollar still a good number, or how's your thinking evolved on that if it has at all?

And then you also mentioned the work rules, which does seem to be something that a lot of you guys are talking about. I wondered, just conceptually, how to think about that if plans are asked to be the ones that sort of get the attestations about whether people are adhering to the work rules, etcetera, work rule requirements, etcetera. How much of a burden would that be, and how how impactful would something like that be on the business, you think?

Yeah, thanks, AJ. Great questions. So, the dollar is still good relative to the view of enhanced APTCs. We're working through the process of sizing the elements that came out in the proposed rule for Marketplace and obviously interfacing with CMS and providing feedback. As we see what gets finalized and for what periods of time, I think we can provide an update on the interplay of those provisions with the enhanced APTCs.

Obviously, we'll have, hopefully, increased visibility on what's gonna happen with the enhanced APTCs as we get into Q2 and Q3 timeframe based on a belief that either through reconciliation or through the government funding vehicles that Congress will act on the extension of those. So more to come, but we're obviously watching that closely and sizing both the potential impact and the interplay. Relative to work requirements, these, as you know, are not new. We have work requirements in some of our states today. We've also seen them come and frankly go in our states over the years.

And based on that experience, really a lot depends on what the ultimate framework is and the definition of able-bodied adults, what the carve outs are, and so we really would expect a high degree of variability in how and if they settle out at the state level, which again is not new for us, right? We operate in 31 states for Medicaid, which means the programs are all different. We're very used to sort of tracking these changes on the horizon and then working closely with our state partners to understand how they would implement them, and we've seen different levels of dependency or expectation relative to MCO's involvement in that process. We think there's a great opportunity to lean in there and map out state by state ways that we can ensure that members continue to have access to critical healthcare resources. So our teams are already at work on that process in anticipation of what may or may not come on the work requirements front.

Thank you. And our next question today comes from Justin Lake of Wolfe Research. Please go ahead.

Thanks. Good morning. Just talking on the exchanges, the risk adjustment numbers have been bouncing around for a lot of your peers. I believe Weekly just gave an update there. Curious what how Weekly's numbers kind of look versus yours?

Were you able did you move your risk adjustment around much in the quarter versus year end for 2024? And then that number does look kind of different than what it did in the end of twenty twenty three versus 'twenty four. Just curious how you see your risk pool changing. Looks like your payable was down pretty meaningful.

Yeah, actually, if you I know it's early. If you pull out the 10 Q we just filed, there's very good consistency, almost exact, consistency when you look at q four twenty four versus, where we ended up at q one. And the weekly data that we get continual updates on relative to the 2024 year, was very consistent with our estimates. So, you know, good nothing sort of out of line in the quarter relative to our estimates at year end for where we think we're gonna end up for 2024. So so pleased with that.

Yeah. The real question is gonna be the utilization we're seeing, in our new business, our 1,900,000 members. Some of that does look consistent with what should show up in 2025 risk adjustment. We think we're being prudent, sort of waiting to see if that's gonna be the case when we get our first view of 2025 risk adjustment data, which comes at the June, early July for that first weekly, data dump for, the industry.

Thank you. And our next question comes from Anne Haynes of Mizuho Securities. Please go ahead.

Good morning. Thank you. I know when you gave original guidance for Medicaid rates the second half, you assumed, I believe, around the 2.5% rate increase. Is that still the case? And do you have increased visibility on how those negotiations are going for the second half?

That would be my first question. And then maybe secondly, with Medicaid besides the flu, is anything running harder than you expected when you versus when you gave original guidance?

Thanks, Ann, for the question. So, composite rate for the full year we're now seeing at mid fours. And the rate negotiations relative upcoming, so think about the sevenone cohort, which is the next cycle, we will start to get visibility into that as we get later into Q2. So, more to come on that front, but as you heard me say, I think we're seeing good continued momentum in our discussions with state partners and the fact that as we roll forward, we have further completion data behind us in terms of the acuity patterns that started to emerge in Q2 right around this time last year. So that helps bolster the conversation in terms of supporting the actuarial calculus and I think helps in conversations with the state.

So obviously looking to that sevenone, nineone and tenone cohort to contribute to the back half of the year. And then, I think you asked about Medicaid utilization beyond flu, and so we continue to see largely the same themes, but Drew, maybe you wanna click into a few of those.

Yeah, no, Clearly, had the flu of one hundred and thirty million in Q1. That's that's transitory. Behavioral health continues to be a trend item. We've mentioned that probably for the last six quarters. We've got initiatives to tackle that and working with our state partners.

Centene (CNC) Q1 2025 Earnings Call Transcript

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