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Employees say:"This is the first organization that I have worked for that I feel that I am often recognized for my accomplishments and contributions to the team. I feel that my people leader genuinely cares about me on both a personal and professional level. I feel that my feedback is valued and am comfortable to speak up at any time. I am really made to feel like I make a difference in my position. I could not see myself anywhere else. This has been the perfect fit for me."

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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. "

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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."

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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."

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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>

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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.”

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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.

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

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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.”

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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.

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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.

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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.

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Centene is the largest Medicaid managed-care organization in the U.S. as of 2026. The company works with programs in the public and private sector to provide health care services to the underinsured and uninsured, military veterans, and commercial organizations. Programs it serves include Medicaid and Medicare plans, Medicare prescription drug plans, the Health Insurance Marketplace, and Tricare plans. It also operates its own health care and dental clinics and pharmacies.

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

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Centene

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Good day, and welcome to the Centene Corporation 2026 first-quarter earnings report. I'd now like to turn the conference over to Jennifer Gilligan, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Rocco. Good morning, everyone. Thank you for joining us on our first quarter 2026 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. Specifically, our commentary on our full year 2026 outlook, including the drivers of such outlook, are forward-looking statements.

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 2026 press release and other public SEC filings, which are available on the company's website under the investor 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. I 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 2026 press release. With that, I would like to turn the call over to our CEO, Sarah London. Sarah?

Thanks, Jen. Thanks to everyone for joining us. This morning, we reported first-quarter adjusted diluted EPS of $3.37, exceeding our previous expectations for the period. The strength of our first quarter performance enables us to increase our full year 2026 adjusted EPS outlook to greater than $3.40, up from our previous expectation of greater than $3.00. We are pleased to be off to a strong start this year, as increased visibility and operational improvements are yielding positive momentum and lifting our overall financial performance. Results in the quarter included excellent progress within our Medicaid business as we continue to drive margin improvement through targeted and increasingly scaled initiatives to modernize and standardize processes to better manage medical cost trend. Our Medicare segment results were ahead of expectations without performance from both Medicare Advantage and PDP offerings.

Finally, our commercial segment, the vast majority of which is made up of Marketplace, performed in line with expectations on a pre-tax margin basis as a slightly higher than expected HBR in the period was offset by favorability in segment SG&A. As everyone knows, it is early, so while we are off to a great start, we are taking a prudent outlook for the balance of 2026 as we continue to gain visibility into key factors that will influence the remainder of the year. With that, let's dig into the results. Medicaid results in the quarter were ahead of our previous projection, outperforming our HBR expectation in the period. Within that, we experienced a flu season that was lighter than our original forecast and saw a slight utilization benefit from weather events.

That said, we were pleased to also deliver solid fundamental outperformance in the quarter, thanks to continued focus and disciplined execution on trend management initiatives across the portfolio. Behavioral health remains the largest driver of trend, with other categories like home health and high-cost drugs continuing to be consistent contributors. That said, we are beginning to see pockets of deceleration across this cohort, largely in line with our expectations for how trend would mature from 2025 into 2026. At the same time, we continue to strengthen and scale the multi-pronged trend program we deployed in the back half of 2024 and ramped significantly in the face of elevated trend in 2025.

This includes standardizing best practices on utilization management across our markets, the addition and further expansion of successful clinical programs, ongoing data-driven network optimization to ensure our members have access to the highest performing providers, advocacy around program reform with our state partners, and increasingly aggressive efforts to stamp out fraud, waste, and abuse. We've discussed here at some length the work we've done around ABA, but with the benefit of more than a year's worth of data under our belt, we are seeing stabilizing year-over-year ABA trends that we believe are a direct result of the actions we have taken to ensure appropriate high-quality care for ABA members across the country. We continue to strengthen our identification of outlier providers who exhibit suspect or fraudulent billing patterns.

At the same time, we continue to advocate for the ability to more fully address fraud, waste, and abuse in a standardized prevention-focused posture across Medicaid programs. We recently highlighted several potential reforms in response to an RFI from CMS, including allowing proactive payment suspensions, creating safe harbors, and improving two-way data sharing. We look forward to partnering with CMS and the states we serve to better protect tax, taxpayer dollars and strengthen overall program integrity. Looking to the remainder of the year, our guidance assumes net trend, defined as medical costs net of these trends management initiatives, remains in the mid 4% range, and we continue to execute with the goal of outperforming that target. Rates are, of course, the other major contributor to our margin restoration agenda. We continue to work closely with our state partners to ensure alignment between program revenue and member acuity.

With respect to the full year outlook, we continue to track in line with our expectation for a composite rate yield of roughly 4.5%. Conversations with Medicaid departments remain constructive and we continue to present refreshed data and, in many instances, programmatic solutions for challenges our state partners are facing as they look to balance costs and benefits within the Medicaid program. While it is still early, we are pleased with the momentum we are seeing across the Medicaid portfolio, and we continue to see opportunity for advancement in 2026 and beyond. Our Medicare segment also delivered strong results in the quarter. Both Medicare Advantage and PDP exceeded expectations, producing an HBR of 84.9, better than our previous forecast and contributing nicely to the first quarter adjusted EPS beat.

Medicare Advantage, we continue to strategically align our membership with our Medicaid footprint and make great progress on our path to positive earnings. While trend continues to be elevated versus historical baselines, it is so far consistent with what we plan for in our bids, with slight avorability in Q1. Thanks to strong execution during both AEP and OEP, we are seeing a slightly more favorable membership mix, and our D-SNP membership is now at 40% of our overall portfolio. We are also seeing stronger year-over-year member retention, the continuation of a now multi-year theme, reinforcing the value of investments made over the last few years to redesign our sales and onboarding experience. This durable member base gives us the opportunity to deploy differentiated care models and drive both quality and health outcomes for members over the long term.

The business also continues to make solid progress on our value-based care strategy. The team has built a disciplined, performance-driven model that is tightly integrated with network strategy, clinical execution, and cost management. We have simplified our contract structure and focused the portfolio to a partner ecosystem that we believe can truly move the needle on quality and cost outcomes. We're also deploying innovative total cost of care models against high-cost specialties such as oncology, chronic kidney disease, and behavioral health. These are part of a broader portfolio of initiatives designed to build critical momentum as we look to return the business to profitability. Our PDP business ended the quarter with just over 8.7 million members, thanks to the team's once again thoughtful and data-driven approach to bid design and positioning.

While it is still early, fundamental outperformance in the quarter was driven by slightly lower than assumed specialty drug trends, which gives us increased confidence in the trajectory of the business for the year. We are pleased that our Medicare members will have the opportunity to participate in the CMS Bridge Program, and we support the goal of expanded GLP-1 access for more seniors. As the largest standalone Part D provider in the country, we've also been actively engaged in dialogue around the BALANCE Model and remain committed to partnering with the administration to leverage data, best practices, and lessons learned from the Bridge Program to position BALANCE for success in the future. Looking ahead, we are encouraged that the finalized 2027 Medicare Advantage rates showed improvement compared to the advanced rate notice.

While the final rate remains below observed medical cost trend, we continue to see a path to delivering break-even financial results next year. Medicare Advantage and PDP programs play a vital role providing access to care for millions of Americans, including some of the most vulnerable of our nation, and we look forward to working with the administration to identify new and important ways to fortify this program and strengthen the safety net overall. Finally, Marketplace. We ended the quarter with just under 3.6 million members, consistent with our previous commentary about post-grace period membership. Metal tier distribution and age stayed consistent with patterns we reported on in early March, with just under half of our members in Silver, roughly 35% of members in Bronze, and the remainder in Gold. Other member demographics, like age and gender, remained consistent with expectations and with recent years' results.

Marketplace results were in line for the quarter with a slightly higher HBR offset by outperformance in SG&A. Within these results, the Q1 HBR was driven by higher than originally expected utilization isolated in our Silver tier membership, a dynamic we foreshadowed in early March. With the benefit of additional visibility, including the new March Wakely report and more complete claims experience, we now view this utilization as consistent with the acuity of the Silver members we enrolled, and we expect this membership to receive a meaningful risk adjustment offset as we look to the balance of the year. Let me talk about the additional insight we have gained since March. After last year's unexpected volatility, Centene committed to finding ways to create additional and earlier visibility into this market to support long-term stability.

Last fall, we reached out to many of our peers, all of whom were receptive to submitting earlier data on membership demographics. Wakely, the independent actuarial firm that calculates interim risk transfer estimates for the market throughout the year, agreed to aggregate and publish that data at the end of March. As a result of that collaboration, the industry has more visibility than it has ever had at this time of the year about overall market dynamics. Having received this demographic data from almost all of our 29 markets, we are pleased to see that the market overall behaved in line to slightly favorable to, our expectations, despite 2026 being a year of unprecedented change. First, the overall market contracted as expected in a post-eAPTC environment.

That said, market-by-market membership loss was in almost every market less than we expected, which suggests that more healthy members stayed in the market in aggregate and that our pricing was appropriate relative to the overall market morbidity. Second, the Wakely data confirmed a meaningful market-wide shift from Silver members into Bronze and, to a lesser degree, Gold, consistent with our expectations and with the directional shift in our own metal distribution. Finally, and perhaps most importantly, this data, when combined with our final Q1 paid membership and a full quarter's worth of claims experience, strongly supports the view that Ambetter retains Silver membership with higher acuity relative to the market, and that this membership will ultimately receive a meaningful risk adjustment offset. Within our Silver tier, 75% of our members were renewals, giving us a high degree of visibility into year-over-year risk score capture.

Through Q1, risk scores tracked closely in line with what we would expect given our claims experience in the period. Wakely data further allowed us to see a strong, consistent correlation between markets where we lost share due to price action and an increase in the overall acuity of our Silver population. Both of these data points strongly support the makeshift hypothesis. Looking to the rest of the year, we have taken what we believe to be a prudent posture relative to our forecast for the business, not reflecting the full suggested risk adjustment offset for this population within our new, greater than $3.40 guidance. The June Wakely data, which consists of claims and risk score data across the market, will be key to allowing us to further refine this assumption.

We continue to believe in our ability to deliver meaningful margin recovery in the Marketplace business and look forward to updating our full-year view with the benefit of the June data. Stepping back, we are pleased that the disciplined execution this quarter yielded solid financial results. As we strengthen the fundamental operations of each of our businesses, we are increasingly well-positioned to deliver tangible progress against our margin recovery goals. To support this work, we announced an evolution of our leadership structure earlier this month. We are pleased that Dan Finke joined the organization to serve as our Group President overseeing the Medicaid and commercial businesses, and we were pleased to elevate Michael Carson to Group President overseeing our Medicare, PDP, and specialty businesses. Their collective experience will be instrumental as we continue to strengthen performance across the portfolio and deliver sustainable, profitable growth.

I'd like to close by calling out two additional bright spots from Q1. First is progress that Centene and the entire industry have made against our prior authorization commitments, including additional commitments announced last week that will make the prior authorization process faster, easier, and less expensive. In our view, this work is not about self-regulating, it's about self-disrupting. Industry leadership has worked closely together over the last year and a half, not because it is easy, but because it is the right thing to do for our members and for the healthcare system overall. I'd like to thank my peers for their awesome partnership and acknowledge the many team members at those organizations who, along with the Centene team, are committed to transforming our systems and the system overall through an unprecedented level of collaboration and transparency.

Finally, I'd like to close by congratulating the entire Cen team for being named to the Forbes Best Employers for Company Culture list for the second year in a row, jumping more than 150 spots from our inaugural ranking last year into the top 50 employers in the country this year. While I'm pleased we delivered strong results in Q1, I'm even more pleased by how we delivered those results. Collaborating as one Cen team, living our values and behaviors, and staying focused on our mission of transforming the health of the communities we serve, one person at a time. With that, I'll turn it over to Drew to provide more details on the quarter.

Thank you, Sarah. Today, we reported a strong first quarter, including $44.7 billion in premium and service revenue and adjusted diluted earnings per share of $3.37. This was just under $0.50 better than our expectations, largely driven by outperformance in Medicaid and Medicare segment HBRs. Our consolidated HBR was 87.3% for Q1. Starting with Medicaid, we ended Q1 with 12.4 million members, slightly down from year-end. More importantly, we demonstrated continued progress in the HBR with Q1 at 93.1%, an improvement of 50 basis points from the first quarter of 2025. Sarah indicated our slate of initiatives on both revenue and medical expense are bearing fruit as we continue to navigate an elevated behavioral health and high-cost drug environment.

While we have a ways to go to get back to a reasonable Medicaid margin, this is the third consecutive quarter of progress toward that goal. We expect continued momentum as states reflect base trend and acuity data in rates and work with us to shape successful and sustainable programs. Medicare segment results were better than expected, including an HBR at 84.9%, demonstrating outperformance in both MA and PDP for Q1. Medicare Advantage, this gives us more confidence about the path to breakeven for 2027, and in PDP, it's always instructed to see how pharmacy trends start the year relative to expectations. To be clear, medical and pharmacy trends are still historically high in those businesses, though were not as high as what we had built into our forecast as we actively manage costs and set bids accordingly.

PDP high trends and high 2025 baseline costs, especially in specialty pharmacy, will be factored into the 2027 bids. This, coupled with the mere mechanic of a risk model that's calibrated based upon pre-IRA claims data and therefore still insufficient to address non low-income trend, should push the direct subsidy up quite a bit again in 2027. In the meantime, we are pleased with the strong start to 2026 in both MA and PDP. Marketplace pre-tax earnings were on track in Q1, with a slightly higher than expected HBR in the quarter, offset by strong SG&A management in the product. Consistent with what we told you at the March conference, our Silver metal tier members had higher than originally forecast gross medical costs in Q1 before any incremental 2026 risk adjustment benefit.

We are very pleased with the early insights gained from the March Wakely data and reports. Sarah took you deeper into those observations, but suffice to say that the market size and share shifts when coupled with the metal tier distribution and our observed risk score trends are consistent with meaningful risk adjustment offsets for the higher Silver tier gross claims trends. In our current guidance, we have calibrated these factors in our membership distribution such that our forecasted year-end risk transfer assumption is for a slight receivable versus a prior payable forecast. Let me simplify all this in terms of guidance. We thought it would be prudent to embed in our current guidance a pre-tax margin for Marketplace around 3% for now, compared to our original forecast of approximately 4%.

As you heard from Sarah, this does not reflect the full potential risk adjustment offset suggested by the data we currently have, as we await the June Wakely data. I'd also like to thank my industry peers for being receptive to this new Q1 process and recognizing an opportunity to gain visibility earlier in the year, and most importantly, for timely submission of useful data to Wakely. This not only helps with 2026 forecasting, it will also give others earlier visibility of their potential risk transfer position when formulating 2027 pricing. One more thing on Marketplace. We ended the quarter with 3.58 million members, right around where we told you we expected to be after navigating sign-ups, payments, and effectuation. Consistent with our original guidance, we expect a little attrition throughout the remainder of the year, ending 2026 a little over 3 million members.

Consolidated adjusted SG&A expense ratio was 7.6% in the first quarter, compared to 7.9% last year, reflecting continued discipline and product mix. We ended the quarter with $437 million of cash available for general corporate use. During the first quarter of 2026, the company sold $1 billion of our standalone 2025 Part D risk share receivables, and proceeds were used to repurchase $1 billion of senior notes that, when coupled with strong Q1 earnings, resulted in a debt-to-cap ratio of 43.2%, down from 46.5% at year-end. Medical claims liability totaled $20.6 billion and represents 48 days in claims payable, an increase of two days as compared to the fourth quarter of 2025.

As we look ahead, due to seasonal PDP sloping and the 2026 proportion of PDP to the total company, we would expect this faster completing business to drive down DCP a day or two as the year progresses. Cash flow provided by operations was $4.4 billion for Q1, primarily driven by strong net earnings, partial 2025 CMS PDP receivable sale, and timing of other net payments and receipts. As we look to the rest of 2026, we are pleased to increase full-year adjusted EPS guidance to greater than $3.40. Press release table, you can see we added $1 billion of premium revenue to our prior range, largely driven by Texas Medicaid. We expect overall Medicaid membership to be down about 6% from year-end to year-end.

We continue to be on track and expect the Medicaid composite rate yield around 4.5%. We also adjusted our consolidated SG&A guidance range down by 10 basis points and added $50 million to expected investment income. No change to our HBR full year range of 90.9%-91.7%. One final topic. Within finance, we are deploying advanced analytics and selective AI-enabled tools across forecasting, medical economics, and payment integrity. Today, these capabilities are used as an independent validation layer alongside our traditional forecasting process, bringing more timely data into how we evaluate emerging medical trend. They're also helping us identify fraud, waste, and abnormal claims behavior earlier, supporting better prioritization of resources and more disciplined cost management on behalf of state and federal taxpayers.

We are pleased with a great start to 2026 and look forward to continuing to drive the margin recovery opportunity. Thank you for your interest in Centene. Rocco, we can open it up for questions.

Yes, sir. Thank you. We'll now begin that question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, we ask that you please pick up your handset before pressing the keys. If at any time your question has been addressed and you'd like to withdraw from your question, please press star then two. Once again, we do ask that you please limit yourself to one question. Today's first question comes from Andrew Mok at Barclays. Please go ahead.

Hi. Good morning. Wanted to follow up on the higher acuity in the ACA Silver tier. Can you help us understand why you believe you attracted that higher acuity cohort for this year? It sounds like you're currently accruing for a partial risk adjustment offset and 3% pretax margins. If you did ultimately get the full risk adjustment offset, you know, what sort of margin would that imply for the full ACA year? Thanks.

Yeah. Thanks, Andrew. Let me sort of take a step back and sort of anchor on the biggest thing that changed in 2026 for everybody, which is really the expiration of the enhanced APTCs. Thanks to the new Wakely report with earlier data, we can confirm that, as expected, drove a significant number of consumers out of the market. It also, as we've seen, as our peers have said, and as the data confirms, drove a shift across the market from Silver membership into Bronze products as consumers looked for more affordable plans. As a result, the Silver tier remaining membership really follows the golden rule of risk pools, that when it shrinks, it becomes more morbid.

Given our market size, our Silver footprint, and frankly, our intentional decision not to go as hard at a Bronze strategy, which we still very much stand by, we were positioned to retain and attract more Silver members who are now more acute in that overall post-eAPTC environment. Now, important to note that in, you know, in other insurance markets, the concept of adverse selection, you know, can be scary, but that's not actually the case in Marketplace because, as you know, the risk adjustment mechanism is specifically designed to counteract adverse selection, and often it can actually be a profitable strategy to care for sicker members in this market. That's really based on our view, with more than a decade of experience in the market.

As we think about the additional visibility that we have since March by virtue of the Wakely data, which has really confirmed that unlike last year, the market is behaving the way we would expect, in a number of cases, actually favorable to our expectations, and then the additional quarter of claims experience for our paid membership, where we're seeing those risk scores year-over-year track directly in line with the claims experience that we observed, that gives us confidence in the view that we have a higher acuity Silver membership that will attract and get a risk adjustment receivable.

As you heard from both my remarks and Drew's, we have not accounted for the full range of what that receivable could be in the updated guidance, but that range does wrap around our original 4% target margin for 2026 in Marketplace, and frankly, higher than that at the top end. You know, bottom line, we believe that what we've incorporated into guidance is a prudent posture for now in advance of getting the June Wakely data, and we still feel very good about delivering meaningful margin improvement for the business in 2026.

Thank you. Our next question today comes from A.J. Rice at UBS. Please go ahead.

Thanks. Hi, everybody. I think coming into the year, you basically, in Medicaid, were forecasting a cost trend of about 4.5, mid-4s, and the rate updates being at mid-4.5%. It sounds like the rate updates are coming in consistent. Maybe the MLR in Medicaid's trending a little better. Is that primarily due to the flu and weather that you're calling out, or are you seeing underlying performance improve there? Does that put you on a glide path if the trend is a little better versus the rate updates to get back to sort of a target margin for Medicaid next year?

Yeah. Thanks, A.J. You're right. We came into the year with an assumption of a flat HBR year-over-year, and really the idea that rate in that mid 4.5% would be matched by net trend, which is obviously overall trend, netted against our medical cost initiatives of 4.5%. We obviously saw a better performance in Q1. A bigger piece of that was flu, a little bit of weather, but there was still fundamental solid outperformance on Medicaid HBR driven by the business. That really is a result of that consistent sort of multi-tenant program that we've deployed over the last 1.5 years and pulling levers around network optimization, further scaling clinical programs, obviously, all the work we're doing around payment integrity and fraud, waste, and abuse.

We're also seeing increasing momentum from states around program changes and starting to see states even more receptive. We've called out a number of examples of those in the past, whether it be around formulary management or clarifying some of the benefits. We're now seeing states start to directly intervene on providers themselves around fraud, waste, and abuse. Those conversations are continuing to roll forward. Very pleased with the idea that part of the outperformance in Medicaid in the quarter was driven by delivering on the planned initiatives, and also the fact that some of that pipeline of 2026 additional initiatives developed a little bit earlier than expected. Obviously, in the forecast for the rest of the year, we're not betting or counting on that outperformance to continue, but given sort of the fundamental drivers of that, it obviously leans positive.

And that would mean that we would come in at an HBR, you know, call it 15 or 20 basis points ahead of that 93.7. As you've heard me say before, I would be disappointed if we didn't beat 93.7 given where we stand today. I will reiterate that I will be disappointed if that's all we can do. As we look ahead to 2027, our goal is to continue to drive margin improvement forward. We obviously have work requirements, a number of policy changes that we're looking ahead to. As we are strengthening the core operations of the business, we are doing that with a mind to and a goal to continue to drive progressive margin improvement through 2027.

Thank you. Our next question today comes from Justin Lake at Wolfe Research. Please go ahead.

Centene (CNC) Q1 2026 Earnings Call Transcript

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