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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.

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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: 
 
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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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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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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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F500-2021-24-Centene

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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.

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.

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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.

Q2 2026

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Q4 2024

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

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Centene

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Good day. Welcome to the Centene Corporation 2026 second quarter conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star the two. We do ask that you please limit yourself to one question. Please note today's event is being recorded. I'd now like to turn the conference over to Jennifer Gilligan, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Rocco. Good morning, everyone. Thank you for joining us on our second 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 second 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. 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 second quarter 2026 press release. With that, I would like to turn the call over to our CEO, Sarah London. Sarah?

Thanks, Jen. Thanks everyone for joining us on the call. This morning, we will review our second quarter results and provide details around our improved full year 2026 financial guidance. Q2 adjusted diluted earnings per share of $2.51 exceeded our previous expectations, with outperformance driven by underlying business strengths and a more fully informed view of our Marketplace risk adjustment positioning. Thanks to strong first-half results, we now expect full year 2026 adjusted diluted earnings per share of greater than $4.80, up from our prior outlook of greater than $3.40 provided during our April update. We are excited by the positive momentum we have built and remain focused on our goal of delivering industry-leading health outcomes with an industry-leading cost structure. Now let's talk about the business. Starting with Medicaid.

Medicaid results were in line with our expectations for the quarter, driven by disciplined execution against our operational and financial goals. We ended the quarter with just over 12 million members, a slightly larger step-down in membership than anticipated. While some of this was driven by state-specific program changes, we also saw an uptick in activity around enrollment and eligibility in certain states. As we look at core medical cost drivers in the quarter, the big rocks remain consistent with past quarters, with behavioral health, home health, and high-cost drugs among the top contributors. We did see a slight uptick in acuity from the expansion population, directly consistent with the increased attrition in the quarter, but we were able to absorb that given the strength of our execution across quality and affordability initiatives.

Rates remain a critical lever and continue to develop positively, with seven one rates coming in better than expected. This improves our full year 2026 composite rate forecast from roughly 4.5% to roughly 5%. The tone and tenor of our state rate conversations remains constructive, rate development continues to be supported by the incorporation of more current data. As you think about our guidance, we are now expecting lower year-end membership than our previous outlook, with the increased enrollment and eligibility activity as we move through the back half of the year. As is typical, we assume that additional attrition will impact acuity and have set guidance to account for that possibility in the second half of 2026. As you would imagine, we are heavily engaged with our state partners as they prepare for OB3 implementation, we are working hard to minimize unnecessary membership disruption.

This includes investing in near real-time data exchange with states to inform ex parte member eligibility, exemption validation, and member outreach. We are also activating a nationwide playbook, building on the work programs we already have in place across our states to help members identify community engagement, education, and workforce opportunities. We are engaging with state actuaries about the best approach to OB3-related rate adjustments. Given recent cost pressures in the business, we haven't talked as much about quality, but it is worth sharing that behind the scenes, we have been systematically driving improved quality performance across our Medicaid markets. Over the last three cycles, through expanded data capture, scalable member engagement programs, and targeted provider incentives, we have delivered improvement in more than 90% of our core clinical measures, ensuring Centene members receive more complete and better quality care each year.

In this cycle, we are targeting more than 75% of our Medicaid health plans NCQA quality ratings to be at or better than three and a half stars. Ultimately, the value of Medicaid managed care is ensuring high-quality outcomes at lower costs, we are building tangible momentum around both. Turning to Medicare, our Medicare segment once again delivered outperformance in Q2, with continued strength in both our PDP and our Medicare Advantage businesses. PDP benefited in the quarter from the true-up of certain prior period items, but the results also reflect fundamental favorability. While we continue to see elevated levels of specialty drug trends, they remain lower than our original expectations through the first half of the year. As a result, we now expect PDP to deliver a pre-tax margin greater than 3% in 2026 versus the 2% we guided to at the beginning of the year.

Our PDP team once again took a thoughtful approach to the 2027 bid process, prioritizing sustainable profitability. As this business hits post IRA stability, we look forward to delivering consistent margin on what is now roughly $25 billion of premium revenue and successfully leveraging our greater than $60 billion in pharmacy spend through our partnership with ESI to deliver industry-leading cost structure to our state customers and members across lines of business. Solid execution from the Medicare Advantage team led to outperformance once again this quarter. Medical costs remain elevated when compared to historical averages, but year-to-date trend is running modestly favorable to expectations. Key medical cost drivers were stable quarter-over-quarter. D-SNP members now represent approximately 40% of our Medicare Advantage portfolio, and that cohort continues to perform favorably.

Looking ahead to 2027, we plan to further simplify our Medicare Advantage footprint, focusing our benefits increasingly on the duals population, where our deep expertise in Medicaid allows us to deliver a local, integrated, and differentiated experience to these members. On the Stars front, we are once again seeing year-over-year improvement in raw performance, supported by the full range of quality initiatives we have deployed over the last three years. That said, we, along with the industry, are facing headwinds from artificial cut point increases and overall Stars program methodology changes, not to mention uncertainty around the future of the program overall. As you'll recall, the company took steps coming into 2025 to de-risk Stars results more broadly as we considered our Medicare Advantage strategy of focusing on lower income, complex populations in the face of a Stars program that fails to effectively risk adjust for these members.

Thanks to these actions, including portfolio optimization, strong operational execution, and SG&A management and strategic duals growth, we are seeing accelerated margin improvement, and we are confident in our plan to deliver break even or better results in 2027 and margin improvement thereafter. Overall, we are pleased with the momentum building in our Medicare segment thus far in 2026 and look forward to leveraging that strength as we prepare for 2027. Last, but certainly not least, Marketplace delivered excellent Q2 results after more than a year's worth of focused execution to achieve meaningful margin recovery in that business. Recall that we moderated our pre-tax margin expectations for the Marketplace at the end of Q1.

Our 3% pre-tax guidance at the time accounted for elevated utilization patterns we observed in Q1, largely driven by our silver tier members, and did not fully reflect the corresponding risk adjustment offset we anticipated given the level of observed membership acuity. A posture that we felt was prudent in advance of receiving the first full Wakely report, which includes the first view of overall market acuity. Rolling those assumptions forward to Q2, first, we continued to see higher utilization patterns among our silver tier members, but these moderated over the quarter compared to what we assumed in our guidance. At the same time, a thorough analysis of the highly anticipated June Wakely report not only confirmed our hypothesis about the relative acuity of our population, but has also allowed us to revise our view of full year performance for the Marketplace business.

Finally, we received favorable development on our final 2025 CMS risk adjustment reconciliation to the tune of $180 million in the quarter. In light of the aggregate first half results, we now expect to deliver a pre-tax margin between 4.5% and 5% for the Marketplace business for the full year, an improvement compared to our previous guidance as well as our initial guidance issued in February. While the year is not finished, it feels important to pause and reflect on the strength of these results. I would be remiss if I did not take this opportunity to very publicly acknowledge and thank our Marketplace team for the exceptional leadership and discipline they demonstrated over the last year to get us to this point. They saw and called a market-wide issue first.

They leveraged more than a decade of experience and the breadth and depth of data that comes with operating in 29 markets to comprehensively diagnose the issue at hand, quickly translate that into actionable insight, execute in a very tight window to appropriately reprice our business for 2026 while correctly and conservatively planning for how 2025 would ultimately unfold. I am humbled by their expertise and grateful to have them guiding this business through an unprecedented year of turbulence and uncertainty. Looking to the rest of 2026, we are jumping off a Q2 membership of roughly 3.5 million members, slightly better than previous expectations, with metal tier distribution, age, and other key demographics largely unchanged from our Q1 results.

We continue to expect membership to decline as we move through the rest of the year, consistent with a return to more regular seasonality, and our guidance has accounted for membership impacts related to various ongoing CMS program integrity efforts. As a leader in this market, we will continue to push for and promote transparency and policy stability as we believe that regardless of the origin story you give it, the individual market is a compelling future-proof platform that can deliver access to high-quality health care for hardworking Americans and small business owners, and increasingly serve as a flexible, portable, and affordable alternative to employer-provided insurance options.

Overall, we are very pleased to deliver a quarter of solid performance and year-over-year progress in each of our business lines. While this dynamic healthcare operating landscape has presented challenges, it has also provided important opportunities at the enterprise level to enhance the way we do business. We are taking advantage of this moment to lean in and transform our organization to better serve the needs of our members, state partners, and stakeholders. This includes thoughtfully reviewing our portfolio to position each business for long-term earnings growth, maximizing our talent bench, organizing our teams in a way that even more fully leverages our scale, and of course, deploying data, technology, and AI to streamline our service delivery and improve our member experience. While we have made progress across all of these categories, I'd like to touch briefly on our AI strategy.

You've heard us reference examples over the last few quarters of high-value AI-enabled use cases, including integrating AI into our forecasting processes to improve precision and the always-on suite of fraud, waste, and abuse algorithms that learn from our inbound claims data every day. There are others. Even our legal department has several high ROI adjunctive use cases in production, including one agent that reviews invoices from outside counsel firms and now saves us a point and a half in our legal bills every month. We view these early successes as proof points for a much larger opportunity ahead. As we look to the next phase of our AI strategy, our focus is increasingly shifting from individual use cases to the underlying capabilities that make AI scalable across the enterprise. As a Medicaid-first company operating in a margin-conscious environment, we take a deliberate approach to where we invest.

That means prioritizing investments in foundational capabilities such as trusted data products, dynamic context management, and open standards that keep business knowledge reusable and portable as the technology evolves. We believe long-term differentiation will increasingly come from proprietary data and context as model technology becomes more commoditized. This disciplined approach positions us to unlock the full potential of AI while maintaining a relentless focus on ROI. It also provides a governed, predictable foundation for AI, which is critical in a regulated environment where consistency, auditability, and compliance are non-negotiable. This work, like all of our transformation efforts, is designed in service of delivering industry-leading outcomes with an industry-leading cost structure, fulfilling our mission and ultimately supporting our ambition to not just manage care, but to power health for the communities we serve.

In closing, we are making meaningful progress on our path to margin restoration while advancing the platform and processes that will modernize and improve the way we do business. This momentum is visible in our strong second quarter results and our increased earnings outlook for 2026. With our members at the center of every strategic decision we make, we see significant opportunity to reshape the healthcare experience for millions of Americans. With that, I'll turn it over to Drew to provide more details on the quarter and our updated full-year outlook.

Thank you, Sarah. Today, we reported very strong second quarter 2026 results, including $44.4 billion in premium and service revenue and adjusted diluted earnings per share of $2.51. As you evaluate Q2 in the context of a baseline for 2027, we had approximately $0.50 of earnings in the quarter relating to settlements of 2025 items in amounts that we wouldn't expect to recur in 2027. About $180 million related to Marketplace final 2025 risk adjustment, net favorability relative to our prior guidance, and about $160 million in our Medicare segment, largely favorable PDP 2025 risk adjustment and quality settlements. These items took strong execution by the team, we wanted you to understand these drivers since the $0.50 will be a reconciling item when we provide a bridge from 2026 to 2027 in a couple of quarters.

That aside, any way you slice it, this was a fantastic quarter. Our consolidated HBR was 89.6% for Q2, down from 93% in Q2 of 2025. Let's dig into each segment. In Medicaid, at a 93.9% HBR, we are right on track with our prior forecast and are still expecting a full year HBR around 93.5%. This is down from our original expectation of 93.7%, as we covered on the Q1 call. Consistent with our prior commentary, we expect Q2 and Q3 Medicaid HBRs to be higher than Q1 and Q4. As we look ahead to Q3, our 7/1 rate cohort, which represents about 20% of our membership, came in strong. This 7/1 cohort provides a nice sequential benefit from Q2 to Q3 to make progress toward matching rate and cost.

Overall, we now expect the full year 2026 rate impact to be approximately 5%, up from 4.5%, with no change in our view of fundamental trend of mid-four for the year. As some of you have written about, we did continue to see attrition in our Medicaid membership, ending Q2 with 12.1 million members, and we expect some states to continue to trim Medicaid rolls leading up to any OB3 implementation in 2027. For now, we are holding the incremental 50 basis points benefit of the rate improvement to account for a little higher membership attrition in the back half of the year, including the associated acuity impact. To be more specific, we expect full-year Medicaid membership to be down 8%-9% compared to 12/31/2025 versus our prior view of being down 6%.

Overall, Medicaid was right on track in Q2 with good signs of medical expense execution coupled with progress on rates. There's more work to do over the next couple of years to restore margin. Medicare segment results were strong in the quarter, including an HBR at 89.5%, inclusive of the 2025 item discussed a minute ago. PDP, with good visibility once you get through two quarters, is having another strong year. We now expect a full year pre-tax margin of greater than 3%, compared to original guidance of 2%. Strong execution by the team, coupled with very good product positioning and being another year removed from the inception of the Inflation Reduction Act, have all contributed to the improvement in our 2026 PDP forecast. Medicare Advantage, representing a little over 40% of segment revenue, continued to perform well, getting closer to break even for full year 2026 performance.

The commercial segment, led by Marketplace, had a very strong quarter with an HBR of 79.2%, compared to prior year 90.6%, driven by the convergence of three positive factors. One, a strong end to 2025, as discussed a minute ago. Two, confirmation of 2026 market acuity, and particularly our relative risk adjustment position being better than reflected in our prior guidance. Three, tapering medical trend driving better than expected Q2 medical costs. While we were optimistic after seeing the new Wakely March demographic report that we helped initiate, as discussed on the Q1 call, as you know, we are waiting to see corroboration from the first Wakely claims reports received in late June. This data helps us understand our acuity relative to the market.

Essentially, the data confirmed we took the correct swift actions in the summer of 2025 when we refiled 2026 rates with the visibility we had at the time of last year's major market shift. Accordingly, we now expect a Marketplace pre-tax margin of 4.5%-5% in 2026, back on track after a temporary industry detour in 2025. As you can see, Marketplace membership was reasonably stable compared to Q1, at 3.5 million members, and we continue to expect a little more attrition as eligibility verifications may step up in the back half of the year.

While we are still vigilant about pricing for risk shifts due to program integrity measures and changes affecting eligibility prospectively, we would expect the Marketplace to be a more stable business for Centene as we look out over the next couple of years, compared to the prior periods of abrupt program changes and the expiration of eAPTCs. Our adjusted SG&A expense ratio was 6.9% in the second quarter, compared to 7.1% last year, reflecting continued discipline and scale, as well as product mix. As Sarah referenced, we are taking actions as part of an enterprise optimization to drive efficiencies and support the affordability of healthcare in 2027 and beyond.

These actions, including further digitization, more ubiquitous use of technology and AI, and improvements in the customer experience alongside operational efficiencies, should help us not just adapt to volume changes in our business, but also drive margin restoration over the next few years. Q2 is initial evidence of that momentum. We ended the quarter with $715 million of cash available for general corporate use. During the second quarter of 2026, we repurchased $260 million of senior notes in our continued effort to delever to create capacity to seize future opportunities. Accordingly, we ended the quarter with a debt to cap ratio of 41.6%, down from 46.5% at year-end. Our medical claims liability totaled $20.3 billion and represents 47 days in claims payable, a decrease of one day as compared to the first quarter of 2026, driven by timing of State Directed Payments.

Cash flow provided by operations was $8 billion year-to-date and $3.6 billion for Q2, primarily driven by net earnings and the net impact of temporary passthrough payment receipts, state premium payments, and Marketplace-related payments to CMS. As a heads up, in Q3, we expect to pay out over $3 billion of Medicaid passthrough payments that are sitting on our balance sheet at the end of Q2.

As you've seen in our disclosure definitions, passthrough payments merely go through premium tax revenue and premium tax expense on our P&L and do not impact any key operating metrics like HBR, SG&A rate, or DCP. Overall, given the strength of the quarter, we now expect greater than $4.80 of adjusted EPS in 2026, inclusive of the $0.50 that we wouldn't expect to recur in 2027. This increase from prior guidance of greater than $3.40 is primarily driven by an improved Marketplace pre-tax margin of 4.5%-5%, and PDP margin of greater than 3%.

Our Medicaid HBR forecast is consistent with prior guidance. The forecasted enterprise adjusted SG&A rate for 2026 is better by 10 basis points. Total revenue is up $6 billion from prior guidance. Only $2 billion of that is actually premium and service revenue, with a billion and a half attributable to Marketplace and a half billion for Medicaid. The remaining $4 billion is merely premium tax pass-through revenue. While we have reported year-to-date adjusted EPS of $5.88, we expect a little above breakeven in Q3 and a loss in Q4 due to the seasonal sloping of our Medicare Part D and commercial products. This second half trajectory is consistent with prior year and commentary we provided on the Q1 call. You can see other guidance elements that were modified in our guidance table.

Our workforce and enterprise optimization is expected to drive an estimated $480 million midpoint of SG&A costs in 2026 that are part of GAAP guidance and highlighted in the reconciliation table in the press release. We look forward to showing continued progress toward restoration of earnings as we look ahead. For those of you who hung in with us through 2025 industry turbulence, joined us since, or are thinking about jumping in, we thank you for your interest in Centene. Rocco, let's open it up for questions.

Yes, sir. We will now begin the 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 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 John Stansel at JPMorgan. Please go ahead.

Great. Thanks for taking the question. Wanted to ask about Medicaid enrollment. Just firstly, as you think about the high acuity population stepping down, any particular areas that are driving that? Then just as we think about overall acuity shifting in the population within 2026, how you view that with a bridge to next year. Are you seeing this as pull forward, or is this kind of incremental to anything we think about for OB3 impacts next year? Thanks.

Thanks, John, for the question. As we said, we did see slight incremental attrition compared to expectation in Q. Mostly, that was in the expansion population. Some of it was driven by state-specific changes, more of the uptick, as you pointed out, in terms of the enrollment and eligibility activity in certain states that are starting to tighten in general, consistent with what we've seen over the last year or so, also starting to think about and prepare for OB3. We saw a slight uptick in acuity in Q2 around that attrition. Obviously, we're able to absorb that given the strength of the execution on initiatives.

As Drew talked about, as we think about guidance for the back half of the year, we're for now holding back that 50 basis points of favorability in the rate in order to see how the additional membership attrition, so the move from 6% to 8 to 9%, impacts acuity in the back half of the year. If we take a big step back, I think your question is exactly right, which is, to what extent is this sort of not just a preparation, potentially a pull forward of some of the activity. Again, obviously not formal implementation of OB3, states starting to tighten those criteria and starting to prepare and sort of categorize populations, and in some ways, I think probably prevent enrollment that would otherwise have had to go through a work requirements process.

I think it's possible that that will end up being some degree of pull forward. Again, we're accounting for that as we think about guidance for the back half of the year. Then, as I mentioned, we are very deep in the planning process with all of our states and thinking about how they're going to go through not just the ex parte process, trying to maximize the data they have for that, so that we ensure that folks who are eligible today and have clear data behind that don't face any coverage disruption. Then where there's opportunity for us to lean in and leverage all of the work we've done in terms of building out networks of community engagement, job programs for our members.

We already had those in 17 states coming into this year. That's given us a fantastic blueprint to build out and obviously have the latitude from CMS guidance to really help members through that process. As we think about this process compared to the broader redeterminations process, it's obviously very different in terms of scope and scale. It's a much more targeted population. We have a much higher degree of impactability than we had during that process, in terms of being able to support members who want to be eligible and who need avenues for engagement, then continue to have very constructive conversations with our state partners about the right way to implement rates that will account for the acuity shift that we would expect as part of the Medicaid expansion population moves.

Thank you. Our next question today comes from Ann Hynes at Mizuho. Please go ahead.

Great. Thank you. I got a lot of questions just on the Medicaid margin progression, given all the OBB changes. I know it's a little too early to provide 2027 guidance, would you expect margins and Medicaid to expand just given the dynamic environment with all the regulatory changes? Thanks.

Ann, thanks for the question. I'll go back to sort of where I just landed in John's question and expand that a little bit as we think about our, first of all, overarching commitment to continued margin progression in Medicaid. That includes this year and moving from the 93.7% and 93.5% and continuing to hold ourselves to a high standard of execution, certainly going to try to improve that the rest of this year. If we think about the number of different policy changes that are going to collide for states next year, it is certainly impactful. It is not something that we can or should hand wave.

Again, I'll sort of tick through a couple of things that I think are helpful to think about and the things that we're thinking about as we approach kind of planning for 2027, guiding for 2027, that give us a sense of confidence in terms of, again, that goal of continued margin progression through the headwinds of OB3. First is that point about scope and scale. Obviously, a very different population than what we went through with the broader redeterminations PHE unwind. Some data points for context. We came into the year with our expansion population as 20% of the Medicaid portfolio. We will end the year with that being roughly 18%. If you just take some of the rough estimates that have been put out there, whether it's RWJ or CBO of, call it, 25%-40% of that may roll off.

You're talking either way, sort of mid-single digit attrition. That would be over 2027, 2028, possibly 2029, if some states delay. Think about that number in the context of the fact that we just said what we anticipate an 8%-9% membership drop this year and are still committed to margin progression. The second piece is this point about impactability. As you think about the cohorts that the expansion members are going to fall in, one is going to be that ex parte eligible, where there's very clear data, whether they off of claims data run through the frailty algorithm, they're automatically eligible. You have a bigger cohort that is what I would sort of describe as practically eligible, right? They are engaged in community activities. They are going to school. They are serving as a caregiver.

All that needs to happen is they need to appropriately document that. That's a cohort that, again, we can support and we're trying to maximize all the sources of data around that. That's a population that we would want to see maintain their eligibility because they're doing all of the right things relative to the legislative guidance. The third cohort are folks who are not currently eligible, again, they can become eligible. That's part of the playbook to offer them opportunities to engage in the community. Workforce opportunities, job training.

If you separate for just a second kind of the perspective on the legislation as being sort of a pay for, when you get down to the state level, even in some of the more ambitious red states, the goal is really for people to be engaged in their own care and their own sort of forward-looking trajectory, not necessarily to keep people from getting healthcare coverage. I think we're talking about a very different kind of impactability to this overall program than we saw with the PHE. The last thing quickly is just rate.

Centene (CNC) Q2 2026 Earnings Call Transcript

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