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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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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.

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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: 
 
"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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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.

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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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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 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 2025 third quarter financial results 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, and to withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Jennifer Gilligan, Senior Vice President, Investor Relations. Please go ahead, ma'am.

Thank you, Rocco, and good morning, everyone. Thank you for joining us on our third quarter 2025 earnings results conference call. Sarah London, Chief Executive Officer, and Drew Asher, Executive Vice President and Chief Financial Officer of Centene Corporation, will host this morning's call, which also can be accessed through our website at Centene.com. Any remarks that Centene Corporation 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 discussion today of our expectations for the drivers of adjusted diluted earnings per share for 2025, and any commentary on expected adjusted diluted earnings per share for 2025, 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 third quarter 2025 press release, Centene Corporation's most recent Form 10-Q filed this morning, and its 10-K filed on February 18, 2025. Additionally, other public SEC filings, which are available on the company's website under the Investor section. Centene Corporation 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 third quarter 2025 press release. With that, I will turn the call over to our CEO, Sarah London. Sarah?

Thanks, Jen, and thanks everyone for joining us to review our third quarter 2025 financial results and updated full-year outlook. We are driving significant progress against the milestones we provided to investors in July, yielding a better than expected adjusted EPS result in the period. This morning, we reported third quarter adjusted EPS of $0.50 ahead of our previous expectation. Within these results, our Medicaid business delivered anticipated HBR improvement in the period that was further aided by a positive 2025 retroactive revenue adjustment in our Florida business. SG&A and performance within our non-core segment were both slightly favorable. Net investment income was stronger than we previously expected, and we experienced a lower effective tax rate in the quarter than originally forecasted. Marketplace experienced additional medical cost pressure in the last month of the quarter, but the segment still produced an on-track result for the period.

Our Medicare segment, including Medicare Advantage and PDP, performed in line with expectations we shared on our second quarter call. With three quarters of the year complete, we are increasing our adjusted EPS forecast to at least $2, up from our previous forecast of $1.75 per share. When we came to you in July with recalibrated earnings expectations, we laid out six key assumptions that bridged us from our April outlook to the $1.75 per share forecast. We'd like to take a moment to update you on how those six factors evolved during the quarter and are now treated within our new adjusted EPS outlook of at least $2. One, relative to Marketplace morbidity and its corresponding impact on risk adjustment assumptions, we received the second tranche of weekly data in September, improving our visibility with industry-level paid claims through July.

We are pleased this data was consistent with our previous estimates, and we have therefore made no changes to our original full-year assumption of a $2.4 billion pre-tax earnings impact within this new forecast. As a reminder, the next update from Weekly is expected in December. Two, also in the forecast with $200 million, we added to account for additional Marketplace medical spend in the back half of the year. Marketplace delivered an in-line result for the quarter, but given the uptick in utilization we saw in September, we are holding the remaining $125 million of this provision in Q4 and are adding another $75 million given the volatility around EAPTCs. While we may not need this cover, as of now, we believe this to be a prudent posture given the landscape uncertainty that remains.

Three, in July, we pointed to a 2025 Medicaid composite rate of roughly 5% based on the rates in hand at the time. With all scheduled rate adjustments now finalized, we expect the 2025 composite rate adjustment to be roughly 5.5%. Four, in July, we were targeting a second half Medicaid HBR of 93.5. Our third quarter Medicaid HBR was 93.4, which included $150 million in Florida’s Children’s Medical Services revenue, of which $90 million or 40 basis points was retro. As a result, we are now on a trajectory for a back half HBR of approximately 93.2. Five, we continue to expect the Medicare segment to deliver $700 million of pre-tax favorability relative to our April full-year forecast. Medicare Advantage and PDP results in the quarter were consistent with our outlook, so no change to this expectation.

Six, we are also still on track to deliver $500 million in pre-tax benefit from SG&A. In fact, we performed slightly better than expected with administrative expense reduction in Q3. However, given the fluid nature of Marketplace open enrollment and the potential for additional enrollment activities surrounding EAPTC decisions, we are keeping the full-year SG&A assumptions unchanged for the last quarter as of now. In addition to those items from our Q2 bridge, we want to highlight investment income and tax rate performance in the quarter and how they impact our expectations for the remainder of the year. As mentioned earlier, Q3 investment income was stronger than expected. Gains were largely driven by one-time items and therefore are not expected to recur.

We believe there may be opportunity to take some investment losses in the fourth quarter to improve the trajectory of investment income in 2026, and we are providing flexibility in the guidance to do so if the opportunity arises. Tax favorability in the quarter was driven by a lower tax rate, which was purely a matter of timing. Our view of the full-year tax rate remains unchanged. While we continue to track and pull levers to address Medicaid cost trend and are similarly watching Marketplace utilization dynamics closely in this uncertain environment, we are pleased with the overall performance of the business in the quarter. With that, let's take a closer look at the performance and trajectory of each core business line, starting with Medicaid. We were pleased to deliver 150 basis points of sequential improvement in our Medicaid HBR this quarter.

While this was aided by improved revenue from the Florida’s Children’s Medical Services contract, it also reflects fundamental improvement that is a direct result of the actions we described on our Q2 call, including rate advocacy, program changes, clinical management, network optimization, and more aggressive fraud, waste, and abuse interventions, among others. Those efforts yielded tangible proof points in Q3. During our second quarter call, we identified two states, Florida and New York, where we were experiencing outsized Medicaid medical cost pressure. In Florida, you'll recall we saw significant trend pressure in the CMS population as members receiving ABA services were transitioned into that sole source contract. We engaged in constructive dialogue with the state and shared real-time data throughout the summer. In September, the state moved to address the underfunding of that program, going back to February 1.

Additionally, the state provided a rate update for the coming year that better reflects the underlying medical demand within that population. In New York, we made real progress on the fraud, waste, and abuse front, particularly in the behavioral health space. The Fidelis team was able to terminate a provider group that engaged in suspicious billing practices and drove sizable excess medical costs at the expense of New York taxpayers. The state has simultaneously taken several serious actions against the same provider. It's a great example of the confidence our state partners in Albany have in Centene. Through these and other performance improvement efforts, the New York team is currently on track to deliver meaningful HBR improvement in the back half of the year compared to Q2 results.

We continue to see trend in Medicaid with the same drivers we described in Q2, namely behavioral health, with ABA a primary contributor, home and community-based services with home health the major driver, and high-cost drugs, though high-cost drug trend did show slight moderation in the period. As you heard on the Q2 call, we have organized enterprise-wide to address these dynamics and saw solid momentum in the quarter on those initiatives. A few examples. We have been actively working with states on solutions to address high-cost drugs and have seen multiple states make movements over the last quarter to implement drug-specific carve-outs and revise formulary decisions, including two states who have reversed course on GLP-1s. Additionally, our ABA task force successfully leveraged our multi-state experience and unique breadth of data to drive important policy advancements with our state partners.

One state established increased precision in ABA clinical service definition, as well as more stringent supervisory and caregiver engagement requirements. This drove a 45% reduction to outlier payment rates, which results in tangible financial improvement for the state's program and aligns members to higher quality services. We are pleased to be making real progress on our Medicaid margin improvement agenda, but we are certainly not declaring victory. With behavioral health still driving 50% of above baseline trend, we continue to aggressively pull levers internally to appropriately manage medical costs and advocate for rates that reflect the medical demand in the ecosystem, all part of returning Medicaid margins to a more normalized long-term levels. Despite the challenges we have navigated over the last few years, our commitment to serving low-income and underserved populations has never been stronger.

We are pleased to be making progress against our financial goals and making good on our commitment to be responsible stewards of state taxpayer dollars, all while continuing to provide high-quality care and access to vital healthcare services for our members. Turning to Marketplace. From a membership standpoint, we ended the quarter with roughly 5.8 million members, slightly better than expectations. As you heard earlier, the business produced an in-line result inclusive of medical cost pressure in September. Given what we saw in September and the reality that we are supporting a population staring down EAPTC expiration and potentially the wholesale loss of affordable healthcare coverage next year, we felt it was prudent to provide for additional coverage in Q4 against a potentially more pronounced year-end utilization push.

In the meantime, we have been laser-focused on positioning our Marketplace book for 2026 margin expansion, and Q3 was the critical window for that effort. We were data-driven in the buildup of our revised rates, which ultimately averaged in the mid-30%, taking into account increased 2025 baseline morbidity, a prudent assumption for year-over-year trend, and the combined risk pool impacts of expiring EAPTCs and program integrity measures. Consistent with what we shared in September, we were able to reprice our products for 2026 in states that cover 95% of our current membership. Where we were not able to fully reflect the expected morbidity in the rates, we took additional actions to minimize margin impact for the remaining membership. Those rates have now been officially approved, and absent any late-breaking policy changes, we'll drive open enrollment as it launches this weekend.

Congressional dialogue around EAPTCs has obviously gained traction in recent weeks, but the outcome remains uncertain. While our products are priced to support year-over-year margin improvement in a scenario where EAPTCs expire, we believe these tax credits offer critical support for hardworking Americans, small business owners, and rural healthcare infrastructure, and we are hopeful Congress can find a path forward. In the meantime, we are ready to facilitate open enrollment with strengthened digital tools and well-trained call center personnel to aid members during this time of uncertainty. Regardless of the outcome, we remain confident in the long-term importance and viability of the individual health insurance market as a critical coverage solution for millions of Americans.

As we move beyond this moment of policy evolution, we continue to see a greater role for this platform to support a more affordable, portable individual insurance experience that we are excited to lean into and lead forward. Finally, Medicare. Both of our Medicare segment businesses performed well during the quarter, producing results consistent with our updated outlook provided this summer. Our reported Medicare segment HBR was 94.3%, reflecting typical cost of care patterns within Medicare Advantage, as well as the inverted seasonality of pharmacy costs within PDP, owing largely to changes related to the IRA. Note that these dynamics are even more pronounced now that PDP is half of our Medicare segment revenue. Medicare Advantage medical cost trend remains elevated compared to historic levels, but was consistent with our expectations for the quarter.

PDP performance was consistent with our previous view and is now largely contained by risk corridors, providing for increased visibility into the fourth quarter as the corridor serves to narrow the band of outcomes through downside protection for the product. AEP is live, and we are actively enrolling members in our 2026 Medicare products. Margin recovery once again took priority over membership as we constructed Medicare Advantage bids, but we are pleased with both the value proposition we are offering beneficiaries as well as our competitive positioning. We continue to invest in our member experience, providing enhanced digital tools and resources for members and prospective members. Dual eligible populations are a strategic focus for Centene Corporation, and we recently launched the first phase of our enhanced integrated duals model across eight states as part of the broader transition of MMPs to integrated D-SNPs effective January 1, 2026.

We look forward to the opportunity to serve these beneficiaries as their needs and our capabilities continue to align and evolve. Earlier this month, CMS released 2026 STAR ratings that impact 2027 financial results, and we are pleased to have generated another year of progress. During this cycle, we elevated our performance despite continued cutpoint headwinds to 60% of members in plans at or above three and a half stars versus 55% from the prior year, with roughly 20% of members in four-star plans. These results demonstrate a true Centene team effort, with the initiatives being planned and executed at every level of the organization and provide us with increased confidence in our ability to achieve break-even pre-tax margin in 2027. We are proud of the Medicare Advantage STAR score advancements we've achieved over the last three years, but remain focused on the opportunity for continued improvement.

In the near term, we are leaning into provider interoperability, multimodal member engagement, and advanced VBC partnerships as levers for the future. Overall, we are pleased to have maintained strong Medicare segment results, including positioning PDP well to achieve results better than the 1% pre-tax margin guidance we began the year with and putting Medicare Advantage on an even stronger path to achieve break-even in 2027. As we reflect on the quarter, we are pleased to have made material and necessary progress on Medicaid profitability and delivered solid results across the balance of the business. It is a testament to the resilience and discipline of this entire organization that we are able to raise the outlook today. While a tremendous amount of work remains ahead of us, we intend to harness the positive momentum we have generated here in the third quarter to help power the balance of the year.

Looking ahead, given that we will not be hosting an Investor Day in December, our plan is to provide detailed 2026 guidance on our Q4 earnings call in early February. In the meantime, we wanted to offer some initial comments on the major building blocks of our 2026 plan. In Marketplace, as we've shared, we were able to successfully take actions to account for baseline morbidity, trend, EAPTC expiry, and program integrity impacts for 2026 across 95% or more of our membership. While the policy landscape remains uncertain, based on what we know today, we believe we have positioned the portfolio well for meaningful margin improvement in 2026. As a result of thoughtful bid construction and disciplined management, we believe our Medicare Advantage business is also well positioned for margin improvement in 2026.

PDP continues to outperform in 2025, but you can assume we would not guide to a similar level of outperformance as we step into 2026, making this a year-over-year headwind as we set initial guidance. In Medicaid, in light of our now better-than-expected full-year trajectory, we believe a prudent posture for 2026 is profitability consistent with our current full-year outlook in 2025. Additionally, you should assume that a lower tax rate environment makes net investment income a headwind and that our tax rate increases. Overall, we remain focused on driving margin improvement across the enterprise and delivering EPS growth in 2026. The current dynamic policy landscape has presented significant challenges in 2025, but also offers meaningful opportunity in the months and years to come.

We have incredible runway ahead of us in the form of operational improvements, efficiency gains, and margin expansion, all in service of our dual mandate to ensure quality health outcomes and serve as responsible stewards of taxpayer dollars. None of this would be possible without the tireless work of more than 60,000 Centeners across the nation, serving and supporting our nearly 28 million members. Thank you once again for showing up day in and day out in service of our mission. With that, I'll turn it over to Drew.

Thank you, Sarah. Today, we reported third quarter 2025 results, including $44.9 billion in premium and service revenue and adjusted diluted earnings per share of $0.50. The GAAP loss per share of $13.50 was the direct result of a $6.7 billion non-cash goodwill impairment charge recorded in the quarter. More on that in a minute. Within the $0.50 of adjusted EPS, we had a temporarily low adjusted effective tax rate in the quarter, which contributed about $0.10 compared to an expected full-year 2025 adjusted tax rate of 20% to 21%. Let's go through the drivers for the quarter and then map that to the full year. Starting with Medicaid, we are pleased to report a Q3 HBR of 93.4%, better than we expected for the quarter and heading in the right direction. Of the three previously discussed high-trending areas, Medicaid high-cost drug trends settled a little in the quarter.

We successfully advocated for much-improved revenue in our Florida’s Children’s Medical Services, or CMS, business, where we've seen very high ABA costs. As Sarah covered, we received a net $150 million positive revenue adjustment in Q3 for the Florida CMS program for the Q1, February 1 to September 30, 2025 period, of which about $90 million was retro to Q1 and Q2 2025. The retro piece was worth about 40 basis points on the Q3 Medicaid HBR. We also made some progress in New York, but there's more work to do to further improve performance. Overall, given the Q3 result and momentum we are seeing from actions we have taken in 2025, we're a little ahead of our back half Medicaid HBR goal. On the rate front, the 9-1 to 10-1 cohort that represents about 28% of annualized premium averaged in the mid-fives, consistent with the full-year 2025 composite rate.

We are focused on 1-1 and 4-1 rates, representing about half of our 2026 annualized premium revenue, and that advocacy is in process. Medicaid membership is at 12.7 million, and we would expect slight attrition over the next few quarters. Stepping back, we are pleased with the sequential progress in Medicaid with opportunity for improvement ahead. In our commercial segment, our HBR was on track for Q3 at 89.9%. Sarah indicated in September we received and evaluated the second run of Marketplace weekly data, which represents updated claims through July. Our review of this data is consistent with the $2.4 billion forecast change we described on the Q2 call. Also, our previous guidance had accounted for a pickup in Marketplace trend in the back half of the year, especially given the level of public discourse around the EAPTCs.

We did see a pickup in utilization in September, including as we assessed risks and opportunities for Q4, we added another $75 million to our prior Marketplace medical expense forecast. The more critical activity during Q3 was focused on 2026 rate filings and EAPTC education and advocacy. We sit here today based upon our rate filings in 29 states. We have priced for our estimates of one, 2025 baseline correction, plus two, 2026 forecasted trend, plus three, the impact of program integrity rules implemented in 2025 and those announced for 2026, and four, the sunset of EAPTCs. Unlike 2025, which is expected to run at a slight loss, we expect these pricing actions to support margin expansion in our Marketplace business in 2026. Our Medicare segment was also on track in the quarter.

Medicare Advantage continues to show progress toward our 2027 goal of break-even, and we were pleased with the progress with the October STARs announcement, as Sarah covered. Within PDP, while trends are still high in the non-low-income PDP population, they weren't as high as we had planned for in Q3. That's good for cash flow and forward forecasting, but is largely offset against the risk corridor receivable for current earnings purposes. As we discussed at a webcast conference during Q3, we are pleased with our 2026 PDP product positioning relative to the relevant benchmarks and direct subsidy estimates. More to come on the Medicare segment after AEP. Our adjusted SG&A expense ratio continues to be strong at 7.0% in the third quarter compared to 8.3% last year and 7.3% year-to-date compared to 8.3% year-to-date last year.

This is largely due to growth in 2025 PDP revenue and continued leveraging of expenses over higher revenues, coupled with good discipline. Given the amount of activity expected in Q4 with open enrollments and member communications, we are assuming for now that we will spend any remaining Q3 SG&A outperformance in Q4. You will notice investment and other income is up $79 million in Q3 compared to Q2. We had a few gains in the quarter, plus temporarily higher cash balances than expected. As we think about Q4, we may harvest some unrealized losses like we did a couple of years ago in Q4 as we think about reinvesting in higher yielding instruments for 2026 and beyond. For now, we are assuming that Q3 investment and other income outperformance will be earmarked for that purpose. Overall, the fundamental business performance was good in Q3 relative to our July forecast.

In our GAAP results, you can see a reduction or write-down of about 38% of our goodwill during Q3. As we covered on the Q2 call, the drop in market cap required us to accelerate our annual goodwill evaluation into Q3. After going through an accounting promulgated and detailed review of our goodwill, we took a one-time non-cash charge of $6.7 billion in our GAAP results. This has no impact on statutory capital, cash, or adjusted EPS results. Our sole credit facility financial covenant is a debt-to-cap limit at 60%, and we sit at 45.5% on 9/30/25 after this write-down. On the topic of the balance sheet, we had zero drawn on our $4 billion revolver that has a duration until 2030.

We also had a strong cash quarter with cash flow provided by operations of $1.4 billion in Q3, primarily driven by net earnings and the net timing of pass-through and other payments. Unregulated cash on hand at quarter end was $357 million. As you can see in the 10-Q, we expect to receive net $200 million in dividends from subsidiaries in Q4. Medical claims liability totaled $21.5 billion and represents 48 days in claims payable, an increase of one day as compared to the second quarter of 2025. If we look at the full year 2025, we are increasing our 2025 adjusted EPS forecast from the previous $1.75 to at least $2, driven by early execution on the improved Florida’s Children’s Medical Services revenue. For 2026, we look forward to providing 2026 guidance on our next quarterly call in early February once we have closed out 2025.

As you heard from Sarah, we look forward to growing adjusted EPS in 2026. Thank you for your interest in Centene, and Rocco, we can open it up for questions.

Thank you. We'll 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 remove yourself from queue, please press star then two. At this time, we'll pause for just a moment to assemble our roster. Today's first question comes from Josh Raskin with Nephron Research. Please go ahead.

Hi, thanks. Good morning. I guess my question really would be, how do you get comfortable that you are getting ahead of trend in the Marketplace? Do competitor exits make the pool less stable for 2026? Is there a point where this adverse selection spiral causes you to rethink certain markets or maybe even the segment entirely?

Yeah, thanks. Good morning, Josh. Thanks for the question. Let me hit utilization and trend in Marketplace both as we think about the back half of 2025 and then how we've thought about it for 2026. As we said, we saw a slight uptick in utilization in September, primarily outpatient ED. It correlated from a time standpoint with the direct uptick in dialogue nationally around both rate increases for 2026 and the EAPTC discussion at the congressional level. Not a perfect correlation or causation, I guess, but sort of correlation there.

As we thought about Q4 and thought about that $200 million provision pushing the remainder of the $125 million into Q4 and then adding another $75 million, it was really based on taking what we saw in September, extrapolating that out, and assuming that given just the volatility in the landscape and the fact that some folks are going to be concerned about their ability to access healthcare next year, we may see more of an uptick than we normally do in terms of that Q4 utilization. We feel like we've put prudent coverage in Q4 as we run out the year.

Relative to 2026, we obviously did a lot of work and just want to call out again the Marketplace team jumping on top of the weekly data in July, really ripped through that and understanding the drivers of what we were seeing and the fact that there were indicators in that data of what the extrapolated morbidity shifts would be above and beyond what we're seeing in 2025 for 2026. What we built into the revised rates that we talked about filing across 95% of membership were four major components. One was that adjusted 2025 baseline morbidity. The fact that the September weekly data came in consistent with our extrapolation off the July data is a strong reinforcing data point. That's one. Two is a healthy provision for trend as we step in year-over-year trends as we step into 2026.

Three is the assumption of the expiration of EAPTCs because that is current law of the land and what that will do to risk pool shifts. The last is a sort of composite view of the additional risk pool shifts that would be driven by both the continuation of the 2025 program integrity measures and enrollment hurdles that were put in place, as well as those hurdles that were in the final rule and also in OB-3. All of that was loaded as part of that revised rate. That gives us confidence that an average step up, as I mentioned, in the 30s, really with a focus on margin over membership, sets us up well for meaningful margin recovery in 2026. There are multiple pieces that are still moving, right? Obviously, we don't know where EAPTCs will land.

The payment program integrity measures that were in the final rule have been stayed in the courts, and our view is it's unlikely that those move ahead of Saturday and possibly not even through at least the original planned open enrollment period. We need to see where those land, but the bottom line is that our pricing took into account sort of all of those actually being in place during the open enrollment period. Lastly, just relative to your comment on overall stability, we do feel like there is still a competitive market. We feel like peers were thoughtful about 2026 in terms of understanding the risk pool shifts. We do think that sort of the fundamental construction of the market with those advanced premium tax credits prevents any kind of sort of death spiral. We've been cautious as we constructed our view of 2026.

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

Thanks. Maybe just follow up on that and then maybe answer something on Medicaid as well. Presumably, the open enrollment people, the open enrollment that enrollees are going to see will reflect the loss of these tax credits. There may well be a move by Congress to extend them in some form or fashion. Do you have the ability to quickly re-engage people to get them to sign up? I assume the people that are sicker and dealing with the health system through their providers will get prompted to resign. I'm thinking about those that are younger, healthier, and have less frequent contacts, many of those still using the exchanges. How easy is it to notify them that now it may make sense to resign up? What efforts do you have in place for that?

Quickly, on your comment about stable margins or stable contribution in Medicaid next year, you know there's a lot of discussion about some states trying to adopt work rules early and also putting in place program integrity measures on that side of the business. How are you thinking about that when you think about your outlook for Medicaid next year? Is that a meaningful swing factor?

Yeah, thanks, AJ. Great questions. Easy question. Let me hit Marketplace first. You're right. What we are navigating through is the idea that traditional open enrollment launches on Saturday. The EAPTC discussion is, you know, we assume live as we speak, with the possibility that there may be action before the end of the year. I think what you're really asking about is sort of breakage. Even if we got EAPTC extension, are we able to go and recapture folks who maybe got an initial letter, made a decision about the affordability of their insurance based on that data point, and don't actually re-engage or return of their own volition to understand how that landscape may change? That is something that we are paying a lot of attention to.

In fact, if you think about our commentary about rolling forward some of the SG&A favorability that we saw in Q3 because of this idea that we may be going through sort of a multi-layered enrollment process, we may find ourselves with a special enrollment period or an extension. We may want to be putting forward additional marketing efforts, obviously mobilizing our broker relationships to go and find those members if and as the landscape changes midstream. Our view is that there will still be some degree of breakage. Even if the EAPTCs are extended in the middle of a cycle and you go forward, for example, with an additional 60-day special enrollment period, our view of market contraction for 2026 is in the high teens to mid-30s range. That's based on all of the different factors that could be at play.

Centene (CNC) Q3 2025 Earnings Call Transcript

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