See which workplaces made this year's list.

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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."

Best Large Workplaces in Health Care

The companies on the Global 500 employ 70.2 million people, and their revenue represents more than one-third of the world’s GDP.

Fortune Global 500

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Fortune 500

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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. "

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.

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

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

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Leaders in all industries rely more than ever on Big Tech—and appreciate the giants that deliver, at scale, without drama.

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

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

100 Best Large Workplaces for Women

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

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

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

Fortune Sector Leaders: Health Care

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

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

GPTW Health Care Large 2023-Centene Corporation

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

GPTW Women 2023-Centene Corporation

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

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

F500-2023-Centene

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

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

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

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

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

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

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

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

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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.”

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

F500-2021-24-Centene

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

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

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

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

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

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

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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.

Change the World

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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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# Work Sites

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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Q4 2024

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 third quarter earnings 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 then two. We do ask that you please limit yourself to one question. Please also 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.

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

Thanks, Jen, and thank you all for joining us to review Centene's third quarter results. This morning, we reported third quarter adjusted diluted earnings per share of $0.58 ahead of our previous expectations. These results, driven by outperformance in our Medicare segment and in-line performance from our Medicaid and commercial businesses, support an improved full-year financial outlook. We now expect 2026 adjusted diluted earnings per share of greater than $5.20. As we remain focused on disciplined execution to finish the year strong, we are excited to carry the positive momentum we are producing across our businesses into 2027. Let's unpack the results by business line, starting with Medicaid.

Our Medicaid business was right on track for the quarter, reflecting the positive rate actions highlighted during our second quarter call and effective execution against key quality and affordability initiatives, including member and provider engagement, network management, and a diverse portfolio of fraud, waste, and abuse interventions. We reported a Medicaid HBR of 93.6%, improving sequentially by 30 basis points from Q2 and keeping pace with our trajectory to achieve a full-year Medicaid HBR of 93.5%. Overall, core trend in the quarter was in line with expectations, and the key drivers that we have been watching for the last 18 months, namely behavioral health, home health, and high-cost drugs, remain among our top areas of focus and intervention.

On a positive note, we observed another quarter of year-over-year stabilization in behavioral health trend with a similar pattern beginning to emerge in home health, evidence of the impact of our cost management and policy advocacy efforts. In the quarter, as expected, we continued to see evidence of states cleaning up eligibility ahead of OB3 implementation, including mixed impact from New York's EP program changes. In the back half of the quarter, we also saw some increased utilization from Children's Medical Services members in Florida ahead of the program transition. In all cases, we were able to absorb that pressure with no impact to our overall trajectory. Medicaid membership tracked largely in line with expectations at quarter end.

We continue to expect an incremental step down in Q4, in line with our previous view that year-end 2026 membership would reflect attrition of roughly 8%-9% compared to year-end 2025. As a reminder, October 1 marked both the roll-off of the Florida CMS membership as well as the beginning of OB3 eligibility terminations for legal non-citizens, and we have at least one state planning to begin work requirements in Q4. These shifts are reflected in our full-year membership projections, and we have accounted for corresponding Q4 acuity impacts in our guidance. Rate updates since July have been consistent with expectations, and our view of the full-year 2026 composite rate remains steady at roughly 5%.

Just over 40% of our Medicaid revenue re-rates as of January 1, and while our view there is still early, we do see signs that rates will continue to reflect better alignment with our cost experience, particularly as 2025 dates of service come more fully into focus for the look-back period. As we think about rate actions specific to the Medicaid expansion population, you will recall that we had a few states in the July 1 cohort who explicitly accounted for anticipated acuity shifts related to work requirements, mainly states with either early starts or intentional OB3 prep activity in the period. Based on our discussions, we expect the remaining expansion states to revisit rate discussions mid-cycle once their implementation timelines and plans become clearer.

For the January 1 cohort, we are similarly seeing strong engagement in the rate-setting process, with explicit dialogue around the best way to address OB3 acuity impacts as they construct and draft 2027 rates. Looking ahead, we are confident we can work with Medicaid departments across our portfolio to make progress on rate adequacy amid the evolving coverage landscape. In the meantime, our local teams are actively partnering to prepare for the implementation of work requirements. States are broadly opting for a more methodical approach to eligibility verifications, which should smooth both membership and acuity impacts across 2027 and into early 2028. This will create more opportunities to correctly calibrate rate to the ultimate mix shift. Based on state guidance, we are mobilizing to support member education, work, and community resource referrals, as well as provider education and readiness support.

These efforts are important to ensure that as a system, we can maximize the opportunity for coverage continuity. Ultimately, we see significant opportunity for margin restoration and sustainable long-term growth in Medicaid. Our unmatched expertise and uniquely mission-driven model position us to help our state partners achieve their Medicaid program goals while supporting our members throughout their health journeys. As signs of trend stabilization emerge and policy changes advance, we look forward to helping to shape the next chapter of Medicaid managed care. Turning to Medicare, our Medicare segment results were strong in the quarter, with Medicare Advantage and standalone Part D performance both exceeding our expectations. Strength in Medicare Advantage was driven by favorable medical cost experience and continued discipline management of the business.

As a result of strong execution against our turnaround plan, we are now on track to achieve break-even financial results in 2026, a year ahead of expectations. With the annual enrollment period underway, we are closely monitoring our portfolio evolution for 2027. As many on this call are aware, we made changes to the way we are going to market for Medicare Advantage in 2027, focusing our efforts on populations and geographies where we can provide differentiated products that create the most value for our members and the communities we serve. We expect Medicare Advantage membership to be down year-over-year in 2027 as we construct a footprint that will allow us to advance margin expansion in 2027 and beyond while delivering high-quality service and benefits to our members. Earlier this month, CMS released Medicare Advantage Stars results, which impact the 2028 plan year.

These results, representing roughly 42% of members at or above 3.5 Stars with 10% of members in four Stars, were in line with our expectations given known program headwinds. Despite cut-point pressure, the team delivered meaningful raw-score improvement in key categories, including results that outpace the industry in several measures related to preventative care and clinical outcomes. We remain focused on improving quality fundamentals, and we continue to advocate for Stars reforms that will better support the vulnerable populations we serve. We believe this important work will ultimately lead to better Star scores and the associated revenue benefit. Our standalone Part D offerings also performed well in the quarter, once again demonstrating the benefits of prudent bid posture, scale, and continued optimization of our cost structure.

Reflecting year-to-date results, we now expect PDP to generate pre-tax margins in the mid to high 3%, a step up from the greater than 3% outlook we shared in July. While we are still early in AEP, based on the landscape and our product positioning, we expect enrollment to tilt toward growth. We continue to see excellent long-term opportunity in Part D, leveraging a deeply established footprint and expertise that we believe uniquely positions us to provide affordable access to pharmacy benefits for American seniors. Finally, our Marketplace team continues to deliver, positioning the product for meaningful year-over-year margin restoration in 2026. The Marketplace business fundamentally outperformed in the quarter, with trend in our high-acuity silver tier continuing to moderate. During the quarter, we received updated data and refreshed our estimates relative to 2026 independent dispute resolution activity and other standard program integrity processes.

The strength of the underlying business allowed us to absorb the impact of these adjustments, and we now expect Marketplace will produce a full-year pre-tax margin at the top of our previous range of 4.5%-5%. CMS continues their efforts to reduce unauthorized enrollments and crack down further on broker fraud. The reserves we had in place coming into Q3 sufficiently accounted for the revenue and risk adjustment impact of this activity in the quarter, and we believe we have similarly accounted for the trailing effects of these efforts through the end of the year in our full-year guidance. Our full-year assumptions for Marketplace also include continued membership attrition and the expected sloping of Q4 medical expenses. In September, we received updated risk adjustment data from Wakely, reflecting claims through July of 2026 and inclusive of data on unauthorized membership.

This data was in line with our expectations, and we continue to expect to be in a meaningful receivable position at the end of the year. While the Ambetter team has been expertly navigating a dynamic landscape, they have also found time to innovate. We will step into 2027 open enrollment with an expanded product suite, including more tailored benefit plans and whole health programs that meet our members where they are and make it easier for them to get affordable, local, and innovative support for their health. We are pleased with where Ambetter's pricing strategy has positioned our products for the 2027 shopping season and remain focused on driving additional margin expansion for Marketplace in 2027. We are proud of how this team has executed in the wake of market disruption and coverage changes, demonstrating agility in 2025 that paved the way for meaningful margin recovery in 2026.

We believe we are well-positioned to harness this positive momentum as we enter the 2027 cycle. Overall, we are pleased with the performance of our core businesses in the quarter and the momentum we are building across the portfolio. While we have made great progress managing cost trends and improving our own cost structure, I am equally excited about the impact the Centene team has had delivering health outcomes for our members. One example of this is the work we have done across the country to turn food from a basic need into a powerful driver of health and affordability. For example, our Nebraska Total Care team has partnered with a leading grocer to offer a healthy food benefit with incremental rewards for evidence-based nutrition counseling, education, and blood sugar screenings to reengage at-risk members and drive behaviors that improve diabetes management.

Improving quality of life, encouraging healthy choices, and supporting chronic disease management are just some of the ways our members can benefit from healthy food programs. Along the same lines, over the last two years, Centene has taken a data-driven approach to designing our Medicare D-SNP supplemental benefits around groceries, housing, and transportation. Based on a hypothesis that by investing in critical needs like food insecurity, we would not only be offering an attractive benefit for enrollees, but one that we know drives better health outcomes. Over the last two quarters, we've completed analyses of these member cohorts and saw that members with higher healthy food benefits had almost $200 per member per month in lower claims spend and better clinical outcomes, including lower blood pressure, HbA1c, and BMI.

By using proven models, prioritizing rigorous data-driven evaluation, and embracing innovation, Centene is delivering on the promise of managed care, better outcomes, lower costs, and improved quality for the members we serve. As we turn our focus to next year, we look forward to building on the important progress we are making operationally, financially, and relative to the impact we have on our members and the communities we serve. Drew will speak to headwinds and tailwinds in more detail in a moment, but based on what we know today, we expect to grow earnings in 2027 off both our updated baseline and our updated guidance. We'll be able to provide more precision on this view as we gain visibility into AEP and OEP performance, January 1 Medicaid rates, and the overall exit trajectory of the businesses.

We look forward to sharing more details when we issue formal 2027 guidance in early February. With that, I'll turn it over to Drew to provide more detail on the quarter and our early view of 2027.

Thank you, Sarah. We are pleased to report another very good quarter on our path to margin restoration, including $45.1 billion in premium and service revenue and adjusted diluted earnings per share of $0.58. This was better than our expectations, such that we are raising our full-year adjusted EPS guidance to greater than $5.20 per diluted share. Similarly, the consolidated HBR at 92.7% was better than our expectations, fueling a full-year improvement in our 2026 HBR guidance. Let's go through the drivers so that you can think about 2026 progress in the context of 2027 and beyond. In Medicaid, at 93.6% in Q3, we were right on track with our full-year forecast of approximately 93.5%. We ended Q3 with 11.9 million members, down 5% year to date, and we expect some states to continue to trim Medicaid rolls leading up to OB3 implementation in 2027.

We are holding our full-year view of membership down 8%-9%, along with the 2026 forecasted 93.5% HBR. Our full-year view on rates and trend has not changed since our Q2 call, and we still see good collaboration and recognition by states for the need to match rates with acuity and trend. We are pleased with the stability of Medicaid and look forward to continued HBR improvement ahead. Medicare segment results, including an HBR at 93.8%, were stronger than expected, driven by both Medicare Advantage and PDP, with PDP representing the majority of the outperformance. Medicare trend was lower than what we had planned for as we continue to execute on trend management initiatives. As Sarah mentioned, we are pleased to be forecasting to reach Medicare Advantage breakeven in 2026, a year earlier than our multi-year plan.

PDP continues to perform strongly with the 2026 forecasted pre-tax margin in the mid to high 3% zone. The Commercial segment, led by Marketplace, continues to demonstrate a marvelous turnaround from 2025. In the quarter, we were on track, and we were able to cover both rounds of CMS unauthorized enrollment as previously anticipated. In addition, in Q3, we reflected other program integrity measures, as well as continued headwinds from certain providers gaming the system with the independent dispute resolution process prompted by the No Surprises Act. We are working with the administration and Congress on plugging the holes that are prompting this healthcare system waste and abuse. The strength of our underlying performance in Marketplace enabled us to account for these matters without missing a beat.

In fact, the underlying strength enabled us to move to the top of our previous 4.5%-5% pre-tax range for 2026. Marketplace membership was slightly down from Q2 with a year-end forecast around 3.2 million members. The improved outlook on Medicare and Commercial segments for 2026 improves our full-year consolidated HBR by 15 basis points at the midpoint. Our adjusted SG&A expense ratio was 6.5% in the third quarter, compared to 7.0% last year. A little better than our expectations, reflecting continued discipline and execution. With anticipated Q4 seasonality and spending, we are holding at a full-year midpoint of 7.2% for 2026. We are also holding the guidance of approximately $1.5 billion of investment and other income for 2026. We ended the quarter with $175 million of cash available for general corporate use.

Since our Q2 call, we repurchased an additional $1.1 billion of senior notes, including the full redemption of our senior notes due 2027 during October. Our total debt as we sit here today is $15.0 billion, down from $18.5 billion at the end of 2024. This not only helps address near-term maturities, it reduces interest expense, including avoiding higher current interest rates, and maybe most importantly, creates capacity for growth opportunities down the road. We ended the quarter with a debt-to-cap ratio of 41.1%. Our 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 2026. During the third quarter, cash flow used by operations was $3.7 billion.

As expected and previewed during the Q2 call, we paid out over $3 billion of Medicaid pass-through payments that were sitting on our balance sheet at the end of Q2. Cash flow provided by operations was $4.3 billion year to date, driven by net earnings and the timing of claims and other payments. Overall, given the strength of the quarter, we now expect greater than $5.20 of adjusted diluted EPS in 2026. This increase from prior guidance of greater than $4.80 is driven by, one, continued strength in our Medicare segment led by PDP. Two, moving our Marketplace pre-tax margin expectation up to the top of the prior 4.5%-5% range. And three, lower interest expense to a midpoint of $610 million. We are pleased to be forecasting significant EPS improvement from 2025, and we look forward to showing continued progress of earnings restoration ahead.

Now let's review 2026 in the context of 2027 and beyond, starting with our current 2026 adjusted EPS guidance of greater than $5.20. Recalling our discussion on the Q2 call, 2026 earnings includes $0.50 that we wouldn't expect to recur in 2027. As we detailed at the end of July, the $0.50 represented $180 million in Marketplace and $160 million in our Medicare segment, largely PDP. Overall, we believe the appropriate jump-off point upon which to apply 2027 tailwinds and headwinds is approximately $4.70 of adjusted EPS. As we sit here today with still a quarter of 2026 to deliver and other open items, such as open enrollment in three of our lines of business and partial visibility on 2027 Medicaid rates, we expect to grow adjusted EPS relative to not only the $4.70 jump-off, but also relative to our revised $5.20 2026 adjusted EPS guidance.

Underneath that, here are some of the 2027 drivers, most of which we have covered heretofore. For selected tailwinds relative to the $4.70 2026 jump-off point, we are currently forecasting continued progress matching Medicaid rates with acuity, though partially offset by OB3 headwinds, such that we still expect slight improvement in the Medicaid HBR. Improved Marketplace pre-tax margin. Medicare Advantage moving from breakeven in 2026 to better than breakeven in 2027. PDP membership growth and an increase in premium yield, given the increase in the direct subsidy, and an improved SG&A rate on a consolidated basis. For a couple of selected headwinds, we are currently forecasting membership attrition in Medicaid from OB3 and the removal of the Unsatisfactory Immigration Status population from managed care in California, and PDP 2026 pre-tax margin outperformance resetting, at least initially in 2027, to a lower margin.

Hopefully, that gives you some early insight into where we sit here in October of 2026. We have a lot of work to do to finish 2026 strong and construct and finalize a plan for 2027 that will be the basis of initial guidance we intend to provide on our Q4 call. Chris Neczypor, our next CFO, has been side by side with me and the finance team for the last couple of months, and we both look forward to sharing results with you on the Q4 call in February. Thank you for your interest in Centene, and Rocco, please open it up for questions.

Absolutely. If you would like to ask a question, please press star then one on your telephone keypad. If you are 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, you would 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 Dave Windley at Jefferies. Please go ahead.

Oh, great. Thanks for taking my question. You answered a number of the topics around Medicaid. I guess I would be interested in a little more color around the dialogue you are having with states and the prospective rate adjustments that they seem to be, at least some of them, seem to be willing to provide. Can you give us any color on that and kind of the mechanism by which they are doing that, given their desire to look back at rates? And then, more specifically, what you are expecting for January 1? Thanks.

Yeah. Thanks, Dave, for the question. Obviously very relevant because we are in flight in those conversations as we look at the January 1 cohort. It is still early, but I would say that we are seeing positive signal in terms of just, first of all, a very high engagement rate, really good conversation and data exchange. We have a number of states that have already put explicit provisions in their draft rates. Then we have others that are still evaluating, but it is really consistent with where they are in the drafting process. I think what we are seeing is two things. One is the sort of increased benefit of having 2025 come into the baseline period. That is obviously more relative to kind of core trend that we have been battling for the last 18 months.

But we are also seeing states acknowledge the need to prospectively account for the acuity shifts of work requirements. I think the hypothesis that we had coming into this process, that because the Medicaid expansion population is a very discreet population, they are rated in a very specific cell. Actually, because a lot of the work the states have done to prepare for the process has required them to go get data, right, to figure out what their frailty definition would be, to get those codes together, to define the community engagement kind of data framework. It means actuaries have more data than we did going into the redeterminations process to actually scenario model the impact on the population. So we saw in that July 1 cohort, we had a few states that were explicitly stepping into work requirements activity, put those in the rates prospectively.

I feel like we're seeing that same trend stepping into the January 1 cohort. We've got really good verbal dialogue with the states that July 1 cohort that would come back mid-cycle, and I think we're continuing to see strong support from CMS in terms of the requirement for explicit explanation of provision around work requirement impact in the rates and encouragement around mid-cycle adjustments and the ability to leverage current period as they set those rates, rather than requiring the look back as they have on more sort of traditional trends. So early, but positive signals in terms of what we're seeing.

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

Thanks. Good morning. Just a couple quick numbers questions. First, on the exchanges going into 2027, I'm curious on how you expect the market as well as your own growth to kind of shape up. Do you think the exchange market overall kind of grows in 2027? Then just quickly, Drew, on your PDP comments, you talked about a reset to margins. Should we expect a reset back to target at 3% or back to where you initially guided 2026 at 2%? Thank you.

Yeah. Thanks, Justin. I'll hit the exchanges and then turn it over to Drew for PDP. I think coming into 2027, our view, and if you think about sort of the significant changes of 2026 relative to expiration of the eAPTCs, our view was that there would be the most significant shift in 2026, but some degree of tail into 2027, just in terms of the program integrity measures, really sort of readjusting the baseline of membership. So our expectations for market overall are still some degree slight contraction. Then our membership is TBD. It's a little too early. We need to see the results of open enrollment period. But I would say we feel very good about how the team positioned the products across our geographies with a focus on driving continued margin expansion in 2027.

Yeah. Justin, on PDP, we feel good about our positioning. We have entered the open enrollment period and like our positioning, not just in the low income population, but also in the enhanced product as well. So excited to be able to forecast some growth there. Then to your point, yes, we typically bring back, at least for initial guidance, to a more of a target margin. I would say in 2025 and 2026 coming out of the chute, that was artificially suppressed because of the Inflation Reduction Act. You will recall we came out at 1% in 2025 and 2% as our initial targets in 2026. We are sort of past that wear-off of the Inflation Reduction Act.

So, we still need to get data from open enrollment, but probably somewhere in that 2%-3% range would be the opening expectation for PDP for the year, and then we would work our tails off to outperform that during the year.

Thank you. Our next question today comes from Stephen Baxter at Wells Fargo. Please go ahead.

Yeah. Hi, thanks. Appreciate the color on the exchanges. I was wondering if you might be willing to call out, I guess, how much of an issue in the quarter this IDR catch-up was, just so we can think about bridging to a reasonable Q4. Then if we look at where you are trending for the full-year MLR, I guess it looks like it is probably going to exceed the initial guidance that you staked out in February, but you are still talking about achieving the high end of this revised margin that you have laid out. Could you help us just kind of bridge some of these moving pieces and why you are still expecting that level of outperformance? Thank you.

Yeah, Stephen, thanks for the questions. If you step back, well, first of all, it is good to understand that Marketplace is not the only item within the Commercial segment. I know it is almost all of the segment, but there is about $4 billion of commercial group business in there, which does weigh on the results for the Commercial segment. As you have probably picked up in the press, we have decided to exit the Health Net commercial group business largely in California. That we will be able to exit on a very orderly fashion over the next, call it 18-24 months. That is part of it. When I step back and look at the Marketplace P&L, we are going from a -1% pre-tax margin last year, as we talked about in 2025, to a now 5% forecasted pre-tax margin. That is 600 basis points of pre-tax margin improvement.

Centene (CNC) Q3 2026 Earnings Call Transcript

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