Centene (CNC) 2024 Wells Fargo Healthcare Conference summary

Business performance and outlook

• Q3 is tracking similarly to Q2, with full-year adjusted EPS expected to exceed $6.80, despite ongoing Medicaid pressure from redeterminations, offset by strong Marketplace, SG&A, and investment income performance.

• Medicaid membership is expected to level off around 13.0 million, lower than previous projections, due to attrition and a 30% rejoiner rate, which is causing gaps in coverage and premium collection.

• Marketplace business continues to perform strongly, with positive pricing strategy for 2025 and CMS adoption of the Agent of Record lock, enhancing stability for members.

• Medicare and PDP bids for 2025 are on track, with strategic decisions to eliminate broker commissions for PDP due to IRA changes, while maintaining full commissions for Medicare Advantage.

• Stars ratings are improving year-over-year, with meaningful progress expected toward the goal of 85% of members at 3.5+ Stars by October 2025.

Medicaid trends and rate dynamics

• Medicaid HBR is under pressure from redeterminations, administrative terminations, and program changes in states, such as pharmacy benefit carve-outs and GLP-1 additions.

• Rate updates are ongoing, with 4%+ increases expected in the back half of the year, but more is needed to reach long-term margin targets.

• States are increasingly responsive to advocacy, with most having acted on rate adjustments, though sufficiency remains a challenge.

• The path to normalized Medicaid margins may extend into 2026, requiring multiple rate cycles and continued data sharing with states.

• Internal levers, such as operational discipline and advocacy, are being used to manage through the unprecedented redetermination environment.

Marketplace and exchange business

• Marketplace performance is robust, with margin preservation prioritized for 2025 and a rigorous county-by-county approach to growth.

• Enhanced subsidies have driven growth, and bipartisan support is expected to help maintain stability, even if federal policy changes.

• Product design and state-based exchange strategies are being developed to mitigate potential subsidy loss impacts.

• ICHRA market is growing, especially among small businesses and rural communities, aligning with a bottom-up growth strategy.

• The company is prepared with multiple contingency plans to maintain target margins regardless of policy shifts.