Centene (CNC) Investor Day 2024 summary

Strategic direction and growth opportunities

• Announced 2025 adjusted EPS guidance of greater than $7.25, representing over 6% year-over-year growth, and reaffirmed a 12%-15% long-term EPS CAGR target.

• Focused on three core businesses—Medicaid, Medicare, and Marketplace—while targeting disruptive growth in Duals (Medicare-Medicaid eligible) and ICHRA (individual coverage health reimbursement arrangements).

• Medicaid expected to represent 55% of 2025 revenue, with significant embedded earnings potential as rates catch up to acuity post-redeterminations; presence in 30 states and 2,098 counties.

• Marketplace business has grown to over 4.5 million members, projected to generate $30 billion in revenue in 2025, and leverages growth in the individual market, gig workers, and ICHRA.

• Duals alignment and ICHRA are highlighted as major, organic growth opportunities not yet included in long-term guidance, leveraging existing infrastructure and market leadership.

Financial guidance and embedded earnings

• 2025 revenue guidance set at $155 billion, with $11 billion growth over 2024, driven by Medicaid rate increases, Marketplace expansion, and PDP growth.

• Health Benefits Ratio (HBR) expected at 88.4%–89.0% for 2025, with Medicaid HBR projected to improve by 60 basis points as rate and acuity alignment progresses.

• Medicare segment targets break-even by 2027, with margin expansion driven by SG&A reductions, operational efficiencies, and value-based care initiatives.

• PDP business projected at $14.5 billion revenue in 2025, with margin improvement expected as IRA changes stabilize.

• Long-term algorithm: 7-8% revenue growth, 1-2% margin expansion, 4-5% capital deployment, and 12%-15% EPS CAGR, supporting double-digit EPS growth.

Policy, market, and risk environment

• Political landscape is expected to limit major healthcare reform, but bipartisan support for Medicaid and Marketplace stability remains strong; states may gain greater flexibility.

• Enhanced APTCs (eAPTCs) are critical for Marketplace stability; management expects some form of extension or modification, with up to $1 EPS risk if not renewed.

• Ten states have not expanded Medicaid, representing a $2.65B opportunity if expansion occurs.

• ICHRA market is seen as a long-term opportunity, with new partnerships and product launches underway to capture group-to-individual market migration.

• Company leverages deep state relationships, local expertise, and a track record of successful RFPs to maintain and grow market share.