Centene Corporation Deutsche Bank 2026 Healthcare Summit

Happy to provide a couple updates on the quarter and then go deeper into any of it. Obviously reiterated our full-year adjusted dilutive EPS guidance of greater than $4.80 this morning. Pleased with the trajectory of the business through two months of the quarter. We are in line with expectations. Trends that we're seeing in Q3 broadly across lines of business consistent with trends that we saw in Q2. Some of the highlights for business lines. Medicaid rates are coming in in line with expectations, and consistent with that 5% composite full-year outlook for rates overall. In addition to just continued focus on quality and affordability initiatives, our major focus is obviously working with our state partners as they are gearing up and, in some cases, starting to implement work requirements. That's taking more and more of the focus on the local level.

From a marketplace standpoint, we are through the pricing cycle, continue to be focused in that business on sustainable margin versus membership. We've also continued to engage with CMS on program integrity efforts across the ACA, and believe that we've fully accounted for the potential impacts of that work in our full-year guidance. Obviously, thinking about where we were with that business at this time, sitting here at this conference last year, very pleased with the recovery, and still on track for that 4.5%-5% margin for 2026. Medicare also gearing up for major selling season.

We talked a little bit about this on the Q2 call, but our focus in Medicare going into 2027 was really portfolio simplification and continuing to focus that portfolio and design explicitly around duals and complex populations and markets where we feel like we can be competitive, both because of our overlap with our Medicaid footprint, and the ability to leverage those local resources to deliver a differentiated service model. I think that's what you'll see. Obviously, we'll have a more fulsome view of the competitive landscape in Medicare over the next month or so as we get the landscape files. But really focused on building a platform there that will set us up for breakeven or better in 2027 and continued margin progression thereafter, and continue to feel good about how that business is performing in 2026. Last but not least, PDP.

We're pleased to be below benchmark in all 34 of our regions going into 2027. I think this news sort of came out after the Q2 call, but the discontinuation of the premium subsidies in the demo, we tend to take a conservative approach in terms of relying on the continuation of the demo. Not concerned about the impact of that in 2027, and continue to be on track for 3% plus margins in PDP. All in all, feel good about where we are in the quarter. Feel very good about where the business is year to date.

That was a great summary.

Yeah, not much has changed since our view on the Q2 call. So obviously came into the year aiming for the flat HBR 93.7 and then saw strength in Q1, so still on track for that 93.5. So still showing margin improvement in year. We did talk about the fact that because some of our states are sort of tightening their processes around eligibility in preparation for work requirements, and then some states are actually pulling forward components of the H.R. 1 implementation that we were expecting an increase in membership decline, so that's the target, originally 6%-8% to 9% of the end of the year. So still on track for that. Trends that we're seeing in the quarter, very consistent with the trends that we've been tracking broadly. So behavioral health, home health, high-cost drugs, those are the areas that we have really focused a number of our initiatives.

Again, not a lot different. We are learning more about how states are approaching and planning to approach work requirements. Most states are leaning toward a monthly eligibility check, which will create a more gradual impact around the membership declines over 2027 and 2028. I think that will be very helpful both in terms of ensuring that members have the right support, we have the ability to deliver documentation, get them engaged in work opportunities, and community engagement opportunities, and that rates have a chance to keep pace with the membership and acuity shifts. Then we have a couple of states that have already started implementation of work requirements, and so far things are playing out in line with expectation, but very early, smaller states, so not sort of a full extrapolation.

A lot of good data coming out of the back half of this year that I think will help us inform our view of how this is going to play out in 2027 and 2028.

Yeah. Well, eligibility is determined by the state in all cases. But we have an important role to play in terms of being able to provide data that we have. If you think about what just recently came out from CMS in terms of the definition of medical frailty, which broadly define categories for states, which provides a little bit more flexibility, but I think was actually helpful in terms of guiding states to leverage objective data that exists in systems, and some of that is data that we have. So one of our major areas of focus over the last couple of months has been building the data interfaces with states. As they think about that automatic or ex parte determination of eligibility, we can help them be fully informed on that initial decision.