-- Diluted EPS of $2.16; Adjusted Diluted EPS of $2.26 ---- Increases 2024 Full Year Guidance -- 2024 adjusted diluted EPS of $2.26, up over 7% from $2.11 in the first quarter of 2023. Increases 2024 full year adjusted diluted EPS guidance by $0.10 to greater than $6.80. Premium and service revenues of $36.3 billion in the first quarter of 2024. Increases 2024 full year premium and service revenue guidance by $1.0 billion. Membership increase of 41% in Marketplace, compared to the first quarter of 2023. ST. LOUIS, April 26, 2024 /PRNewswire/ -- Centene Corporation (NYSE:CNC) ("the Company") announced today its financial results for the first quarter ended March 31, 2024. In summary, the 2024 first quarter results were as follows: Total revenues (in millions) $             40,407 Premium and service revenues (in millions) $             36,337 Health benefits ratio 87.1 % SG&A expense ratio 8.9 % Adjusted SG&A expense ratio (1) 8.7 % GAAP diluted EPS $                  2.16 Adjusted diluted EPS (1) $                  2.26 Total cash flow used in operations (in millions) $                  (456) (1) Represents a non-GAAP financial measure. A full reconciliation of the adjusted diluted earnings per share (EPS) and adjusted selling, general and administrative (SG&A) expenses is shown in the Non-GAAP Financial Presentation section of this release. "Centene's first quarter results demonstrate the strength of our diversified platform. We are pleased to raise full year 2024 guidance as we look to maximize the positive momentum being generated by our core businesses. We are executing against our strategic plans for growth and increasing access to affordable, high-quality healthcare for our members and the communities we serve," said Chief Executive Officer of Centene, Sarah M. London. Other Events On April 1, 2024, Centene's Oklahoma subsidiary, Oklahoma Complete Health, commenced the statewide contracts to provide managed care for the SoonerSelect and SoonerSelect Children's Specialty Plan programs. The new contracts have a one-year term with five, one-year renewal options. Also in April, the state of Florida announced its intent to award contracts to five health plans, including Centene's Florida subsidiary, Sunshine Health, as a result of the reprocurement of the Statewide Medicaid Managed Care program. Centene's Michigan subsidiary, Meridian in Michigan, was selected in April by the Michigan Department of Health and Human Services to continue to serve as a Medicaid health plan for the Comprehensive Health Care Program. The proposed Medicaid contracts are expected to begin on October 1, 2024, and run through September 30, 2029, with three, one-year optional extensions. Awards & Community Engagement In April, Centene was recognized by Forbes as one of the Best Employers for Diversity 2024, as well as by Newsweek, which named Centene one of America's Greatest Workplaces for Mental Wellbeing 2024. In March, Centene's Kansas subsidiary, Sunflower Health Plan, and Centene Foundation announced a $160,000 grant to the Hays Medical Center Foundation to provide on-demand and scheduled telepsychiatry services at Hays Medical Center. The partnership will bolster capacity for telehealth behavioral health services across central and western Kansas by providing 24-hour access to board-certified psychiatrists, alleviating pressure on rural emergency rooms. In March, Fortune recognized Centene as one of America's Most Innovative Companies for 2024. In February, Centene's Michigan subsidiary, Meridian in Michigan, and the Centene Foundation announced a partnership with the Wayne Mobile Health Unit (WMHU) to improve maternal and infant health and broadly support the WMHU's community outreach efforts to deliver preventative health services directly in neighborhoods, at homes and in workplaces. Membership The following table sets forth membership by line of business: March 31, 2024 2023 Traditional Medicaid (1) 11,750,000 14,521,100 High Acuity Medicaid (2) 1,547,600 1,801,200 Total Medicaid 13,297,600 16,322,300 Commercial Marketplace 4,348,800 3,093,600 Commercial Group 422,700 437,200 Total Commercial 4,771,500 3,530,800 Medicare (3) 1,146,800 1,343,800 Medicare PDP 6,438,900 4,459,300 Total at-risk membership 25,654,800 25,656,200 TRICARE eligibles 2,768,000 2,799,300 Total 28,422,800 28,455,500 (1) Membership includes Temporary Assistance for Needy Families (TANF), Medicaid Expansion, Children's Health Insurance Program (CHIP), Foster Care and Behavioral Health. (2) Membership includes Aged, Blind, or Disabled (ABD), Intellectual and Developmental Disabilities (IDD), Long-Term Services and Supports (LTSS) and Medicare-Medicaid Plans (MMP) Duals. (3) Membership includes Medicare Advantage and Medicare Supplement.   Premium and Service Revenues The following table sets forth supplemental revenue information ($ in millions): Three Months Ended March 31, 2024 2023 % Change Medicaid $         21,460 $         22,227 (3) % Commercial 7,751 5,252 48 % Medicare (1) 5,935 5,876 1 % Other 1,191 1,597 (25) % Total premium and service revenues $         36,337 $         34,952 4 % (1) Medicare includes Medicare Advantage, Medicare Supplement, D-SNPs and Medicare Prescription Drug Plan (PDP).   Statement of Operations: Three Months Ended March 31, 2024 For the first quarter of 2024, premium and service revenues increased 4% to $36.3 billion from $35.0 billion in the comparable period of 2023. The increase was driven by membership growth in the Marketplace business due to strong product positioning as well as overall market growth, partially offset by recent divestitures in the Other segment and lower Medicaid membership primarily due to redeterminations. Health benefits ratio (HBR) of 87.1% for the first quarter of 2024 represents an increase from 87.0% in the comparable period in 2023. The SG&A expense ratio was 8.9% for the first quarter of 2024, compared to 8.6% in the first quarter of 2023. The adjusted SG&A expense ratio was 8.7% for the first quarter of 2024, compared to 8.5% in the first quarter of 2023. The increases were driven by growth in the Marketplace business, which operates at a meaningfully higher SG&A ratio as compared to Medicaid, along with Medicare distribution costs. The increases were partially offset by ongoing SG&A reduction initiatives and the divestiture of Circle Health Group (Circle Health), which operated at a higher SG&A expense ratio. The SG&A expense ratio in the first quarter of 2024 was also impacted by higher acquisition and divestiture related costs in addition to severance costs due to a restructuring. The effective tax rate was 21.4% for the first quarter of 2024, compared to 18.8% in the first quarter of 2023. The effective tax rate for the first quarter of 2024 reflects tax effects of the Circle Health divestiture. The effective tax rate for the first quarter of 2023 reflects the tax effects of the distribution of long-term stock awards to the estate of the Company's former CEO as well as the Magellan Specialty Health gain. For the first quarter of 2024, our effective tax rate on adjusted earnings was 24.6%, compared to 24.3% in the first quarter of 2023. Cash flow used in operations for the first quarter of 2024 was $456 million, primarily driven by net earnings, more than offset by timing of experience rebate payments, a delay in premium payments from one of our state partners subsequently received in April 2024 and pharmacy rebate remittance timing as we transitioned to the new third-party pharmacy benefits manager (PBM), which commenced in January 2024. Balance Sheet At March 31, 2024, the Company had cash, investments and restricted deposits of $37.5 billion and maintained $205 million of cash and cash equivalents in its unregulated entities. Medical claims liabilities totaled $18.1 billion. The Company's days in claims payable was 53 days, a decrease of one day as compared to the fourth quarter of 2023 and the first quarter of 2023. The decrease of one day was driven by an increase from the timing of claims receipts due to impacts of the Change Healthcare cybersecurity incident, more than offset by a decrease in outstanding pharmacy payables and the acceleration of state-directed payments. Total debt was $18.0 billion, which included $350 million of borrowings on the $2.0 billion Revolving Credit Facility at quarter end. During the first quarter of 2024, the Company repurchased 681 thousand shares for $51 million. In April 2024, the Company repurchased an additional 2.7 million shares for $200 million. As of April 26, 2024, $5.0 billion remains available under the Company's stock repurchase program. Outlook The Company is updating its 2024 diluted EPS guidance floor to greater than $5.94 and its 2024 adjusted diluted EPS guidance floor to greater than $6.80. The Company's annual guidance for 2024 is as follows and will be discussed further on our conference call: Full Year 2024 GAAP diluted EPS                                                                > $5.94 Adjusted diluted EPS (1) > $6.80 (1) A full reconciliation of adjusted diluted EPS is shown in the Non-GAAP Financial Presentation section of this release. Full Year 2024 Low High  Total revenues (in billions) $   147.5 $   150.5 Premium and service revenues (in billions) $   135.5 $   138.5 HBR 87.3 % 87.9 % SG&A expense ratio 8.4 % 9.0 % Adjusted SG&A expense ratio (2) 8.4 % 9.0 % Effective tax rate 22.9 % 23.9 % Adjusted effective tax rate (3) 24.1 % 25.1 % Diluted shares outstanding (in millions) 522.2 525.2 (2) Represents a non-GAAP financial measure. Adjusted SG&A expense ratio excludes acquisition and divestiture related expenses and severance costs due to a restructuring of approximately $85 million to $95 million. (3) Represents a non-GAAP financial measure. Adjusted effective tax rate excludesincome tax effects of adjustments of approximately $200 million to $210 million.   Conference Call As previously announced, the Company will host a conference call Friday, April 26, 2024, at 8:30 a.m. ET to review the financial results for the first quarter ended March 31, 2024. Investors and other interested parties are invited to listen to the conference call by dialing 1-877-883-0383 in the U.S. and Canada; +1-412-902-6506 from abroad, including the following Elite Entry Number: 9229812 to expedite caller registration; or via a live, audio webcast on the Company's website at www.centene.com, under the Investors section. A webcast replay will be available for on-demand listening shortly following the completion of the call for the next 12 months or until 11:59 p.m. ET on Friday, April 25, 2025, at the aforementioned URL. In addition, a digital audio playback will be available until 9 a.m. ET on Friday, May 3, 2024, by dialing 1-877-344-7529 in the U.S., 1-855-669-9658 in Canada, or +1-412-317-0088 from abroad, and entering access code 7730668. Non-GAAP Financial Presentation The Company is providing certain non-GAAP financial measures in this release as the Company believes that these figures are helpful in allowing investors to more accurately assess the ongoing nature of the Company's operations and measure the Company's performance more consistently across periods. The Company uses the presented non-GAAP financial measures internally in evaluating the Company's performance and for planning purposes, by allowing management to focus on period-to-period changes in the Company's core business operations, and in determining employee incentive compensation. Therefore, the Company believes that this information is meaningful in addition to the information contained in the GAAP presentation of financial information. The Company strongly encourages investors to review its consolidated financial statements and publicly filed reports in their entirety and cautions investors that the non-GAAP financial measures used by the Company may differ from similar measures used by other companies, even when similar terms are used to identify such measures. The presentation of non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. The Company believes the presentation of non-GAAP financial measures that excludes amortization of acquired intangible assets, acquisition and divestiture related expenses, as well as other items, allows investors to develop a more meaningful understanding of the Company's core performance over time. The tables below provide reconciliations of non-GAAP items ($ in millions, except per share data): Three Months Ended March 31, 2024 2023 GAAP net earnings attributable to Centene $                1,163 $                1,130 Amortization of acquired intangible assets 173 183 Acquisition and divestiture related expenses 61 23 Other adjustments (1) (99) (53) Income tax effects of adjustments (2) (81) (114) Adjusted net earnings $                1,217 $                1,169   (1)   Other adjustments include the following pre-tax items:   2024: (a) for the three months ended March 31, 2024: net gain on the previously reported divestiture of Magellan Specialty Health due to the achievement of contingent consideration of $81 million, net gain on the sale of property, subject to closing costs, of $24 million, Health Net Federal Services asset impairment due to the 2024 final ruling on the TRICARE Managed Care Support Contracts of $14 million, gain on the previously reported divestiture of Circle Health of $10 million, severance costs due to a restructuring of $9 million and gain on the previously reported divestiture of HealthSmart due to the finalization of working capital adjustments of $7 million:   2023: (a) for the three months ended March 31, 2023: Magellan Specialty Health divestiture gain of $79 million and real estate impairments of $26 million.