2017 Investor Day - Centene Corporation · PDF fileCENTENE - JUNE 2017 INVESTOR DAY 20...

2017 Investor DayJune 16, 2017

SSID: Centene Corp Password: welcome2017

2CENTENE - JUNE 2017 INVESTOR DAY

IntroductionEdmund E. Kroll, SVP, Finance and Investor Relations


Forward-Looking StatementsThe company and its representatives may from time to time make written and oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act(“PSLRA”) of 1995, including statements in this and other presentations, press releases, filings with the Securities and Exchange Commission (“SEC”), reports to stockholders and inmeetings with investors and analysts. In particular, the information provided in this presentation may contain certain forward-looking statements with respect to the financialcondition, results of operations and business of Centene and certain plans and objectives of Centene with respect thereto, including but not limited to the expected benefits of theacquisition of Health Net, Inc. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Without limiting the foregoing,forward-looking statements often use words such as “anticipate”, "seek", “target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe”, “hope”, “aim”, “continue”, “will”, “may”,"can", “would”, “could” or “should” or other words of similar meaning or the negative thereof. We intend such forward-looking statements to be covered by the safe-harbor provisionsfor forward-looking statements contained in PSLRA. A number of factors, variables or events could cause actual plans and results to differ materially from those expressed or implied inforward-looking statements. Such factors include, but are not limited to, Centene’s ability to accurately predict and effectively manage health benefits and other operating expensesand reserves; competition; membership and revenue declines or unexpected trends; changes in healthcare practices, new technologies, and advances in medicine; increased health carecosts; changes in economic, political or market conditions; changes in federal or state laws or regulations, including changes with respect to government health care programs as wellas changes with respect to the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act and any regulations enacted thereunderthat may result from changing political conditions; rate cuts or other payment reductions or delays by governmental payors and other risks and uncertainties affecting Centene’sgovernment businesses; Centene’s ability to adequately price products on federally facilitated and state based Health Insurance Marketplaces; tax matters; disasters or majorepidemics; the outcome of legal and regulatory proceedings; changes in expected contract start dates; provider, state, federal and other contract changes and timing of regulatoryapproval of contracts; the expiration, suspension or termination of Centene’s contracts with federal or state governments (including but not limited to Medicaid, Medicare, andTRICARE); challenges to Centene's contract awards; cyber-attacks or other privacy or data security incidents; the possibility that the expected synergies and value creation fromacquired businesses, including, without limitation, the Health Net acquisition, will not be realized, or will not be realized within the expected time period, including, but not limited to, asa result of conditions, terms, obligations or restrictions imposed by regulators in connection with their approval of, or consent to, the acquisition; the exertion of management’s timeand Centene’s resources, and other expenses incurred and business changes required in connection with complying with the undertakings in connection with certain regulatoryapprovals; disruption from the acquisition making it more difficult to maintain business and operational relationships; the risk that unexpected costs will be incurred in connection with,among other things, the acquisition and/or the integration; changes in expected closing dates, estimated purchase price and accretion for acquisitions; the risk that acquired businesseswill not be integrated successfully; Centene's ability to maintain or achieve improvement in the Centers for Medicare and Medicaid Services (CMS) Star ratings and other quality scoresthat impact revenue; availability of debt and equity financing, on terms that are favorable to Centene; inflation; foreign currency fluctuations; and risks and uncertainties discussed inthe reports that Centene has filed with the SEC. These forward-looking statements reflect Centene’s current views with respect to future events and are based on numerous assumptionsand assessments made by Centene in light of its experience and perception of historical trends, current conditions, business strategies, operating environments, future developmentsand other factors it believes appropriate. By their nature, forward-looking statements involve known and unknown risks and uncertainties and are subject to change because they relateto events and depend on circumstances that will occur in the future. The factors described in the context of such forward-looking statements in this presentation could cause Centene’splans with respect to the Health Net acquisition, actual results, performance or achievements, industry results and developments to differ materially from those expressed in or impliedby such forward-looking statements. Although it is currently believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given thatsuch expectations will prove to have been correct and persons reading this presentation are therefore cautioned not to place undue reliance on these forward-looking statements whichspeak only as of the date of this presentation. Centene does not assume any obligation to update the information contained in this presentation (whether as a result of newinformation, future events or otherwise), except as required by applicable law. This list of important factors is not intended to be exhaustive. We discuss certain of these matters morefully, as well as certain other risk factors that may affect Centene's business operations, financial condition and results of operations, in Centene's filings with the SEC, including theannual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.


Earnings Guidance PolicyOur Company’s policy is, “that the Company undertakes no obligation to update its earningsguidance, other than as part of its quarterly or yearly earnings disclosure, and that silence onguidance by the Company or Company officials should not be interpreted that guidance has or hasnot changed. In any event, no updated guidance would ever be given that is not previously orsimultaneously disclosed in an SEC filing or other broad non-exclusionary means.”

“Further, it is Company policy to generally not hold discussions with investors commencing twoweeks prior to earnings release.”


Strategic OverviewMichael F. Neidorff, Chairman, President & CEO


EPS

HBR

$ 69% increaseTotal Revenues

51% increaseAdjusted Diluted

110 bps improvementHealth Benefits Ratio

Q1 2017 Financials(year-over-year)

EPS

$ 42% increaseTotal Revenues

40% increaseAdjusted Diluted

2017 5-Year CAGR(based on the mid-point of 2017 guidance )


30,900 employees

WHO WE ARE

St. Louisbased company founded in Milwaukee in 1984

WHAT WE DO

28 stateswith government sponsored healthcare programs

12.1 million members

~300 product / market solutions

Serving ~900,000 individuals

$46-46.8B

2 international markets

2017 revenue guidance

EnvolveFederalServices

Commercial(Marketplace)

MedicareComplexCareMedicaid

*Including 3 implementation markets


Continued Operational Success

2017 - #662016 - #1242015 - #1862014 - #2512013 - #3032012 - #4532011 - #493


HealthcareReform

Haley BarbourFounding Partner - BGR Group;Former Governor of Mississippi

Richard GephardtCentene Board Member; CEO – Gephardt Group; Former Majority Leader of the U.S. House of Representatives

David SchiappaPartner at the Duberstein Group

Joe AntosWilson H. Taylor Scholar in Health Care and Retirement Policy - American Enterprise Institute

Jonathan DinesmanSVP, Government Relations - Centene

Expert Panel


Focused on Vulnerable and Low Income Populations

118M

318M US Population

Medicare and Medicaid Population

Population Demographics

60% below 400% FPL

76% below 400% FPL

* Source: U.S. Census Bureau | Current Population Survey (CPS) | Last Revised: March, 2016


Need for High Quality, Affordable Healthcare Remains Constant

The healthcare industry will continue to strive to:

Improve access

Promote appropriate utilization

Increase quality outcomes

LeverageExpertise

Execute onGrowth

Strategies

Focus onFundamentals

Centene will continue to:


Value Based Provider Partnerships

Analytics Infrastructure

Integrated Solutions

Business Operations

Multi-product Portfolio Business Model

CA Market Update

Partnering with State Governments

Product Leadership

Product Updates and Growth Pipeline

International





Business Operations

Multi-product Portfolio Business Model

CA Market Update


Product Leadership


International

Leveraging our business model:

15 subsidiaries exceeding $1B in revenue





Business Operations


CA Market Update

Product Leadership


International





Business Operations

CA Market Update

Product Leadership


InternationalIntegration of HNT is on track

or ahead of schedule




Business Operations


Product Leadership


International

Furthering our value based partnerships with providers

JV owned health plan with North Carolina Medical Society and the

North Carolina Community Health Center Association



Business Operations


Product Leadership


International


Business Operations


Product Leadership


InternationalData

AnalysisData

IntegrationData

CaptureFaster:

HealthInterventionsPerformance

ImprovedQuality

ReducedCosts

Results in:


Business Operations

Product Leadership


International

MarketplaceFederalServicesMLTSS

MedicaidManaged

Care

National Leading Products


Business Operations


International

GrowthPipeline

• 14 RFP wins in the past 18 months

• Pipeline remains robust

MedicareAdvantage

• Focused on under 400% FPL population

• Four new markets in 2017

Marketplace

• Served ~1.2 million exchange members*

• Expand in 3 new markets and 6 existing markets in 2018

* As of March 31, 2017


Business Operations

International

World Economic Forum


Poised for Continued Growth

2012

$46.4 billion

Today

2017 mid-point revenue guidance$8 billionRevenue:

2814States:Including 3 implementation markets

$13.6 billion$1.4 billionMarket Cap.:

30,9006,800Employees:

12 million2 millionMembers:

as of June 15, 2017

as of March 31, 2017

as of March 31, 2017

as of June 30, 2012


Finance UpdateJeffrey Schwaneke – EVP, CFO & Treasurer


1 Represents a non-GAAP measure. See Appendix A for reconciliation of non-GAAP measures.

(CONTINUING OPERATIONS)

Diluted EPS of $3.41

Total Revenues of $40.6 billionFortune 500 #66 + 78%

+ 18%

Revenues

Added 6.3 million members between years + 124%Membership

Diluted EPS

Adjusted Diluted EPS of $4.43 + 41%Adjusted Diluted EPS1

Health Benefits Ratio of 86.5%HBR 240 bps improvement

2016 Performance


Diluted EPS of $0.79

Total Revenues of $11.7 billion + 69%

+ $0.91

Revenues

Added 605K members between years + 5%Membership

Diluted EPS

Adjusted Diluted EPS of $1.12 + 51%Adjusted Diluted EPS1

Health Benefits Ratio of 87.6%HBR 110 bps improvement

Q1 2017 Performance

1 Represents a non-GAAP measure. See Appendix A for reconciliation of non-GAAP measures.


$ 42%Total Revenues1

EPS 40%Adj. Diluted EPS2

CNC 42%Stock Price3

Delivering ShareholderValue

5 Year Compound Annual Growth Rates2012-2017(F), excluding stock price

1 Based upon 2017 guidance midpoint.2 Represents a non-GAAP measure using the guidance midpoint. See Appendix A for reconciliation of non-GAAP measures. The 5 year GAAP diluted EPS CAGR is 37% using the guidance midpoint. 3 5 year stock price CAGR as of June 13, 2017.


Source: SEC filings and Yahoo!Finance 2017 analyst estimates. Peer group includes Aetna, Anthem, Cigna, Humana, Molina, United and WellCare.

7% 8% 8%11%

13%

18%

27%

42%

CNC

Total Revenues CAGR vs. Peers5 YEAR CAGR, 2012-2017(F)


$1.47

$2.31 $3.14

$4.43

2013 2014 2015 2016 2017 (F)

CNC 5 Year CAGR +40%2

Guidance Range

$4.50 – $4.90

Adjusted Diluted Earnings Per Share1(FROM CONTINUING OPERATIONS)

1 Represents a non-GAAP measure. See Appendix A for reconciliation of non-GAAP measures.2 Based on 2017 guidance range mid-point.


Note: CAGR from June 13, 2012 – June 13, 2017. Source: Yahoo!Finance1 Peer group includes Aetna, Anthem, Cigna, Humana, Molina, United and WellCare.

13%

27%

42%

Stock Price CAGR vs. Peers

S&P Composite

PeerGroup1

CNC

5 YEAR CAGR, JUNE 2012-2017


2.6 2.94.1

5.1

11.4

$8.1 $10.9

$16.6

$22.8

$40.6

2012 2013 2014 2015 2016 2017(F)

Membership

Total Revenues

Guidance Mid-point

$46.4

Total Revenues/Membership Growth($ IN BILLIONS, MEMBERSHIP IN MILLIONS)


-

500

1,000

1,500

2,000

2014 2015 2016 Q1 2017

Large/Small Group &Individual Off-Exchange

Health InsuranceMarketplace

Commercial Membership

Key Drivers:• Health Net acquisition• Growth in Health Insurance

Marketplace• Reached over 1 million

exchange members in Q1 2017

Commercial Expansion Driving Growth(MEMBERSHIP IN THOUSANDS)

●

●

●

States with large/small group & individual off-exchange membership●


2,000

4,000

6,000

8,000

2014 2015 2016 Q1 2017

Medicaid Membership

Key Drivers:• Health Net acquisition• Product and market growth• Medicaid expansion

Medicaid Driving Growth(MEMBERSHIP IN THOUSANDS)

States with business implementation in process


2015: $22.8 Billion 2016: $40.6 Billion 2017(F): $46.4 Billion1

88.9%

86.5%8.3%

9.2%

2015 2016 2017(F)

HBR

Adj. SG&A2

1

Commercial and Medicare growth driving changes in

HBR & SG&A

Diversifying Revenues

Medicaid Medicare/Duals CommercialSpecialty/Government

2 Adjusted SG&A expense excludes certain items. See Appendix A for reconciliation of non-GAAP measures. 2017(F) excludes Health Net acquisition related expenses of $5 - $8 million and the Penn Treaty assessment expense of $47 million.

84%

2% 4%

10%

72%

13%9%

6%68%

17%

9%6%

1 Midpoint of guidance range.


TANF, CHIP & Foster Care

64%

Commercial 17%

Other7%

Medicare/Duals3%ABD 8%

LTC 1%

TANF, CHIP, Foster CareAvg. PMPM $200–$600

CommercialAvg. PMPM $375

DualsAvg. PMPM $2,250

Long-Term CareAvg. PMPM $3,600

At-Risk Membership Characteristics

Other/Service

Lower HBR

ABDAvg. PMPM $900

Higher HBR

MedicareAvg. PMPM $1,000


As of Q1 2017

Membership Revenue

Medicaid:

TANF, CHIP & Foster Care 61% 39%

ABD & LTC 9% 29%

Behavioral Health 5% 2%

Commercial 20% 19%

Medicare & Duals 3% 10%

Correctional 2% 1%

100% 100%

At-Risk Membership and Premium Revenue


December 31, 2015

December 31, 2016

March 31,2017

Cash and investments $3,978 $9,118 $10,340

Total assets 7,339 20,197 21,362

Debt:

Senior notes, at par 925 4,600 4,600

Revolving credit agreement 225 100 100

Mortgage notes 67 64 63

Other debt & cap. leases 4 (109) (116)

Total debt 1,221 4,655 4,647

Total stockholders’ equity 2,168 5,909 6,084

Debt to capital ratio, excl. non recoursedebt

34.7% 43.7% 43.0%

Balance Sheet($ IN MILLIONS)

Reduced leverage by 130 basis points subsequent to the acquisition of Health Net


Q12016

Q22016

Q32016

Q42016

Q12017

42.0%

42.5%

43.0%

43.5%

44.0%

44.5%

45.0%Strategically manage our

balance sheet

Debt to capital ratio expected to be in low 40%’s by Q4 2017Note: excludes non-recourse mortgage note

Leverage

Continue to reduce our debt-to-capital ratio

Aligning financial statement exposure through interest

rate swaps


Balance March 31, 2017

March 31, 2017Effective

Interest Rate1

$1,400 million 5.625% Senior Notes, due February 2021 $1,400 5.47%

$1,000 million 4.75% Senior Notes, due May 2022 $1,008 3.98%

$1,000 million 6.125% Senior Notes, due February 2024 $1,000 5.48%

$1,200 million 4.75% Senior Notes, due January 2025 $1,200 4.10%

Revolving credit agreement $100 4.50%

Total Debt/ Weighted average rate $4,708 4.78%

1 Including impact of any interest rate swaps.

Senior Notes and Revolver

Centene’s S&P rating upgraded to ‘BB+’ from ‘BB’ in May 2017

($ IN MILLIONS)


$6.0B$4.3B

Investment PortfolioQ1 2017

$2.7B$2.0B

Total DebtQ1 2017

Swapped Floating Rate Debt at 1 or 3

month LIBOR

Floating rate debt expense offset by

short-term investment income

Cash & Investments highly correlated to

LIBOR rate

Impact of Short-Term Interest Rates


Estimated Impact of Change in 3-Month LIBORAs of March 31, 2017.

($7 )($14)

($20)($27)

$11

$22

$32

$43

Interest Expense Interest Income

+$4

+$8

+$12

+$16

Annual Net Favorable Pre-tax Impact

Impact of Short-Term Interest Rates

+75 bps+50 bps+25 bps +100 bps

($ IN MILLIONS)


32.7% 36.7% 34.9% 36.7%

0.3%0.4%

2.1%3.3%9.9%

11.5% 14.8%

2014 2015 2016 2017(F)

Nondeductible Compensation

ACA Health Insurer Fee

All Other Income Tax

42.9%

51.8%48.6%

39-41%

2017 nondeductible compensation represents approx. $38M or $0.211 per diluted share of income tax expense.

Effective Tax Rate

1 Based on 2017 guidance range mid-point.


Timeline – uncertain based on current

environment

Immediate tax deduction for capital

expenditures

Corporate tax rate from 35% to

15%-20%

Potential implications of proposed tax reform

Eliminate net interest expense

deduction

Proposed Income Tax Reform


Effective TaxRate

CorporateTax Rate

Net InterestAddback

CompensationDeductions

Annualized RateOutlook with

Proposed Reforms

Tax ReformHealthcare

Reform

39-41%

Potential Implications of Tax & Healthcare Reform

18-25%

(15-20%)+2% (3%)

In addition, we would benefit from a one-time deferred rate change of ~15% in the year tax reform is enacted (>$100 million after tax).


$792

$1,534 $129

$270

2015 2016 2017 (F)

HIF Impact$1,804

$921Guidance

Range $1,800 to

$2,000

Adjusted EBITDA1

1 Represents a non-GAAP measure. See Appendix A for reconciliation of non-GAAP measures.2 Based on 2017 guidance range mid-point.

YOY Increase 45% 96% 5%2

Adj. EBITDA as % of Revenue 4.0% 4.4% 4.1%2

($ IN MILLIONS)


Low HighTotal Revenues $46,000 $46,800

GAAP diluted EPS $3.75 $4.15

Adjusted Diluted EPS1 $4.50 $4.90

HBR% 87.0% 87.5%

Selling, general & administrative (SG&A)% 9.1% 9.6%

Adjusted SG&A%1 9.0% 9.5%

Effective Tax Rate 39.0% 41.0%

Diluted Shares (in millions) 176.9 177.9

1 Represents a non-GAAP measure. See Appendix A for reconciliation of non-GAAP measures. Adjusted SG&A% excludes Health Net acquisition related expenses of $5 - $8 million and the Penn Treaty assessment expense of $47 million.

2017 Guidance($ IN MILLIONS, EXCEPT PER SHARE DATA)


Update: Markets Christopher Bowers, EVP - Markets


State Health Plan Membership Growth

0.0

1.0

2.0

3.0

4.0

5.0

6.0

3.7M

0.5M<15k0.1M

4.4M

(in m

illio

ns)

Total Membership(as of 1/1/16)

*excludes Correctional, Behavioral Health, Federal Services, ASO and Envolve membership

Medicaid Complex Care Commercial Medicare


State Health Plan Membership Growth

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

Medicaid Complex Care Commercial Medicare

5.7M,~50%

0.8M,~60%

0.3M,~2,600%

1.9M,~1,800%

Total Membership(as of 3/31/17)

8.7M, ~100%

(in m

illio

ns)



Increasing Scale and Diversification

HEALTH PLANS BY PREMIUM SIZE

12

1

10

12

Under $1 billion Over $1 billion

2017(P)

2012


Key Membership Drivers in 2017

12/31/16 2017(P)

Marketplace

New States (NE, NV)

ExistingMarket

Expansions

OrganicGrowth

2017 Growth Areas

~9%



2017 Market Updates

State Start Date Product Mix

EstimatedMarket Size

Numberof Plans Membership

NE 1/1/17 All populations(acute only –LTSS & I/DD)

228,000 3 plans 79k*

MO 5/1/17 Medicaid 737,500 3 plans 280k**

NV 7/1/17 TANF, CHIP, Medicaid Expansion 425,000 4 plans ~35k**

*as of March 31, 2017**Estimates

52CENTENE - JUNE 2017 INVESTOR DAY 52

ManagingMarket Level

Trends


Centene Playbook to Offset Trends

Trends

HBRInitiatives

PaymentIntegrity

Public PolicyEngagement

QualityManagement

RiskAdjustment

Actuarial Coordination


Centene Medicaid Rate Experience

2014 2015 2016

Est. Cost Trend 1.5%-2.5%

Net Rate Increase 0-1%

Health Benefits Ratio Consistent HBR performance

Playbook strategies maintain HBR levels despite increasing trends


Plan Example - Large Traditional Medicaid Product

Strategies to Offset to Medical Trend

• ED utilization reduction of ~5% (onsite ED Diversion)

• Improved Rx utilization by 12% to mitigate inflationary pressures

• Incremental payment integrity strategies


Continue to Generate Strong Growth Through:

• Expansion and retention of existing business

• Acquisition of new business

• Broader product penetration

Managing and offsetting rate pressures and cost trends through our

comprehensive playbook of Health Plan tools and strategies


Business Unit UpdateSteven Sell, CEO & Plan President - CA Market


California: Progress Update

Improved financial performance

Improved operational performance

Well positioned for the future

15 Months after the Merger Close


A Large Market….• 39M Californians• Over 27M in risk-based care models*

In All Segments….• Medicaid, Medicare, Duals• Employer Group, Individual• Military, Correctional• Specialty

With Strong Stakeholder Alignment.• Physicians, Medical Groups, Hospitals• CDI, DMHC, DHCS, CMS, CovCA• Brokers, GA’s and Consultants

California: Market Overview

* Does not include self-insured population (approx. 6M) or Medicare FFS population (approx. 3.5M)


Improved Financial Performance

• No Premium Deficiency Reserves taken for 2017

• On track to meet all merger-related synergy targets

• Successfully managing Medicaid Expansion rates

• Expertise in managing heavily capitated population

• Applying rigor to management of Fee For Service costs

Leveraging Best of Both Model

Financial Performance


Operational Performance

• Processing improvements

• Medical cost reduction initiatives

• Expanded fraud, waste & abuse capability

• Enhanced case management

• Insourcing care management to Centene systems & processes

• Concurrent review

Medical Management

Claims Management


Operational Performance cont’d

• Improved Covered CA Net Promoter Score

• Positive member satisfaction trend

• Network is stable

• Maintaining low medical cost trend

• Improved management of FFS providers

• Risk Adjustment improvements

Provider Engagement

Quality & Customer Experience


California Market Culture

Local Accountability and Control

Employee Engagement and Development

Performance Orientation


• Medicaid

• Duals/MMP

• Correctional Health

Well Positioned for the Future

Medicaid Plan with ~2M lives and 19%

market share

Market share statewide with

~3M lives

#1 11%

Power of MCO Portfolio

A Market Leader

12% Market Share in Sacramento

29% Market Share in the Central Valley

18% Market Share in Los Angeles County

*as of March 31, 2017


Update: Products Jesse Hunter, EVP - Products


Product Focus

National Product Leadership

Multi-Product Strategy

Marketplace Update

Medicare Update


Product Focus



Marketplace Update

Medicare Update


Product Objective

EnvolveHealth

FederalServices

Commercial(Marketplace)

Medicare

ComplexCare

Medicaid

Market leading products focused on

government sponsored healthcare

programs


Demonstrating Product Leadership

1st or 2nd in Membership

NationalMarket leadingposition across

Products

1987

2007

2008

2013

2014

2017

1984


AHIPProduct Thought Leadership

MHPA

MACPAC

MLTSS

AMSUS

ECHBC

National MLTSS Health Plan Association

Medicaid and CHIP Payment and Access Commission

Association of Military Surgeons of the United States

America’s Health Insurance Plans

Medicaid Health Plans of America

Envolve Center for Health Behavior Change


Product Focus



Marketplace Update

Medicare Update



Medicaid

Medicare & Duals

MSO

Correctional Marketplace


Product Focus



Marketplace Update

Medicare Update


Membership Demographics

93%

7%

2015* 2016 2017

93%

* 2015 does not include Health Net

7% 9%

91%

78%

22%

2015* 2016 2017

85%

12% 8%

90%

3% 2%

Subsidized

Unsubsidized

Premium Subsidies

Silver

Bronze

Gold & Platinum

Metal Tier


Peak Membership

2014 76,000

2015 167,000

2016 683,000

2017 1,200,000

2017 Marketplace Footprint

Centene State

Centene HIM Membership

#1 National Carrieron Marketplace


Carrier Exit Case Study – Broward County, FL

Carrier’s market exit resulted in a large number of auto-assignments, including 18,000 members assigned to Ambetter

Premium Subsidy

CostSharing

Reduction

Total Enrollees

Members Auto Assigned to Ambetter 83.6% 70.0% 18,114

Auto Assignments that Effectuated with Ambetter 95.1% 84.9% 6,564

All New Ambetter Members 92.9% 79.8% 55,202


Path to 2018

5/1 - 6/21Initial State Filings

5/1 - 8/16DOI Reviews, Negotiations and Revisions

May Dec.Nov.Oct.Sept.Aug.Jul.Jun.

8/1 - 8/16Rate Finalization by DOIs and Handoff to CMS

8/20Court Date for CSRs

9/16 - 9/27FFM QHP certification signing

10/12Feds FFM QHP certification signing

11/1 – 12/15Open Enrollment

2 0 1 7


• 2018 “business as usual” approach based on ACA• Plan design and pricing reflect market variability and need for flexibility

• Pursue strategic expansion and membership growth• Strive to maintain our price advantage• Deliver targeted profit margin

Centene State

Centene HIM Membership

New HIM Markets in 2018

HIM Expansion Markets

2018 Marketplace Positioning


Product Focus



Marketplace Update

Medicare Update


2017 Medicare Profile Products

MA /MAPD

D-SNP

I-SNP

80

• Membership: 328,000 (March 31, 2017)

• $3B Medicare Platform (2016)

• Multi-product

• Multi-state

• 4 Star Parent Organization Rating

Centene State

Centene Medicare Market

MMP

C-SNP

Med. Supp.

EGWP


Medicare Strategy

Geography Beneficiary Plan Design

Focus onCNC Markets

Focus onindividuals

under 400% FPL

Creating lowor no cost

premium plans


Operationalizing Strategies and Insights

Test and Learn Model

• Brand: New national brand

• Network: Expand non-Medicaid provider network & increase focus on value based purchasing

• Sales and Marketing: Targeted broker relationships and community depth


2018 OutlookFocused Growth Strategy

• Submitted 11 new market LOIs originally and plan to enter six new markets

• Launch two D-SNP focused markets

• Additional growth investment in new 2017 markets

• Launch targeted 2018 markets that align with network, plan design, and sales opportunity

Medicare to represent 20%+ of total Centene growth

Longer-term Expectations:


Industry Leading Multi-Product Portfolio

Ability to leverage multi-product portfolio

Demonstrated commitment to national product leadership

Focused on diversified growth across government healthcare landscape


Value in ExperienceC. David Minifie, Chief Experience Officer & EVP


Transforming the Health of the Community, One Person at a Time

OUR PURPOSE | why we do what we do

OUR BRAND PILLARS | How we go about doing it

Focus on the Individual

WholeHealth

Active LocalInvolvement


Focus on the IndividualWhat are the challenges our consumers face on the road to better health?

KNOWN & UNKNOWN

PRESENT & FUTURE

DIRECT & INDIRECT


MEMBERS AND THEIR FAMILIES, PROVIDERS & CAREGIVERSan expansive consumer ecosystem, includes


Changing Landscape

HISTORICAL BUSINESS CONSUMER REALITY

• Auto-assignment• State Government• Product• Transaction

• Consumer Choice• Individual Consumer• People• Engagement

Satisfaction drives results

More Likely to Renew

More Likely to Recommend

More Likely to Forgive

More Likely to Try a New Offering

92%

88%

67%

57%


Learning More About Our Consumers

Sophisticated Segmentation Research Detailed Mapping & Targeting

TO WHERE THEY AREFROM WHO THEY ARE


Local Still Matters


*Figures represent Ambetter membership only (does not include Covered CA members)


Adults 65+Includes those who are

about to “age-in,” as well as switchers.


• Brand matters; hard to break in with well-entrenched competitors

• Overall Medicare-eligible carrier switching is small in any one year (about 6%)

• Major switch triggers are: bad customer experience, PCP falling out of plan, Rx price changes

• Age-ins shop for: brand, price/cost, doctor, formulary• Providers can be very influential, as can brokers/agents

The Consumer: Highlights


Emotional Journey to Get to a Medicare Plan Decision

“Do I qualify for Medicare?”“What does MA cover?”

“Do I need other coverage?”

“What are my options?”“What plan is best for me?”

“How do I enroll?”

Most feel confusion, uncertainty & anxiety

Our goal: guided, confident & relieved


• The name Allwell is simple, clear and easy to understand.

• Individuals feel that the name conveys the concepts of “good health and being taken care of.”

• Tested well against competitor brands already in market.

CONSISTENTLY PERFORMED WELL IN RESEARCH AMONG MEDICARE ELIGIBLES

Medicare consumers prefer a brand with a local extension, with 61% of consumers preferring a local brand name.


Local, flexible and scalable brand architecture

Trusted, local partner for all Texans and their community

Covers full range of government-sponsored Medicaid & Children’s Health Insurance Plans (CHIP)

STATE-BASED MARKET BRAND

PRODUCT BRAND FOR MARKETPLACE

PRODUCT BRAND FOR MEDICARE

EXTENSIONS FOR CONSUMER CATAGORIES


Transforming the Health of the Community, One Person at a Time

OUR PURPOSE | why we do what we do

OUR BRAND PILLARS | How we go about doing it

Focus on the Individual

WholeHealth

Active LocalInvolvement


Question and Answer

Break


2017 Investor Day


Growth and DiversificationCynthia Brinkley, EVP - Global Corporate Development


$677BAddressable Markets Pipeline $798B

$100B

$9B

$105B

$175B

Correctional Healthcare

Health Insurance Marketplace

Federal Services

Medicaid

Medicare

International*Data based on Congressional Budget Office projections and Company estimates for FY 2019

$1.86 trillion*


Correctional Healthcare

Health Insurance Marketplace

Federal Services

Medicaid

Medicare

International

$249 billion

TargetedPipeline


2018 Revenue Visibility

2017P 2018P

• HIM and Medicare Market Expansions

• Full Year of MO & NV• PA Go-live• IL, MS, MA

Reprocurements• New Envolve Contracts • HIF Return

• CA In-Home Support Services (IHSS) carve-out

GROWTH DRIVERS

$50B+

$46.4B

2018P

$51B+

*2017 mid-point of guidance range