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美國
證券交易委員會
華盛頓特區20549
___________________________________________
表格 10-Q
____________________________________________
(標記一個)
☒根據1934年證券交易法第13或15(d)條款的季度報告。
截至2024年6月30日季度結束 2024年9月30日

或
☐根據1934年證券交易法第13或15(d)條款的過渡報告
過渡期從_____到_____
____________________________________________
委員會文件號碼： 001-31826
____________________________________________
康西哥公司
（依憑章程所載的完整登記名稱）
特拉華州42-1406317
(依據所在地或其他管轄區)(國稅局雇主識別號碼)
的註冊地或組織地點)識別號碼)
Forsyth Boulevard 7700號 
St. Louis,密蘇里州63105
(總部辦公地址)（郵政編碼）

登記者的電話號碼，包括區號： (314) 725-4477 
根據1973年證券交易法第12(b)條規定註冊的證券：
每個班級的標題交易標的（s）註冊的每個交易所的名稱
普通股 $0.001 面值CNC紐約證券交易所
勾選方框表示登記人： (1) 在過去12個月（或登記人需提交此類報告的更短期間）已提交1934年證券交易法第13或15(d)條所要求提交的所有報告，並且(2) 在過去90天內已受到該提交要求的規定 ☒ 是 ☐ 無
請以勾選標示的方式指示：在過去的12個月內（或對於要求提交此類文件的更短期間內），登記者是否根據Regulation S-T的405條例（本章節中的232.405）提交了所有要求根據該規則應提交的互動數據文件？ ☒ 是 ☐ 無
請勾選，表示公司是否屬於大型加速檔案提交者、加速檔案提交者、非加速檔案提交者、較小的申報公司，或新興成長公司。請參閱交易所法案第120億2條中「大型加速檔案提交者」、「加速檔案提交者」、「較小的申報公司」和「新興成長公司」的定義。
大型加速歸檔人☒加速歸檔人☐
未採用加速方式的申報人 ☐小型報告公司☐
新興成長型企業☐
如果一家新興成長型企業，請打勾表示公司已選擇不使用擴展過渡期以符合根據《交易所法案》第13(a)條所提供的任何新的或修訂財務會計準則。 ☐
請用勾選標示方式指示登記人是否為外殼公司（依照《交易所法》第120億2條的定義）。是☐  否 ☒
截至2024年10月23日，申報人持有 504,865 千股普通股。


康西哥公司
第10-Q表格季報告
目 錄
 頁碼
  
第一部分
財務資訊
项目1。
 
 
 
 
 
 
项目2。
项目3。
项目4。
第二部分
其他信息
项目1。
项目1A。
项目2。
项目5。
第6項。

目錄

對於前瞻性陳述的警語

所有板塊中，除了目前或歷史事實陳述之外，本申報中包含的所有言論均屬前瞻性陳述。 在不限制前述情形的情況下，前瞻性陳述通常使用「相信」、「預期」、「計畫」、「期待」、「估計」、「打算」、「尋求」、「目標」、「目的」、「可能」、「將」、「會」、「將會」、「應該」、「可以」、「持續」等類似詞語或表達方式（及其否定）。 康西哥集團及其附屬公司（Centene, 本公司，我們）打算使此前瞻性陳述受到1995年《私人證券訴訟改革法案》關於前瞻性陳述的安全港條款的保護，我們將此聲明納入以遵守這些安全港條款。 具體而言，這些陳述包括但不限於有關我們未來的營運或財務表現、市場機會、競爭、預期的合約開始日期和條款、與已完成和未來的收購和處分相關的預期活動、我們的投資以及我們可用現金資源的足夠程度。 這些陳述可能可在本申報的各個部分中找到，例如第一部分第2項「管理層對財務狀況和營運結果的討論」、第二部分第1項「法律訴訟」和第二部分第1A項「風險因素」。

這些前瞻性聲明反映了我們對未來事件的觀點，並基於我們對歷史趨勢、當前條件、業務策略、營運環境、未來發展以及其他我們認為適當的因素進行的眾多假設和評估。由於涉及事件且取決於將來發生的情況，前瞻性聲明涉及已知和未知的風險和不確定性，並且可能會因為涉及將來可能引發的經濟、監管、競爭和其他因素，我們或我們所在的行業的實際結果、活動水平、表現或成就與這些前瞻性聲明所隱含或表達的任何未來結果、活動水平、表現或成就存在實質不同。 這些聲明不能保證未來表現，而且存在風險、不確定性和假設。

本申報書中的所有前瞻性陳述均基於本申報書日期我們所擁有的資訊。除非法律另有要求，我們不承擔更新或修訂本申報書中包含的前瞻性陳述的義務，不論是否因本申報書日期後的新資訊、未來事件或其他原因。您不應過度依賴任何前瞻性陳述，因為實際結果可能因多種重要因素、變數和事件（包括但不限於）與預測、估計或其他前瞻性陳述有顯著差異。

•我們設計和定價產品的能力具有競爭力和/或精算合理性，包括但不限於由醫療補助重新確定引起的任何影響；
•我們有能力維持或取得康哲藥業星級評分的改進，並在每種情況下維持或取得其他質量評分的改進，這可能影響營業收入和未來增長；
•我們能夠準確預測和有效管理健康福利和其他營業費用及儲備金，包括醫療利用率的波動；
•競爭，包括供應商、經紀人分銷網絡、合同再採購和有機增長；
•我們有能力充分預測需求，並提供運營資源以維持服務水平要求；
•我們有效管理信息系統的能力；
•業務交易中的干擾、意外成本或類似風險，包括收購、出售業務以及與第三方關係的變化；
•對房地產業、投資、商譽和無形資產的減值；
•高級管理層變動、一個或多個關鍵人員的離職或無法吸引、僱傭、整合和留住熟練人員;
•會員和營業收入下降或出現意外趨勢;
•政府支付人士的利率削減或其他付款減少或延遲，以及影響我們政府業務的其他風險和不確定性;
•醫療實踐的變化，新技術和醫學進步；
•我們在遵守適用法律的前提下，有效而道德地運用人工智能和機器學習的能力；
•醫療保健成本上升;
•通貨膨脹和利率期貨;
•社會、經濟和政治條件以及地緣政治事件的影響，包括因美國總統或國會變動引起的影響；
•市場條件的變化;
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•changes in federal or state laws or regulations, including changes with respect to income tax reform or government healthcare programs as well as changes with respect to the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act (collectively referred to as the ACA) and any regulations enacted thereunder;
•uncertainty concerning government shutdowns, debt ceilings or funding;
•tax matters;
•disasters, climate-related incidents, acts of war or aggression or major epidemics;
•changes in expected contract start dates and terms;
•changes in provider, broker, vendor, state, federal and other contracts and delays in the timing of regulatory approval of contracts, including due to protests;
•the expiration, suspension, or termination of our contracts with federal or state governments (including, but not limited to, Medicaid, Medicare or other customers);
•the difficulty of predicting the timing or outcome of legal or regulatory audits, investigations, proceedings or matters including, but not limited to, our ability to resolve claims and/or allegations made by states with regard to past practices on acceptable terms, or at all, or whether additional claims, reviews or investigations will be brought by states, the federal government or shareholder litigants, or government investigations;
•我們合同獎項面臨的挑戰;
•網絡攻擊或其他數據安全事件或我們未能遵守適用的隱私、數據或安全法律和法規；
•管理層時間和我們的資源投入，以及與遵守合同條款和在取得任何收購或處置的監管、政府或第三方許可或批准有關的承諾相關的其他支出和業務變更；
•如有收購或處置方面的預期截止日期、預估購買價格或收益變動，請知會。
•我們投資組合中的損失；
•關於我們的負債限制和限制；
•a downgrade of our corporate family rating, issuer rating or credit rating of our indebtedness; and
•the availability of debt and equity financing on terms that are favorable to us.

This list of important factors is not intended to be exhaustive. We discuss certain of these matters more fully, as well as certain other factors that may affect our business operations, financial condition, and results of operations, in our filings with the Securities and Exchange Commission (SEC), including our annual report on Form 10-K, other quarterly reports on Form 10-Q and current reports on Form 8-K. Due to these important factors and risks, we cannot give assurances with respect to our future performance, including without limitation our ability to maintain adequate premium levels or our ability to control our future medical and selling, general and administrative costs.


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目錄

非通用會計準則財務報告

公司在本報告中提供了某些非GAAP財務指標，因爲公司認爲這些數字有助於讓投資者更準確地評估公司運營的持續性，並在各個時期更一致地衡量公司的表現。公司在內部使用所呈現的非GAAP財務指標來評估公司的表現和制定計劃，使管理層能夠專注於公司核心業務運營的時期性變化，並確定員工激勵報酬。因此，公司認爲這些信息除了GAAP財務信息呈現的信息之外也具有意義。公司強烈建議投資者全面審閱其合併財務報表和公開提交的報告，並警告投資者，公司使用的非GAAP財務指標可能與其他公司使用的類似指標不同，即使使用了相似的術語來標識這些指標。非GAAP財務指標的呈現並不打算單獨考慮，也不打算作爲根據GAAP編制和呈現的財務信息的替代。

公司特別相信，展示不包括已取得無形資產的攤銷、收購和剝離相關費用以及其他項目的非GAAP財務指標，能夠讓投資者隨着時間更深入地了解公司的核心表現。

以下表格提供了非GAAP項目的調解（單位：百萬美元，每股數據除外）：
截至9月30日的三個月截至9月30日的九個月
2024202320242023
歸屬於康西哥的普通會計淨收益$713 $469 $3,022 $2,657 
取得的無形資產攤銷173 180 519 542 
收購和剝離相關費用8 16 75 52 
其他調整 (1)
— 472 (97)345 
調整的所得稅影響 (2)
(45)(55)(171)(190)
調整後的淨收益 $849 $1,082 $3,348 $3,406 
歸屬於康西哥的按照通用會計準則攤薄後每股收益 (EPS)$1.36 $0.87 $5.69 $4.85 
取得的無形資產攤銷0.33 0.33 0.98 0.99 
收購和剝離相關費用0.02 0.03 0.14 0.09 
其他調整 (1)
— 0.87 (0.18)0.63 
調整的所得稅影響 (2)
(0.09)(0.10)(0.32)(0.35)
調整後的攤薄每股收益$1.62 $2.00 $6.31 $6.21 
(1) 其他調整包括以下稅前項目：
2024:
截至2024年9月30日的九個月: 由於終成附帶條件並最終確定工作資本調整而產生的麥哲倫特殊健康分賣的淨利潤8300萬美元，或每股0.15美元（稅後0.11美元），售出物業的淨利潤2100萬美元，或每股0.04美元（稅後0.03美元），圈子衛生集團（Circle Health）的先前報告的分手盈利2000萬美元，或每股0.04美元（稅後0.12美元），由於TRICARE託管保健支持合同2024年最終裁定而產生的健康網聯邦服務資產減值1400萬美元，或每股0.03美元（稅後0.02美元），由於重組而產生的離職成本1300萬美元，或每股0.02美元（稅後0.01美元），對我們在西班牙和中歐業務分拆的額外損失700萬美元，或每股0.01美元（稅後0.01美元）以及鑑於最終確定工作資本調整而產生的HealthSmart的先前報告的分撥盈利700萬美元，或每股0.01美元（稅後0.01美元）。

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2023:
(a) for the three months ended September 30, 2023: Circle Health impairment of $251 million, or $0.46 per share ($0.50 after-tax), Operose Health Group (Operose Health) impairment of $142 million, or $0.26 per share ($0.24 after-tax), real estate impairments of $47 million, or $0.09 per share ($0.09 after-tax), severance costs due to a restructuring of $22 million, or $0.04 per share ($0.03 after-tax) and a reduction to the previously recorded gain on the sale of Magellan Rx of $10 million, or $0.02 per share ($0.00 after-tax);

(b) for the nine months ended September 30, 2023: Circle Health impairment of $251 million, or $0.46 per share ($0.49 after-tax), Operose Health impairment of $142 million, or $0.26 per share ($0.24 after-tax), real estate impairments of $92 million, or $0.17 per share ($0.15 after-tax), gain on the sale of Apixio of $91 million, or $0.17 per share ($0.12 after-tax), gain on the sale of Magellan Specialty Health of $79 million, or $0.14 per share ($0.12 after-tax), severance costs due to a restructuring of $22 million, or $0.04 per share ($0.03 after-tax), gain on the previously reported divestiture of Centurion of $15 million, or $0.03 per share ($0.02 after-tax), an additional loss on the divestiture of our Spanish and Central European businesses of $13 million, or $0.02 per share ($0.01 after-tax) and a reduction to the previously recorded gain on the sale of Magellan Rx of $10 million, or $0.02 per share ($0.00 after-tax).

(2) The income tax effects of adjustments are based on the effective income tax rates applicable to each adjustment. The three and nine months ended September 30, 2024, include a tax benefit of $2 million, or $0.00 per share, related to tax adjustments on previously reported divestitures. The nine months ended September 30, 2023, include a one-time income tax benefit of $69 million, or $0.12 per share, resulting from the distribution of long-term stock awards to the estate of the Company's former CEO.

Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
GAAP selling, general and administrative expenses$3,057 $3,048 $9,169 $9,075 
Less:
Acquisition and divestiture related expenses8 16 75 52 
Restructuring costs— 22 13 22 
Real estate optimization— — — 7 
Adjusted selling, general and administrative expenses$3,049 $3,010 $9,081 $8,994 
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PART I
FINANCIAL INFORMATION

Item 1. Financial Statements.
CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In millions, except shares in thousands and per share data in dollars)
September 30, 2024December 31, 2023
(Unaudited)
ASSETS  
Current assets:  
Cash and cash equivalents$14,577 $17,193 
Premium and trade receivables18,281 15,532 
Short-term investments2,992 2,459 
Other current assets1,559 5,572 
Total current assets37,409 40,756 
Long-term investments17,691 16,286 
Restricted deposits1,452 1,386 
Property, software and equipment, net2,042 2,019 
Goodwill17,558 17,558 
Intangible assets, net5,582 6,101 
Other long-term assets617 535 
Total assets$82,351 $84,641 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY 
Current liabilities:  
Medical claims liability$17,995 $18,000 
Accounts payable and accrued expenses13,338 16,420 
Return of premium payable1,959 1,462 
Unearned revenue658 715 
Current portion of long-term debt111 119 
Total current liabilities34,061 36,716 
Long-term debt17,494 17,710 
Deferred tax liability769 641 
Other long-term liabilities2,618 3,618 
Total liabilities54,942 58,685 
Commitments and contingencies
Redeemable noncontrolling interests13 19 
Stockholders' equity:  
Preferred stock, $0.001 par value; authorized 10,000 shares; no shares issued or outstanding at September 30, 2024 and December 31, 2023
— — 
Common stock, $0.001 par value; authorized 800,000 shares; 619,945 issued and 510,078 outstanding at September 30, 2024, and 615,291 issued and 534,484 outstanding at December 31, 2023
1 1 
Additional paid-in capital20,522 20,304 
Accumulated other comprehensive (loss)(226)(652)
Retained earnings15,065 12,043 
Treasury stock, at cost (109,867 and 80,807 shares, respectively)
(8,055)(5,856)
Total Centene stockholders' equity27,307 25,840 
Nonredeemable noncontrolling interest89 97 
Total stockholders' equity27,396 25,937 
Total liabilities, redeemable noncontrolling interests and stockholders' equity$82,351 $84,641 
The accompanying notes to the consolidated financial statements are an integral part of these statements. 
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CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except shares in thousands and per share data in dollars)
(Unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Revenues:
Premium$36,115 $33,866 $106,784 $101,404 
Service784 1,101 2,425 3,353 
Premium and service revenues36,899 34,967 109,209 104,757 
Premium tax5,124 3,075 13,057 9,782 
Total revenues42,023 38,042 122,266 114,539 
Expenses:  
Medical costs32,201 29,479 93,898 88,260 
Cost of services692 856 2,041 2,603 
Selling, general and administrative expenses3,057 3,048 9,169 9,075 
Depreciation expense140 148 408 436 
Amortization of acquired intangible assets173 180 519 542 
Premium tax expense5,095 3,156 13,218 10,021 
Impairment— 440 13 478 
Total operating expenses41,358 37,307 119,266 111,415 
Earnings from operations665 735 3,000 3,124 
Other income (expense):  
Investment and other income432 214 1,440 992 
Interest expense(176)(181)(530)(542)
Earnings before income tax921 768 3,910 3,574 
Income tax expense211 293 896 914 
Net earnings710 475 3,014 2,660 
(Earnings) loss attributable to noncontrolling interests3 (6)8 (3)
Net earnings attributable to Centene Corporation$713 $469 $3,022 $2,657 

Net earnings per common share attributable to Centene Corporation:
Basic earnings per common share$1.37 $0.87 $5.71 $4.86 
Diluted earnings per common share$1.36 $0.87 $5.69 $4.85 

Weighted average number of common shares outstanding:
Basic521,965 539,535 528,912 546,374 
Diluted523,542 541,270 530,915 548,412 

The accompanying notes to the consolidated financial statements are an integral part of these statements.
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CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)
(In millions, unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Net earnings$710 $475 $3,014 $2,660 
Change in unrealized gain (loss) on investments549 (235)442 (124)
Change in unrealized gain (loss) on investments, tax effect(130)56 (109)29 
Change in unrealized gain (loss) on investments, net of tax419 (179)333 (95)
Reclassification adjustment, net of tax1 57 93 61 
Foreign currency translation adjustments, net of tax— (22)— 24 
Net unrealized gain on cash flow hedge, net of tax— 20 — 20 
Other comprehensive earnings (loss)420 (124)426 10 
Comprehensive earnings1,130 351 3,440 2,670 
Comprehensive (earnings) loss attributable to noncontrolling interests3 (6)8 (3)
Comprehensive earnings attributable to Centene Corporation$1,133 $345 $3,448 $2,667 

The accompanying notes to the consolidated financial statements are an integral part of these statements.
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CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In millions, except shares in thousands and per share data in dollars)
(Unaudited)

Three and Nine Months Ended September 30, 2024
 Centene Stockholders' Equity  
 Common Stock   Treasury Stock  
 
$0.001 Par Value Shares
AmtAdditional Paid-in CapitalAccumulated Other Comprehensive
Earnings (Loss)		Retained Earnings
$0.001 Par Value Shares
AmtNoncontrolling InterestTotal
Balance, December 31, 2023615,291 $1 $20,304 $(652)$12,043 80,807 $(5,856)$97 $25,937 
Comprehensive Earnings:         
Net earnings (loss)— — — — 1,163 — — (4)1,159 
Other comprehensive earnings, net of $(12) tax
— — — 22 — — — — 22 
Common stock issued for employee benefit plans3,882 — 14 — — — — — 14 
Common stock repurchases— — — — — 1,983 (151)— (151)
Stock compensation expense— — 70 — — — — — 70 
Divestiture of non-controlling interest— — — — — — — (3)(3)
Balance, March 31, 2024619,173 $1 $20,388 $(630)$13,206 82,790 $(6,007)$90 $27,048 
Comprehensive Earnings:         
Net earnings— — — — 1,146 — — — 1,146 
Other comprehensive loss, net of $(5) tax
— — — (16)— — — — (16)
Common stock issued for employee benefit plans322 — 11 — — — — — 11 
Common stock repurchases— — — — — 10,704 (810)— (810)
Stock compensation expense— — 62 — — — — — 62 
Balance, June 30, 2024619,495 $1 $20,461 $(646)$14,352 93,494 $(6,817)$90 $27,441 
Comprehensive Earnings:
Net earnings (loss)— — — — 713 — — (1)712 
Other comprehensive earnings, net of $131 tax
— — — 420 — — — — 420 
Common stock issued for employee benefit plans450 — 12 — — — — — 12 
Common stock repurchases— — — — — 16,373 (1,238)— (1,238)
Stock compensation expense— — 49 — — — — — 49 
Balance, September 30, 2024619,945 $1 $20,522 $(226)$15,065 109,867 $(8,055)$89 $27,396 

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Three and Nine Months Ended September 30, 2023
 Centene Stockholders' Equity  
 Common Stock   Treasury Stock  
 
$0.001 Par Value Shares
AmtAdditional Paid-in CapitalAccumulated Other Comprehensive
Earnings (Loss)		Retained Earnings
$0.001 Par Value Shares
AmtNoncontrolling InterestTotal
Balance, December 31, 2022607,847 $1 $20,060 $(1,132)$9,341 57,093 $(4,213)$124 $24,181 
Comprehensive Earnings:         
Net earnings— — — — 1,130 — — — 1,130 
Other comprehensive earnings, net of $61 tax
— — — 217 — — — — 217 
Common stock issued for employee benefit plans6,508 — 12 — — — — — 12 
Common stock repurchases— — — — — 5,548 (423)— (423)
Stock compensation expense— — 61 — — — — — 61 
Purchase of redeemable noncontrolling interest— — (12)— — — — — (12)
Balance, March 31, 2023614,355 $1 $20,121 $(915)$10,471 62,641 $(4,636)$124 $25,166 
Comprehensive Earnings:         
Net earnings (loss)— — — — 1,058 — — (3)1,055 
Other comprehensive loss, net of $(34) tax
— — — (83)— — — — (83)
Common stock issued for employee benefit plans388 — 9 — — — — — 9 
Common stock repurchases— — — — — 6,099 (408)— (408)
Stock compensation expense— — 56 — — — — — 56 
Purchase of non-redeemable noncontrolling interests— — (3)— — — — (24)(27)
Balance, June 30, 2023614,743 $1 $20,183 $(998)$11,529 68,740 $(5,044)$97 $25,768 
Comprehensive Earnings:
Net earnings— — — — 469 — — 3 472 
Other comprehensive loss, net of $(34) tax
— — — (124)— — — — (124)
Common stock issued for employee benefit plans213 — 11 — — — — — 11 
Common stock repurchases— — — — — 11,620 (781)— (781)
Stock compensation expense— — 50 — — — — — 50 
Purchase of non-redeemable noncontrolling interests— — (1)— — — — — (1)
Balance, September 30, 2023614,956 $1 $20,243 $(1,122)$11,998 80,360 $(5,825)$100 $25,395 

The accompanying notes to the consolidated financial statements are an integral part of these statements.
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CENTENE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions, unaudited)

 Nine Months Ended September 30,
 20242023
Cash flows from operating activities:  
Net earnings$3,014 $2,660 
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization927 978 
Stock compensation expense181 167 
Impairment13 478 
Deferred income taxes14 14 
(Gain) loss on divestitures, net(103)(172)
Other adjustments, net(2)158 
Changes in assets and liabilities  
Premium and trade receivables(2,737)(2,329)
Other assets78 (103)
Medical claims liabilities(5)401 
Unearned revenue(58)1,878 
Accounts payable and accrued expenses(503)3,127 
Other long-term liabilities(84)583 
Other operating activities, net6 (4)
Net cash provided by operating activities741 7,836 
Cash flows from investing activities:  
Capital expenditures(490)(576)
Purchases of investments(5,770)(4,729)
Sales and maturities of investments4,147 4,373 
Divestiture proceeds, net of divested cash959 690 
Net cash used in investing activities(1,154)(242)
Cash flows from financing activities:  
Proceeds from long-term debt350 2,170 
Payments and repurchases of long-term debt(594)(1,970)
Common stock repurchases(2,181)(1,602)
Proceeds from common stock issuances37 32 
Purchase of noncontrolling interest— (87)
Other financing activities, net(5)— 
Net cash used in financing activities(2,393)(1,457)
Effect of exchange rate changes on cash, cash equivalents and restricted cash7 19 
Net increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents(2,799)6,156 
Cash and cash equivalents reclassified (to) from held for sale(3)(36)
Cash, cash equivalents and restricted cash and cash equivalents, beginning of period
17,452 12,330 
Cash, cash equivalents and restricted cash and cash equivalents, end of period
$14,650 $18,450 
Supplemental disclosures of cash flow information:  
Interest paid$495 $496 
Income taxes paid$821 $759 
The following table provides a reconciliation of cash, cash equivalents and restricted cash and cash equivalents reported within the Consolidated Balance Sheets to the totals above:
September 30,
20242023
Cash and cash equivalents$14,577 $18,190 
Restricted cash and cash equivalents, included in restricted deposits73 260 
Total cash, cash equivalents and restricted cash and cash equivalents$14,650 $18,450 

The accompanying notes to the consolidated financial statements are an integral part of these statements.
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CENTENE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Organization and Operations

Basis of Presentation

The accompanying interim financial statements have been prepared under the presumption that users of the interim financial information have either read or have access to the audited financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The unaudited interim financial statements herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, footnote disclosures that would substantially duplicate the disclosures contained in the December 31, 2023 audited financial statements have been omitted from these interim financial statements, where appropriate. In the opinion of management, these financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of the interim periods presented.

Certain 2023 amounts in the consolidated financial statements and notes to the consolidated financial statements have been reclassified to conform to the 2024 presentation. These reclassifications have no effect on net earnings or stockholders' equity as previously reported.

Accounting Guidance Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require public entities to disclose significant segment expenses that are regularly provided to the chief operating decision-maker and included within segment profit and loss. The new standard is effective for annual periods beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The new guidance is not expected to have a significant impact on the Company's consolidated financial statements or segment disclosures.

In December 2023, the FASB issued an ASU which includes amendments that further enhance income tax disclosures, primarily through standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction. The new standard is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the effect of the new disclosure requirements.

In March 2024, the SEC adopted the final rule under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors. This rule will require disclosure of material climate-related risks and material direct greenhouse gas emissions from operations owned or controlled (Scope 1) and/or material indirect greenhouse gas emissions from purchased energy consumed in owned or controlled operations (Scope 2). Additionally, the rules require disclosure in the notes to the financial statements of the effects of severe weather events and other natural conditions, subject to certain materiality thresholds. The disclosure requirements will begin phasing in for reports and registration statements including financial information with respect to annual periods beginning in 2025. In April 2024, the SEC voluntarily stayed the final rule pending the completion of judicial review by the Court of Appeals for the Eighth Circuit. The Company is monitoring the development of litigation related to the SEC's rule, and is currently evaluating the effect of the new disclosure requirements.

2. Acquisitions and Divestitures

Magellan Specialty Health Divestiture

For the nine months ended September 30, 2024, the Company recorded an additional gain on the previously reported divestiture of Magellan Specialty Health of $83 million for achievement of contingent consideration related to the sale and finalization of working capital adjustments, which is included in investment and other income in the Consolidated Statements of Operations.

Circle Health Group Divestiture

On August 28, 2023, the Company signed a definitive agreement to sell Circle Health Group (Circle Health), one of the U.K.'s largest independent hospital operators, which is included in the Other segment.

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In accordance with the signed definitive agreement in the third quarter of 2023, and subsequently updated in the fourth quarter of 2023, the Company recorded impairment charges related to goodwill associated with the pending divestiture totaling $292 million, or $258 million after-tax.

In order to manage the foreign exchange risk on the sale price associated with the pending divestiture of Circle Health, in August 2023 the Company entered into a foreign currency swap agreement for a notional amount of $931 million, to sell £740 million. The swap agreement was formally designated and qualified as a cash flow hedge. The swap expired on the earlier of the divestiture closing date or March 28, 2024. The gain or loss due to changes in the fair value of the foreign currency swap was recorded in other comprehensive income until the Circle Health divestiture closed, at which time the gain or loss was recorded in earnings to the same line in the Consolidated Statement of Operations as the gain or loss on sale.

On January 12, 2024, the Company completed the divestiture for $931 million. Upon closing the divestiture, the Company settled the foreign currency swap and recorded a corresponding gain of $20 million, which includes the cumulative translation adjustment previously recorded in accumulated other comprehensive income in the Consolidated Balance Sheet. The gain is included in investment and other income in the Consolidated Statements of Operations. During the nine months ended September 30, 2024, the Company realized a net tax benefit of approximately $40 million on the loss recognized on the divestiture.

Collaborative Health Systems Divestiture

In July 2024, the Company entered into a definitive agreement to sell Collaborative Health Systems (CHS), a management services organization, which is included in the Other segment.

As of September 30, 2024, the assets and liabilities of CHS were considered held for sale resulting in $16 million of assets held for sale in other current assets and $2 million of liabilities held for sale in accounts payable and accrued expenses on the Consolidated Balance Sheet. The majority of the held for sale assets were previously reported as investments, cash and receivables.

On October 4, 2024, the Company completed the previously announced sale of CHS. The Company estimates that it will recognize an after-tax gain of approximately $0 million to $20 million in the fourth quarter of 2024, subject to purchase price adjustments.
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3. Short-term and Long-term Investments, Restricted Deposits

Short-term and long-term investments and restricted deposits by investment type consist of the following ($ in millions):
 September 30, 2024December 31, 2023
 Amortized CostGross
Unrealized Gains		Gross
Unrealized Losses		Fair ValueAmortized CostGross
Unrealized Gains		Gross
Unrealized Losses		Fair Value
Debt securities:
U.S. Treasury securities and obligations of
U.S. government corporations and agencies
$592 $6 $(4)$594 $403 $— $(8)$395 
Corporate securities10,808 158 (277)10,689 9,984 78 (461)9,601 
Restricted certificates of deposit
3 — — 3 4 — — 4 
Restricted cash equivalents
73 — — 73 259 — — 259 
Short-term time deposits
875 — — 875 746 — — 746 
Municipal securities4,224 32 (114)4,142 4,135 21 (171)3,985 
Asset-backed securities1,773 22 (17)1,778 1,665 8 (35)1,638 
Residential mortgage-backed securities1,725 24 (81)1,668 1,503 7 (103)1,407 
Commercial mortgage-backed securities
1,231 10 (52)1,189 1,149 5 (82)1,072 
Equity securities15 — — 15 17 — — 17 
Private equity investments
913 — — 913 833 — — 833 
Life insurance contracts
196 — — 196 174 — — 174 
Total$22,428 $252 $(545)$22,135 $20,872 $119 $(860)$20,131 

The Company's investments are debt securities classified as available-for-sale with the exception of equity securities, certain private equity investments and life insurance contracts. Private equity investments include direct investments in private equity securities as well as private equity funds. The Company's investment policies are designed to provide liquidity, preserve capital and maximize total return on invested assets with a focus on high credit quality securities. The Company limits the size of investment in any single issuer other than U.S. treasury securities and obligations of U.S. government corporations and agencies. As of September 30, 2024, 99% of the Company's investments in rated securities carry an investment grade rating by nationally recognized statistical rating organizations. At September 30, 2024, the Company held certificates of deposit, equity securities, private equity investments and life insurance contracts, which did not carry a credit rating. Accrued interest income on available-for-sale debt securities was $171 million and $153 million at September 30, 2024 and December 31, 2023, respectively, and is included in other current assets in the Consolidated Balance Sheets.

The Company's residential mortgage-backed securities are primarily issued by the Federal National Mortgage Association, Government National Mortgage Association or Federal Home Loan Mortgage Corporation, which carry implicit or explicit guarantees of the U.S. government. The Company's commercial mortgage-backed securities are primarily senior tranches with a weighted average rating of AA+ and a weighted average duration of 3 years at September 30, 2024.

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The fair value of available-for-sale debt securities with gross unrealized losses by investment type and length of time that individual securities have been in a continuous unrealized loss position were as follows ($ in millions):
 September 30, 2024December 31, 2023
 Less Than 12 Months12 Months or MoreLess Than 12 Months12 Months or More
 Unrealized LossesFair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized LossesFair Value
U.S. Treasury securities and obligations of
U.S. government corporations and agencies
$— $11 $(4)$163 $— $79 $(8)$232 
Corporate securities(1)437 (276)5,025 (6)658 (455)6,260 
Municipal securities(1)287 (113)2,176 (4)553 (167)2,237 
Asset-backed securities— 43 (17)381 (2)197 (33)855 
Residential mortgage-backed securities— 41 (81)795 (2)153 (101)814 
Commercial mortgage-backed securities— 38 (52)714 (2)114 (80)754 
Short-term time deposits— — — — — 31 — — 
Total$(2)$857 $(543)$9,254 $(16)$1,785 $(844)$11,152 

As of September 30, 2024, the gross unrealized losses were generated from 4,332 positions out of a total of 6,813 positions. The change in fair value of available-for-sale debt securities is primarily a result of movement in interest rates subsequent to the purchase of the security.

For each security in an unrealized loss position, the Company assesses whether it intends to sell the security or if it is more likely than not the Company will be required to sell the security before recovery of the amortized cost basis for reasons such as liquidity, contractual or regulatory purposes. If the security meets this criterion, the decline in fair value is recorded in earnings. The Company does not intend to sell these securities prior to maturity and it is not likely that the Company will be required to sell these securities prior to maturity; therefore, the Company did not record an impairment for these securities.

In addition, the Company monitors available-for-sale debt securities for credit losses. Certain investments have experienced a decline in fair value due to changes in credit quality, market interest rates and/or general economic conditions. The Company recognizes an allowance when evidence demonstrates that the decline in fair value is credit related. Evidence of a credit-related loss may include rating agency actions, adverse conditions specifically related to the security or failure of the issuer of the security to make scheduled payments.

The contractual maturities of short-term and long-term debt securities and restricted deposits are as follows ($ in millions):
 September 30, 2024December 31, 2023
 InvestmentsRestricted DepositsInvestmentsRestricted Deposits
 Amortized CostFair ValueAmortized CostFair ValueAmortized CostFair ValueAmortized CostFair Value
One year or less$2,751 $2,733 $400 $399 $2,308 $2,284 $566 $564 
One year through five years7,795 7,667 685 677 7,738 7,431 527 504 
Five years through ten years4,354 4,318 311 306 3,905 3,735 298 283 
Greater than ten years209 206 70 70 155 154 34 35 
Asset-backed securities4,729 4,635 — — 4,317 4,117 — — 
Total$19,838 $19,559 $1,466 $1,452 $18,423 $17,721 $1,425 $1,386 
 
Actual maturities may differ from contractual maturities due to call or prepayment options. Equity securities, private equity investments and life insurance contracts are excluded from the table above because they do not have a contractual maturity. The Company has an option to redeem substantially all of the securities included in the greater than ten years category listed above at amortized cost.
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4. Fair Value Measurements

Assets and liabilities recorded at fair value in the Consolidated Balance Sheets are categorized based upon observable or unobservable inputs used to estimate fair value. Level inputs are as follows:
Level Input:Input Definition:
Level IInputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.
 
Level IIInputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.
 
Level IIIUnobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The following table summarizes fair value measurements by level at September 30, 2024, for assets and liabilities measured at fair value on a recurring basis ($ in millions):
 Level ILevel IILevel IIITotal
Assets    
Cash and cash equivalents$14,577 $— $— $14,577 
Investments:    
U.S. Treasury securities and obligations of U.S. government corporations and agencies$56 $— $— $56 
Corporate securities— 10,649 — 10,649 
Municipal securities— 3,344 — 3,344 
Short-term time deposits— 875 — 875 
Asset-backed securities— 1,778 — 1,778 
Residential mortgage-backed securities— 1,668 — 1,668 
Commercial mortgage-backed securities— 1,189 — 1,189 
Equity securities14 1 — 15 
Total investments$70 $19,504 $— $19,574 
Restricted deposits:    
Cash and cash equivalents$73 $— $— $73 
U.S. Treasury securities and obligations of U.S. government corporations and agencies538 — — 538 
Corporate securities— 40 — 40 
Certificates of deposit— 3 — 3 
Municipal securities— 798 — 798 
Total restricted deposits$611 $841 $— $1,452 
Total assets at fair value$15,258 $20,345 $— $35,603 

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The following table summarizes fair value measurements by level at December 31, 2023, for assets and liabilities measured at fair value on a recurring basis ($ in millions):
 Level ILevel IILevel IIITotal
Assets    
Cash and cash equivalents$17,193 $— $— $17,193 
Investments:    
U.S. Treasury securities and obligations of U.S. government corporations and agencies$62 $— $— $62 
Corporate securities— 9,564 — 9,564 
Municipal securities— 3,232 — 3,232 
Short-term time deposits— 746 — 746 
Asset backed securities— 1,638 — 1,638 
Residential mortgage-backed securities— 1,407 — 1,407 
Commercial mortgage-backed securities— 1,072 — 1,072 
Equity securities15 2 — 17 
Total investments$77 $17,661 $— $17,738 
Restricted deposits:    
Cash and cash equivalents$259 $— $— $259 
U.S. Treasury securities and obligations of U.S. government corporations and agencies333 — — 333 
Corporate securities— 37 — 37 
Certificates of deposit— 4 — 4 
Municipal securities— 753 — 753 
Total restricted deposits$592 $794 $— $1,386 
Total assets at fair value$17,862 $18,455 $— $36,317 
Liabilities
Accounts payable and accrued expenses:
Foreign currency swap agreement$— $13 $— $13 
Total liabilities at fair value$— $13 $— $13 
 
The Company utilizes matrix-pricing services to estimate fair value for securities which are not actively traded on the measurement date. The Company designates these securities as Level II fair value measurements. In addition, the aggregate carrying amount of the Company's private equity investments and life insurance contracts, which approximates fair value, was $1,109 million and $1,007 million as of September 30, 2024 and December 31, 2023, respectively.
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5. Medical Claims Liability

The following table summarizes the change in medical claims liability for the nine months ended September 30, 2024 ($ in millions):
 MedicaidMedicareCommercialOtherConsolidated Total
Balance, January 1, 2024$10,814 $3,612 $3,460 $114 $18,000 
Less: Reinsurance recoverable5 — 44 — 49 
Balance, January 1, 2024, net10,809 3,612 3,416 114 17,951 
Incurred related to:
Current year59,327 16,134 19,211 1,216 95,888 
Prior years(1,247)(439)(306)7 (1,985)
Total incurred58,080 15,695 18,905 1,223 93,903 
Paid related to:
Current year50,198 13,006 15,773 1,040 80,017 
Prior years8,543 2,713 2,523 120 13,899 
Total paid58,741 15,719 18,296 1,160 93,916 
Plus: Premium deficiency reserve— (5)— — (5)
Balance, September 30, 2024, net
10,148 3,583 4,025 177 17,933 
Plus: Reinsurance recoverable20 — 42 — 62 
Balance, September 30, 2024
$10,168 $3,583 $4,067 $177 $17,995 

The following table summarizes the change in medical claims liability for the nine months ended September 30, 2023 ($ in millions):
 MedicaidMedicareCommercialOtherConsolidated Total
Balance, January 1, 2023$11,253 $3,431 $1,921 $140 $16,745 
Less: Reinsurance recoverable7 — 19 — 26 
Balance, January 1, 2023, net11,246 3,431 1,902 140 16,719 
Incurred related to:
Current year60,379 14,680 13,994 1,095 90,148 
Prior years(1,303)(326)(256)(3)(1,888)
Total incurred59,076 14,354 13,738 1,092 88,260 
Paid related to:
Current year50,774 12,069 11,575 984 75,402 
Prior years8,517 2,452 1,376 136 12,481 
Total paid59,291 14,521 12,951 1,120 87,883 
Balance, September 30, 2023, net
11,031 3,264 2,689 112 17,096 
Plus: Reinsurance recoverable4 — 41 — 45 
Balance, September 30, 2023
$11,035 $3,264 $2,730 $112 $17,141 

Reinsurance recoverables related to medical claims are included in premium and trade receivables. Changes in estimates of incurred claims for prior years are primarily attributable to reserving under moderately adverse conditions. Additionally, as a result of development within "Incurred related to: Prior years," the Company recorded $236 million and $341 million as a reduction to premium revenue in the nine months ended September 30, 2024 and 2023, respectively, for minimum health benefits ratio (HBR) and other return of premium programs.

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Incurred but not reported (IBNR) plus expected development on reported claims as of September 30, 2024 was $12,654 million. Total IBNR plus expected development on reported claims represents estimates for claims incurred but not reported, development on reported claims and estimates for the costs necessary to process unpaid claims at the end of each period. The Company estimates its liability using actuarial methods that are commonly used by health insurance actuaries and meet Actuarial Standards of Practice. These actuarial methods consider factors such as historical data for payment patterns, cost trends, product mix, seasonality, utilization of healthcare services and other relevant factors.

The Company reviews actual and anticipated experience compared to the assumptions used to establish medical costs. The Company establishes premium deficiency reserves if actual and anticipated experience indicates that existing policy liabilities together with the present value of future gross premiums will not be sufficient to cover the present value of future benefits, settlement and maintenance costs. For purposes of determining premium deficiencies, contracts are grouped in a manner consistent with the method of acquiring, servicing and measuring the profitability of such contracts and expected investment income is excluded. In December 2023, the Company recorded a premium deficiency reserve of $250 million related to the 2024 Medicare Advantage contract year, which was increased to $300 million in the first quarter of 2024, to $335 million in the second quarter of 2024 and decreased by $90 million to $245 million in the third quarter of 2024 consistent with the intra-year flow of seasonality.

6. Affordable Care Act

The Affordable Care Act established risk spreading premium stabilization programs as well as a minimum annual medical loss ratio (MLR) and cost sharing reductions.

The Company's net receivables (payables) for each of the programs are as follows ($ in millions):
September 30, 2024December 31, 2023
Risk adjustment receivable$1,805 $893 
Risk adjustment payable(1,705)(2,553)
Minimum medical loss ratio(586)(164)
Cost sharing reduction receivable10 — 
Cost sharing reduction payable(68)(114)

In July 2024, the Centers for Medicare and Medicaid Services (CMS) announced the final risk adjustment transfers for the 2023 benefit year. As a result of the announcement, the risk adjustment net payable was decreased by $131 million in the third quarter of 2024, with a total impact of $1,475 million for the nine months ended September 30, 2024. After consideration of minimum MLR and other related impacts, which includes the effect to the 2024 benefit year, the net pre-tax benefit recognized was $920 million in the nine months ended September 30, 2024.
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7. Debt
 
Debt consists of the following ($ in millions):
 September 30, 2024December 31, 2023
$2,500 million 4.25% Senior Notes due December 15, 2027
$2,397 $2,395 
$2,300 million 2.45% Senior Notes due July 15, 2028
2,302 2,303 
$3,500 million 4.625% Senior Notes due December 15, 2029
3,277 3,277 
$2,000 million 3.375% Senior Notes due February 15, 2030
2,000 2,000 
$2,200 million 3.00% Senior Notes due October 15, 2030
2,200 2,200 
$2,200 million 2.50% Senior Notes due March 1, 2031
2,200 2,200 
$1,300 million 2.625% Senior Notes due August 1, 2031
1,300 1,300 
Total senior notes15,676 15,675 
Term Loan Facility2,033 2,115 
Revolving Credit Agreement— 150 
Finance leases and other1 11 
Debt issuance costs(105)(122)
Total debt17,605 17,829 
Less: current portion(111)(119)
 Long-term debt$17,494 $17,710 
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8. Stockholders' Equity

The Company's Board of Directors has authorized a stock repurchase program of the Company's common stock from time to time on the open market or through privately negotiated transactions. The Company is authorized to repurchase up to $10,000 million, inclusive of past authorizations. As of September 30, 2024, the Company had a remaining amount of $3,160 million available under the stock repurchase program. In October 2024, the Company repurchased an additional 5.2 million shares for $380 million.

The following represents the Company's share repurchase activity ($ in millions, shares in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
SharesCostSharesCostSharesCostSharesCost
Share buybacks16,254 $1,218 11,609 $773 27,595 $2,069 22,489 $1,550 
Income tax withholding119 9 11 1 1,465 112 778 52 
Total share repurchases (1)
16,373 $1,227 11,620 $774 29,060 $2,181 23,267 $1,602 
(1)
Excludes year-to-date share repurchase excise tax of approximately $18 million and $10 million accrued as of September 30, 2024 and 2023, respectively.

Shares repurchased for income tax withholding are shares withheld in connection with employee stock plans to meet applicable tax withholding requirements. These shares are typically included in the Company's treasury stock.

9. Earnings Per Share

The following table sets forth the calculation of basic and diluted net earnings per common share ($ in millions, except per share data in dollars and shares in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
 2024202320242023
Earnings attributable to Centene Corporation$713 $469 $3,022 $2,657 
Shares used in computing per share amounts: 
Weighted average number of common shares outstanding521,965 539,535 528,912 546,374 
Common stock equivalents (as determined by applying the treasury stock method)1,577 1,735 2,003 2,038 
Weighted average number of common shares and potential dilutive common shares outstanding523,542 541,270 530,915 548,412 
Net earnings per common share attributable to Centene Corporation:
Basic earnings per common share$1.37 $0.87 $5.71 $4.86 
Diluted earnings per common share$1.36 $0.87 $5.69 $4.85 

The calculation of diluted earnings per common share for the three months ended September 30, 2024 and 2023 excludes 273 thousand shares and 1,313 thousand shares, respectively, related to anti-dilutive stock options, restricted stock and restricted stock units.

The calculation of diluted earnings per common share for the nine months ended September 30, 2024 and 2023 excludes 266 thousand shares and 1,383 thousand shares, respectively, related to anti-dilutive stock options, restricted stock and restricted stock units.
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10. Segment Information

The Company operates in four segments: (1) a Medicaid segment, (2) a Medicare segment, (3) a Commercial segment and (4) an Other segment.

The Medicaid, Medicare and Commercial segments primarily represent the government-sponsored or subsidized programs under which the Company offers managed healthcare services. The Other segment includes the Company's pharmacy operations, vision and dental services, clinical healthcare, behavioral health, international operations, and corporate management companies, among others. The Company's international businesses, Operose Health Group (Operose Health) and Circle Health, were divested in December 2023 and January 2024, respectively.

Factors used in determining the reportable business segments include the nature of operating activities, the existence of separate senior management teams and the type of information presented to the Company's chief operating decision-maker to evaluate all results of operations. The Company does not report total assets by segment since this is not a metric used to allocate resources or evaluate segment performance.

Segment information for the three months ended September 30, 2024, is as follows ($ in millions):
 MedicaidMedicareCommercialOther/EliminationsConsolidated Total
Premium$21,291 $5,643 $8,693 $488 $36,115 
Service25 — — 759 784 
Premium and service revenues21,316 5,643 8,693 1,247 36,899 
Premium tax5,124 — — — 5,124 
Total external revenues26,440 5,643 8,693 1,247 42,023 
Internal revenues— — — 4,290 4,290 
Eliminations— — — (4,290)(4,290)
Total revenues$26,440 $5,643 $8,693 $1,247 $42,023 
Medical costs$19,818 $4,968 $6,957 $458 $32,201 
Cost of services$23 $— $— $669 $692 
Gross margin (1)
$1,475 $675 $1,736 $120 $4,006 
(1)
Gross margin represents premium and service revenues less medical costs and cost of services.

Segment information for the three months ended September 30, 2023, is as follows ($ in millions):
 MedicaidMedicareCommercialOther/EliminationsConsolidated Total
Premium$21,619 $5,430 $6,451 $366 $33,866 
Service— — 2 1,099 1,101 
Premium and service revenues21,619 5,430 6,453 1,465 34,967 
Premium tax3,075 — — — 3,075 
Total external revenues24,694 5,430 6,453 1,465 38,042 
Internal revenues— — — 3,978 3,978 
Eliminations— — — (3,978)(3,978)
Total revenues$24,694 $5,430 $6,453 $1,465 $38,042 
Medical costs$19,607 $4,462 $5,089 $321 $29,479 
Cost of services$— $— $— $856 $856 
Gross margin (1)
$2,012 $968 $1,364 $288 $4,632 
(1)
Gross margin represents premium and service revenues less medical costs and cost of services.
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Segment information for the nine months ended September 30, 2024, is as follows ($ in millions):
 MedicaidMedicareCommercialOther/EliminationsConsolidated Total
Premium$62,958 $17,556 $24,977 $1,293 $106,784 
Service68 — 2 2,355 2,425 
Premium and service revenues63,026 17,556 24,979 3,648 109,209 
Premium tax13,057 — — — 13,057 
Total external revenues76,083 17,556 24,979 3,648 122,266 
Internal revenues— — — 12,451 12,451 
Eliminations— — — (12,451)(12,451)
Total revenues$76,083 $17,556 $24,979 $3,648 $122,266 
Medical costs$58,080 $15,690 $18,905 $1,223 $93,898 
Cost of services$66 $— $— $1,975 $2,041 
Gross margin (1)
$4,880 $1,866 $6,074 $450 $13,270 
(1)
Gross margin represents premium and service revenues less medical costs and cost of services.

Segment information for the nine months ended September 30, 2023, is as follows ($ in millions):
 MedicaidMedicareCommercialOther/EliminationsConsolidated Total
Premium$65,741 $16,971 $17,437 $1,255 $101,404 
Service— — 2 3,351 3,353 
Premium and service revenues65,741 16,971 17,439 4,606 104,757 
Premium tax9,782 — — — 9,782 
Total external revenues75,523 16,971 17,439 4,606 114,539 
Internal revenues— — — 11,634 11,634 
Eliminations— — — (11,634)(11,634)
Total revenues$75,523 $16,971 $17,439 $4,606 $114,539 
Medical costs$59,076 $14,354 $13,738 $1,092 $88,260 
Cost of services$2 $— $— $2,601 $2,603 
Gross margin (1)
$6,663 $2,617 $3,701 $913 $13,894 
(1)
Gross margin represents premium and service revenues less medical costs and cost of services.
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11. Contingencies

The Company is routinely subjected to legal and regulatory proceedings in the normal course of business. These matters can include, without limitation:

•periodic compliance and other reviews and investigations by various federal and state regulatory agencies with respect to requirements applicable to the Company's business, including, without limitation, those related to payment of out-of-network claims, compliance with CMS Medicare and Marketplace regulations, including risk adjustment and broker compensation, compliance with the False Claims Act, the calculation of minimum MLR and rebates related thereto, submissions to state agencies related to payments or state false claims acts, pre-authorization penalties, timely review of grievances and appeals, timely and accurate payment of claims, cybersecurity issues, including those related to the Company's or the Company's third-party vendors' information systems, and the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and other federal and state fraud, waste and abuse laws;
•litigation arising out of general business activities, such as tax matters, disputes related to healthcare benefits coverage or reimbursement, putative securities class actions, and medical malpractice, privacy, real estate, intellectual property, vendor disputes and employment-related claims; and
•disputes regarding reinsurance arrangements, claims arising out of the acquisition or divestiture of various assets, class actions and claims relating to the performance of contractual and non-contractual obligations to providers, members, employer groups, vendors and others, including, but not limited to, the alleged failure to properly pay claims and challenges to the manner in which the Company processes claims, claims related to network adequacy and claims alleging that the Company has engaged in unfair business practices.

Among other things, these matters may result in awards of damages, fines or penalties, which could be substantial, and/or could require changes to the Company's business. The Company intends to vigorously defend itself against legal and regulatory proceedings to which it is currently a party; however, these proceedings are subject to many uncertainties. In some of the cases pending against the Company, substantial non-economic or punitive damages are being sought.

The Company records reserves and accrues costs for certain legal proceedings and regulatory matters to the extent that it determines an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. While such reserves and accrued costs reflect the Company's best estimate of the probable loss for such matters, the recorded amounts may differ materially from the actual amount of any such losses. In some cases, no estimate of the possible loss or range of loss in excess of amounts accrued, if any, can be made because of the inherently unpredictable nature of legal and regulatory proceedings, which may be exacerbated by various factors, including but not limited to, they may involve indeterminate claims for monetary damages or may involve fines, penalties or punitive damages; present novel legal theories or legal uncertainties; involve disputed facts; represent a shift in regulatory policy; involve a large number of parties, claimants or regulatory bodies; are in the early stages of the proceedings; involve a number of separate proceedings and/or a wide range of potential outcomes; or result in a change of business practices.

As of the date of this report, amounts accrued for legal proceedings and regulatory matters were not material, except for the reserve estimate as previously disclosed in the Company's 2023 Annual Report on Form 10-K with respect to claims or potential claims involving services provided by Envolve Pharmacy Solutions, Inc. (Envolve), as the Company's pharmacy benefits management (PBM) subsidiary. The Company has reached no-fault settlement agreements related to services previously provided by Envolve with the vast majority of states impacted. Such agreements have provided for payment amounts consistent with the initial reserve estimate established in the second quarter of 2021 related to this issue.

It is possible that in a particular quarter or annual period the Company's financial condition, results of operations, cash flow and/or liquidity could be materially adversely affected by an ultimate unfavorable resolution of or development in legal and/or regulatory proceedings. The Company believes that the ultimate outcome of any of the regulatory and legal proceedings that are currently pending against it should not have a material adverse effect on financial condition, results of operations, cash flow or liquidity.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in this filing. The discussion contains forward-looking statements that involve known and unknown risks and uncertainties.

EXECUTIVE OVERVIEW

General

We are a leading provider of government-sponsored healthcare. We provide access to quality healthcare for more than 1 in 15 individuals nationwide through government-sponsored programs, including Medicaid, Medicare and the Health Insurance Marketplace. Our focus is on improving health and health care for low-income, complex populations.

Our results of operations depend on our ability to manage expenses associated with health benefits (including estimated costs incurred) and selling, general and administrative (SG&A) costs. We measure operating performance based upon two key ratios. The health benefits ratio (HBR) represents medical costs as a percentage of premium revenues, excluding premium tax revenues that are separately billed, and reflects the direct relationship between the premiums received and the medical services provided. The SG&A expense ratio represents SG&A costs as a percentage of premium and service revenues, excluding premium taxes separately billed.

Regulatory Trends and Uncertainties

The United States government, policymakers and healthcare experts continue to discuss and debate various elements of the United States healthcare model. We remain focused on the promise of delivering access to high-quality, affordable healthcare to all of our members and believe we are well positioned to meet the needs of the changing healthcare landscape.

The American Rescue Plan Act (ARPA), enacted in March 2021, initially enhanced eligibility for the premium tax credit for enrollees in the Health Insurance Marketplace. The enhanced eligibility extended by the Inflation Reduction Act, enacted in August 2022, expires at the end of 2025. We continue to advocate for legislation and regulations aimed at leveraging Medicaid and the Health Insurance Marketplace to maintain health insurance coverage and affordability for consumers.

In addition, newly finalized Centers for Medicare & Medicaid Services (CMS) regulations will require beneficiaries dually enrolled in Medicare and Medicaid who receive integrated care through Medicare Advantage Dual Eligible Special Needs Plans (D-SNPs) to have aligned enrollment with their Medicaid Managed Care Organization beginning in 2027, which may restrict our product offerings in some geographic service areas. We believe we are positioned well given our overlapping Medicaid and Medicare Advantage footprints and are committed to navigating evolving regulations.

The COVID-19 pandemic impacted and continues to affect our business as it relates to Medicaid eligibility changes. The Families First Coronavirus Response Act, enacted in March 2020, increased federal matching rates for state Medicaid programs with a requirement that states suspend Medicaid redeterminations throughout the public health emergency (PHE). As a result, since the onset of the PHE through March 2023, our Medicaid membership increased by 3.6 million members (excluding new states North Carolina and Delaware and various state product expansions or managed care organization changes). The Consolidated Appropriations Act, 2023, signed into law on December 29, 2022, delinked the Medicaid continuous coverage requirements from the PHE and, as a result, some states began Medicaid disenrollments on April 1, 2023. Per the Act and clarifying CMS guidance, redeterminations related to the PHE were largely intended to conclude during the second quarter of 2024. However, redeterminations in certain states moved at a slower pace due to CMS compliance action to pause and/or complete corrective action prior to disenrolling beneficiaries and some states have seen redeterminations extend past the second quarter of 2024. Since March 31, 2023, redeterminations are the primary driver of our Medicaid membership decline. While some states are still concluding the redetermination process for certain populations of members, we anticipate that any remaining reductions will be limited as the majority of states have substantially completed their unwinding processes as of October 2024. We continue to work with our state partners to match rates to acuity post-redeterminations.

We are actively engaged to help ensure individuals take the state agency requested action to confirm eligibility in their Medicaid coverage or find other appropriate coverage that is best for themselves and their families. Our Ambetter Health product covers the majority of our Medicaid states, and we believe we are among the best positioned in the healthcare market to enroll those transitioning coverage through redeterminations.

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We also closely monitor state legislation across our markets and are advocating for and seeing adoption of coverage expansions for Medicaid adult populations (e.g., North Carolina), postpartum, foster care children, among others, as well as mitigating adverse legislation addressing pharmacy, prior authorization and other issues. The Consolidated Appropriations Act, 2023 outlined key coverage expansion provisions, which went into effect in January 2024, requiring states to provide 12 months of continuous coverage for children under Medicaid and the Children's Health Insurance Program (CHIP). The year-end spending bill also made the state option to extend coverage for postpartum women for up to 12 months permanent.

We have more than three decades of experience, spanning seven presidents from both sides of the aisle, in delivering high-quality healthcare services on behalf of states and the federal government to under-insured and uninsured families, commercial organizations and military families. This expertise has allowed us to deliver cost-effective services to our government partners and our members. With trends in the personalization of healthcare technology, we continue the use of data and analytics to optimize our business. We continue to believe we have both the capacity and capability to successfully navigate industry changes to the benefit of our members, customers, providers and shareholders.

Third Quarter 2024 Highlights

Our financial performance for the third quarter of 2024 is summarized as follows:

•Managed care membership of 28.6 million, an increase of 670 thousand members, or 2% year-over-year.

•Total revenues of $42.0 billion, representing 10% growth year-over-year.

•Premium and service revenues of $36.9 billion, representing 6% growth year-over-year.

•HBR of 89.2%, compared to 87.0% for the third quarter of 2023.

•SG&A expense ratio of 8.3%, compared to 8.7% for the third quarter of 2023.

•Adjusted SG&A expense ratio of 8.3%, compared to 8.6% for the third quarter of 2023.

•Operating cash flows used cash of $1.0 billion in the third quarter of 2024.

•Diluted earnings per share (EPS) of $1.36, compared to $0.87 for the third quarter of 2023.

•Adjusted diluted EPS of $1.62, compared to $2.00 for the third quarter of 2023.

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A reconciliation from GAAP diluted EPS to adjusted diluted EPS is highlighted below, and additional detail is provided above under the heading "Non-GAAP Financial Presentation":
Three Months Ended September 30,
20242023
GAAP diluted EPS attributable to Centene$1.36 $0.87 
Amortization of acquired intangible assets0.33 0.33 
Acquisition and divestiture related expenses0.02 0.03 
Other adjustments (1)
— 0.87 
Income tax effects of adjustments (2)
(0.09)(0.10)
Adjusted diluted EPS$1.62 $2.00 
(1) Other adjustments include the following pre-tax items:
2023:
(a) Circle Health Group (Circle Health) impairment of $251 million, or $0.46 per share ($0.50 after-tax), Operose Health Group (Operose Health) impairment of $142 million, or $0.26 per share ($0.24 after-tax), real estate impairments of $47 million, or $0.09 per share ($0.09 after-tax), severance costs due to a restructuring of $22 million, or $0.04 per share ($0.03 after-tax) and a reduction to the previously recorded gain on the sale of Magellan Rx of $10 million, or $0.02 per share ($0.00 after-tax).

(2) The income tax effects of adjustments are based on the effective income tax rates applicable to each adjustment. The three months ended September 30, 2024, include a tax benefit of $2 million, or $0.00 per share, related to tax adjustments on previously reported divestitures.

We reference an adjusted SG&A expense ratio, defined as adjusted SG&A expenses, which excludes acquisition and divestiture related expenses and other items, divided by premium and service revenues. A reconciliation from GAAP SG&A to adjusted SG&A and additional detail is provided above under the heading "Non-GAAP Financial Presentation." We also reference effective tax rate on adjusted earnings, defined as GAAP income tax expense (benefit) excluding the income tax effects of adjustments to net earnings divided by adjusted earnings (loss) before income tax expense.


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Current and Future Operating Drivers

The following items contributed to our results of operations as compared to the previous year:

Medicaid

•In September 2024, our subsidiary, Superior HealthPlan (Superior), commenced the contract awarded by the Texas Health and Human Services Commission to continue to provide healthcare coverage to the aged, blind or disabled (ABD) population in the state's STAR+PLUS program. The contract has a six-year term with a maximum of three additional two-year extensions.

•In September 2024, our subsidiary, NH Healthy Families, commenced the contract awarded by the New Hampshire Department of Health and Human Services to continue providing physical health, behavioral health and pharmacy services for New Hampshire's Medicaid managed care program, known as Medicaid Care Management (MCM). The contract has a five-year term.

•In July 2024, our subsidiaries, Carolina Complete Health and WellCare of North Carolina, began coordinating physical and other health services with Local Management Entities/Managed Care Organizations under the state's new Tailored Plan program. The Tailored Plans are integrated health plans designed for individuals with significant behavioral health needs or intellectual/developmental disabilities.

•In June 2024, our subsidiary, Western Sky Community Care, concluded serving members upon the expiration of its New Mexico Medicaid managed care contract.

•In April 2024, our 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.

•In January 2024, our subsidiary, Nebraska Total Care, commenced the statewide Medicaid managed care contract to continue serving the state's Medicaid Managed Care Program, known as Heritage Health. The initial contract term is five years and includes the option for two subsequent, one-year renewals, for a potential total of seven years.

•In January 2024, our California health plan commenced direct Medicaid contracts in 10 counties (Los Angeles, Sacramento, Amador, Calaveras, Inyo, Mono, San Joaquin, Stanislaus, Tulare and Tuolumne). In Los Angeles, a portion of the membership is subcontracted. Prior to January 2024, our California health plan previously served the state's Medicaid Managed Care population with contracts in 13 counties, including San Diego.

•In December 2023, our subsidiaries, Carolina Complete Health and WellCare of North Carolina, began providing coverage under North Carolina's new Medicaid Expansion program.

•In September 2023, our subsidiary, Superior, commenced a new six-year contract awarded by the Texas Health and Human Services Commission to continue providing youth in foster care with healthcare coverage through the STAR Health Medicaid program. Superior has been the sole provider of STAR Health coverage since the program launched in 2008.

•In April 2023, eligibility redeterminations related to the PHE began. We anticipate that any remaining reductions will be limited to certain populations of members as the majority of states have substantially completed their unwinding processes as of October 2024. We continue to work with our state partners to match rates to acuity post-redeterminations.

•In April 2023, the state of New York removed pharmacy services for certain of our managed care contracts in connection with the state's transition of pharmacy services to Medicaid fee-for-service.

•In February 2023, our subsidiary, Buckeye Health Plan, commenced the Medicaid contract awarded by the Ohio Department of Medicaid to continue providing members with quality healthcare, coordinated services and benefits.

Medicare

•Given our strong bid positioning, Medicare Prescription Drug Plan (PDP) membership increased 49% year-over-year.
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•Consistent with our strategic positioning and bid strategy, Medicare Advantage membership declined 14% year-over-year.

•The decrease in our Star quality ratings in the 2023 rating year, which CMS published in October 2022, adversely impacts our 2024 Medicare revenue. The decrease in Star quality ratings is driven by the expiration of certain disaster relief provisions as well as deterioration in select metrics. As a result of this expectation, we recorded a premium deficiency reserve of $250 million in the fourth quarter of 2023, which increased to $300 million in the first quarter of 2024 to $335 million in the second quarter of 2024 and decreased by $90 million to $245 million in the third quarter of 2024 to reflect the seasonality of earnings, in connection with the 2024 Medicare Advantage business.

Commercial

•In 2024, our Health Insurance Marketplace product, Ambetter Health expanded into Delaware. In total, the Marketplace plan is available across 29 states. Additionally, Marketplace membership increased 22% year-over-year due to the expanded footprint, strong product positioning and open enrollment results, as well as overall market growth.

Other

•In July 2024, our subsidiary, Magellan Health, commenced the Idaho Behavioral Health Plan contract.

•In December 2023 and January 2024, we completed the divestitures of Operose Health and Circle Health, respectively.

•In June 2023, we completed the divestiture of Apixio. We maintain a close relationship with, and a minority interest in, the business.

•In January 2023, we completed the divestitures of Magellan Specialty Health, Centurion and HealthSmart.

The benefits of successful execution of our value creation initiatives have impacted our current results of operations and will continue to impact future results of operations, including the implementation of our new third-party pharmacy benefits management (PBM) contract, which commenced in January 2024.

We expect the following items to impact our future results of operations, subject to the resolution of various third-party protests within the Medicaid segment:

Medicaid

•In October 2024, our subsidiary, Meridian Health Plan of Michigan, commenced the contract awarded by the Michigan Department of Health and Human Services (MDHHS) to continue serving as a Medicaid health plan for the Comprehensive Health Care Program. The contract has a five-year term, with three optional one-year extensions, for a total of eight possible contract years.

•In September 2024, our subsidiary, Health Net Community Solutions, was selected by the California Department of Health Care Services to provide managed dental health care services to beneficiaries of Medi-Cal, the State's Medicaid program, in Los Angeles and Sacramento counties. The new 54-month contract is expected to take effect on July 1, 2025.

•In September 2024, our subsidiary, Iowa Total Care, was selected by the Iowa Department of Health and Human Services to continue providing Medicaid managed care services under the Iowa Health Link program. The contract is expected to begin July 1, 2025 and is a four-year term, with an optional two-year extension, for a total of six possible contract years.

•In August 2024, our subsidiary, PA Health and Wellness, was selected by the Pennsylvania Department of Human Services to continue to administer Pennsylvania's Community HealthChoices program, the Medicaid managed care program that covers adults who are dually eligible for Medicare and Medicaid or who qualify to receive Medicaid long-term services and supports due to a need for the level of care provided in a nursing facility. The contract is expected to begin April 1, 2025 and is a five-year term, with three optional one-year extensions, for a total of eight possible contract years.
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•In July 2024, the State of Florida announced plans to execute agreements with eight health plans, including our subsidiary, Sunshine Health. The Statewide Medicaid Managed Care program includes integrated Managed Medical Assistance, Long-Term Care services, Serious Mental Illness, Child Welfare and HIV specialty products. The contract is expected to begin on February 1, 2025.

•In May 2024, our subsidiary, Sunflower Health Plan, was selected to continue providing managed health care services through KanCare, the State of Kansas' Medicaid and Children's Health Insurance Program. The new contract is expected to take effect on January 1, 2025 for a three-year term, with two optional one-year extensions, for a total of five possible contract years.

•In December 2023, our subsidiary, Arizona Complete Health, was selected by the Arizona Health Care Cost Containment System – Arizona's single state Medicaid agency – to provide managed care for the Arizona Long Term Care System (ALTCS). The program supports Arizonans who are elderly and/or have a physical disability (E/PD) with physical and behavioral healthcare, as well as provides pharmacy benefits and home and community-based services. The new ALTCS-E/PD contract is expected to begin in October 2025 and is a three-year term, with four optional one-year extensions, for a total of seven possible contract years.

•In August 2022, our subsidiary, Magnolia Health Plan (Magnolia), was awarded the Mississippi Division of Medicaid contract. Under the new contract, Magnolia will continue serving the state's Coordinated Care Organization Program, which will consist of the Mississippi Coordinated Access Network and the Mississippi CHIP. The contract is expected to begin in July 2025.

Medicare

•In 2025, Wellcare will offer Medicare Advantage plans in 32 states, including its newest state, Iowa. Wellcare will discontinue offering Medicare Advantage products in Alabama, Massachusetts, New Hampshire, New Mexico, Rhode Island and Vermont in 2025. We currently anticipate that the 2025 Plan year will operate at a loss driven by Star ratings; accordingly, we expect to record a premium deficiency reserve in the fourth quarter of 2024.

•In October 2024, CMS issued 2025 Medicare Advantage Star Ratings on the Medicare Plan Finder. Based on the data, Centene Corporation had approximately 46% of its Medicare Advantage membership enrolled in plans rated 3.5 stars or higher – compared to approximately 23% in the prior year. This represents meaningful progress and was consistent with internal expectations despite higher than industry-anticipated cut point changes. Additionally, we are appealing CMS' scoring of our TTY (Text-to-Voice teletypewriter services for the hearing impaired) measure which, if successful, could further increase our percentage of Medicare Advantage members enrolled in plans rated 3.5 stars or higher.

•In October 2024, our subsidiary, Meridian Health Plan of Michigan, was selected by the MDHHS to provide highly integrated Medicare and Medicaid services for dually eligible Michiganders through a Highly Integrated Dual Eligible Special Needs Plan. The plan is expected to launch on January 1, 2026 and is a seven-year term, with three optional one-year extensions, for a total of 10 possible contract years.

Commercial

•In 2025, our Health Insurance Marketplace product, Ambetter Health will expand its geographic footprint, adding 60 new counties across 10 states, which includes expansion into Iowa. In total, the Marketplace plan will be available across 29 states.

Other

•In October 2024, we completed the sale of Collaborative Health Systems, a management services organization.

•In December 2022, the Department of Defense announced that the TRICARE Managed Care Support Contract commencing in 2025 was not awarded to Health Net Federal Services.
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MEMBERSHIP

From September 30, 2023 to September 30, 2024, our managed care membership increased by 670 thousand, or 2%. The following table sets forth our membership by line of business:
 September 30, 2024December 31, 2023September 30, 2023
Traditional Medicaid (1)
11,478,600 12,754,000 13,470,900 
High Acuity Medicaid (2)
1,590,200 1,718,000 1,769,600 
Total Medicaid13,068,800 14,472,000 15,240,500 
Commercial Marketplace4,501,300 3,900,100 3,681,600 
Commercial Group426,600 427,500 424,200 
Total Commercial4,927,900 4,327,600 4,105,800 
Medicare (3)
1,129,900 1,284,200 1,310,600 
Medicare PDP6,766,400 4,617,800 4,539,800 
Total at-risk membership25,893,000 24,701,600 25,196,700 
TRICARE eligibles2,747,000 2,773,200 2,773,200 
Total
28,640,000 27,474,800 27,969,900 
(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.
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RESULTS OF OPERATIONS

The following discussion and analysis is based on our Consolidated Statements of Operations, which reflect our results of operations for the three and nine months ended September 30, 2024 and 2023, prepared in accordance with generally accepted accounting principles in the United States (GAAP). 

Summarized comparative financial data for the three and nine months ended September 30, 2024 and 2023 is as follows ($ in millions, except per share data in dollars):
Three Months Ended September 30,
Nine Months Ended September 30,
 20242023% Change20242023% Change
Premium$36,115 $33,866 7 %$106,784 $101,404 5 %
Service784 1,101 (29)%2,425 3,353 (28)%
Premium and service revenues36,899 34,967 6 %109,209 104,757 4 %
Premium tax5,124 3,075 67 %13,057 9,782 33 %
Total revenues42,023 38,042 10 %122,266 114,539 7 %
Medical costs32,201 29,479 9 %93,898 88,260 6 %
Cost of services692 856 (19)%2,041 2,603 (22)%
Selling, general and administrative expenses3,057 3,048 n.m.9,169 9,075 1 %
Depreciation expense140 148 (5)%408 436 (6)%
Amortization of acquired intangible assets173 180 (4)%519 542 (4)%
Premium tax expense5,095 3,156 61 %13,218 10,021 32 %
Impairment— 440 n.m.13 478 (97)%
Earnings from operations665 735 (10)%3,000 3,124 (4)%
Investment and other income432 214 102 %1,440 992 45 %
Interest expense(176)(181)3 %(530)(542)2 %
Earnings before income tax921 768 20 %3,910 3,574 9 %
Income tax expense211 293 (28)%896 914 (2)%
Net earnings710 475 49 %3,014 2,660 13 %
(Earnings) loss attributable to noncontrolling interests3 (6)n.m.8 (3)n.m.
Net earnings attributable to Centene Corporation$713 $469 52 %$3,022 $2,657 14 %
Diluted earnings per common share attributable to Centene Corporation$1.36 $0.87 56 %$5.69 $4.85 17 %
n.m.: not meaningful


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Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Total Revenues

Total revenues increased 10% in the three months ended September 30, 2024, over the corresponding period in 2023, primarily driven by Medicaid rate increases, membership growth in the Marketplace business due to strong product positioning as well as overall market growth, along with increased premium tax revenue, partially offset by lower Medicaid membership primarily due to redeterminations and recent divestitures in the Other segment.

Operating Expenses

Medical Costs/HBR

The HBR for the three months ended September 30, 2024, was 89.2%, compared to 87.0% in the same period in 2023. The increase was primarily driven by higher acuity in Medicaid resulting from the redetermination process as we continue to work with states to match rates with acuity. The increase was also driven by Medicare Star rating impacts.

Cost of Services

Cost of services decreased by $164 million in the three months ended September 30, 2024, compared to the corresponding period in 2023. The decrease was primarily driven by recent divestitures. The cost of service ratio for the three months ended September 30, 2024, was 88.3%, compared to 77.7% in the same period in 2023. The increase was primarily driven by the divestiture of Circle Health, which operated at a lower cost of service ratio.

Selling, General & Administrative Expenses

The SG&A expense ratio was 8.3% for the third quarter of 2024, compared to 8.7% in the third quarter of 2023. The adjusted SG&A expense ratio was 8.3% for the third quarter of 2024, compared to 8.6% in the third quarter of 2023. The decreases were primarily driven by the divestiture of Circle Health, which operated at a higher SG&A expense ratio, and continued leveraging of expenses over higher revenues. The decreases were partially offset by growth in the Marketplace business, which operates at a meaningfully higher SG&A expense ratio as compared to Medicaid.

Impairment

During the third quarter of 2023, we recorded total impairment charges of $440 million, including a $251 million charge related to assets associated with the then pending divestiture of Circle Health, a $142 million charge related to assets associated with our Operose Health business based on market indicators of fair value, and additional impairments of $47 million related to our ongoing real estate optimization initiatives.
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Other Income (Expense)

The following table summarizes the components of other income (expense) for the three months ended September 30, ($ in millions): 
 20242023
Investment and other income$432 $214 
Interest expense(176)(181)
Other income (expense), net$256 $33 

Investment and other income. Investment and other income increased by $218 million in the three months ended September 30, 2024, compared to the corresponding period in 2023. The three months ended September 30, 2024 included increased interest income on investments driven by higher cash balances. The three months ended September 30, 2023 included a $75 million realized loss on the sale of investments from rebalancing a portion of our portfolio with a focus on higher interest rate investments.

Interest expense. Interest expense decreased by $5 million in the three months ended September 30, 2024, compared to the corresponding period in 2023.

Income Tax Expense

For the three months ended September 30, 2024, we recorded income tax expense of $211 million on pre-tax earnings of $921 million, or an effective tax rate of 22.9%. For the third quarter of 2024, our effective tax rate on adjusted earnings was 23.3%.

For the three months ended September 30, 2023, we recorded an income tax expense of $293 million on pre-tax earnings of $768 million, or an effective tax rate of 38.2%. The effective tax rate for the third quarter of 2023 reflects the tax effects of impairments as well as the then pending divestiture of Circle Health. For the third quarter of 2023, our effective tax rate on adjusted earnings was 24.2%.


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Segment Results

The following table summarizes our consolidated operating results by segment for the three months ended September 30, ($ in millions):
 20242023% Change
Total Revenues   
Medicaid$26,440 $24,694 7 %
Medicare5,643 5,430 4 %
Commercial8,693 6,453 35 %
Other1,247 1,465 (15)%
Consolidated total$42,023 $38,042 10 %
Gross Margin (1)
  
Medicaid$1,475 $2,012 (27)%
Medicare675 968 (30)%
Commercial1,736 1,364 27 %
Other120 288 (58)%
Consolidated total$4,006 $4,632 (14)%
(1)
Gross margin represents premium and service revenues less medical costs and cost of services.

Medicaid

Total revenues increased 7% in the three months ended September 30, 2024, compared to the corresponding period in 2023. Gross margin decreased $537 million in the three months ended September 30, 2024, compared to the corresponding period in 2023. The increase in total revenues was primarily driven by increased premium tax revenue and rate increases, partially offset by lower membership primarily due to redeterminations. Gross margin decreased due to lower overall membership as a result of the redetermination process, coupled with higher acuity post-redeterminations as we continue to work with our state partners to match rates to the changes in acuity.

Medicare

Total revenues increased 4% in the three months ended September 30, 2024, compared to the corresponding period in 2023 primarily driven by increased PDP membership of 49%, partially offset by lower Medicare Advantage membership. Gross margin decreased $293 million in the three months ended September 30, 2024, compared to the corresponding period in 2023, primarily driven by lower Medicare Advantage revenue resulting from the Star quality ratings impact and lower membership discussed above.

Commercial

Total revenues increased 35% in the three months ended September 30, 2024, compared to the corresponding period in 2023. Gross margin increased $372 million in the three months ended September 30, 2024, compared to the corresponding period in 2023. Increases were primarily driven by 22% membership growth in the Marketplace business along with improved margin through strong 2024 product design and execution.

Other

Total revenues decreased 15% in the three months ended September 30, 2024, compared to the corresponding period in 2023. Gross margin decreased $168 million in the three months ended September 30, 2024, compared to the corresponding period in 2023. Decreases were primarily due to recent divestitures.
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Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Total Revenues

Total revenues increased 7% in the nine months ended September 30, 2024, over the corresponding period in 2023 primarily driven by membership growth in the Marketplace business due to strong product positioning as well as overall market growth and outperformance in Marketplace risk adjustment for the 2023 benefit year, along with Medicaid rate increases and increased premium tax revenue. The increases were partially offset by lower Medicaid membership primarily due to redeterminations and recent divestitures in the Other segment.

Operating Expenses

Medical Costs/HBR

The HBR for the nine months ended September 30, 2024 was 87.9%, compared to 87.0% in the same period in 2023. The increase was primarily driven by higher acuity in Medicaid resulting from the redetermination process as we continue to work with states to match rates with acuity. The increase was also driven by Medicare Star rating impacts. The increases were partially offset by Marketplace membership growth and improved margin through strong 2024 product design and execution as well as outperformance in Marketplace risk adjustment for the 2023 benefit year.

Cost of Services

Cost of services decreased by $562 million in the nine months ended September 30, 2024, compared to the corresponding period in 2023. The decrease was primarily driven by recent divestitures. The cost of service ratio for the nine months ended September 30, 2024 was 84.2%, compared to 77.6% in the same period in 2023. The increase was primarily driven by the divestiture of Circle Health, which operated at a lower cost of service ratio.

Selling, General & Administrative Expenses

The SG&A expense ratio for the nine months ended September 30, 2024 was 8.4%, compared to 8.7% for the corresponding period in 2023. The adjusted SG&A expense ratio for the nine months ended September 30, 2024 was 8.3%, compared to 8.6% for the nine months ended September 30, 2023. The decrease in the adjusted SG&A expense ratio was primarily driven by the divestiture of Circle Health, which operated at a higher SG&A expense ratio, ongoing SG&A savings initiatives and continued leveraging of expenses over higher revenues. The decrease was partially offset by growth in the Marketplace business, which operates at a meaningfully higher SG&A expense ratio as compared to Medicaid and Medicare distribution costs.

Impairment

During the nine months ended September 30, 2024, we recorded total impairment charges of $13 million, primarily driven by Health Net Federal Services property, software and equipment related to the TRICARE Managed Care Support Contract that was no longer recoverable following the 2024 final ruling.

During the nine months ended September 30, 2023, we recorded total impairment charges of $478 million, including a $251 million charge related to assets associated with the then pending divestiture of Circle Health, a $142 million charge related to assets associated with our Operose Health business based on market indicators of fair value, and additional impairments of $85 million related to our ongoing real estate optimization initiatives.

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Other Income (Expense)

The following table summarizes the components of other income (expense) for the nine months ended September 30, ($ in millions): 
 20242023
Investment and other income$1,440 $992 
Interest expense(530)(542)
Other income (expense), net$910 $450 

Investment and other income. Investment and other income increased by $448 million in the nine months ended September 30, 2024, compared to the corresponding period in 2023, driven by higher interest rates on larger investment balances. The nine months ended September 30, 2024 also included an $83 million Magellan Specialty Health divestiture gain, $21 million net gain on the sale of property, $20 million Circle Health divestiture gain and $7 million HealthSmart divestiture gain partially offset by an additional loss on the divestiture of our Spanish and Central European businesses of $7 million.

The nine months ended September 30, 2023 included a $91 million gain on the sale of Apixio, a $79 million gain on the sale of Magellan Specialty Health and a $15 million gain on the previously reported divestiture of Centurion, partially offset by a $75 million realized loss on the sale of investments from rebalancing a portion of our portfolio with a focus on higher interest rate investments, an additional loss on the divestiture of our Spanish and Central European businesses of $13 million and a $10 million reduction to the previously recorded gain on the sale of Magellan Rx.

Interest expense. Interest expense decreased by $12 million in the nine months ended September 30, 2024, compared to the corresponding period in 2023.

Income Tax Expense

For the nine months ended September 30, 2024, we recorded income tax expense of $896 million on pre-tax earnings of $3.9 billion, or an effective tax rate of 22.9%. The effective tax rate for 2024 reflects tax effects of the Circle Health divestiture. For the nine months ended September 30, 2024, our effective tax rate on adjusted earnings was 24.2%.

For the nine months ended September 30, 2023, we recorded income tax expense of $914 million on pre-tax earnings of $3.6 billion, or an effective tax rate of 25.6%. The effective tax rate for 2023 reflects the tax effects of the distribution of long-term stock awards to the estate of the Company's former CEO, divestiture gains, impairments as well as the then pending divestiture of Circle Health. For the nine months ended September 30, 2023, our effective tax rate on adjusted earnings was 24.5%.

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Segment Results

The following table summarizes our consolidated operating results by segment for the nine months ended September 30, ($ in millions):
 20242023% Change
Total Revenues   
Medicaid$76,083 $75,523 1 %
Medicare17,556 16,971 3 %
Commercial24,979 17,439 43 %
Other3,648 4,606 (21)%
Consolidated total$122,266 $114,539 7 %
Gross Margin (1)
  
Medicaid$4,880 $6,663 (27)%
Medicare1,866 2,617 (29)%
Commercial6,074 3,701 64 %
Other450 913 (51)%
Consolidated total$13,270 $13,894 (4)%
(1)
Gross margin represents premium and service revenues less medical costs and cost of services.

Medicaid

Total revenues increased 1% in the nine months ended September 30, 2024, compared to the corresponding period in 2023. Gross margin decreased $1.8 billion in the nine months ended September 30, 2024, compared to the corresponding period in 2023. The increase in total revenues was primarily driven by increased premium tax revenue and rate increases, partially offset by lower membership primarily due to redeterminations. Gross margin decreased due to lower overall membership as a result of the redetermination process, coupled with higher acuity post-redeterminations as we continue to work with our state partners to match rates to the changes in acuity.

Medicare

Total revenues increased 3% in the nine months ended September 30, 2024, compared to the corresponding period in 2023, primarily driven by increased PDP membership of 49%, partially offset by lower Medicare Advantage membership. Gross margin decreased $751 million in the nine months ended September 30, 2024, compared to the corresponding period in 2023 driven primarily by lower Medicare Advantage revenue resulting from the Star quality ratings impact and lower membership discussed above.

Commercial

Total revenues increased 43% in the nine months ended September 30, 2024, compared to the corresponding period in 2023. Gross margin increased $2.4 billion in the nine months ended September 30, 2024, compared to the corresponding period in 2023. Increases were primarily driven by 22% membership growth in the Marketplace business along with improved margin through strong 2024 product design and execution as well as outperformance in Marketplace risk adjustment for the 2023 benefit year.

Other

Total revenues decreased 21% in the nine months ended September 30, 2024, compared to the corresponding period in 2023. Gross margin decreased $463 million in the nine months ended September 30, 2024, compared to the corresponding period in 2023. Decreases were primarily due to recent divestitures.
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LIQUIDITY AND CAPITAL RESOURCES

Shown below is a condensed schedule of cash flows used in the discussion of liquidity and capital resources ($ in millions).
 Nine Months Ended September 30,
 20242023
Net cash provided by operating activities$741 $7,836 
Net cash used in investing activities(1,154)(242)
Net cash used in financing activities(2,393)(1,457)
Effect of exchange rate changes on cash and cash equivalents7 19 
Net increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents$(2,799)$6,156 

Cash Flows Provided by Operating Activities

Normal operations are funded primarily through operating cash flows and borrowings under our Revolving Credit Facility. Operating activities provided cash of $741 million in the nine months ended September 30, 2024, compared to providing cash of $7.8 billion in the comparable period in 2023.

Cash flows provided by operations in 2024 were primarily driven by net earnings, partially offset by pharmacy rebate remittance timing as we transitioned to the new third-party PBM, which commenced in January 2024, and risk adjustment payments for the Marketplace 2023 benefit year.

Cash flows provided by operations in 2023 were driven by net earnings and increases in unearned revenue and accounts payable driven by the early receipt of payments from CMS.

Cash Flows Used in Investing Activities

Investing activities used cash of $1.2 billion in the nine months ended September 30, 2024, compared to using cash of $242 million in the comparable period in 2023. Cash flows used in investing activities in 2024 and 2023 were driven primarily by net additions to the investment portfolio of our regulated subsidiaries (including transfers from cash and cash equivalents to long-term investments) and capital expenditures, partially offset by divestiture proceeds.

We spent $490 million and $576 million in the nine months ended September 30, 2024 and 2023, respectively, on capital expenditures the majority of which was driven by system enhancements and computer hardware.

As of September 30, 2024, our investment portfolio consisted primarily of fixed-income securities with an average duration of 3.3 years. At September 30, 2024, we had unregulated cash and investments of $1.2 billion, including $266 million of cash and cash equivalents and $888 million of investments. Unregulated cash and investments at December 31, 2023 was $1.0 billion, including $200 million of cash and cash equivalents and $810 million of investments.

Cash Flows Used in Financing Activities

Financing activities used cash of $2.4 billion in the nine months ended September 30, 2024, compared to using cash of $1.5 billion in the comparable period in 2023. Financing activities in 2024 were driven by stock repurchases of $2.2 billion, which included $2.1 billion under the stock repurchase program and $112 million of repurchases related to income tax withholding upon the vesting of previously awarded stock grants, and net decreases in debt of $244 million.

Financing activities in 2023 were driven by stock repurchases of $1.6 billion.

Liquidity Metrics

We have a stock repurchase program authorizing us to repurchase common stock from time to time on the open market or through privately negotiated transactions. In 2023, the Company's Board of Directors authorized up to a cumulative total of $10.0 billion of repurchases under the program.

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During the third quarter of 2024, we repurchased 16.3 million shares of common stock for $1.2 billion under the stock repurchase program. We have approximately $3.2 billion remaining under the program for repurchases as of September 30, 2024. No duration has been placed on the repurchase program. We reserve the right to discontinue the repurchase program at any time. Refer to Note 8. Stockholders' Equity for further information on stock repurchases.

As of September 30, 2024, we had an aggregate principal amount of $15.7 billion of senior notes issued and outstanding. The indentures governing our various maturities of senior notes contain restrictive covenants. As of September 30, 2024, we were in compliance with all covenants.

As part of our capital allocation strategy, we may decide to repurchase debt or raise capital through the issuance of debt in the form of senior notes. In 2022, the Company's Board of Directors also authorized a $1.0 billion senior note debt repurchase program. No repurchases were made during the quarter ended September 30, 2024. As of September 30, 2024, there was $700 million available under the senior note debt repurchase program.

The credit agreement underlying our Revolving Credit Facility and Term Loan Facility contains customary covenants as well as financial covenants including a minimum fixed charge coverage ratio and a maximum debt-to-EBITDA ratio. Our maximum debt-to-EBITDA ratio under the credit agreement may not exceed 4.0 to 1.0. As of September 30, 2024, we had no borrowing outstanding under our Revolving Credit Facility, $2.0 billion of borrowings under our Term Loan Facility, and we were in compliance with all covenants. As of September 30, 2024, there were no limitations on the availability of our Revolving Credit Facility as a result of the debt-to-EBITDA ratio.

We had outstanding letters of credit of $145 million as of September 30, 2024, which were not part of our Revolving Credit Facility. The letters of credit bore weighted interest of 0.7% as of September 30, 2024. In addition, we had outstanding surety bonds of $886 million as of September 30, 2024.

At September 30, 2024, our debt to capital ratio, defined as total debt divided by the sum of total debt and total equity, was 39.1%, compared to 40.7% at December 31, 2023. The debt to capital ratio decrease was primarily driven by net earnings, partially offset by year-to-date stock repurchases. We utilize the debt to capital ratio as a measure, among others, of our leverage and financial flexibility.

At September 30, 2024, we had working capital, defined as current assets less current liabilities, of $3.3 billion, compared to $4.0 billion at December 31, 2023. We manage our short-term and long-term investments aiming to ensure a sufficient portion of the portfolio is highly liquid and can be sold to fund short-term requirements as needed.

2024 Expectations

During the remainder of 2024, we expect dividends to be offset by capital contributions to our insurance subsidiaries. We expect to spend approximately $170 million in additional capital expenditures.

Based on our operating plan, we expect that our available cash, cash equivalents and investments, cash from our operations and cash available under our Revolving Credit Facility will be sufficient to finance our general operations and capital expenditures for at least 12 months from the date of this filing. While we are currently in a strong liquidity position and believe we have adequate access to capital, we may elect to increase borrowings on our Revolving Credit Facility, which matures in August 2026. Additionally, our senior notes mature between December 2027 and August 2031. From time to time, we may elect to raise additional funds for working capital and other purposes, either through issuance of debt or equity, the sale of investment securities or otherwise, as appropriate. In addition, we may strategically pursue refinancing or redemption opportunities to extend maturities and/or improve terms of our indebtedness if we believe such opportunities are favorable to us.

We intend to continue to target initiatives to improve productivity, efficiencies and reduced organizational costs, as well as capital deployment activities, including stock repurchases, portfolio optimization and the evaluation of refinancing opportunities. In addition to creating shareholder value, these actions encompass a larger organizational mission to enhance our member and provider experience, improve outcomes for our members and innovate to ensure that Centene is a great partner in all aspects of our operations.
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REGULATORY CAPITAL AND DIVIDEND RESTRICTIONS
 
Our operations are conducted through our subsidiaries. As managed care organizations, most of our subsidiaries are subject to state regulations and other requirements that, among other things, require the maintenance of minimum levels of statutory capital, as defined by each state, and restrict the timing, payment and amount of dividends and other distributions that may be paid to us. Generally, the amount of dividend distributions that may be paid by a regulated subsidiary without prior approval by state regulatory authorities is limited based on the entity's level of statutory net income and statutory capital and surplus.

Our regulated subsidiaries are required to maintain minimum capital requirements prescribed by various regulatory authorities in each of the states in which we operate. During the nine months ended September 30, 2024, we received dividends of $2.8 billion from and made $416 million of capital contributions to our regulated subsidiaries. For our subsidiaries that file with the National Association of Insurance Commissioners (NAIC), the aggregate risk-based capital (RBC) level as of December 31, 2023, which was the most recent date for which reporting was required, was in excess of 350% of the Authorized Control Level. We intend to continue to maintain an aggregate RBC level in excess of 350% of the Authorized Control Level during 2024.

Under the California Knox-Keene Health Care Service Plan Act of 1975, as amended (Knox-Keene), certain of our California subsidiaries must comply with tangible net equity (TNE) requirements. Under these Knox-Keene TNE requirements, actual net worth less certain unsecured receivables and intangible assets must be more than the greater of (i) a fixed minimum amount, (ii) a minimum amount based on premiums or (iii) a minimum amount based on healthcare expenditures, excluding capitated amounts.

Under the New York State Department of Health Codes, Rules and Regulations Title 10, Part 98, our New York subsidiary must comply with contingent reserve requirements. Under these requirements, net worth based upon admitted assets must equal or exceed a minimum amount based on annual net premium income.

The NAIC has adopted rules which set minimum RBC requirements for insurance companies, managed care organizations and other entities bearing risk for healthcare coverage. As of September 30, 2024, each of our health plans was in compliance with the RBC requirements enacted in those states.

As a result of the above requirements and other regulatory requirements, certain of our subsidiaries are subject to restrictions on their ability to make dividend payments, loans or other transfers of cash to their parent companies. Such restrictions, unless amended or waived or unless regulatory approval is granted, limit the use of any cash generated by these subsidiaries to pay our obligations. The maximum amount of dividends that can be paid by our insurance company subsidiaries without prior approval of the applicable state insurance departments is subject to restrictions relating to statutory surplus, statutory income and unassigned surplus.

CRITICAL ACCOUNTING ESTIMATES

Please see "Critical Accounting Estimates in Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our 2023 Annual Report on Form 10-K for a description of our Critical Accounting Estimates.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

INVESTMENTS AND DEBT

As of September 30, 2024, we had short-term investments of $3.0 billion and long-term investments of $19.1 billion, including restricted deposits of $1.4 billion. The short-term investments generally consist of highly liquid securities with maturities between three and 12 months. The long-term investments consist of municipal, corporate and U.S. Treasury securities, government-sponsored obligations, life insurance contracts, asset-backed securities, and equity securities, and have maturities greater than one year. Restricted deposits consist of investments required by various state statutes to be deposited or pledged to state agencies. Due to the nature of the states' requirements, these investments are classified as long-term regardless of the contractual maturity date. Substantially all of our investments are subject to interest rate risk and will decrease in value if market rates increase. Assuming a hypothetical and immediate 1% increase in market interest rates at September 30, 2024, the fair value of our fixed income investments would decrease by approximately $674 million.

For a discussion of the interest rate risk that our investments are subject to, refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, Part 1, Item 1A, "Risk Factors – Our investment portfolio may suffer losses which could materially and adversely affect our results of operations or liquidity."

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures - We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

In connection with the filing of this Form 10-Q, management evaluated, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2024. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2024.

Changes in Internal Control Over Financial Reporting - No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II
OTHER INFORMATION


Item 1. Legal Proceedings.

A description of the legal proceedings to which the Company and its subsidiaries are a party is contained in Note 11. Contingencies to the consolidated financial statements included in Part I of this Quarterly Report on Form 10-Q, and is incorporated herein by reference.

Item 1A. Risk Factors.

There have been no material changes to the risk factors disclosed in our 2023 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In November 2005, the Company's Board of Directors announced a stock repurchase program, which was most recently increased in December 2023. The Company is authorized to repurchase up to $10.0 billion, inclusive of past authorizations, of which $3.2 billion remains as of September 30, 2024.

The stock repurchase program is effected primarily through regular open-market purchases (which may include repurchase plans designed to comply with Rule 10b5-1 and accelerated share repurchases), the amounts and timing of which are subject to the Company's discretion as part of its capital allocation strategy, and may be based upon general market conditions and the prevailing price and trading volumes of its common stock. No duration has been placed on the repurchase program. The Company reserves the right to discontinue the repurchase program at any time.

Issuer Purchases of Equity Securities
Third Quarter 2024
(Shares in thousands)
Period
 
Total Number of Shares Purchased (1)
Average Price
Paid per Share (2)
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
($ in millions) (3)
July 1, 2024 - July 31, 2024
457 $75.82 439 $4,344 
August 1, 2024 - August 31, 2024
4,217 77.46 4,215 4,018 
September 1, 2024 - September 30, 2024
11,699 73.96 11,600 3,160 
Total16,373 $74.92 16,254 $3,160 
(1)
Includes 119 thousand shares relinquished to the Company by certain employees for payment of taxes.
(2)
Average price paid per share excludes quarter-to-date accrued share repurchase excise tax of approximately $11 million.
(3)
A remaining amount of approximately $3.2 billion is available under the stock repurchase program as of September 30, 2024.

Item 5. Other Information

(a) None.

(b) None.

(c) During the three months ended September 30, 2024, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

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Item 6. Exhibits.
EXHIBIT NUMBER 
DESCRIPTION
10.1*
31.1
31.2
32.1#
32.2#
101The following materials from the Centene Corporation Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in Inline Extensible Business Reporting Language (iXBRL): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Earnings (Loss); (iv) the Consolidated Statements of Stockholders' Equity; (v) the Consolidated Statements of Cash Flows and (vi) related notes.
104Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101.
 * Indicates a management contract or compensatory plan or arrangement.
# This certification is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act), or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.
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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized as of October 25, 2024.

 CENTENE CORPORATION
 
 By: /s/ SARAH M. LONDON
 Chief Executive Officer
(principal executive officer)
 By: /s/ ANDREW L. ASHER
 Executive Vice President, Chief Financial Officer
(principal financial officer)
 By: /s/ KATIE N. CASSO
 Senior Vice President, Finance, Corporate Controller and Chief Accounting Officer
(principal accounting officer)

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