Centene Corporation

Good day and welcome to the Centene Corporation second quarter 2022 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Jen Gilligan, Senior Vice President, Finance and Investor Relations. Please go ahead, Jen.

Thank you, Rocco, and good morning, everyone. Thank you for joining us on our second quarter 2022 earnings results conference call. Sarah London, Chief Executive Officer, Brent Layton, President and Chief Operating Officer, and Drew Asher, Executive Vice President and Chief Financial Officer of Centene, will host this morning's call, which also can be accessed through our website at centene.com. Any remarks that Centene may make about future expectations, plans, and prospects constitute forward-looking statements for the purpose of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in Centene's most recent Form 10-K, filed on February 22nd of 2022, and other public SEC filings. Centene anticipates that subsequent events and developments may cause its estimates to change. While the company may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. The call will also refer to certain non-GAAP measures, A reconciliation of these measures with the most directly comparable gap measures can be found in our second quarter 2022 press release, which is available on the company's website under the investor section. Please mark your calendars for our next earnings conference call scheduled for October 25th. With that, I would like to turn the call over to our CEO, Sarah London. Sarah?

Thanks, Jen. And thank you, everyone, for joining us this morning. Centene entered 2022 with a focus on value creation. As a reminder, value creation at Centene means becoming a better partner by simplifying and strengthening our operations, making it easier for our members and providers to work with us. It means focusing on our core business and leveraging trusted local relationships to fuel discipline growth. And it means allocating capital to innovation that delivers better outcomes. Value creation is not measured solely in earnings per share, but importantly, in the impact that we have on the members we serve and the communities we support. Over the last six months, our value creation program has gained momentum and scale with efforts that span our local health plans and enterprise-wide functions. At the same time, the team is executing well on our day-to-day objectives and doubling down on our work to define the long-term trajectory of the organization for 2025 and beyond. with a focus on sustainable growth and market leadership. This morning, I'll provide headlines of our quarterly performance and cover a few more recent value creation updates. Before handing the call over to Brent for an update on product line performance, I'd also like to touch briefly on what I've observed over my first few months as CEO about Centene's ability to differentiate in the marketplace. Let's start with the quarter. Second quarter results were directly in line with the guidance we provided at our June Investor Day. Thoughtful product positioning across lines of business, initiatives to enhance medical management, and a more balanced approach to capital allocation all contributed to our strong first half performance, which provides an excellent foundation to build from as we look to the balance of the year. Today, we once again increased guidance with our full year adjusted EPS outlook now at $5.60 to $5.75. which represents a cumulative 20-cent increase since Q1. You will hear more details about the quarter and this improved full-year outlook from Drew shortly. On the value creation front, we are full steam ahead. You've now heard quite a bit about the myriad in-flight initiatives Jim Murray and his team are tracking and supporting in close partnership with our business leaders. We continue to see solid progress on our operating model redesign efforts. as well as work to optimize key process-driven functions like quality and utilization management. Our plan to establish a pharmacy center of excellence across the health plans continues to advance, and the PBM RFP process remains on track. In the handful of weeks since our June investor day, we completed the panther divestiture, closing out another key milestone in our portfolio review work. As previously announced, a majority of the net proceeds from the sale will be used to repurchase stock and the balance to reduce debt. Yesterday, we announced another important portfolio action with the signing of a definitive agreement to divest our Spanish and Central European assets to Vivaldo Sante, which is the third largest private hospital company in France. We believe Vivaldo Sante is well-positioned to invest in and grow Ribera Salud, Torreón, and ProDiagnostics Group while ensuring they continue to provide high-quality care for patients across Europe. Across the remainder of our non-health plan portfolio, the review process remains very active, and the team is leveraging our evolving long-term strategic framework to ensure that we position these assets, either through investment, partnership, or divestiture, to deliver maximum strategic benefit moving forward. Consistent with our capital deployment plans, it is worth highlighting that we repurchased $450 million of our common stock since the beginning of Q2, in part leveraging proceeds from other minor asset sales in the quarter. On the real estate front, we previously described a comprehensive exercise to evaluate our leased and owned real estate portfolio. Today, we took an important step towards the achievement of run rate savings related to that exercise, recognizing a charge reflecting a material reduction in the company's real estate footprint. This allows us to capture savings associated with the space rationalization beginning in Q3. We continue to expect approximately $200 million of run rate savings for 2023 and beyond. This initiative reflects the high value we place on evolving Centene to meet the needs of our incredible workforce. But it should also serve as a proof point that we will look to pull forward the benefits of our work wherever possible as we progress on this value creation journey. As you can see, value creation work streams are delivering tangible progress and measurable results. As we move into the second half of the year, we will continue to provide updates on major operational milestones in keeping with our commitment to transparency. and to prove that we are building the momentum necessary to carry us through the rest of this year and help us deliver meaningful financial results in 2023 and 2024. Centene's ability to grow, deliver, and transform all at the same time is made possible by our most valuable asset, our 80,000 diverse and innovative employees. Their mission-driven dedication to our members powers everything we do in this organization. I've spent quite a bit of time on the actual and virtual road since taking on this new role, meeting with our health plan leaders, renewing connections with our key state partners, and listening to team members at the front lines of our market operations. And I want to report back to you that my conviction regarding the power of Centene's local approach has never been greater. Local matters when it comes to growth, as our unparalleled business development team proved yet again with their recent win in the state of Delaware. Years of boots on the ground personal visits, relationship building, and deep market knowledge were key to securing a contract award in Centene's 30th Medicaid state. Local makes the difference when it comes to outsize impact, as I saw on my visit to our Silver Summit health plan in Nevada. There, team members realized how many of our new mothers didn't have access to transportation, and so they partner with an organization called Baby's Bounty to create a diaper van that could deliver baby essentials, diapers, and wipes directly to Southern Nevada's tiniest and most vulnerable residents. Local also makes a difference when it comes to innovation, as I experienced firsthand on a recent trip to New Hampshire. Combating the effect of rapidly rising food prices and knowing the risk food insecurity presents to our Medicaid members, our team at New Hampshire Healthy Families jump-started their Green to Go program, distributing locally sourced fruits and vegetables from food vans strategically positioned across the Granite State. But let me tell you where local really makes a difference. Local makes a difference when it comes to caring, the kind of deep personal caring that comes when your customer is also your neighbor. On May 14th, when shots rang out in the aisles of a neighborhood grocery store in downtown Buffalo, our extraordinary colleagues at Fidelis Care in New York State sprang into action. No one from headquarters had to call them and tell them what to do. They knew what to do because they were there inside the community because they were local. Within 24 hours, Fidelis employees mobilized to distribute food and needed supplies into a community whose only grocery store was surrounded in police tape. And with the neighborhood pharmacy inside that Topps grocery store suddenly closed, our locally based team identified and called every one of the 373 members who'd filled their prescriptions at that pharmacy in recent months. Within 72 hours, each of those 373 members received a personal call from a FidelisCare employee checking in on them, assuring their supply of medication was in order, and assisting them in identifying additional pharmacy resources in the area. Neighbors engaging in simple but profound acts of human caring. That's the power of local. We are proud of the progress and the financial performance of Centene year to date, and we are proud of the work that our team members do every day. Value creation for members leads to value creation for shareholders, and we will continue to focus on this alignment in the coming months and years as we execute on both value creation and our long-term strategic plan for 2025 and beyond. With that, I'd like to pass the call to Brent for more detail on our core business line performance during the quarter. Brent?