Centene (CNC) 10-K risk factor changes: FY2021 vs FY2020

Unless the context otherwise requires, the terms the [removed: “Company,” “we,” “us,” “our”] [added: "Company," "we," "us," "our"] or similar terms and [removed: “Centene” (i) prior to the closing of the Magellan Acquisition,] [added: "Centene"] refer to Centene Corporation, together with its consolidated [removed: subsidiaries, without giving effect to the Magellan Acquisition, and (ii) upon and after the closing of the Magellan Acquisition, refer to us, after giving effect to the Magellan Acquisition.][added: subsidiaries.]

Our business could be [added: materially] adversely affected by the effects of widespread public health pandemics, such as [removed: the spread of] COVID-19.

Public health pandemics or widespread outbreaks of contagious [removed: diseases] [added: diseases, such as COVID-19,] could [added: materially] adversely impact our business.

[removed: The] [added: Our business has been affected by the spread of COVID-19, and the] extent to which COVID-19 continues to impact our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence.

Factors that may determine the severity of the impact include the duration and scale of the outbreak, new information which may emerge concerning the severity of COVID-19, (including new strains, which may be more contagious, more severe or less responsive to treatment or vaccines), the costs of prevention and treatment of COVID-19 and the potential that we will not receive [removed: state and federal] government reimbursement of additional expenses incurred by our members who contract or require testing for COVID-19 or who experience other health impacts as a result of the pandemic, employee [added: retention,] mobility, productivity and utilization of leave and other benefits, financial and other impacts on the healthcare provider community, disruptions or delays in the supply chain for testing and treatment supplies, protective equipment and other products and services, and the actions to contain COVID-19 or address its impact (including [removed: federal, state and local] laws, regulations and emergency orders, [removed: including directives to remain] [added: such as stay] at [removed: home, physically distance or] [added: home orders, physical distancing requirements,] forced business closures [removed: as well as] [added: and vaccine requirements or mandates and directives related to] the timing and scope of vaccine distribution), among [removed: others.][added: other factors.]

Additionally, the spread of COVID-19 has [removed: led to] [added: previously caused] disruption and volatility in the global capital markets, [removed: which] [added: and future disruptions] could adversely impact our access to [removed: capital, and a decline in interest rates which could reduce our investment income.][added: capital.]

Finally, the impact of the above items on our [removed: state and federal] [added: government] partners could result in program changes or delays or reduced capitation payments to us.

We cannot at this time predict the ultimate impact of the COVID-19 pandemic, but it could [removed: adversely affect] [added: have a material adverse effect on] our business, including our financial position, results of operations [removed: and/or] [added: and] cash flows.

For example, in October [removed: 2020,] [added: 2021,] the [removed: Centers for Medicare and Medicaid Services (CMS)] [added: CMS] published updated Medicare Star quality ratings for the [removed: 2021] [added: 2022] rating year.

[removed: Approximately 30%] [added: Over 50%] of our Medicare members are in a 4 star or above plan for the [removed: 2022] [added: 2023] bonus year, compared to [removed: 46%] [added: approximately 30%] for the [removed: 2021] [added: 2022] bonus [removed: year] [added: year,] and [removed: 86%] [added: 46%] for the [removed: 2020] [added: 2021] bonus year.

Our quality bonus and rebates may be negatively impacted [removed: in 2021] and [removed: 2022 and] the attractiveness of our Medicare Advantage plans may be [removed: reduced.][added: reduced if we are unable to maintain or improve these ratings.]

Although we do not anticipate that a single-payer [removed: national] health insurance system [added: or other major healthcare reform provisions] will be enacted by the current [removed: Congress,] [added: Congress or state regulators, certain] members of Congress [added: and certain state regulators] have proposed [removed: several] legislative initiatives [removed: over various sessions of Congress] that would establish some [added: form of a single public or quasi-public agency that organizes healthcare financing, but under which healthcare delivery would remain private.]

Additionally, the potential impact of the [removed: change of] [added: current] administration on healthcare reform efforts is unknown.

Failure to accurately estimate and price our medical expenses or effectively manage our medical costs or related administrative costs could [removed: negatively affect] [added: have a material adverse effect on] our results of operations, financial position and cash flows.

For example, our [removed: Medicaid] [added: government-sponsored health programs] revenue is often based on bids submitted before the start of the initial contract year.

Changes in healthcare regulations and practices, the level of utilization of healthcare services, [added: out-of-network utilization and pricing,] hospital and pharmaceutical costs, [added: unexpected events, such as] disasters, the [removed: potential] effects of climate change, major epidemics, pandemics or newly emergent diseases (such as COVID-19), new medical technologies, new pharmaceutical compounds, increases in provider fraud and other external factors, including general economic conditions such as inflation and unemployment levels, are generally beyond our control and could reduce our ability to accurately predict and effectively control the costs of providing health benefits.

Also, member behavior could continue to be influenced by the uncertainty surrounding the ACA, including [removed: ongoing] legal challenges to the ACA [removed: including the case originally captioned Texas v.][added: or potential changes in premium subsidies.]

We reassess the estimates of the risk adjustment settlements each reporting period and any resulting [removed: adjustments are made to premium revenue.]

Any failure to adequately price products offered or any reduction in products offered in the Health Insurance Marketplaces may have a [removed: negative impact] [added: material adverse effect] on our results of operations, financial position and cash [removed: flow.][added: flows.]

[removed: Due to among other things, the elimination of the individual mandate penalty in the Tax Cuts and Jobs Act (TCJA), we] [added: We] may be adversely selected by individuals who have higher acuity levels than those individuals who selected us in the past and healthy individuals may decide to opt out of the pool altogether.

In addition, the risk adjustment provisions of the ACA established to apportion risk amongst insurers may not be effective in appropriately mitigating the financial risks related to the [added: Health Insurance] Marketplace product, are subject to a high degree of estimation and variability, and are affected by our members' acuity relative to the membership acuity of other insurers.

Further, changes in the competitive marketplace over [removed: time] [added: time, changes to member eligibility in the program design or changes in the financial incentives of individuals to participate in such products] may exacerbate the uncertainty in these relatively new markets.

Any significant variation from our expectations regarding acuity, enrollment levels, adverse selection, [added: out-of-network costs,] or other assumptions utilized in setting adequate premium rates could have a material adverse effect on our results of operations, financial position and cash flows.

We derive a portion of our cash flow and gross margin from our [removed: PDP] [added: prescription drug plan (PDP)] operations, for which we submit annual bids for participation.

The results of our bids could [removed: materially affect] [added: have a material adverse effect on] our results of operations, financial condition and cash flows.

Our [removed: 2021] [added: 2022] PDP bids resulted in [removed: 33] [added: 34] of the 34 CMS regions in which we were below the benchmarks, [removed: and within the de minimis range in the remaining region,] compared with our [removed: 2020] [added: 2021] PDP bids in which we were below the benchmarks in [removed: 32] [added: 33] regions, and within the de minimis range in the remaining [removed: two regions.][added: region.]

The accurate and timely reporting of encounter data is increasingly important to the success of our programs because more states are using encounter data to determine [removed: compliance with performance standards and to set premium rates.]

Further, our government contracts contain certain provisions regarding eligibility, enrollment and dis-enrollment processes for covered services, eligible providers, periodic financial and informational reporting, quality assurance, timeliness of claims [removed: payment] [added: payment, compliance with contract terms] and [added: law, and] agreement to maintain a Medicare plan in the state and financial standards, among other things, and are subject to cancellation if we fail to perform in accordance with the standards set by regulatory agencies.

Any adverse review, audit or investigation could result in, among other things: cancellation of our contracts; refunding of amounts we have been paid pursuant to our contracts; imposition of fines, penalties and other sanctions on us; loss of our right to participate in various programs; increased difficulty in selling our products and services; loss of one or more of our licenses; lowered quality Star ratings; [added: harm to our reputation;] or required changes to the way we do business.

Execution of our [removed: growth] [added: value creation] strategy may [removed: increase costs or liabilities, or] create disruptions in our business.

Our [removed: growth] [added: value creation] strategy [removed: includes, without limitation,] [added: has included, and may continue to include] the acquisition and expansion of health plans participating in government sponsored healthcare programs and specialty services businesses, contract rights and related assets of other health plans both in our existing service areas and in new markets and start-up operations in new markets or new products in existing markets.

[removed: We] [added: While we may] continue to pursue opportunistic acquisitions to expand into new geographies and complementary business lines as well as to augment existing operations, [removed: and we] [added: our acquisition strategies] may [removed: be in discussions with respect to one or multiple targets at any given time.][added: shift as we implement our Value Creation Plan.]

We also face the risk that we will not be able to effectively integrate acquisitions into our existing operations effectively without substantial expense, delay or other operational or financial [removed: problems] [added: problems, including due to conditions on regulatory approval of such acquisitions,] and we may need to divert more management resources to integration than we planned.

We may experience delays in operational start dates, including those related to [removed: stay-at-home directives and other] [added: the] impacts of COVID-19.

If we are unable to effectively [removed: execute] [added: implement or integrate] our [removed: growth] [added: value creation] strategy, including as a result of the continued impact of COVID-19, our future growth will suffer and our results of operations could be harmed.

We [removed: are seeking] [added: have sought and continue] to [added: seek to] diversify our business lines into areas that complement our government sponsored health plan business in order to grow our revenue stream and diversify our business.

To the extent that competition intensifies in any market that we serve, as a result of industry consolidation or otherwise, our ability to retain or increase members and providers, or maintain or increase our revenue growth, pricing [added: flexibility and control over medical cost trends may be adversely affected.]

[removed: In] addition, if these providers refuse to contract with us, use their market position to negotiate contracts unfavorable to us or place us at a competitive disadvantage, our ability to market products or to be profitable in those areas could be materially and adversely affected.

A failure in or breach of our operational or security systems or infrastructure, or those of third parties with which we do business, including as a result of cyber-attacks, could have [removed: an] [added: a material] adverse effect on our business.

[removed: We maintain a rigorous system of prevention and] detection controls through our security programs; however, our prevention and detection controls may not prevent or identify all such attacks on a timely basis, or at all.

In addition, increased utilization patterns (including deferred demand) have had, and may continue to have, an impact on our business as members' pattern of seeking healthcare fluctuates.

For example, risk adjustment could be adversely impacted by COVID-19 related impacts such as disrupted member utilization patterns, access to members for in-home assessments and regulatory changes such as the retroactive disallowance of Hydroxychloroquine adversely impacting our second quarter 2021 results.

Similarly, a decline in interest rates has reduced, and could further reduce, our investment income.

The increase in Star quality ratings for the 2022 rating year is primarily due to certain disaster relief provisions, which we do not expect to be applicable in future years.

As a result, we expect to experience a meaningful decrease to our Star ratings for the 2023 Star rating year, which impacts the 2024 bonus year.

adjustments are made to premium revenue.

For example, risk adjustment could be adversely impacted by COVID-19 related impacts such as disrupted member utilization patterns, access to members for in-home assessments and regulatory changes such as the retroactive disallowance of Hydroxychloroquine adversely impacting our second quarter 2021 results.

compliance with performance standards and to set premium rates.

For example, March 2021, the State of Ohio filed a civil action against us.

The complaint alleged breaches of contract with the Ohio Department of Medicaid relating to the provision of pharmacy benefits management (PBM) services and violations of Ohio law relating to such contracts including among other things, by (i) seeking payment for services already reimbursed, (ii) not accurately disclosing to the Ohio Department of Medicaid the true cost of the PBM services and (iii) inflating dispensing fees for prescription drugs.

We have reached no-fault agreements with the Attorneys General of nine states, including Ohio, to resolve claims made by the states related to services provided by Envolve, our pharmacy benefits manager subsidiary.

As a result of the settlement, the Ohio Attorney General's litigation against us was dismissed.

Additionally, we are in discussions to bring final resolution to these concerns in other affected states.

Consistent with those discussions, we recorded a reserve estimate of $1,250 million in the second quarter of 2021 related to the issue, inclusive of the above settlements and rebates that we determined in the course of the matter are payable across our products.

Notwithstanding such settlement and other ongoing discussions, additional claims, reviews or investigations relating to our PBM business may still be brought by other states, the federal government or shareholder litigants, and there is no guarantee we will have the ability to settle such claims with other states within the reserve estimate we have recorded and on other acceptable terms, or at all.

Although our Value Creation Plan is designed to enable us to build upon our strong foundation and unlock value and drive margin expansion through various initiatives, including, without limitation, targeted SG&A initiatives; share repurchases; divestitures; refinancing activities; using data-driven and innovative approaches to enhance efficiency, lower costs, and drive better health outcomes for our members and providers; streamlining procurement and improving our bid process; and further scaling through standardization of our operating model and consolidation of our platform, these initiatives are subject to a variety of risks including, without limitation: anticipated benefits not being realized or not at the levels or on the timing anticipated; that implementation will be materially delayed or more difficult than expected; the diversion of management’s time and attention; and initiatives being more expensive to complete than anticipated, including as a result of unexpected factors or events.

In

We maintain a rigorous system of prevention and

In July 2021, Mr. Neidorff informally communicated to the board that he may decide for personal reasons to step down before the end of his contract, after which the board and Mr. Neidorff established a succession planning initiative to ensure a full continuity plan.

This succession planning process was discussed in the Company’s Preliminary Prospectus Supplement, filed July 29, 2021.

Subsequently, in December 2021, Mr. Neidorff communicated his intent to retire as Chief Executive Officer in 2022.

Mr. Neidorff will serve as Executive Chairman throughout the remainder of 2022, upon his retirement as Chief Executive Officer.

We anticipate this will require government agencies to find funding alternatives, which may result in

For example, we expect Medicaid eligibility redeterminations, which have been suspended during COVID, to begin in 2022, which we expect to reduce our membership.

It remains uncertain whether the current administration will propose changes to restrict these insurance plan options that are not required to meet ACA requirements, and what the impact of such potential changes may be.

In contrast to previous executive and legislative efforts to restrict or limit certain provisions of the ACA, the American Rescue Act, enacted on March 11, 2021, contained provisions aimed at leveraging Medicaid and the Health Insurance Marketplace to expand health insurance coverage and affordability to consumers.

The American Rescue Act authorized an additional $1.9 trillion in federal spending to address the COVID-19 public health emergency, and contained several provisions designed to increase coverage of certain healthcare services, expand eligibility and benefits, incentivize state Medicaid expansion, and adjust federal financing for state Medicaid programs, the ultimate impact of which remain uncertain.

The American Rescue Act enhanced eligibility for the advance premium tax credit for certain enrollees in the Health Insurance Marketplace currently expires on December 31, 2022, and if it is not extended, our Health Insurance Marketplace membership may be reduced.

For example, in March 2021, the State of Ohio filed a civil action against us.

The complaint alleged breaches of contract with the Ohio Department of Medicaid relating to the provision of PBM services and violations of Ohio law relating to such contracts, including among other things, by (i) seeking payment for services already reimbursed, (ii) not accurately disclosing to the Ohio Department of Medicaid the true cost of the PBM services and (iii) inflating dispensing fees for prescription drugs.

We have reached no-fault agreements with the Attorneys General of nine states, including Ohio, to resolve claims made by the states related to services provided by Envolve, our pharmacy benefits manager subsidiary.

As a result of the settlement, the Ohio Attorney General’s litigation against us was dismissed.

Additionally, we are in discussions to bring final resolution to these concerns in other affected states.

Consistent with those discussions, we recorded a reserve estimate of $1,250 million in the second quarter of 2021 related to this issue, inclusive of the above settlements and rebates that we determined in the course of the matter are payable across our products.

Notwithstanding such settlement and other ongoing discussions, additional claims, reviews or investigations relating to our PBM business may still be brought by other states, the federal government or shareholder litigants, and there is no guarantee we will have the ability to settle such claims with other states within the reserve estimate we have recorded and on other acceptable terms, or at all.

For example, in March 2021, the State of Ohio filed a civil action against us.

The complaint alleged breaches of contract with the Ohio Department of Medicaid relating to the provision of PBM services and violations of Ohio law relating to such contracts, including among other things, by (i) seeking payment for services already reimbursed, (ii) not accurately disclosing to the Ohio Department of Medicaid the true cost of the PBM services and (iii) inflating dispensing fees for prescription drugs.

We have reached no-fault agreements with the Attorneys General of nine states, including Ohio, to resolve claims made by the states related to services provided by Envolve, our pharmacy benefits manager subsidiary.

As a result of the settlement, the Ohio Attorney General’s litigation against us was dismissed.

Additionally, we are in discussions to bring final resolution to these concerns in other affected states.

In December 2019, a novel strain of coronavirus (COVID-19) emerged, which has now spread globally, including throughout the United States.

form of a single public or quasi-public agency that organizes healthcare financing, but under which healthcare delivery would remain private.

United States, which is currently pending before the Supreme Court.

For those regions in which we are within the de minimis range, we will not be eligible to have new members auto-assigned to us, but we will not lose our existing auto-assigned membership.

In addition, we are planning to further expand our business internationally and we will be subject to additional risks, including, but not limited to, political risk, an unfamiliar regulatory regime, currency exchange risk and exchange controls, cultural and language differences, foreign tax issues, and different labor laws and practices.

flexibility and control over medical cost trends may be adversely affected.

Even if the ACA is not amended or repealed under the current administration, a future administration or members of Congress could continue to propose changes impacting implementation of the ACA, which could materially and adversely affect our financial position or operations.

Arkansas was the first state to obtain federal approval to use Medicaid funding to purchase private insurance for low-income residents, and we began operations under the program beginning on January 1, 2014.

The ACA imposed HIF was $8.0 billion in 2014, and $11.3 billion in each of 2015 and 2016, with increasing annual amounts thereafter.

The HIF payable in 2017 was suspended by the Consolidated Appropriations Act for fiscal year 2016; however, a $14.3 billion payment occurred in 2018.

Collection of the HIF for 2019 was also suspended, but resumed in 2020 with a $15.5 billion payment.

If we are not reimbursed by the states for the cost of the HIF (including the associated tax impact), or if we are unable to otherwise adjust our business model to address the current assessment, our results of operations, financial position and cash flows may be materially adversely affected.

In December 2018, a partial summary judgment ruling in Texas v.

United States of America held that the ACA's individual mandate requirement was essential to the ACA, and without it, the remainder of the ACA was invalid (i.e., that it was not "severable" from the ACA).

That decision was appealed to the Fifth Circuit, which ruled in December 2019 that the individual mandate was unconstitutional after Congress set the individual mandate penalty to $0 and remanded the case to the district court for additional analysis on the question of severability.

In March 2020, the U.S. Supreme Court agreed to hear the case to review whether the individual mandate is constitutional and, if the individual mandate is unconstitutional, the severability issue.

In June 2020, Noel J.

Francisco, the then Solicitor General of the United States, together with multiple U.S. Department of Justice colleagues, submitted a brief to the U.S. Supreme Court supporting the argument that the individual mandate is unconstitutional and that the remaining provisions of the ACA are not severable.

The U.S. Supreme Court heard oral arguments in November 2020 and a ruling is anticipated in 2021.

The ACA remains in effect until judicial review of the decision is concluded.

CMS subsequently issued a Notice of Proposed Rulemaking on November 8, 2018, advancing CMS' efforts to streamline the Medicaid and CHIP managed care regulatory framework and to pursue a broader strategy to relieve regulatory burdens, support state flexibility and local leadership, and promote transparency, flexibility, and innovation in the delivery of care.

the authorization, compounding, packaging and distribution of pharmaceuticals and other healthcare products.

Due to the inherent uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any such proceedings.

An unfavorable outcome could have a material adverse impact on our business and financial position, results of operations and/or cash flows and may affect our reputation.

As of December 31, 2020, we had consolidated indebtedness of $16,779 million.

including our ability to incur additional indebtedness, create liens, pay dividends, make certain investments or other restricted payments, sell or otherwise dispose of substantially all of our assets and engage in other activities.

On July 27, 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021.

On November 30, 2020, ICE Benchmark Administration (IBA), the administrator of LIBOR, announced plans to consult on ceasing the publication of certain U.S. dollar LIBOR rates on December 31, 2021 and to extend the transition for other U.S. dollar LIBOR rates to June 2023.

The U.S. Federal Reserve concurrently issued a statement advising banks to stop new U.S. dollar LIBOR issuances by the end of 2021.

In light of these recent announcements, the future of LIBOR at this time is uncertain and any changes in the methods by which LIBOR is determined or regulatory activity related to the phasing out of LIBOR could cause LIBOR to perform differently than in the past or cease to exist.

The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S. financial institutions, announced replacement of U.S. dollar LIBOR with a new index calculated by short-term repurchase agreements, backed by U.S. Treasury securities called the Secured Overnight Financing Rate (SOFR).

The first publication of SOFR was released in April 2018.

Whether or not SOFR attains market traction as a LIBOR replacement tool remains in question and the future of LIBOR at this time is uncertain.

As a result, it is not possible to predict the effect of any changes, establishment of alternative references rates or other reforms to LIBOR that may be enacted in the U.K. or elsewhere.

The financing arrangements that we entered into in connection with the WellCare Acquisition may, under certain circumstances, contain restrictions and limitations that could significantly impact our ability to operate our business.

We incurred significant new indebtedness in connection with the WellCare Acquisition.

Certain of the agreements governing the indebtedness that we incurred in connection with the WellCare Acquisition contains covenants that, among other things, may, under certain circumstances, place limitations on the dollar amounts paid or other actions relating to:

- payments in respect of, or redemptions or acquisitions of, debt or equity issued by us or our subsidiaries, including the payment of dividends on our common stock;

- incurring additional indebtedness;

- incurring guarantee obligations;

The following discussion and analysis does not include certain items related to the year ended December 31, [removed: 2018,] [added: 2019,] including year-to-year comparisons between the year ended December 31, [removed: 2019] [added: 2020] and the year ended December 31, [removed: 2018.][added: 2019.]

For a comparison of our results of operations for the fiscal years ended December 31, [removed: 2019] [added: 2020] and December 31, [removed: 2018,] [added: 2019,] see Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, [removed: 2019,] [added: 2020,] filed with the SEC on February [removed: 18, 2020.*][added: 22, 2021.*]

The health benefits ratio (HBR) represents medical costs as a percentage of premium revenues, excluding premium tax and health insurer fee [added: (HIF)] revenues that are separately billed, and reflects the direct relationship between the premiums received and the medical services provided.

[removed: Our insurance subsidiaries are subject] [added: Prior] to [added: 2021, before] the Affordable Care Act [removed: annual] [added: (ACA)] health insurer fee [removed: (HIF), absent a HIF moratorium or repeal.][added: repeal was effected, our insurance subsidiaries were subject to the HIF.]

We [removed: recognize] [added: recognized] revenue for reimbursement of the HIF, including the "gross-up" to reflect the non-deductibility of the HIF.

Collectively, this revenue [removed: is] [added: was] recorded as premium tax and health insurer fee revenue in the Consolidated Statements of Operations.

For certain products, premium taxes, state assessments and the HIF [removed: are] [added: were] not pass-through payments and [removed: are] [added: were] recorded as premium revenue and premium tax expense or health insurer fee expense in the Consolidated Statements of Operations.

Due to the size of the health insurer fee, one of the primary drivers of the year-over-year variances discussed throughout this section is related to the [removed: reinstatement] [added: repeal] of the HIF in [removed: 2020.][added: 2021.]

On January [removed: 23, 2020,] [added: 4, 2022,] we acquired all of the issued and outstanding shares of [removed: WellCare Health Plans,] [added: Magellan Health,] Inc. [removed: (WellCare) (the WellCare Acquisition).][added: (Magellan).]

The WellCare Acquisition [removed: brought] [added: brings] a high-quality Medicare platform and further [removed: extended] [added: extends] our robust Medicaid offerings.

[removed: Due to the size of the acquisition,] [added: As a result,] one of the primary drivers of the year-over-year variances discussed throughout this section is related to [removed: the acquisition of WellCare.][added: COVID-19.]

[removed: Acquisitions][added: | Acquisitions | | | — | | | | | | 3,856 | | | | | | 59 | | |]

PANTHERx is one of the largest and fastest-growing specialty pharmacies in the United States [added: specializing in orphan drugs and treating rare diseases.]

PANTHERx and its management team [removed: will continue to] operate independently as part of our Envolve Pharmacy Solutions business [removed: unit, a total drug management program that includes integrated PBM services and specialty pharmacy solutions to millions of members throughout the United States.][added: unit.]

With this transaction, we [removed: will] [added: intend to] continue to digitize the administration of healthcare and accelerate [removed: innovation and modernization across the enterprise.][added: innovation.]

Apixio [removed: will remain] [added: remains] an operationally independent entity as part of our Health Care Enterprises [removed: group to continue] [added: group,] bringing value to its clients and the industry, while also realizing the benefits of enhanced scale.

The impact [added: of COVID-19] on our business in both the short-term and long-term is [removed: uncertain.][added: uncertain and difficult to predict.]

The outlook for [removed: 2021] [added: 2022] depends on future developments, including but not limited to: the length and severity of the outbreak (including new [removed: strains,] [added: variants,] which may be more contagious, more severe or less responsive to treatment or vaccines), the effectiveness of containment actions, [removed: and] the timing [removed: around the development] [added: and effectiveness] of [removed: treatments] [added: vaccinations] and [removed: distribution] [added: achievement] of [removed: vaccinations.][added: herd immunity, and the timing and rate at which members return to accessing healthcare.]

From March 31, 2020 through December 31, [removed: 2020,] [added: 2021,] our Medicaid membership has increased by [removed: 1.7] [added: 2.5] million [removed: members.][added: members (excluding the new North Carolina membership).]

[removed: The] [added: In addition, the] pandemic [removed: also] has [added: and continues to have] the potential to impact the administration of state and federal healthcare programs, premium rates and risk sharing mechanisms.

We continue to have active dialogues with our state [removed: partners.][added: partners to ensure our rates are actuarially sound.]

For additional information regarding regulatory trends and uncertainties, see Part I, Item 1 [removed: *"Business] [added: "*Business] - [removed: Regulation"*] [added: Regulation*"] and Item 1A, "*Risk Factors*."

[removed: 2020 Highlights][added: 2020:]

Our financial performance for [removed: 2020] [added: 2021] is summarized as follows:

- Year-end managed care membership of [removed: 25.5] [added: 26.6] million, an increase of [removed: 10.3] [added: 1.1] million members, or [removed: 67%] [added: 4%] over [removed: 2019.][added: 2020.]

- Total revenues of [removed: $111.1] [added: $126.0] billion, representing [removed: 49%] [added: 13%] growth year-over-year.

- HBR of [removed: 86.2%] [added: 87.8%] for [removed: 2020,] [added: 2021,] compared to [removed: 87.3%] [added: 86.2%] for [removed: 2019.][added: 2020.]

- SG&A expense ratio of [removed: 9.5%] [added: 8.6%] for [removed: 2020,] [added: 2021,] compared to [removed: 9.3%] [added: 9.5%] for [removed: 2019.][added: 2020.]

- Adjusted SG&A expense ratio of [removed: 8.9%] [added: 8.4%] for [removed: 2020,] [added: 2021,] compared to [removed: 9.2%] [added: 8.9%] for [removed: 2019.][added: 2020.]

- Diluted EPS of [removed: $3.12] [added: $2.28] for [removed: 2020,] [added: 2021,] compared to [removed: $3.14] [added: $3.12] for [removed: 2019.][added: 2020.]

- Adjusted Diluted EPS of [removed: $5.00] [added: $5.15] for [removed: 2020,] [added: 2021,] compared to [removed: $4.42] [added: $5.00] for [removed: 2019.][added: 2020.]

- Operating cash flows of [removed: $5.5] [added: $4.2] billion, or 3.1 times net earnings, for [removed: 2020.][added: 2021.]

| | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [added: 2019 | | |]

| GAAP diluted EPS attributable to Centene | | | $ | [removed: 3.12] [added: 2.28] | | | | | $ | [removed: 3.14] [added: 3.12] | | | | |

| Amortization of acquired intangible assets | | | [removed: 0.95] [added: 1.00] | | | | | | [removed: 0.47] [added: 0.95] | | | | | |

| Acquisition related expenses | | | [removed: 0.86] [added: 0.24] | | | | | | [removed: 0.19] [added: 0.86] | | | | | |

| Other adjustments (1) | | | [removed: 0.07] [added: 1.63] | | | | | | [removed: 0.62] [added: 0.07] | | | | | |

| Adjusted Diluted EPS | | | $ | [removed: 5.00] [added: 5.15] | | | | | $ | [removed: 4.42] [added: 5.00] | | | | |

[removed: - 2020 -] [added: (b)] gain related to the divestiture of certain products of our Illinois health plan of $104 million, or $0.10 per diluted share, net of [removed: an] income tax expense of $0.08; [removed: (b) non-cash impairment of our third-party care management software business of $72 million, or $0.10 per diluted share, net of an income tax benefit of $0.02;] and [removed: (c) debt extinguishment costs of $61 million, or $0.07 per diluted share, net of an income tax benefit of $0.04; and]

Total consideration for the acquisition was approximately $2.6 billion, consisting of $2.5 billion in cash ($95.00 per share) and an estimated $67 million related to the fair value replacement equity awards associated with pre-combination service.

The Magellan acquisition enables us to provide whole-health, integrated healthcare solutions to deliver better health outcomes at lower costs for complex, high-cost populations.

Acquisitions and Divestitures

In June 2019, we acquired 40% of Circle Health, one of the U.K.’s largest independent operators of hospitals.

The initial 40% investment was accounted for as an equity method investment.

In July 2021, we acquired the remaining 60% interest of Circle Health for $705 million.

Beginning in July 2021, we consolidate 100% of Circle Health.

One of the primary drivers of the year-over-year variances discussed throughout this section are related to the acquisitions of Circle Health and PANTHERx.

In December 2021, we sold a majority stake in U.S. Medical Management, LLC (USMM) and recognized a pre-tax gain of $150 million.

We believe this best positions USMM to expand its reach and impact while helping us to deliver on our Value

Creation Plan.

We used proceeds from the divestiture of USMM and cash on hand to repurchase 2.4 million shares of Centene common stock for $200 million.

Value Creation Plan

As introduced in June 2021, the Value Creation Plan is designed to drive margin expansion by leveraging our scale and generating sustainable profitable growth.

In order to execute the Value Creation Plan, we created the Value Creation Office, which includes members of executive leadership.

The three major pillars of the Value Creation Plan are: SG&A expense savings, gross margin expansion and strategic capital management.

The first pillar, SG&A expense savings, includes initiatives targeting improving productivity, driving efficiencies and reducing costs throughout the organization, including real estate optimization.

The second pillar, gross margin expansion, will be achieved through initiatives including bid discipline, clinical initiatives, quality improvement and pharmacy cost management.

The third pillar, strategic capital management, focuses on value-creating capital deployment activities such as share repurchases, portfolio optimization and debt and investment management.

In 2020, we saw significant decreases in traditional utilization as stay-at-home orders were put in place, partially offset by COVID-19 treatment costs.

As stay-at-home orders were lifted and vaccinations became available in 2021, utilization has returned in varying degrees.

In 2021, we launched several initiatives which encourage our health plan members, as well as all Americans, to receive the COVID-19 vaccine.

Medical utilization continues to lack consistency and will be influenced by the intensity of additional waves of the pandemic.

We continue to watch external trends closely, as COVID-19 costs could increase based upon macro trends.

New variants and additional waves of the pandemic could create new dynamics and uncertainties around our expectations.

2021 Highlights

- Premium and service revenues of $118.0 billion, representing 14% growth year-over-year.

| | | | 2021 | | | | | | 2020 | | | | | |

(a) legal settlement expense and related legal fees of $1,264 million, or $1.76 per diluted share, net of an income tax benefit of $0.38;

(b) debt extinguishment costs of $125 million, or $0.16 per diluted share, net of an income tax benefit of $0.05;

(c) severance costs due to a restructuring of $54 million, or $0.06 per diluted share, net of an income tax benefit of $0.03;

(d) a reduction to the previously reported gain due to the finalization of the working capital adjustment related to the divestiture of certain products of our Illinois health plan of $62 million, or $0.08 per diluted share, net of an income tax benefit of $0.02;

(e) non-cash gain related to the acquisition of the remaining 60% interest of Circle Health of $309 million, or $0.52 per diluted share, net of income tax expense of $0.00;

(f) non-cash impairment of our equity method investment in RxAdvance of $229 million, or $0.32 per diluted share, net of an income tax benefit of $0.07; and

(g) gain related to the divestiture of U.S. Medical Management (USMM) of $150 million, or $0.23 per diluted share, net of income tax expense of $0.02.

(a) debt extinguishment costs of $61 million, or $0.07 per diluted share, net of an income tax benefit of $0.04;

*•Circle Health.* In July 2021, we acquired the remaining interest in our equity method investment in Circle Health, one of the U.K.’s largest independent operators of hospitals.

*•Correctional.* In July 2021, Centurion commenced a contract with the Indiana Department of Corrections.

In October 2021, Centurion commenced a contract with the Idaho Department of Corrections.

In November 2021, Centurion commenced a contract with the Missouri Department of Corrections.

A moratorium suspended the HIF for the 2019 calendar year.

The HIF has been repealed beginning in 2021.

WellCare Acquisition

The transaction was valued at $19.6 billion, including the assumption of $1.95 billion of outstanding debt.

The combination enables us to provide access to more comprehensive and differentiated solutions across more markets with a continued focus on affordable, high-quality, culturally-sensitive healthcare services.

In January 2021, we announced that we entered into a definitive merger agreement under which we will acquire Magellan Health for $95.00 per share in cash for a total enterprise value of approximately $2.2 billion.

The transaction will broaden and deepen our whole health capabilities and establish a leading behavioral health platform.

The transaction is subject to clearance under the Hart-Scott Rodino Act, receipt of required state regulatory approvals, the approval of the definitive merger agreement by Magellan Health's stockholders and other customary closing conditions.

The transaction is not contingent upon financing.

We intend to fund the acquisition primarily through debt financing.

The transaction is expected to close in the second half of 2021.

We continued to execute on our growth strategy through acquisitions during 2020.

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specializing in orphan drugs and treating rare diseases.

To support our members, providers, employees and the communities we serve, we have taken several actions and made numerous investments related to the COVID-19 crisis.

We have extended coverage of COVID-19 screening, testing and treatment services for Medicaid, Medicare and Marketplace members and are waiving all associated member cost share amounts.

We are delivering new critical support to Safety Net providers, including Federally Qualified Healthcare Centers (FQHCs), behavioral health providers, and long-term service and support organizations.

We continue to address social determinants of health for vulnerable populations during the COVID-19 crisis with a commitment to research and investment in non-medical barriers to achieving quality health outcomes.

We developed initiatives designed to support the disability community affected by the pandemic.

We created a provider support program to assist our network providers who are seeking benefits from the Small Business Administration (SBA) through the CARES Act.

We established a Medical Reserve Leave policy to support clinical employees who want to join a medical reserve force and serve their communities during the COVID-19 pandemic.

We are providing additional employee benefits including waiving cost-sharing for COVID-19 related treatment, emergency paid sick leave, and one-time payments to employees in a small number of critical office functions.

We have taken significant steps to support our employees to protect their health and safety, while also ensuring that our business can continue to operate and that services continue without disruption.

We have implemented our business continuity plans and have taken actions to support our workforce.

We have transitioned the vast majority of our employees to work from home, allowing Centene to continue to operate at close to full capacity, while continuing to maintain our internal control framework.

As a result, we have experienced and expect continued incremental costs due to investments and actions we have already taken and continued efforts to protect our members, employees and communities we serve.

Medical utilization continues to normalize as elective procedures and other non-emergent care resume, consistent with our expectations.

We have experienced and continue to expect incremental COVID-19 costs as the outbreak continues to spread.

In addition, the pandemic has widespread economic impact, driving interest rate decreases and lowering our investment income.

The impact of all these items slightly benefited our 2020 results.

*•Arkansas.* In March 2019, our Arkansas subsidiary, Arkansas Total Care, assumed full-risk on a Medicaid special needs population comprised of people with high behavioral health needs and individuals with developmental/intellectual disabilities.

In July 2019, Centurion began operating under a contract to provide comprehensive healthcare services to inmates housed in Arizona's state prison system, and also began operating under a re-awarded contract to continue the provision of mental and dental health services to the Georgia Department of

Correction's state prison facilities.

In February 2019, Centurion began operating under a new contract to provide comprehensive healthcare services to detainees of the Metropolitan Detention Center located in Albuquerque, New Mexico.

- *Florida.* In December 2018, our Florida subsidiary, Sunshine Health, began providing physical and behavioral healthcare services through Florida's Statewide Medicaid Managed Care Program under its new five year contract which was implemented for all 11 regions by February 2019.

In January 2020, we expanded our offerings in the 2020 Health Insurance Marketplace in ten existing markets: Arizona, Florida, Georgia, Kansas, North Carolina, Ohio, South Carolina, Tennessee, Texas, and Washington.

- *HealthSmart.* In May 2019, we acquired HealthSmart, a third party administrator providing customizable and scalable health plan solutions for self-funded employers, universities and colleges, and Native American Tribal Enterprises.

Services include plan administration, care management and wellness programs, network, casualty claim, and pharmacy benefit solutions.

- *Iowa.* In July 2019, our Iowa subsidiary, Iowa Total Care, Inc., began operating under a new statewide contract for the IA Health Link Program.

*•Louisiana.* In January 2020, our Louisiana subsidiary, Louisiana HealthCare Connections, began operating under an emergency contract extension in response to protested contract awards.

As of December 31, [removed: 2020,] [added: 2021,] we had short-term investments of [removed: $1.6] [added: $1.5] billion and long-term investments of [removed: $13.9] [added: $15.1] billion, including restricted deposits of $1.1 billion.

Assuming a hypothetical and immediate 1% increase in market interest rates at December 31, [removed: 2020,] [added: 2021,] the fair value of our fixed income investments would decrease by approximately [removed: $319] [added: $365] million.

For a discussion of the interest rate risk that our investments are subject to, see "Risk Factors – [removed: *Our] [added: Our] investment portfolio may suffer losses which could materially and adversely affect our results of operations or [removed: liquidity.*"][added: liquidity."]

We have a foreign currency swap for a notional amount of $705 million with a creditworthy financial institution to manage foreign exchange risk related to a Great British Pound denominated note receivable from a consolidated international subsidiary.

As a result, the fair value of the swap varies with foreign exchange rate fluctuations.

Assuming a 1% increase in the Great British Pound to US Dollar foreign exchange rate at December 31, 2021, the fair value of our swap would decrease by approximately $7 million.

An increase in the US Dollar to Great British Pound foreign exchange rate decreases the fair value of the swap and conversely, a decrease in the foreign currency exchange rate increases the value.

The offsetting changes in fair value of the foreign currency swap and the remeasurement of the underlying intercompany note receivable were both recognized in investment and other income in the Consolidated Statements of Operations.

The Company does not hold or issue any derivative instruments for trading or speculative purposes.

[Table](#i472c0331253e47d58d9d1a966ac282de_7) [of Contents](#i472c0331253e47d58d9d1a966ac282de_7)

For the year ended December 31, [removed: 2020,] [added: 2021,] our Managed Care and Specialty Services segments accounted for [removed: 96%] [added: 95%] and [removed: 4%,] [added: 5%,] respectively, of our total external revenues.

Our membership totaled [removed: 25.5] [added: 26.6] million as of December 31, [removed: 2020.][added: 2021.]

For the year ended December 31, [removed: 2020,] [added: 2021,] our total revenues and net earnings attributable to Centene were [removed: $111.1] [added: $126.0] billion and [removed: $1.8] [added: $1.3] billion, respectively, and our total cash flow from operations was [removed: $5.5] [added: $4.2] billion.

On January [removed: 23, 2020,] [added: 4, 2022,] we acquired all of the issued and outstanding shares of [removed: WellCare Health Plans,] [added: Magellan Health,] Inc. [removed: (WellCare, and such acquisition, the WellCare Acquisition).][added: (Magellan) for a total purchase price of approximately $2.6 billion.]

Each state establishes its own eligibility standards, benefit packages, payment [added: rates and program administration within federal standards.]

The federal government paid [added: 90% of] the [removed: entire] costs for Medicaid Expansion coverage for newly eligible beneficiaries [removed: from 2014 through 2016, 95% of the costs] in [removed: 2017, 94% of the costs in 2018, 93% of the costs in 2019, and 90% of the costs in 2020.][added: 2021.]

[removed: ABD beneficiaries represent a] growing portion of all Medicaid recipients.

According to ADvancing States (formerly National Association of States United for Aging and Disabilities), as of [removed: November 2020,] [added: August 2021,] 25 states utilize some form of managed [removed: LTSS, up from eight in 2004.][added: LTSS.]

[added: As of the first quarter of 2020,] CMS estimated the total Medicaid market to be approximately [removed: $649] [added: $684] billion in [removed: 2020,] [added: 2021,] and estimates the market will grow to over $1.0 trillion by 2028.

Medicaid spending is estimated to have increased by [removed: 4.5%] [added: 5.5%] in [removed: 2020] [added: 2021] and is projected to increase at an average annual rate of [removed: 5.7%] [added: 5.8%] between [removed: 2020] [added: 2021] and 2028.

According to CMS, there were approximately [removed: 11.0] [added: 11.3] million dual-eligible enrollees in [removed: 2019.][added: 2020.]

The Medicare program provides [removed: health care] [added: healthcare] coverage primarily to individuals age 65 or older, as well as to individuals with certain disabilities.

Beginning with the 2014 Star ratings (calculated in 2013), Medicare Advantage plans [removed: are] [added: were] required to achieve a minimum of 4.0 Stars to qualify for a quality bonus payment.

CMS estimated the total Medicare market was approximately [removed: $859] [added: $923] billion in [removed: 2020,] [added: 2021,] and estimates the market will grow to approximately $1.6 trillion by 2028.

Medicare spending is estimated to have increased [removed: 7.2%] [added: 7.5%] in fiscal [removed: 2020] [added: 2021] and is projected to increase at an average annual rate of 7.7% between [removed: 2020] [added: 2021] and 2028.

We have contracted with CMS to serve as a plan [removed: sponsor,] [added: sponsor] offering stand-alone Medicare Part D PDP plans to Medicare-eligible beneficiaries.

States have the option of operating [added: their own Marketplace or partnering with the federal government.]

We have [removed: a growing] [added: an] international presence in [removed: Spain,] the United Kingdom [removed: (UK)] [added: (UK), Spain,] and Slovakia.

[removed: In] [added: Also, in] the UK, [removed: our subsidiaries,] [added: we have subsidiaries] operating as part of Operose Health Group, [removed: represent] [added: which includes AT Medics Holdings, representing] one of the largest provider networks in the country and [removed: deliver] [added: delivering] medical and community based services in the primary care sector of the National Health Service (NHS), which is the publicly funded, national healthcare system for England.

[removed: We also have a noncontrolling investment in] [added: In July 2021, we acquired] the [removed: UK] [added: remaining interest] in Circle [removed: Health Group,] [added: Health,] which includes BMI Healthcare and represents [added: one of] the UK’s largest independent hospital [removed: operator.][added: operators.]

[removed: *•Financial] [added: - *Financial] Strength and Scale.* We are a large healthcare enterprise with [removed: $111.1] [added: $126.0] billion in revenue and [removed: $5.5] [added: $4.2] billion in operating cash flow in [removed: 2020.][added: 2021.]

Our strong historical operating performance, size, and scale allow us to continue to [removed: grow, diversify and] invest in our businesses through [added: technology,] strategic [removed: acquisitions and investments in technology] [added: acquisitions,] and [removed: other] [added: key] resources that support our business, allowing us to navigate the changing healthcare landscape.

We are a leader in [added: many states, including in] the four largest Medicaid states.

We seek to continue to increase our Medicaid, Medicare and Health Insurance Marketplace membership through alliances with key providers, outreach efforts, development and implementation of community-specific products and [added: targeted] acquisitions.

Through the utilization of a multi-business line approach, [added: through products such as Ambetter Value,] we are able to improve the quality of care, improve outcomes, diversify our revenues and help control our medical costs.

- *Localized Approach with Centralized Support Infrastructure.* We take a localized approach to managing our subsidiaries, including provider and [added: certain] member services.

- *Managed care expertise in government subsidized programs.* Our expertise in [removed: Medicaid] [added: government-sponsored programs] has helped us establish and maintain strong relationships with our constituent communities of members, providers and state governments.

[added: We] provide access to services through local providers and staff that focus on the cultural norms of their individual communities.

To that end, systems and procedures have been designed to address community-specific challenges through outreach, [removed: education, transportation] [added: education] and other member support activities.

This is demonstrated through health plan [removed: accreditations] [added: accreditations, such as NCQA] and [added: Medicare Star ratings, and various] program awards.

[removed: While covered] [added: Covered] healthcare benefits vary from customer to customer and program to [removed: program, our health plans generally provide the following services:][added: program.]

[removed: - *Start] [added: *•Start] Smart for Your Baby,* or Start Smart, is our award winning prenatal and infant health program designed to increase the percentage of pregnant people receiving early prenatal care, reduce the incidence of low-birth-weight and pre-term babies, identify high-risk pregnancies, increase participation in the federal Women, Infant and Children program, prevent hospital admissions in the first year of life and increase well-child visits.

[removed: The] [added: *•The] Neonatal Admissions [removed: program] [added: Program*] is an extension of the Start Smart for Your Baby program with a focus on newborns who have a hospital stay longer than standard after delivery, including those with admissions to the Newborn Intensive Care Unit (NICU).

The program focuses on post-hospitalization [removed: outreach (PHO),] [added: outreach,] calls to members to verify they understand their discharge instructions, follow up with a Primary Care Physician (PCP), receive medication reconciliation, and, for the highest-risk members, [removed: are linked] [added: linking] with a Community Health Worker.

- *Chronic Conditions* aims to improve the health and quality of life for members with diabetes, asthma, chronic obstructive pulmonary disease (COPD), congestive heart [removed: failure (CHF),] [added: failure,] coronary artery [removed: disease (CAD),] [added: disease,] and/or hypertension.

[removed: - *Fluvention*] [added: *•Fluvention*] works to decrease the spread of the flu by increasing the number of members that receive a timely annual flu vaccination.

- *MemberConnections* is a community face-to-face outreach and education program designed to create a link between the member, provider and the care team to help identify potential challenges or risk elements to a member's health, such as [added: social needs,] nutritional challenges and health education gaps.

The topics of this series include how to manage asthma, [removed: Chronic Obstructive Pulmonary Disease (COPD),] [added: COPD,] diabetes, heart disease and HIV.

- *Promotores Health Network (PHN)* is a volunteer-driven community health network designed to improve the community's health through health education specific to health conditions impacting their [added: local] community and providing guidance and linkage to healthcare services and local resources.

- *OpiEnd* is a clinical program [added: with a 98% accuracy rate] designed to identify members at risk for an opioid abuse diagnosis based on a series of critical social and clinical indicators called the Opioid Risk Classification Algorithm (ORCA).

The Magellan acquisition enables Centene to provide whole-health, integrated healthcare solutions to deliver better health outcomes at lower costs for complex, high-cost populations.

ABD beneficiaries represent a

As previously disclosed, we are exploring strategic alternatives for our international business as part of our portfolio review.

We continue to design and deploy enhanced capabilities that we expect will streamline and digitize the member and provider experience, increase satisfaction and deliver administrative efficiencies.

In 2021, we served members in all 50 states through hundreds of product solutions and are constantly evaluating new opportunities for expansion.

- *Provider outreach and programs.* Our health plans have adopted a value-based approach where network providers are actively incentivized by provisions for additional payments to the providers or reimbursement from the providers based upon their performance in cost and quality measures.

Value-based collaboration with providers leads to improved quality outcomes and reduced administrative burden.

*•Member Access Campaign* is a nationwide effort focused on COVID-19 testing and vaccinations through events hosted by Centene health plans or their partners.

- *Neighborhood, Environment and Social Traits (NEST)* is a predictive model created by Centene, supported by artificial intelligence, using more than 200 geo-demographic characteristics as inputs that enables us to more proactively address risks and barriers to health that impact our members and the community as a whole, such as access to the COVID-19 vaccine and other necessary care.

This program has led to a 70% increase in the prediction of low birth weight babies resulting in reduced pregnancy complications, preterm deliveries and infant disease.

strategies for improvements in their patient panel outcomes.

We employ multiple strategies, including care coordination and complex case management, which are tailored to meet the individual needs of our members as well as address the unique health needs within the communities where we serve.

We promote local physician participation in quality improvement through physician committees chaired by local physician leaders.

The year-over-year increase in our Star quality ratings is primarily due to certain disaster relief provisions, which we do not expect to be applicable in future years.

As a result, we expect to experience a meaningful decrease to our Star ratings for the 2023 Star rating year, which impacts the 2024 bonus year.

We expect this to be followed by a subsequent increase to our Star ratings for the 2024 Star rating year, which impacts the 2025 bonus year.

We have announced our intention to transition Envolve Pharmacy Solutions from a pharmacy benefit manager to an enterprise center of excellence for our health plans, continuing standardization across clinical protocols and benefits administration.

outcomes.

- *Behavioral, Pharmacy and Specialty Health.* Magellan Health, which we acquired on January 4, 2022, provides carve-out management services for behavioral health, pharmacy, employee assistance plans and other areas of specialty healthcare including diagnostic imaging, musculoskeletal management, cardiac and physical medicine.

These services are provided through Magellan's comprehensive network of medical and behavioral health professionals, clinics, hospitals, skilled nursing facilities, home care agencies and ancillary service providers.

We issued an ESHG Report to the Community to communicate the value of our ESHG efforts in 2020; and in 2021, we issued a Task Force on Climate-related Financial Disclosures (TCFD) report outlining our governance structure, strategy, risks, opportunities, and metrics and target-setting related to managing climate change.

In December 2021, we issued our first Sustainability Accounting Standards Board (SASB) Index report aligned with the SASB Managed Care standard, providing meaningful sustainability information to our stakeholders.

The U.S. Supreme Court heard oral arguments in November 2020 and issued its decision in June 2021, ruling that the plaintiffs lacked standing to challenge the individual mandate provision, thus leaving the ACA in effect.

As of December 31, 2021, we had approximately 72,500 full-time equivalent (FTE) employees.

During fiscal 2021, the number of employees increased primarily due to the international expansion offset by the divestiture of USMM.

Our EIGs are key drivers of Centene's culture.

In 2021, our EIGs produced more than 250 development programs ranging from panel discussions to personal development workshops.

Centene's talent advisors, in partnership with hiring leaders, work to nurture a pipeline that connects us to a diverse workforce.

All of our talent advisors receive training to become Certified Diversity Recruiters and this past year, several participated in the Association of Talent Acquisition Professionals Diversity, Equity and Inclusion (DEI) Excellence Program.

The program empowers talent advisors to further their capabilities and bring DEI talent acquisition best practices into their respective organizations.

Centene keeps the health and well-being of our employees as one of the main driving factors of business decisions.

For nearly two years, our workforce has demonstrated resilience, courage, and leadership as we've navigated the pandemic and provided uninterrupted service to our members, with more than 90% of our workforce working from home.

In 2021, based on feedback from our employees, we enhanced our benefits to provide employees with permanent remote working options and enhanced hybrid working arrangements.

We also continued to offer the enhanced employee benefits implemented in 2020, such as: our Medical Reserve Leave policy; providing clinical staff paid leave and benefits for up to three months of volunteer service; additional paid leave for employees caring for a family or household member affected by COVID-19; covering screening, testing, treatment, and vaccination for COVID-19; and employees were offered up to a $1,000 discount to their health insurance premiums if they completed healthy behaviors, including receiving a COVID-19 vaccination.

Importantly, we continued to support employees with virtual programming focused on a variety of well-being topics and further developed our employee resource site to provide increased access to well-being resources.

compensation.

Centene is committed to developing a workforce who can thrive in the evolving world of work, enabling our organization to further accelerate growth, inclusivity, and innovation.

Through Centene University, we've designed learning and development at scale, using new digital tools, real-time virtual learnings and customized leadership development programs, accessible to all employees, in a modern learning environment.

Employees can explore more than 10,000 resources on a variety of leadership and skill development topics.

Additionally, in 2021, we further emphasized critical skills needed to future-ready our talent through our flagship leadership program, APEX.

In January 2021, we announced that we entered into a definitive merger agreement under which we will acquire Magellan Health for $95.00 per share in cash for a total enterprise value of approximately $2.2 billion.

The transaction, which was unanimously approved by the Boards of Directors of both companies, is expected to broaden and deepen our whole health capabilities and establish a leading behavioral health platform.

The transaction is subject to clearance under the Hart-Scott Rodino Act, receipt of required state regulatory approvals, the approval of the definitive merger agreement by Magellan Health's stockholders and other customary closing conditions.

The transaction is not contingent upon financing.

We intend to fund the acquisition primarily through debt financing.

The transaction is expected to close in the second half of 2021.

WellCare Acquisition

The transaction was valued at $19.6 billion, including the assumption of $1.95 billion of outstanding debt.

The WellCare Acquisition brought a high-quality Medicare platform and further extended our robust Medicaid offerings.

The WellCare Acquisition also enables us to provide access to more comprehensive and differentiated solutions across more markets with a continued focus on affordable, high-quality, culturally-sensitive healthcare services.

With the WellCare Acquisition, we further broadened our product offerings by adding a Medicare prescription drug plan to our existing business lines.

rates and program administration within federal standards.

Through our acquisition of WellCare in January 2020, we now offer stand-alone PDP to Medicare beneficiaries.

their own Marketplace or partnering with the federal government.

In 2020, we expanded our Health Insurance Marketplace footprints in several existing markets, and we completed the WellCare Acquisition, further expanding our scale and presence.

In addition, in 2019 a nationally recognized statistical rating organization raised our long-term issuer credit rating to an investment grade rating.

In 2020, we served members in all 50 states through approximately 450 product solutions.

We are constantly evaluating new opportunities for expansion both domestically and abroad.

We

- *Provider outreach and programs.* Our health plans have adopted a physician-driven approach where network providers are actively engaged in developing and implementing healthcare delivery policies and strategies.

We prepare provider comparisons on a severity adjusted basis.

This approach is designed to eliminate unnecessary costs, improve services to members and simplify the administrative burdens placed on providers.

- *Connections Plus* is a cell phone program developed for high-risk members who have limited or no safe and reliable access to telephone.

This program seeks to eliminate lack of safe, reliable access to a telephone as a barrier to coordinating care, thus reducing avoidable adverse events such as inappropriate emergency department utilization, hospital admissions and premature birth.

- *Outcomes Improvement Central (OIC)* is a highly collaborative initiative that empowers partners across the organization to develop evidence-based clinical programs to promote best practice information sharing, and to establish measurable outcomes for clinical studies.

The OIC also serves as a repository of enterprise pilots and programs intended to improve the members' health outcomes.

- *myStrength ("The health club for your mind")* is a web and mobile self-help resource to manage depression, anxiety, substance use, and chronic pain.

myStrength empowers members to be active participants in their journey to becoming and staying mentally and physically healthy.

burdens on our providers.

We employ strategies, including complex case management, which are adjusted for implementation in our individual markets by a system of physician committees chaired by local physician leaders.

This is achieved through a low cost strategy that helps optimize clients' pharmacy benefits.

management tools, mail order pharmacy services, home delivery services, analytics and clinical consulting and patient and physician intervention.

- *Home-Based Primary Care.* U.S. Medical Management (USMM) provides home-based primary care services for high acuity populations and participates as an Accountable Care Organization (ACO) through the CMS Medicare Shared Savings Program.

These themes were vital as executive leaders from across the enterprise completed an ESG assessment early in 2020.

In December 2020, we issued a Report to the Community to communicate the value of our ESHG efforts.

The Supreme Court heard oral arguments in November 2020 and a ruling is anticipated in 2021.

The ACA remains in effect until judicial review of the decision is concluded.

As of December 31, 2020, we had approximately 71,300 employees.

During fiscal 2020, the number of employees increased by approximately 14,700 or 26%, primarily due to the acquisition of WellCare in 2020.

rate was less than 10%, which is in line with the insurance industry standard benchmark, which is comprised of certain of our key competitors (AON Salary Increase and Turnover Study – Second Edition (September 2020)).

For the fiscal year ended December 31, [removed: 2020][added: 2021]

See the definitions of "large accelerated [removed: filer",] [added: filer,"] "accelerated [removed: filer",] [added: filer,"] "smaller reporting [removed: company",] [added: company,"] and "emerging growth company" in Rule 12b-2 of the Exchange Act.

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based upon the last reported sale price of the common stock on the New York Stock Exchange on June 30, [removed: 2020,] [added: 2021,] was [removed: $36.8] [added: $42.5] billion.

As of February [removed: 19, 2021,] [added: 18, 2022,] the registrant had [removed: 581,593,037] [added: 582,865,870] shares of common stock issued and outstanding.

Portions of the Proxy Statement for the registrant's [removed: 2021] [added: 2022] annual meeting of stockholders are incorporated by reference in Part III, Items 10, 11, 12, 13 and 14.

| Item 1. | | | | | | [removed: [Business](#i472c0331253e47d58d9d1a966ac282de_19)] [added: [Business](#iaaf57b6d82474148a2290f155fcc3e5b_22)] | | | [removed: [1](#i472c0331253e47d58d9d1a966ac282de_19)] [added: [1](#iaaf57b6d82474148a2290f155fcc3e5b_22)] | | |

| Item 1A. | | | | | | [Risk [removed: Factors](#i472c0331253e47d58d9d1a966ac282de_22)] [added: Factors](#iaaf57b6d82474148a2290f155fcc3e5b_25)] | | | [removed: [23](#i472c0331253e47d58d9d1a966ac282de_22)] [added: [23](#iaaf57b6d82474148a2290f155fcc3e5b_25)] | | |

| Item 1B. | | | | | | [Unresolved Staff [removed: Comments](#i472c0331253e47d58d9d1a966ac282de_25)] [added: Comments](#iaaf57b6d82474148a2290f155fcc3e5b_28)] | | | [removed: [38](#i472c0331253e47d58d9d1a966ac282de_25)] [added: [38](#iaaf57b6d82474148a2290f155fcc3e5b_28)] | | |

| Item 2. | | | | | | [removed: [Properties](#i472c0331253e47d58d9d1a966ac282de_28)] [added: [Properties](#iaaf57b6d82474148a2290f155fcc3e5b_31)] | | | [removed: [38](#i472c0331253e47d58d9d1a966ac282de_28)] [added: [38](#iaaf57b6d82474148a2290f155fcc3e5b_31)] | | |

| Item 3. | | | | | | [Legal [removed: Proceedings](#i472c0331253e47d58d9d1a966ac282de_31)] [added: Proceedings](#iaaf57b6d82474148a2290f155fcc3e5b_34)] | | | [removed: [38](#i472c0331253e47d58d9d1a966ac282de_31)] [added: [38](#iaaf57b6d82474148a2290f155fcc3e5b_34)] | | |

| Item 4. | | | | | | [Mine Safety [removed: Disclosures](#i472c0331253e47d58d9d1a966ac282de_34)] [added: Disclosures](#iaaf57b6d82474148a2290f155fcc3e5b_37)] | | | [removed: [38](#i472c0331253e47d58d9d1a966ac282de_34)] [added: [38](#iaaf57b6d82474148a2290f155fcc3e5b_37)] | | |

| Item 5. | | | | | | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#i472c0331253e47d58d9d1a966ac282de_40)] [added: Securities](#iaaf57b6d82474148a2290f155fcc3e5b_43)] | | | [removed: [39](#i472c0331253e47d58d9d1a966ac282de_40)] [added: [39](#iaaf57b6d82474148a2290f155fcc3e5b_43)] | | |

| Item 7. | | | | | | [Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i472c0331253e47d58d9d1a966ac282de_46)] [added: Operations](#iaaf57b6d82474148a2290f155fcc3e5b_52)] | | | [removed: [42](#i472c0331253e47d58d9d1a966ac282de_46)] [added: [42](#iaaf57b6d82474148a2290f155fcc3e5b_52)] | | |

| Item 7A. | | | | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#i472c0331253e47d58d9d1a966ac282de_73)] [added: Risk](#iaaf57b6d82474148a2290f155fcc3e5b_76)] | | | [removed: [62](#i472c0331253e47d58d9d1a966ac282de_73)] [added: [60](#iaaf57b6d82474148a2290f155fcc3e5b_76)] | | |

| Item 8. | | | | | | [Financial Statements and Supplementary [removed: Data](#i472c0331253e47d58d9d1a966ac282de_76)] [added: Data](#iaaf57b6d82474148a2290f155fcc3e5b_79)] | | | [removed: [63](#i472c0331253e47d58d9d1a966ac282de_76)] [added: [61](#iaaf57b6d82474148a2290f155fcc3e5b_79)] | | |

| Item 9. | | | | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#i472c0331253e47d58d9d1a966ac282de_196)] [added: Disclosure](#iaaf57b6d82474148a2290f155fcc3e5b_178)] | | | [removed: [104](#i472c0331253e47d58d9d1a966ac282de_196)] [added: [101](#iaaf57b6d82474148a2290f155fcc3e5b_178)] | | |

| Item 9A. | | | | | | [Controls and [removed: Procedures](#i472c0331253e47d58d9d1a966ac282de_199)] [added: Procedures](#iaaf57b6d82474148a2290f155fcc3e5b_181)] | | | [removed: [104](#i472c0331253e47d58d9d1a966ac282de_199)] [added: [101](#iaaf57b6d82474148a2290f155fcc3e5b_181)] | | |

| Item 9B. | | | | | | [Other [removed: Information](#i472c0331253e47d58d9d1a966ac282de_205)] [added: Information](#iaaf57b6d82474148a2290f155fcc3e5b_187)] | | | [removed: [106](#i472c0331253e47d58d9d1a966ac282de_205)] [added: [103](#iaaf57b6d82474148a2290f155fcc3e5b_187)] | | |

| Item 10. | | | | | | [Directors, Executive Officers and Corporate [removed: Governance](#i472c0331253e47d58d9d1a966ac282de_211)] [added: Governance](#iaaf57b6d82474148a2290f155fcc3e5b_193)] | | | [removed: [106](#i472c0331253e47d58d9d1a966ac282de_211)] [added: [103](#iaaf57b6d82474148a2290f155fcc3e5b_193)] | | |

| Item 11. | | | | | | [Executive [removed: Compensation](#i472c0331253e47d58d9d1a966ac282de_214)] [added: Compensation](#iaaf57b6d82474148a2290f155fcc3e5b_196)] | | | [removed: [106](#i472c0331253e47d58d9d1a966ac282de_214)] [added: [103](#iaaf57b6d82474148a2290f155fcc3e5b_196)] | | |

| Item 12. | | | | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i472c0331253e47d58d9d1a966ac282de_217)] [added: Matters](#iaaf57b6d82474148a2290f155fcc3e5b_199)] | | | [removed: [106](#i472c0331253e47d58d9d1a966ac282de_217)] [added: [103](#iaaf57b6d82474148a2290f155fcc3e5b_199)] | | |

| Item 13. | | | | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#i472c0331253e47d58d9d1a966ac282de_220)] [added: Independence](#iaaf57b6d82474148a2290f155fcc3e5b_202)] | | | [removed: [106](#i472c0331253e47d58d9d1a966ac282de_220)] [added: [103](#iaaf57b6d82474148a2290f155fcc3e5b_202)] | | |

| Item 14. | | | | | | [Principal Accountant Fees and [removed: Services](#i472c0331253e47d58d9d1a966ac282de_223)] [added: Services](#iaaf57b6d82474148a2290f155fcc3e5b_205)] | | | [removed: [106](#i472c0331253e47d58d9d1a966ac282de_223)] [added: [104](#iaaf57b6d82474148a2290f155fcc3e5b_205)] | | |

| Item 15. | | | | | | [Exhibits and Financial Statement [removed: Schedules](#i472c0331253e47d58d9d1a966ac282de_229)] [added: Schedules](#iaaf57b6d82474148a2290f155fcc3e5b_211)] | | | [removed: [107](#i472c0331253e47d58d9d1a966ac282de_226)] [added: [104](#iaaf57b6d82474148a2290f155fcc3e5b_208)] | | |

| Item 16. | | | | | | [Form 10-K [removed: Summary](#i472c0331253e47d58d9d1a966ac282de_232)] [added: Summary](#iaaf57b6d82474148a2290f155fcc3e5b_214)] | | | [removed: [112](#i472c0331253e47d58d9d1a966ac282de_232)] [added: [109](#iaaf57b6d82474148a2290f155fcc3e5b_214)] | | |

In particular, these statements include, without limitation, statements about our future operating or financial performance, market opportunity, [removed: growth] [added: value creation] strategy, competition, expected activities in completed and future acquisitions, including statements about the impact of our [removed: proposed] [added: recently completed] acquisition of Magellan Health (the Magellan Acquisition), [removed: our recently completed acquisition of WellCare Health Plans, Inc. (WellCare and such acquisition, the WellCare Acquisition),] other recent and future [removed: acquisitions,] [added: acquisitions and dispositions,] investments and the adequacy of our available cash resources.

- uncertainty as to the expected financial performance of the combined company following [added: the recent] completion of the Magellan Acquisition;

- the possibility that the expected synergies and value creation from the Magellan Acquisition or the WellCare Acquisition [added: (or other acquired businesses)] will not be realized, or will not be realized within the [removed: applicable] [added: respective] expected time periods;

- the risk that unexpected costs will be incurred in connection with the [removed: completion and/or] integration of the Magellan Acquisition or that the integration of Magellan Health will be more difficult or time consuming than [removed: expected;][added: expected, or similar risks from other acquisitions we may announce or complete from time to time;]

- a downgrade of the credit rating of our [removed: indebtedness, which could give rise to an obligation to redeem existing] indebtedness;

- disruption from the [removed: announcement, pendency and/or completion and/or] integration of the Magellan Acquisition or [added: from] the integration of the WellCare Acquisition, or similar risks from other acquisitions we may announce or complete from [added: time to time, including potential adverse reactions or changes to business relationships with customers, employees, suppliers or regulators, making it more difficult to maintain business and operational relationships;]

- 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 [removed: (ACA)] and the Health Care and Education Affordability Reconciliation [removed: Act, collectively] [added: Act (collectively] referred to as the [removed: ACA] [added: ACA)] and any regulations enacted thereunder that may result from changing political conditions, the new administration or judicial [removed: actions, including the ultimate outcome in "Texas v.][added: actions;]

- [removed: the possibility that the expected synergies] [added: timing] and [added: extent of benefits from strategic] value creation [removed: from acquired businesses,] [added: initiatives,] including [removed: businesses we may acquire in] the [removed: future,] [added: possibility that these initiatives] will not be [removed: realized,] [added: successful,] or will not be realized within the expected time [removed: period;][added: periods;]

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 [added: our] quarterly reports on Form 10-Q and current reports on Form 8-K.

[removed: The] [added: These] risks include, but are not limited to, the following, all of which are more fully described in Part 1, Item 1A "Risk [removed: Factors" section below.][added: Factors".]

- Our business could be [added: materially] adversely affected by the effects of widespread public health pandemics, such as [removed: the spread of] COVID-19;

- Failure to accurately estimate and price our medical expenses or effectively manage our medical costs or related administrative costs could [removed: negatively affect] [added: have a material adverse effect on] our results of operations, financial position and cash flows;

- Any failure to adequately price products offered or any reduction in products offered in the Health Insurance Marketplaces may have a [removed: negative impact] [added: material adverse effect] on our results of operations, financial position and cash [removed: flow;][added: flows;]

The results of our bids could [removed: materially affect] [added: have a material adverse effect on] our results of operations, financial condition and cash flows;

- Execution of our [removed: growth] [added: value creation] strategy may [removed: increase costs or liabilities, or] create disruptions in our business;

| Item 6. | | | | | | [Reserved](#iaaf57b6d82474148a2290f155fcc3e5b_46) | | | [41](#iaaf57b6d82474148a2290f155fcc3e5b_46) | | |

| Item 9C. | | | | | | [Disclosure Regarding Foreign Jurisdictions that Prevent Implications](#iaaf57b6d82474148a2290f155fcc3e5b_1934) | | | [103](#iaaf57b6d82474148a2290f155fcc3e5b_1934) | | |

| [Signatures](#iaaf57b6d82474148a2290f155fcc3e5b_217) | | | | | | | | | [110](#iaaf57b6d82474148a2290f155fcc3e5b_217) | | |

- the risk that the election of new directors, changes in senior management and inability to retain key personnel may create uncertainty or negatively impact our ability to execute quickly and effectively;

- the difficulty of predicting the timing or outcome of legal or regulatory proceedings or matters, including, but not limited to, our ability to resolve claims and/or allegations made by states with regard to past practices, including at Envolve Pharmacy Solutions, Inc. (Envolve), as our pharmacy benefits manager (PBM) subsidiary, within the reserve estimate we have recorded and on other acceptable terms, or at all, or whether additional claims, reviews or investigations relating to our PBM business will be brought by states, the federal government or shareholder litigants, or government investigations;

- Our business and results of operations may be materially adversely affected if we fail to manage and complete divestitures; and

2021:

(a) legal settlement expense and related legal fees of $1,264 million, or $1.76 per diluted share, net of an income tax benefit of $0.38;

(b) debt extinguishment costs of $125 million, or $0.16 per diluted share, net of an income tax benefit of $0.05;

(c) severance costs due to a restructuring of $54 million, or $0.06 per diluted share, net of an income tax benefit of $0.03;

(d) a reduction to the previously reported gain due to the finalization of the working capital adjustment related to the divestiture of certain products of our Illinois health plan of $62 million, or $0.08 per diluted share, net of an income tax benefit of $0.02;

(e) non-cash gain related to the acquisition of the remaining 60% interest of Circle Health of $309 million, or $0.52 per diluted share, net of income tax expense of $0.00;

(f) non-cash impairment of our equity method investment in RxAdvance of $229 million, or $0.32 per diluted share, net of an income tax benefit of $0.07; and

(g) gain related to the divestiture of U.S. Medical Management (USMM) of $150 million, or $0.23 per diluted share, net of income tax expense of $0.02.

2020:

(a) debt extinguishment costs of $61 million, or $0.07 per diluted share, net of an income tax benefit of $0.04;

(c) non-cash impairment of $72 million, or $0.10 per diluted share, net of an income tax benefit of $0.02.

2019:

(b) debt extinguishment costs of $30 million, or $0.05 per diluted share, net of an income tax benefit of $0.02.

| Less: | | | | | | | | | | | | | | | | | |

| Restructuring costs | | | 54 | | | | | | — | | | | | | — | | |

| Legal fees related to legal settlement | | | 14 | | | | | | — | | | | | | — | | |

| | | | | | | | | | | | |

| Item 6. | | | | | | [Removed and Reserved](#i472c0331253e47d58d9d1a966ac282de_2065) | | | [41](#i472c0331253e47d58d9d1a966ac282de_2065) | | |

| [Signatures](#i472c0331253e47d58d9d1a966ac282de_235) | | | | | | | | | [113](#i472c0331253e47d58d9d1a966ac282de_235) | | |

- the impact of COVID-19 on global markets, economic conditions, the healthcare industry and our results of operations and the response by governments and other third parties;

- the risk that regulatory or other approvals required for the Magellan Acquisition may be delayed or not obtained or are obtained subject to conditions that are not anticipated that could require the exertion of management's time and our resources or otherwise have an adverse effect on us;

- the risk that Magellan Health's stockholders do not approve the definitive merger agreement;

- the possibility that certain conditions to the consummation of the Magellan Acquisition will not be satisfied or completed on a timely basis and accordingly the Magellan Acquisition may not be consummated on a timely basis or at all;

- the exertion of management's time and our resources, and other expenses incurred and business changes required, in connection with complying with the undertakings in connection with any regulatory, governmental or third party consents or approvals for the Magellan Acquisition;

- the risk that potential litigation in connection with the Magellan Acquisition may affect the timing or occurrence of the Magellan Acquisition or result in significant costs of defense, indemnification and liability;

- the possibility that competing offers will be made to acquire Magellan Health;

- the inability to retain key personnel;

time to time, including potential adverse reactions or changes to business relationships with customers, employees, suppliers or regulators, making it more difficult to maintain business and operational relationships;

United States of America" regarding the constitutionality of the ACA;

- the difficulty of predicting the timing or outcome of pending or future legal and regulatory proceedings or government investigations;

- disruption caused by significant completed and pending acquisitions making it more difficult to maintain business and operational relationships;

- the risk that unexpected costs will be incurred in connection with the completion and/or integration of acquisition transactions;

- The financing arrangements that we entered into in connection with the WellCare Acquisition may, under certain circumstances, contain restrictions and limitations that could significantly impact our ability to operate our business;

- The merger with Magellan Health is subject to conditions, some or all of which may not be satisfied, or completed on a timely basis, if at all.

Failure to complete the merger with Magellan Health could have adverse effects on our business;

- Centene and Magellan Health may be targets of securities class action and derivative lawsuits that could result in substantial costs and may delay or prevent the Magellan Acquisition from being completed;

- Completion of the Magellan Acquisition may trigger change in control or other provisions in certain agreements to which Magellan Health or its subsidiaries are a party, which may have an adverse impact on the combined company’s business and results of operations; and

2018 - the impact of retroactive changes to the California minimum medical loss ratio (MLR) of $30 million of expense or $0.06 per diluted share, net of an income tax benefit of $0.02.

We own our corporate office headquarters buildings and land located in St. Louis, Missouri, which is used by each of our reportable [removed: segments.][added: segments, and we are in the process of completing our East coast headquarters in Charlotte, North Carolina.]

| | | | [removed: 2021] [added: 2022] Stock Price (through February [removed: 19, 2021)] [added: 18, 2022)] | | | | | | | | | | | | [removed: 2020] [added: 2021] Stock Price | | | | | | | | | | | | [removed: 2019] [added: 2020] Stock Price | | | | | | | | |

| First Quarter | | | $ | [removed: 70.26] [added: 86.81] | | | | | $ | [removed: 57.71] [added: 74.47] | | | | | $ | [removed: 68.64] [added: 70.26] | | | | | $ | [removed: 43.96] [added: 57.16] | | | | | $ | [removed: 69.25] [added: 68.64] | | | | | $ | [removed: 49.56] [added: 43.96] | |

| Second Quarter | | | | | | | | | | | | | | | [removed: 74.70] [added: 75.25] | | | | | | [removed: 53.83] [added: 59.33] | | | | | | [removed: 58.25] [added: 74.70] | | | | | | [removed: 45.44] [added: 53.83] | | |

| Third Quarter | | | | | | | | | | | | | | | [removed: 68.45] [added: 75.59] | | | | | | [removed: 53.60] [added: 59.67] | | | | | | [removed: 54.89] [added: 68.45] | | | | | | [removed: 42.77] [added: 53.60] | | |

| Fourth Quarter | | | | | | | | | | | | | | | [removed: 72.31] [added: 85.44] | | | | | | [removed: 57.56] [added: 60.81] | | | | | | [removed: 63.79] [added: 72.31] | | | | | | [removed: 41.62] [added: 57.56] | | |

As of February [removed: 19, 2021,] [added: 18, 2022,] there were [removed: 1,120] [added: 1,078] holders of record of our common stock.

During the [removed: first] [added: fourth] quarter of [removed: 2020,] [added: 2021,] we used proceeds from [removed: divestitures] [added: divestiture of U.S. Medical Management (USMM) and cash on hand] to repurchase [removed: 8.7] [added: 2.4] million shares of Centene common stock for [removed: $500] [added: $200] million through our stock repurchase program.

We have [removed: approximately 5.5] [added: $800] million [removed: available shares] remaining under the program for repurchases as of December 31, [removed: 2020.][added: 2021.]

| Issuer Purchases of Equity Securities Fourth Quarter [removed: 2020] [added: 2021] (shares in thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Period | | | | | | Total Number of Shares Purchased(1) | | | | | | Average Price Paid per Share | | | | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | | | | | [removed: Maximum Number] [added: Approximate $ Value] of [removed: Shares that] [added: Shares that] May Yet [removed: Be Purchased Under the] [added: Be Purchased Under the] Plans [removed: or Programs(2)] [added: or Programs (in millions)(2)] | | |

| (1) Shares [removed: acquired represent] [added: purchased through a publicly announced plan or program and] shares relinquished to the Company by certain employees for payment of taxes or option cost upon vesting of restricted stock units or option exercise. | | | | | | | | | | | | | | | | | | | | | | | | | | |

| (2) Our Board of Directors adopted a stock repurchase program which allows for repurchases of up to 14,160 thousand shares. [removed: A] [added: As of January 2021, a] remaining amount of 5,488 thousand shares [removed: are] [added: were] available under the program. [added: In February 2021, the Company's Board of Directors approved an increase in the Company's existing share repurchase program for its common stock. With the increase, the Company was authorized to repurchase up to $1.0 billion worth of shares of the Company's common stock, inclusive of the previously approved stock repurchase program. A remaining amount of $800 million is available under the program.] No duration has been placed on the repurchase program. | | | | | | | | | | | | | | | | | | | | | | | | | | |

The graph below compares the cumulative total stockholder return on our common stock for the period from December 31, [removed: 2015] [added: 2016] to December 31, [removed: 2020] [added: 2021] with the cumulative total return of the New York Stock Exchange Composite Index, the Standard & Poor's Supercomposite Managed Healthcare Index and the Standard & Poor's 500 over the same period.

The graph assumes an investment of $100 on December 31, [removed: 2015] [added: 2016] in our common stock (at the last reported sale price on such day), the New York Stock Exchange Composite Index, the Standard & Poor's Supercomposite Managed Healthcare Index, and the Standard & Poor's 500 and assumes the reinvestment of any dividends.

[removed: ][added: ]

| | | | [removed: 2015] [added: 2016] | | | | | | [removed: 2016] [added: 2017] | | | | | | [removed: 2017] [added: 2018] | | | | | | [removed: 2018] [added: 2019] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2020] [added: 2021] | | |

| New York Stock Exchange Composite Index | | | 100.00 | | | | | | [removed: 109.01] [added: 115.84] | | | | | | [removed: 126.28] [added: 102.87] | | | | | | [removed: 112.14] [added: 125.83] | | | | | | [removed: 137.16] [added: 131.36] | | | | | | [removed: 143.19] [added: 155.23] | | |

| Centene Corporation closing stock price | | | $ | [removed: 32.90] [added: 28.25] | | | | | $ | [removed: 28.25] [added: 50.44] | | | | | $ | [removed: 50.44] [added: 57.65] | | | | | $ | [removed: 57.65] [added: 62.87] | | | | | $ | [removed: 62.87] [added: 60.03] | | | | | $ | [removed: 60.03] [added: 82.40] | |

| Centene Corporation annual stockholder return | | | [removed: 26.7] [added: (14.1)] | | % | | | | [removed: (14.1)] [added: 78.5] | | % | | | | [removed: 78.5] [added: 14.3] | | % | | | | [removed: 14.3] [added: 9.1] | | % | | | | [removed: 9.1] [added: (4.5)] | | % | | | | [removed: (4.5)] [added: 37.3] | | % |

| October 1 – October 31, 2021 | | | | | | 3 | | | | | | $ | 64.90 | | | | | — | | | | | | $ | 1,000 | |

| November 1 – November 30, 2021 | | | | | | 2 | | | | | | 73.94 | | | | | | — | | | | | | 1,000 | | |

| December 1 – December 31, 2021 | | | | | | 3,012 | | | | | | 82.42 | | | | | | 2,402 | | | | | | 800 | | |

| Total | | | | | | 3,017 | | | | | | $ | 79.10 | | | | | 2,402 | | | | | | $ | 800 | |

| Centene Corporation | | | $ | 100.00 | | | | | $ | 178.55 | | | | | $ | 204.07 | | | | | $ | 222.55 | | | | | $ | 212.50 | | | | | $ | 291.68 | |

| S&P Supercomposite Managed Healthcare Index | | | 100.00 | | | | | | 142.26 | | | | | | 156.88 | | | | | | 186.13 | | | | | | 213.81 | | | | | | 296.76 | | |

| S&P 500 | | | 100.00 | | | | | | 119.42 | | | | | | 111.97 | | | | | | 144.31 | | | | | | 167.77 | | | | | | 212.89 | | |

In 2009, our Board of Directors extended our stock repurchase program.

The initial program authorized the repurchase of up to 6.7 million shares of our common stock from time to time on the open market or through privately negotiated transactions.

In October 2019, our Board of Directors approved a $500 million increase to our Company's stock repurchase program, based on the stock price at the close of the WellCare Acquisition.

| October 1 – October 31, 2020 | | | | | | 3 | | | | | | $ | 65.26 | | | | | — | | | | | | 5,488 | | |

| November 1 – November 30, 2020 | | | | | | 4 | | | | | | 64.40 | | | | | | — | | | | | | 5,488 | | |

| December 1 – December 31, 2020 | | | | | | 867 | | | | | | 61.04 | | | | | | — | | | | | | 5,488 | | |

| Total | | | | | | 874 | | | | | | $ | 61.07 | | | | | — | | | | | | 5,488 | | |

| Centene Corporation | | | $ | 100.00 | | | | | $ | 85.87 | | | | | $ | 153.31 | | | | | $ | 175.23 | | | | | $ | 191.09 | | | | | $ | 182.46 | |

| S&P Supercomposite Managed Healthcare Index | | | 100.00 | | | | | | 118.21 | | | | | | 168.16 | | | | | | 185.45 | | | | | | 220.03 | | | | | | 252.75 | | |

| S&P 500 | | | 100.00 | | | | | | 109.54 | | | | | | 130.81 | | | | | | 122.65 | | | | | | 158.07 | | | | | | 183.77 | | |

We have audited the accompanying consolidated balance sheets of Centene Corporation and subsidiaries (the Company) as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] the related consolidated statements of operations, comprehensive earnings, stockholders' equity, and cash flows for each of the years in the three‑year period ended December 31, [removed: 2020,] [added: 2021,] and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, [removed: 2020,] [added: 2021,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 22, [removed: 2021] [added: 2022] expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

As discussed in Note 8 to the consolidated financial statements, the balance at December 31, [removed: 2020] [added: 2021] was [removed: $12,438] [added: $14,243] million.

The final settlement of the December 31, [removed: 2020] [added: 2021] ACA risk adjustment accruals is scheduled to be determined by the Centers for Medicare and Medicaid Services (CMS) in June [removed: 2021,] [added: 2022,] based on data submitted by insurance companies through April [removed: 2021.][added: 2022.]

As discussed in Note 9, the Company recorded an estimated asset and liability (the ACA risk adjustment accruals) of [removed: $340] [added: $522] million, and [removed: $1,224] [added: $536] million, respectively at December 31, [removed: 2020.][added: 2021.]

| | | | December 31, [removed: 2020] [added: 2021] | | | | | | December 31, [removed: 2019] [added: 2020] | | |

| Cash and cash equivalents | | | $ | [added: 13,118 | | | | | $ |] 10,800 | | | | | $ | 12,123 | |

| Premium and trade receivables | | | [removed: 9,696] [added: 12,238] | | | | | | [removed: 6,247] [added: 9,696] | | |

| Short-term investments | | | [removed: 1,580] [added: 1,539] | | | | | | [removed: 863] [added: 1,580] | | |

| Other current assets | | | [removed: 1,317] [added: 1,602] | | | | | | [removed: 1,090] [added: 1,317] | | |

| Total current assets | | | [removed: 23,393] [added: 28,497] | | | | | | [removed: 20,323] [added: 23,393] | | |

| Long-term investments | | | [removed: 12,853] [added: 14,043] | | | | | | [removed: 7,717] [added: 12,853] | | |

| Restricted deposits | | | [removed: 1,060] [added: 1,068] | | | | | | [removed: 658] [added: 1,060] | | |

| Property, software and equipment, net | | | [removed: 2,774] [added: 3,391] | | | | | | [removed: 2,121] [added: 2,774] | | |

| Goodwill | | | [removed: 18,652] [added: 19,771] | | | | | | [removed: 6,863] [added: 18,652] | | |

| Intangible assets, net | | | [removed: 8,388] [added: 7,824] | | | | | | [removed: 2,063] [added: 8,388] | | |

| Other long-term assets | | | [removed: 1,599] [added: 3,781] | | | | | | [removed: 1,249] [added: 1,599] | | |

| Total assets | | | $ | [removed: 68,719] [added: 78,375] | | | | | $ | [removed: 40,994] [added: 68,719] | |

| Medical claims liability | | | $ | [removed: 12,438] [added: 14,243] | | | | | $ | [removed: 7,473] [added: 12,438] | |

| Accounts payable and accrued expenses | | | [removed: 7,069] [added: 8,493] | | | | | | [removed: 4,164] [added: 7,069] | | |

| Return of premium payable | | | [removed: 1,458] [added: 2,328] | | | | | | [removed: 824] [added: 1,458] | | |

| Unearned revenue | | | [removed: 523] [added: 434] | | | | | | [removed: 383] [added: 523] | | |

| Current portion of long-term debt | | | [removed: 97] [added: 14] | | | | | | [removed: 88] [added: —] | | |

| Total current liabilities | | | [removed: 21,585] [added: 25,765] | | | | | | [removed: 12,932] [added: 21,585] | | |

| Long-term debt | | | [removed: 16,682] [added: 18,571] | | | | | | [removed: 13,638] [added: 16,682] | | |

| Deferred tax liability | | | [removed: 1,534] [added: 1,407] | | | | | | [removed: 189] [added: 1,534] | | |

| Other long-term liabilities | | | [removed: 2,956] [added: 5,610] | | | | | | [removed: 1,543] [added: 2,956] | | |

| Total liabilities | | | [removed: 42,757] [added: 51,353] | | | | | | [removed: 28,302] [added: 42,757] | | |

| Redeemable noncontrolling interests | | | [removed: 77] [added: 82] | | | | | | [removed: 33] [added: 77] | | |

| Preferred stock, $0.001 par value; authorized 10,000 shares; no shares issued or outstanding at December 31, [removed: 2020] [added: 2021] and December 31, [removed: 2019] [added: 2020] | | | — | | | | | | — | | |

| Common stock, $0.001 par value; authorized 800,000 shares; [removed: 598,249] [added: 602,704] issued and [removed: 581,479] [added: 582,479] outstanding at December 31, [removed: 2020,] [added: 2021,] and [removed: 421,508] [added: 598,249] issued and [removed: 415,048] [added: 581,479] outstanding at December 31, [removed: 2019] [added: 2020] | | | 1 | | | | | | [removed: —] [added: 1] | | |

| Additional paid-in capital | | | [removed: 19,459] [added: 19,672] | | | | | | [removed: 7,647] [added: 19,459] | | |

| Accumulated other comprehensive earnings | | | [removed: 337] [added: 77] | | | | | | [removed: 134] [added: 337] | | |

| Retained earnings | | | [removed: 6,792] [added: 8,139] | | | | | | [removed: 4,984] [added: 6,792] | | |

| Treasury stock, at cost [removed: (16,770] [added: (20,225] and [removed: 6,460] [added: 16,770] shares, respectively) | | | [removed: (816)] [added: (1,094)] | | | | | | [removed: (214)] [added: (816)] | | |

| Total Centene stockholders' equity | | | [removed: 25,773] [added: 26,795] | | | | | | [removed: 12,551] [added: 25,773] | | |

| Noncontrolling interest | | | [removed: 112] [added: 145] | | | | | | [removed: 108] [added: 112] | | |

| Total stockholders' equity | | | [removed: 25,885] [added: 26,940] | | | | | | [removed: 12,659] [added: 25,885] | | |

| Total liabilities, redeemable noncontrolling interests and stockholders' equity | | | $ | [removed: 68,719] [added: 78,375] | | | | | $ | [removed: 40,994] [added: 68,719] | |

February 22, 2022

| Current portion of long-term debt | | | 267 | | | | | | 97 | | |

| Legal settlement | | | 1,250 | | | | | | — | | | | | | — | | |

| Common stock repurchases | | | (326) | | | | | | — | | | | | | (19) | | | | | | — | | | | | | — | | | | | | 3,455 | | | | | | (278) | | | | | | — | | | | | | (297) | | |

| Contribution from noncontrolling interest | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 46 | | | | | | 46 | | |

| Divestiture of noncontrolling interest | | | — | | | | | | — | | | | | | (9) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 5 | | | | | | (4) | | |

| Balance, December 31, 2021 | | | 602,704 | | | | | | $ | 1 | | | | | $ | 19,672 | | | | | $ | 77 | | | | | $ | 8,139 | | | | | 20,225 | | | | | | $ | (1,094) | | | | | $ | 145 | | | | | $ | 26,940 | |

| Net earnings | | | $ | 1,336 | | | | | $ | 1,794 | | | | | $ | 1,309 | |

| Gain on acquisition | | | (309) | | | | | | — | | | | | | — | | |

| Other adjustments, net | | | (11) | | | | | | — | | | | | | — | | |

- Foreign currency swap: Estimated based on Great British Pound to US Dollar foreign exchange rates.

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.

Generally, the risk score is

| | | | 2021 | | | | | | 2020 | | | | | | 2019 | | |

| Recoveries | | | (43) | | | | | | — | | | | | | — | | |

Further, other income (expense) includes gains or losses sales of investments, divestitures, and acquisitions as well as debt extinguishment costs.

Total consideration for the acquisition was approximately $2,566 million, consisting of $2,499 million in cash ($95.00 per share) and an estimated $67 million related to the fair value replacement equity awards associated with pre-combination service.

The acquisition of Magellan will be accounted for as a business combination using the acquisition method of accounting which requires assets acquired and liabilities assumed to be recognized at fair value as of the acquisition date.

The valuation of assets acquired and liabilities assumed has not yet been finalized.

Any necessary adjustments from preliminary estimates will be finalized within one year from the date of acquisition.

Measurement period adjustments will be recorded in the period in which they are determined, as if they had been completed at the acquisition date.

Due to the timing of the acquisition, the Company has performed limited valuation procedures, and the valuation of all assets acquired and liabilities assumed is not yet complete.

In 2021, the Company redeemed WellCare Health Plans, Inc.'s outstanding 5.375% Senior Notes due 2026 (together the 2026 Notes).

In 2021, the Company recorded a reduction to the previously reported gain due to the finalization of the working capital adjustment related to the divestiture of certain products of the Company's Illinois health plan of $62 million.

| Total | | | $ | 16,521 | | | | | $ | 243 | | | | | $ | (114) | | | | | $ | 16,650 | | | | | $ | 15,046 | | | | | $ | 465 | | | | | $ | (18) | | | | | $ | 15,493 | |

| Total | | | $ | (102) | | | | | $ | 7,602 | | | | | $ | (12) | | | | | $ | 331 | | | | | $ | (16) | | | | | $ | 1,699 | | | | | $ | (2) | | | | | $ | 144 | |

In June 2019, the Company acquired 40% of Circle Health, one of the U.K.’s largest independent operators of hospitals.

The initial 40% investment was accounted for as an equity method investment.

In July 2021, the Company acquired the remaining 60% interest of Circle Health for $705 million.

As a result of the acquisition, the Company recorded a non-cash gain of $309 million on its original investment in the twelve months ended December 31, 2021.

The gain was included in investment and other income on the Consolidated Statement of Operations.

Beginning in July 2021, the Company consolidates 100% of Circle Health.

In September 2021, the Company recorded a $229 million impairment of its equity method investment in RxAdvance, a pharmacy benefit manager.

During the third quarter, the Company made a strategic decision to transition from using the RxAdvance platform and consolidate its business on an alternative external platform as a result of the Company's focus on simplification of its pharmacy operations.

The impairment was based on the Company’s estimate of RxAdvance’s future cash flows and other market indicators of fair value.

| Total | | | $ | 14,350 | | | | | $ | 14,483 | | | | | $ | 1,072 | | | | | $ | 1,068 | | | | | $ | 12,666 | | | | | $ | 13,109 | | | | | $ | 1,056 | | | | | $ | 1,060 | |

| Short-term time deposits | | | — | | | | | | 109 | | | | | | — | | | | | | 109 | | |

| Equity securities | | | 324 | | | | | | 2 | | | | | | — | | | | | | 326 | | |

| Total investments | | | $ | 495 | | | | | $ | 14,314 | | | | | $ | — | | | | | $ | 14,809 | |

| U.S. Treasury securities and obligations of U.S. government corporations and agencies | | | 469 | | | | | | — | | | | | | — | | | | | | 469 | | |

*Evaluation of acquisition-date fair value of purchased contract rights and customer relationships intangible assets acquired in the WellCare Health Plans, Inc. business combination*

As discussed in Note 3 to the consolidated financial statements, the Company acquired WellCare Health Plans, Inc. (WellCare) in a business combination on January 23, 2020.

In connection with the transaction, the Company recorded purchased contract rights and customer relationships intangible assets associated with the generation of future income from WellCare’s existing contracts and customers.

The acquisition-date fair value for the purchased contract rights and customer relationships assets was $5,737 million.

We identified the evaluation of the acquisition-date fair value of purchased contract rights and customer relationships intangible assets acquired in the WellCare business combination as a critical audit matter.

There was a higher degree of

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auditor judgment involved in evaluating certain of management’s assumptions used in determining the fair value of these intangible assets.

Specifically, the assumptions for the contract renewal probabilities for Medicaid contracts and member attrition rates for Medicare and Prescription Drug Plans were challenging to assess as there was limited observable market information.

The determination of the fair value of the purchased contract rights and customer relationships assets was sensitive to possible changes in the assumptions used in the forecast for contract renewal probabilities and member attrition rates.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter.

This included controls related to the Company’s acquisition-date fair value process and the development of the relevant assumptions identified above.

We evaluated the estimated contract renewal probabilities for Medicaid contracts by comparing to the historical managed care contract renewal results of the Company and certain internal and external factors.

We evaluated the estimated member attrition rates for Medicare and Prescription Drug Plans by comparing to the historical Medicare and Prescription Drug Plans member attrition rates of WellCare.

We also compared the member attrition rates to previous acquisitions made by the Company and certain internal and external factors.

We performed sensitivity analyses over the contract renewal probabilities and member attrition rate assumptions to assess their impact on the Company’s determination of the fair value of the purchased contract rights and customer relationships assets.

We involved valuation professionals with specialized skills and knowledge, who compared the models used by the Company to calculate the contract renewal probabilities and member attrition rate assumptions to generally accepted valuation practices.

February 22, 2021

| Balance, December 31, 2017 | | | 360,758 | | | | | | $ | — | | | | | $ | 4,349 | | | | | $ | (3) | | | | | $ | 2,748 | | | | | 13,884 | | | | | | $ | (244) | | | | | $ | 14 | | | | | $ | 6,864 | |

| Common stock issued for acquisitions | | | — | | | | | | — | | | | | | 331 | | | | | | — | | | | | | — | | | | | | (9,787) | | | | | | 176 | | | | | | — | | | | | | 507 | | |

| Common stock issued for stock offering | | | 53,207 | | | | | | | | | | | | 2,779 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 2,779 | | |

| Cumulative-effect of adopting new accounting guidance | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 15 | | | | | | — | | | | | | — | | | | | | — | | | | | | 15 | | |

| Purchase of noncontrolling interest | | | — | | | | | | — | | | | | | (172) | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (15) | | | | | | (187) | | |

| Proceeds from the issuance of common stock | | | — | | | | | | — | | | | | | 2,779 | | |

The transaction was valued at approximately $19,555 million, including the assumption of $1,950 million of outstanding debt.

The WellCare Acquisition brought a high-quality Medicare platform and further extended the Company's robust Medicaid offerings.

The combination enables the Company to provide access to more comprehensive and differentiated solutions across more markets with a continued focus on affordable, high-quality, culturally-sensitive healthcare services.

plans, premiums received from its members and the Centers for Medicare and Medicaid Services (CMS) for its Medicare product, and premiums from members of its commercial health plans.

In June 2016, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) which changes how entities measure credit losses for most financial assets and certain other investments that are not measured at fair value through net income.

The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations.

The amended guidance requires the measurement of all expected credit losses for financial assets (or groups of financial assets) and available-for-sale debt securities held at the reporting date over the remaining life based on historical experience, current conditions, and reasonable and supportable forecasts.

The guidance is effective for annual and interim periods beginning after December 15, 2019.

The Company adopted the new guidance in the first quarter of 2020.

The majority of the Company’s receivables and other financial instruments are with government entities and, therefore, the adoption did not have a material impact on its receivables and other financial instruments.

The Company evaluated its investment portfolio under the new available-for-sale debt securities impairment model guidance.

The vast majority of the Company’s investment portfolio are low risk, investment grade securities.

The impact of the Company's evaluation of the investment portfolio resulted in an immaterial decrease to retained earnings at January 1, 2020.

The Company evaluates available-for-sale debt securities on a regular basis and records an allowance for credit losses, if necessary.

The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods.

Evaluation of Disclosure Controls and Procedures - Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, [removed: 2020.][added: 2021.]

Based on the evaluation of our disclosure controls and procedures as of December 31, [removed: 2020,] [added: 2021,] our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were [removed: effective at the reasonable assurance level.][added: effective.]

Based on our evaluation under the framework in *Internal Control - Integrated Framework (2013)*, our management concluded that our internal control over financial reporting was effective at the reasonable assurance level as of December 31, [removed: 2020.][added: 2021.]

Our management's assessment of the effectiveness of our internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included herein.

We have audited Centene Corporation and subsidiaries' (the Company) internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] the related consolidated statements of operations, comprehensive earnings, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, [removed: 2020,] [added: 2021,] and the related notes (collectively, the consolidated financial statements), and our report dated February 22, [removed: 2021] [added: 2022] expressed an unqualified opinion on those consolidated financial statements.

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 year ended December 31, 2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

February 22, 2022

Changes in Internal Control Over Financial Reporting \- On January 23, 2020, we acquired WellCare.

Management has finalized our evaluation of the internal controls and has integrated WellCare's internal controls over financial reporting with our existing internal controls over financial reporting.

This integration has led to changes in the internal controls over financial reporting for us and the acquired WellCare business.

We have not experienced any material impact to our internal controls over financial reporting even though our global workforce continues to primarily work-from-home due to COVID-19.

We are continually monitoring and assessing the COVID-19 situation and its impact on our internal controls.

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February 22, 2021

PART III

Not applicable

PART III

Information concerning our directors will appear in our Proxy Statement for our [removed: 2021] [added: 2022] annual meeting of stockholders under "Proposal One: Election of Directors." This portion of the Proxy Statement is incorporated herein by reference.

Pursuant to General Instruction G(3) to Form 10-K and the Instruction to Item [removed: 401of] [added: 401 of] Regulation S-K, information regarding our executive officers is provided in Item 1 of Part I of this Annual Report on Form 10-K under the caption "Information about our Executive Officers."

Information concerning our executive officers' compliance with Section 16(a) of the Exchange Act will appear in our Proxy Statement for our [removed: 2021] [added: 2022] annual meeting of stockholders under "Delinquent Section 16(a) [removed: Reports,] [added: Reports",] if [removed: applicable."][added: applicable.]

Information concerning certain corporate governance matters will appear in our Proxy Statement for our [removed: 2021] [added: 2022] annual meeting of stockholders under "Corporate Governance and Risk Management." These portions of our Proxy Statement are incorporated herein by reference.

Information concerning our audit committee financial expert and identification of our audit committee will appear in our Proxy Statement for our [removed: 2021] [added: 2022] annual meeting of stockholders under "Board of Directors Committees." Information concerning our code of ethics will appear in our Proxy Statement for our [removed: 2021] [added: 2022] annual meeting of stockholders under "Corporate Governance and Risk Management." These portions of our Proxy Statement are incorporated herein by reference.

Information concerning executive compensation will appear in our Proxy Statement for our [removed: 2021] [added: 2022] Annual Meeting of Stockholders under "Information About Executive Compensation." Information concerning Compensation Committee interlocks and insider participation will appear in the Proxy Statement for our [removed: 2021] [added: 2022] Annual Meeting of Stockholders under "Compensation Committee Interlocks and Insider Participation." These portions of the Proxy Statement are incorporated herein by reference.

Information concerning the security ownership of certain beneficial owners and management and our equity compensation plans will appear in our Proxy Statement for our [removed: 2021] [added: 2022] annual meeting of stockholders under "Information About Stock Ownership" and "Equity Compensation Plan Information." These portions of the Proxy Statement are incorporated herein by reference.

Information concerning director independence, certain relationships and related transactions will appear in our Proxy Statement for our [removed: 2021] [added: 2022] annual meeting of stockholders under "Corporate Governance and Risk Management," "Director Independence" and "Related Party Transactions." These portions of our Proxy Statement are incorporated herein by reference.

Information concerning principal accountant fees and services will appear in our Proxy Statement for our [removed: 2021] [added: 2022] annual meeting of stockholders under "Proposal Three: Ratification of Appointment of Independent Registered Public Accounting Firm." This portion of our Proxy Statement is incorporated herein by reference.

Our independent registered public accounting firm is KPMG LLP, St. Louis, MO.

The Auditor Firm ID is 185.

[Table](#i472c0331253e47d58d9d1a966ac282de_7) [of Contents](#i472c0331253e47d58d9d1a966ac282de_7)

Consolidated Balance Sheets as of December 31, [removed: 2020] [added: 2021] and [removed: 2019][added: 2020]

Consolidated Statements of Operations for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018][added: 2019]

Consolidated Statements of Comprehensive Earnings for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018][added: 2019]

Consolidated Statements of Stockholders' Equity for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018][added: 2019]

Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018][added: 2019]

| | | | | | | | | | | | | | | | | | | INCORPORATED BY REFERENCE [removed: 1] | | | | | | | | | | | | | | |

| 2.1 | | | | | | [Agreement and Plan of Merger, dated as of March 26, 2019, by and among Centene Corporation, Wellington Merger Sub I, Inc., Wellington Merger Sub II, Inc., and WellCare Health Plans, [removed: Inc](http://www.sec.gov/Archives/edgar/data/1071739/000119312519087588/d612092dex21.htm)[.](http://www.sec.gov/Archives/edgar/data/1071739/000119312519087588/d612092dex21.htm)] [added: Inc.](http://www.sec.gov/Archives/edgar/data/1071739/000119312519087588/d612092dex21.htm)] | | | | | | | | | | | | 8-K | | | | | | March 27, 2019 | | | | | | 2.1 | | |

| 3.2 | | | | | | [By-laws of Centene Corporation, as amended and restated effective as of [removed: October 22, 2019](http://www.sec.gov/Archives/edgar/data/1071739/000107173919000109/exhibit3120191022.htm)] [added: December 14, 2021](https://www.sec.gov/Archives/edgar/data/1071739/000114036121041462/brhc10031842_ex3-1.htm)] | | | | | | | | | | | | 8-K | | | | | | [removed: October 22, 2019] [added: December 14, 2021] | | | | | | 3.1 | | |

| 4.1 | | | | | | [Description of Securities of the [removed: Company](https://www.sec.gov/Archives/edgar/data/1071739/000107173920000060/exhibit412019123110-k.htm)] [added: Company](https://www.sec.gov/Archives/edgar/data/1071739/000107173922000071/a2021123110-kexhibit41.htm)] | | | | | | [added: X] | | | | | | [removed: 10-K] | | | | | | [removed: February 18, 2020] | | | | | | [removed: 4.1] | | |

| 4.2 | | | | | | [Indenture, dated [removed: November 9, 2016, among] [added: as of December 6, 2019, by and between] Centene [removed: Escrow Corporation] [added: Corporation, as issuer,] and The Bank of New York Mellon Trust Company, N.A., [added: as trustee,] relating to the Company’s [removed: 4.75%] [added: 4.25%] Senior Notes due [removed: 2025] [added: 2027] (including [added: the] Form of Global Note [removed: as Exhibit A thereto)](http://www.sec.gov/Archives/edgar/data/1071739/000119312516764433/d276112dex41.htm)] [added: attached thereto)](https://www.sec.gov/Archives/edgar/data/1071739/000114036119022065/nc10006710x1_ex4-2.htm)] | | | | | | | | | | | | 8-K | | | | | | [removed: November 9, 2016] [added: December 6, 2019] | | | | | | [removed: 4.1] [added: 4.2] | | |

| 4.3 | | | | | | [Indenture, dated as of [removed: May 23, 2018,] [added: December 6, 2019,] by and between Centene [removed: Escrow I] Corporation, as issuer, and The Bank of New York Mellon Trust Company, N.A., as trustee, relating to the [removed: Company's 5.375%] [added: Company’s 4.625%] Senior Notes due [removed: 2026] [added: 2029] (including [added: the] Form of Global Note attached [removed: thereto)](http://www.sec.gov/Archives/edgar/data/1071739/000119312518172209/d510424dex41.htm)] [added: thereto)](https://www.sec.gov/Archives/edgar/data/1071739/000114036119022065/nc10006710x1_ex4-3.htm)] | | | | | | | | | | | | 8-K | | | | | | [removed: May 23, 2018] [added: December 6, 2019] | | | | | | [removed: 4.1] [added: 4.3] | | |

| [removed: 4.4] [added: 4.6] | | | | | | [First Supplemental Indenture, dated as of [removed: July 1, 2018, by and] [added: October 7, 2020,] between [removed: Centene Corporation] [added: the Company] and The Bank of New York Mellon Trust Company, N.A., as [removed: Trustee](http://www.sec.gov/Archives/edgar/data/1071739/000119312518211166/d864570dex42.htm)] [added: trustee](https://www.sec.gov/Archives/edgar/data/1071739/000114036120022652/brhc10015782_ex4-2.htm)] | | | | | | | | | | | | 8-K | | | | | | [removed: July 2, 2018] [added: October 7, 2020] | | | | | | 4.2 | | |

| [removed: 4.5] [added: 4.4] | | | | | | [Indenture, dated as of [removed: December 6, 2019,] [added: February 13, 2020,] by and between Centene Corporation, as issuer, and The Bank of New York Mellon Trust Company, N.A., as trustee, relating to the [removed: Company’s 4.75%] [added: Company's 3.375%] Senior Notes due [removed: 2025] [added: 2030] (including the Form of Global Note attached [removed: thereto)](https://www.sec.gov/Archives/edgar/data/1071739/000114036119022065/nc10006710x1_ex4-1.htm)] [added: thereto)](https://www.sec.gov/Archives/edgar/data/1071739/000114036120003140/nc10008630x1_ex4-1.htm)] | | | | | | | | | | | | 8-K | | | | | | [removed: December 6, 2019] [added: February 13, 2020] | | | | | | 4.1 | | |

| [removed: 4.6] [added: 4.7] | | | | | | [removed: [Indenture,] [added: [Second Supplemental Indenture,] dated as of [removed: December 6, 2019, by and] [added: February 17, 2021,] between [removed: Centene Corporation, as issuer,] [added: the Company] and The Bank of New York Mellon Trust Company, N.A., as [removed: trustee, relating to the Company’s 4.25% Senior Notes due 2027 (including the Form of Global Note attached thereto)](https://www.sec.gov/Archives/edgar/data/1071739/000114036119022065/nc10006710x1_ex4-2.htm)] [added: trustee](https://www.sec.gov/Archives/edgar/data/1071739/000114036121005231/nt10019947x5_ex4-2.htm)] | | | | | | | | | | | | 8-K | | | | | | [removed: December 6, 2019] [added: February 17, 2021] | | | | | | 4.2 | | |

| [removed: 4.7] [added: 4.5] | | | | | | [removed: [Indenture,] [added: [Base Indenture,] dated as of [removed: December 6, 2019, by and] [added: October 7, 2020,] between [removed: Centene Corporation, as issuer,] [added: the Company] and The Bank of New York Mellon Trust Company, N.A., as [removed: trustee, relating to the Company’s 4.625% Senior Notes due 2029 (including the Form of Global Note attached thereto)](https://www.sec.gov/Archives/edgar/data/1071739/000114036119022065/nc10006710x1_ex4-3.htm)] [added: trustee](https://www.sec.gov/Archives/edgar/data/1071739/000114036120022652/brhc10015782_ex4-1.htm)] | | | | | | | | | | | | 8-K | | | | | | [removed: December 6, 2019] [added: October 7, 2020] | | | | | | [removed: 4.3] [added: 4.1] | | |

| 4.8 | | | | | | [removed: [Indenture,] [added: [Third Supplemental Indenture,] dated as of [removed: January 23, 2020, by and] [added: July 1, 2021,] between [removed: Centene Corporation, as issuer,] [added: the Company] and The Bank of New York Mellon Trust Company, N.A., as [removed: trustee, relating to the Company’s 5.375% Senior Notes due 2026 (including the Form of Global Note attached thereto)](https://www.sec.gov/Archives/edgar/data/1071739/000114036120001310/ex4_2.htm)] [added: trustee](https://www.sec.gov/Archives/edgar/data/0001071739/000114036121023163/nt10023682x6_ex4-2.htm)] | | | | | | | | | | | | 8-K | | | | | | [removed: January 23, 2020] [added: July 1, 2021] | | | | | | 4.2 | | |

| [removed: 4.10] [added: 4.9] | | | | | | [removed: [Base] [added: [Fourth Supplemental] Indenture, dated as of [removed: October 7, 2020,] [added: August 12, 2021,] between the Company and The Bank of New York Mellon Trust Company, N.A., as [removed: trustee](https://www.sec.gov/Archives/edgar/data/1071739/000114036120022652/brhc10015782_ex4-1.htm)] [added: trustee](https://www.sec.gov/ix?doc=/Archives/edgar/data/1071739/000107173921000226/cnc-20210930.htm)] | | | | | | | | | | | | 8-K | | | | | | [removed: October 7, 2020] [added: August 12, 2021] | | | | | | [removed: 4.1] [added: 4.4] | | |

| 10.3 | | | * | | | [removed: [2012] [added: [Centene Corporation 2012] Stock Incentive [removed: plan,] [added: Plan,] as [removed: Amended](http://www.sec.gov/Archives/edgar/data/1071739/000107173917000037/exhibit101.htm)] [added: amended](https://www.sec.gov/Archives/edgar/data/0001071739/000107173921000121/a20210430exhibit101.htm)] | | | | | | | | | | | | 8-K | | | | | | April [removed: 27, 2017] [added: 30, 2021] | | | | | | 10.1 | | |

| 10.6 | | | * | | | [removed: [C](https://www.sec.gov/Archives/edgar/data/1071739/000107173921000039/a2020123110-kexhibit106.htm)[entene] [added: [Centene] Corporation 2007 Long-Term Incentive [removed: Plan](https://www.sec.gov/Archives/edgar/data/1071739/000107173921000039/a2020123110-kexhibit106.htm)[,](https://www.sec.gov/Archives/edgar/data/1071739/000107173921000039/a2020123110-kexhibit106.htm) [as] [added: Plan, as] Amended](https://www.sec.gov/Archives/edgar/data/1071739/000107173921000039/a2020123110-kexhibit106.htm) | | | | | | [removed: X] | | | | | | [added: 10-K] | | | | | | [added: February 22, 2021] | | | | | | [added: 10.6] | | |

| 10.8 | | | * | | | [Executive Employment Agreement between Centene Corporation and Michael [removed: F.](http://www.sec.gov/Archives/edgar/data/1071739/000119312504189970/dex101.htm) [Neidorff,] [added: F. Neidorff,] dated November 8, 2004](http://www.sec.gov/Archives/edgar/data/1071739/000119312504189970/dex101.htm) | | | | | | | | | | | | 8-K | | | | | | November 9, 2004 | | | | | | 10.1 | | |

| 10.11 | | | * | | | [Form of Non-statutory Stock Option Agreement (Employees) [removed: #](https://www.sec.gov/Archives/edgar/data/1071739/000107173921000039/a2020123110-kexhibit1011.htm)[2](https://www.sec.gov/Archives/edgar/data/1071739/000107173921000039/a2020123110-kexhibit1011.htm)] [added: #2](https://www.sec.gov/Archives/edgar/data/1071739/000107173921000039/a2020123110-kexhibit1011.htm)] | | | | | | [removed: X] | | | | | | [added: 10-K] | | | | | | [added: February 22, 2021] | | | | | | [added: 10.11] | | |

| [removed: 10.12] [added: 10.13] | | | * | | | [Form of Non-statutory Stock Option Agreement (Directors)](http://www.sec.gov/Archives/edgar/data/1071739/000107173909000007/exhibit1018.htm) | | | | | | | | | | | | 10-K | | | | | | February 23, 2009 | | | | | | 10.18 | | |

| [removed: 10.13] [added: 10.14] | | | * | | | [Form of Incentive Stock Option Agreement](http://www.sec.gov/Archives/edgar/data/1071739/000107173908000034/exhibit106.htm) | | | | | | | | | | | | 10-Q | | | | | | October 28, 2008 | | | | | | 10.6 | | |

| [removed: 10.14] [added: 10.15] | | | * | | | [Form of Restricted Stock Unit Agreement #1](http://www.sec.gov/Archives/edgar/data/1071739/000107173917000018/exhibit1020.htm) | | | | | | | | | | | | 10-K | | | | | | February 21, 2017 | | | | | | 10.20 | | |

| [removed: 10.15] [added: 10.16] | | | * | | | [Form of Restricted Stock Unit Agreement [removed: #](https://www.sec.gov/Archives/edgar/data/1071739/000107173920000281/a20201215-exhibit101.htm)[2](https://www.sec.gov/Archives/edgar/data/1071739/000107173920000281/a20201215-exhibit101.htm) [(under] [added: #2 (under] the 2012 Stock Incentive Plan, As Amended)](https://www.sec.gov/Archives/edgar/data/1071739/000107173920000281/a20201215-exhibit101.htm) | | | | | | | | | | | | 8-K | | | | | | December 21, 2020 | | | | | | 10.1 | | |

| [removed: 10.16] [added: 10.17] | | | * | | | [Form of Performance Based Restricted Stock Unit Agreement #1](http://www.sec.gov/Archives/edgar/data/1071739/000107173917000018/exhibit1023.htm) | | | | | | | | | | | | 10-K | | | | | | February 21, 2017 | | | | | | 10.23 | | |

| [removed: 10.17] [added: 10.18] | | | * | | | [Form of Performance Based Restricted Stock Unit Agreement #2 (under the 2012 Stock Incentive Plan, As Amended)](https://www.sec.gov/Archives/edgar/data/1071739/000107173920000281/a20201215-exhibit102.htm) | | | | | | | | | | | | 8-K | | | | | | December 21, 2020 | | | | | | 10.2 | | |

| [removed: 10.18] [added: 10.19] | | | * | | | [Form of Long-Term Incentive Plan Agreement #1](http://www.sec.gov/Archives/edgar/data/1071739/000107173917000018/exhibit1025.htm) | | | | | | | | | | | | 10-K | | | | | | February 21, 2017 | | | | | | 10.25 | | |

| [removed: 10.19] [added: 10.20] | | | * | | | [Form of Long-Term Incentive Plan Agreement #2 (under the 2007 Long-Term Incentive Plan, As Amended)](https://www.sec.gov/Archives/edgar/data/1071739/000107173920000281/a20201215-exhibit103.htm) | | | | | | | | | | | | 8-K | | | | | | December 21, 2020 | | | | | | 10.3 | | |