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

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

EXECUTIVE OVERVIEW

General

We are a leading healthcare enterprise, committed to helping people live healthier lives, with an established expertise in lower-income and medically complex populations. We provide access to high-quality healthcare, innovative programs, and a wide range of health solutions that help families and individuals get well, stay well, and be well. We believe that our local approach enables us to provide accessible, quality, culturally sensitive healthcare coverage to our communities.

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

Value Creation Plan

We established our Value Creation Plan to drive margin expansion by leveraging our scale and generating sustainable, profitable growth. In addition to creating shareholder value, this plan is an ongoing effort to modernize and improve how we work in order to propel our organization to new levels of success and elevate the member and provider experiences. During the first quarter of 2023, we completed the following key milestones in our Value Creation Plan:

• Completed the divestitures of Magellan Specialty Health, Centurion, our prison healthcare business, and HealthSmart, our third-party health plan administration business.

• Completed $377 million of common stock repurchases in the first quarter of 2023 through our stock repurchase program, which were funded through divestiture proceeds and free cash flow generated from operations. In addition, in April 2023, we completed an additional $200 million of common stock repurchases.

• Completed operating model changes initiated in 2022, including streamlining call center management and utilization management.

• Initiated standardization of our pharmacy operating model.

• Launched our cloud-based, next-gen clinical population health platform.

Segments Update

In early 2023, and in conjunction with our updated strategic plan, executive leadership realignment, and corresponding 2023 divestitures, we have revised the way we manage the business, evaluate performance, and allocate resources, resulting in an updated segment structure comprised of (1) a Medicaid segment, (2) a Medicare segment, (3) a Commercial segment and (4) an Other segment. We began reporting under this new segment structure in 2023. Prior year information has been adjusted to reflect the change in segment reporting.

Regulatory Trends and Uncertainties

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

In contrast to previous executive and legislative efforts to restrict or limit certain provisions of the Affordable Care Act (ACA), the American Rescue Plan Act (ARPA), enacted in March 2021, contained provisions aimed at leveraging Medicaid and the Health Insurance Marketplace to expand health insurance coverage and affordability to consumers. The ARPA authorized an additional $1.9 trillion in federal spending to address the COVID-19 public health emergency (PHE), 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 ARPA initially enhanced eligibility for the advance premium tax credit for enrollees in the Health Insurance Marketplace, which was extended through the 2025 tax year by the Inflation Reduction Act, enacted in August 2022.

In October 2022, the Treasury Department issued a final rule to address the family glitch in the ACA, which relates to determining who is eligible for premium subsidies. We see this as a significant step in making Marketplace more affordable for working families.

The COVID-19 pandemic has impacted and may continue to affect our business. The Families First Coronavirus Response Act, enacted in March 2020, increased federal matching rates for state Medicaid programs with a requirement that states suspend Medicaid redeterminations throughout the PHE. As a result, since the onset of the PHE, our Medicaid membership has increased by 3.5 million members (excluding new states North Carolina and Delaware and various state product expansions or managed care organization changes). The Consolidated Appropriations Act, 2023, signed into law on December 29, 2022, delinked the Medicaid continuous coverage requirements from the PHE and, as a result, states began Medicaid disenrollments on April 1, 2023. Per the Act, redeterminations related to the PHE should be initiated within 12 months, by March 31, 2024, and conclude during the second quarter of 2024. We are taking decisive action to help ensure individuals take the state agency requested action to confirm eligibility in their Medicaid coverage or find other appropriate coverage that is best for themselves and their families. Our Ambetter Health product covers the majority of our Medicaid states, and we believe we are among the best positioned in the healthcare market to capture those transitioning coverage through redeterminations. Although Medicaid continuous coverage requirements were decoupled from the PHE, we are working to prepare for other provisions still tied to the end of the PHE which expires May 11, 2023, including COVID costs and coverage requirements, various other payment structures and electronic prescribing of controlled substances.

We have more than three decades of experience, spanning seven presidents from both sides of the aisle, in delivering high-quality healthcare services on behalf of states and the federal government to under-insured and uninsured families, commercial organizations, and military families. This expertise has allowed us to deliver cost-effective services to our government partners and our members. While healthcare experts maintain a focus on personalized healthcare technology, we continue to make strategic decisions to accelerate the development of new software platforms and analytical capabilities. We continue to believe we have both the capacity and capability to successfully navigate industry changes to the benefit of our members, customers, and shareholders.

First Quarter 2023 Highlights

Our financial performance for the first quarter of 2023 is summarized as follows:

• Managed care membership of 28.5 million, an increase of 2.2 million members, or 8% year-over-year.

• Total revenues of $38.9 billion, representing 5% growth year-over-year.

• Premium and service revenues of $35.0 billion, representing 2% growth year-over-year.

• HBR of 87.0%, compared to 87.3% for the first quarter of 2022.

• SG&A expense ratio of 8.6%, compared to 8.0% for the first quarter of 2022.

• Adjusted SG&A expense ratio of 8.5%, compared to 7.7% for the first quarter of 2022.

• Operating cash flows of $4.3 billion for the first quarter of 2023.

• Adjusted diluted earnings per share (EPS) of $2.11, compared to $1.83 for the first quarter of 2022.

A reconciliation from GAAP diluted EPS to adjusted diluted EPS is highlighted below, and additional detail is provided above under the heading "Non-GAAP Financial Presentation":

			Three Months Ended March 31,
			2023						2022
GAAP diluted EPS attributable to Centene			$	2.04					$	1.44
Amortization of acquired intangible assets			0.33						0.34
Acquisition and divestiture related expenses			0.04						0.16
Other adjustments (1)			(0.09)						—
Income tax effects of adjustments (2)			(0.21)						(0.11)
Adjusted diluted EPS			$	2.11					$	1.83

(1) Other adjustments include the following pre-tax items:

2023:

(a) Magellan Specialty Health divestiture gain of $79 million, or $0.14 per share ($0.12 after-tax) and real estate impairments of $26 million, or $0.05 per share ($0.04 after-tax).

2022:

(b) Costs related to the PBM legal settlement of $2 million, or $0.00 per share ($0.00 after-tax).

(2) The income tax effects of adjustments are based on the effective income tax rates applicable to each adjustment. In addition, the three months ended March 31, 2023, includes a one-time income tax benefit of $69 million, or $0.13 per share, resulting from the distribution of long-term stock awards to the estate of the Company's former CEO.

Current and Future Operating Drivers

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

Medicaid

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

• In January 2023, our subsidiary, Delaware First Health, commenced its contract for the statewide Medicaid managed care programs.

• In January 2023, our subsidiary, Louisiana Healthcare Connections, commenced the Medicaid contract awarded by the Louisiana Department of Health to continue administering quality, integrated healthcare services to members across the state.

• In January 2023, our subsidiary, Managed Health Services, commenced the contract awarded by the Indiana Department of Administration to continue serving Hoosier Healthwise and Health Indiana Plan members with Medicaid and Medicaid alternative managed care and care coordination services.

• In October 2022, the state of Ohio removed pharmacy services in connection with the state's transition from managed care to a single pharmacy benefits management (PBM).

• In July 2022, our subsidiary, Home State Health, commenced the MO HealthNet Managed Care General Plan and Specialty Plan contracts. Under the General Plan, Home State Health continues to serve multiple MO HealthNet programs including Children's Health Insurance members and the state's newly implemented Medicaid expansion population, across all regions of Missouri. Additionally, as the sole provider of the newly awarded Specialty Plan, Home State Health now serves approximately 53,500 foster children and children receiving adoption subsidy assistance.

• Beginning in 2020*,* the federal government issued a PHE which suspended Medicaid eligibility redeterminations. The ongoing suspensions, which were extended to April 2023, have driven increased membership.

Medicare

• Medicare membership declined year-over-year due to lower annual enrollment.

Commercial

• In 2023, our Health Insurance Marketplace product, Ambetter Health, expanded into Alabama and extended its footprint by more than 60 counties across 12 existing states. In total, the Marketplace plan is available in more than 1,500 counties across 28 states. Additionally, Marketplace membership increased year-over-year due to the expanded footprint, strong product positioning and open enrollment results, as well as overall market growth.

Other

• In January 2023, we completed the divestitures of Magellan Specialty Health, Centurion, our prison healthcare business, and HealthSmart, our third-party health plan administration business.

• In December 2022, we completed the divestiture of Magellan Rx, which was part of the Magellan Health, Inc. (Magellan) business acquired in January 2022.

• In November 2022, we completed the divestiture of our ownership stakes in our Spanish and Central European businesses, including Ribera Salud, Torrejón Salud, and Pro Diagnostics Group.

• In July 2022, we completed the divestiture of PANTHERx Rare (PANTHERx).

We expect the following items to impact our future results of operations:

Medicaid

• In April 2023, eligibility redeterminations related to the PHE began. These redeterminations will extend over a 14-month period and are expected to conclude in the second quarter of 2024. In addition to delinking the Medicaid continuous enrollment provision from the PHE, the year-end spending bill also outlines key coverage expansion provisions, including Children’s Health Insurance Program (CHIP) coverage. The provision requires states to provide 12 months of continuous coverage for children under Medicaid and CHIP effective January 2024 and made the state option to extend coverage for postpartum women for up to 12 months permanent.

• In March 2023, the state of North Carolina passed legislation for Medicaid Expansion, presenting a growth opportunity in our existing market.

• In December 2022, our subsidiary, Health Net of California, was selected by the California Department of Health Care Services for direct Medicaid contracts in 10 counties, including Los Angeles (in which a portion will be subcontracted). The contracts are anticipated to begin in January 2024.

• In September 2022, our subsidiary, Nebraska Total Care, was awarded the Nebraska Department of Health and Human Services statewide Medicaid managed care contract. Under the new contract, Nebraska Total Care will continue serving the state's Medicaid Managed Care Program, known as Heritage Health. The new contract term is five years and includes the option for two, one-year renewals. The contract is anticipated to begin in January 2024, subject to the resolution of third-party protests.

• In September 2022, our subsidiary, Superior HealthPlan (Superior), was awarded a new, six-year contract by the Texas Health and Human Services Commission to continue providing youth in foster care with healthcare coverage through the STAR Health Medicaid program. Superior has been the sole provider of STAR Health coverage since the program launched in 2008. The contract is anticipated to begin in September 2023.

• In August 2022, our subsidiary, Magnolia Health Plan (Magnolia), was awarded the Mississippi Division of Medicaid contract. Under the new contract, Magnolia will continue serving the state's Coordinated Care Organization Program, which will consist of the Mississippi Coordinated Access Network and the Mississippi CHIP. The contract is anticipated to begin in July 2023, subject to the resolution of third-party protests.

• In August 2021, our subsidiaries, Carolina Complete Health and WellCare of North Carolina, were selected to coordinate physical and/or other health services with Local Management Entities/Managed Care Organizations under the state's new Tailored Plans. The Tailored Plans, which are expected to launch in October 2023, are integrated health plans designed for individuals with significant behavioral health needs and intellectual/developmental disabilities.

Medicare

• In October 2022, the Centers for Medicare and Medicaid Services (CMS) published updated Medicare Star quality ratings for the 2023 rating year, which impacts the 2024 revenue year. The decrease in Star quality ratings is driven by the expiration of certain disaster relief provisions as well as deterioration in select metrics. Over the past year, our leadership team launched a multi-year plan to build and improve quality across the enterprise with a strong focus on enhanced patient experience and access to care. We expect to begin to see the results of these efforts with the 2024 rating year (2025 revenue year).

Other

• We continue to execute on Value Creation Plan initiatives including the award of the new PBM contract commencing in 2024, portfolio review, real estate optimization, stock and debt repurchases, along with an ongoing focus on quality improvement actions. We expect these actions will drive future margin expansion, create shareholder value, and improve the experience for our members and providers.

MEMBERSHIP

From March 31, 2022 to March 31, 2023, we increased our managed care membership by 2.2 million, or 8%. The following table sets forth our membership by line of business:

			March 31, 2023						December 31, 2022						March 31, 2022
Traditional Medicaid (1)			14,521,100						14,264,800						13,590,100
High Acuity Medicaid (2)			1,801,200						1,710,000						1,682,800
Total Medicaid (4)			16,322,300						15,974,800						15,272,900
Commercial Marketplace			3,093,600						2,076,100						2,031,000
Commercial Group			437,200						441,100						449,700
Total Commercial			3,530,800						2,517,200						2,480,700
Medicare (3) (4)			1,343,800						1,511,100						1,452,500
Medicare PDP			4,459,300						4,226,000						4,169,700
Total at-risk membership			25,656,200						24,229,100						23,375,800
TRICARE eligibles			2,799,300						2,832,300						2,862,400
Total			28,455,500						27,061,400						26,238,200
(1) Membership includes Temporary Assistance for Needy Families (TANF), Medicaid Expansion, Children's Health Insurance Program (CHIP), Foster Care, and Behavioral Health. (2) Membership includes Aged, Blind, or Disabled (ABD), Intellectual and Developmental Disabilities (IDD), Long-Term Services and Supports (LTSS), and Medicare-Medicaid Plans (MMP) Duals. (3) Membership includes Medicare Advantage and Medicare Supplement. (4) Membership includes 1,323,000, 1,291,300, and 1,231,500 Dual Eligible Special Needs Plans (D-SNP) beneficiaries for the periods ending March 31, 2023, December 31, 2022, and March 31, 2022, respectively.

RESULTS OF OPERATIONS

The following discussion and analysis is based on our Consolidated Statements of Operations, which reflect our results of operations for the three months ended March 31, 2023 and 2022, prepared in accordance with generally accepted accounting principles in the United States (GAAP).

Summarized comparative financial data for the three months ended March 31, 2023 and 2022 is as follows ($ in millions, except per share data in dollars):

			Three Months Ended March 31,
			2023						2022						% Change
Premium			$	33,825					$	31,889					6		%
Service			1,127						2,343						(52)		%
Premium and service revenues			34,952						34,232						2		%
Premium tax			3,937						2,953						33		%
Total revenues			38,889						37,185						5		%
Medical costs			29,434						27,838						6		%
Cost of services			870						1,988						(56)		%
Selling, general and administrative expenses			3,011						2,745						10		%
Depreciation expense			142						156						(9)		%
Amortization of acquired intangible assets			183						199						(8)		%
Premium tax expense			4,011						3,006						33		%
Impairment			20						—						n.m.
Earnings from operations			1,218						1,253						(3)		%
Investment and other income			353						52						n.m.
Debt extinguishment			—						3						n.m.
Interest expense			(180)						(160)						(13)		%
Earnings before income tax			1,391						1,148						21		%
Income tax expense			261						296						(12)		%
Net earnings			1,130						852						33		%
(Earnings) loss attributable to noncontrolling interests			—						(3)						n.m.
Net earnings attributable to Centene Corporation			$	1,130					$	849					33		%
Diluted earnings per common share attributable to Centene Corporation			$	2.04					$	1.44					42		%
n.m.: not meaningful

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

Total Revenues

The following table sets forth supplemental revenue information for the three months ended March 31, ($ in millions):

			2023						2022						% Change
Medicaid			$	26,164					$	24,076					9		%
Commercial			5,252						4,132						27		%
Medicare (1)			5,876						5,757						2		%
Other			1,597						3,220						(50)		%
Total Revenues			$	38,889					$	37,185					5		%
(1) Medicare includes Medicare Advantage, Medicare Supplement, D-SNPs, and Medicare Prescription Drug Plan (PDP).

Total revenues increased 5% in the three months ended March 31, 2023 over the corresponding period in 2022, driven by 52% membership growth in the Marketplace business due to strong product positioning and open enrollment results, as well as overall market growth; organic Medicaid growth, primarily due to the ongoing suspension of eligibility redeterminations; and increased Medicaid premium tax revenue. The decrease in Other revenue was driven by recent divestitures.

Operating Expenses

Medical Costs/HBR

The HBR for the three months ended March 31, 2023, was 87.0%, compared to 87.3% in the same period in 2022. The HBR for the first quarter of 2023 was favorably impacted by continued disciplined Marketplace pricing and lower utilization in Medicare, partially offset by updated Medicaid return of premium payable revenue estimates related to prior periods.

Cost of Services

Cost of services decreased by $1.1 billion in the three months ended March 31, 2023, compared to the corresponding period in 2022. The cost of service ratio for the three months ended March 31, 2023, was 77.2%, compared to 84.8% in the same period in 2022. The decreases were driven by recent divestitures.

Selling, General & Administrative Expenses

The SG&A expense ratio was 8.6% for the first quarter of 2023, compared to 8.0% in the first quarter of 2022. The adjusted SG&A expense ratio was 8.5% for the first quarter of 2023, compared to 7.7% in the first quarter of 2022. The increases were driven by growth in the Marketplace business, which operates at a higher SG&A ratio.

Impairment

During the first quarter of 2023, we recorded impairment charges of $20 million for additional impairments related to our ongoing real estate optimization initiatives, consisting of leased and owned real estate assets and related fixed assets.

Other Income (Expense)

The following table summarizes the components of other income (expense) for the three months ended March 31, ($ in millions):

			2023						2022
Investment and other income			$	353					$	52
Debt extinguishment			—						3
Interest expense			(180)						(160)
Other income (expense), net			$	173					$	(105)

Investment and other income. Investment and other income increased by $301 million in the three months ended March 31, 2023 compared to the corresponding period in 2022, driven by increased interest rates and the $79 million Magellan Specialty Health divestiture gain.

Debt extinguishment. During the first quarter of 2022, we recognized an immaterial gain related to the redemption of Magellan’s outstanding Senior Notes.

Interest expense. Interest expense increased by $20 million in the three months ended March 31, 2023, compared to the corresponding period in 2022. The increase was driven by increased interest rates.

Income Tax Expense

For the three months ended March 31, 2023, we recorded income tax expense of $261 million on pre-tax earnings of $1.4 billion, or an effective tax rate of 18.8%. The effective tax rate for the first quarter of 2023 reflects the tax effects of the distribution of long-term stock awards to the estate of the Company's former CEO as well as the Magellan Specialty Health gain. For the first quarter of 2023, our effective tax rate on adjusted earnings was 24.3%. For the three months ended March 31, 2022, we recorded an income tax expense of $296 million on pre-tax earnings of $1.1 billion, or an effective tax rate of 25.8%. For the first quarter of 2022, our effective tax rate on adjusted earnings was 25.1%.

Segment Results

The following table summarizes our consolidated operating results by segment for the three months ended March 31, ($ in millions):

			2023						2022						% Change
Total Revenues
Medicaid			$	26,164					$	24,074					9		%
Medicare			5,876						5,757						2		%
Commercial			5,252						4,132						27		%
Other			1,597						3,222						(50)		%
Consolidated Total			$	38,889					$	37,185					5		%
Gross Margin (1)
Medicaid			$	2,217					$	2,346					(5)		%
Medicare			868						711						22		%
Commercial			1,247						858						45		%
Other			316						491						(36)		%
Consolidated Total			$	4,648					$	4,406					5		%
(1) Gross margin represents premium and service revenues less medical costs and cost of services.

Medicaid

Total revenues increased 9% in the three months ended March 31, 2023, compared to the corresponding period in 2022. The increase was due to organic Medicaid growth, partially due to the ongoing suspension of eligibility redeterminations. Gross margin decreased $129 million between years primarily as a result of updated return of premium payable revenue estimates related to prior periods.

Medicare

Total revenues increased 2% in the three months ended March 31, 2023, compared to the corresponding period in 2022. Gross margin increased $157 million in the three months ended March 31, 2023, compared to the corresponding period in 2022. Increases were primarily due to lower utilization.

Commercial

Total revenues increased 27% in the three months ended March 31, 2023, compared to the corresponding period in 2022. Gross margin increased $389 million in the three months ended March 31, 2023, compared to the corresponding period in 2022. Increases were primarily driven by 52% membership growth in the Marketplace business, resulting from strong product positioning and open enrollment results, overall market growth, and continued disciplined pricing.

Other

Total revenues decreased 50% in the three months ended March 31, 2023, compared to the corresponding period in 2022. Gross margin decreased $175 million in the three months ended March 31, 2023, compared to the corresponding period in 2022. Decreases were primarily due to recent divestitures.

LIQUIDITY AND CAPITAL RESOURCES

Shown below is a condensed schedule of cash flows used in the discussion of liquidity and capital resources ($ in millions).

			Three Months Ended March 31,
			2023						2022
Net cash provided by operating activities			$	4,269					$	1,151
Net cash (used in) investing activities			(253)						(2,401)
Net cash (used in) financing activities			(183)						(498)
Effect of exchange rate changes on cash and cash equivalents			2						33
Net increase (decrease) in cash, cash equivalents, and restricted cash and cash equivalents			$	3,835					$	(1,715)

Cash Flows Provided by Operating Activities

Normal operations are funded primarily through operating cash flows and borrowings under our revolving credit facility. Operating activities provided cash of $4.3 billion in the three months ended March 31, 2023, compared to $1.2 billion in the comparable period in 2022. Cash flows provided by operations in 2023 were driven by net earnings, increases in unearned revenue and accounts payable driven by the early receipt of payments from CMS of approximately $2.8 billion, the timing of pass through payments of $1.2 billion, partially offset by a delay in premium payments from one of our state partners of $1.1 billion.

Cash flows provided by operations in 2022 were primarily driven by net earnings.

Cash Flows Used in Investing Activities

Investing activities used cash of $253 million in the three months ended March 31, 2023, and $2.4 billion in the comparable period in 2022. Cash flows used in investing activities in 2023 primarily consisted of net additions to the investment portfolio of our regulated subsidiaries (including transfers from cash and cash equivalents to long-term investments) and capital expenditures, partially offset by divestiture proceeds.

In 2022, cash flows used in investing activities primarily related to our acquisition of Magellan and net additions to the investment portfolio of our regulated subsidiaries (including transfers from cash and cash equivalents to long-term investments).

We spent $225 million and $242 million in the three months ended March 31, 2023 and 2022, respectively, on capital expenditures primarily for system enhancements.

As of March 31, 2023, our investment portfolio consisted primarily of fixed-income securities with an average duration of 3.5 years. We had unregulated cash and investments of $1.0 billion at March 31, 2023 compared to $1.4 billion at December 31, 2022.

Cash Flows Used in Financing Activities

Financing activities used cash of $183 million in the three months ended March 31, 2023, compared to using cash of $498 million in the comparable period in 2022. Financing activities in 2023 were driven by stock repurchases of $423 million, partially offset by increased borrowings on our revolving credit facility.

Liquidity Metrics

We have a stock repurchase program authorizing us to repurchase common stock from time to time on the open market or through privately negotiated transactions. In 2022, the Company's Board of Directors authorized up to a total of $6.0 billion of repurchases under the program.

During the quarter, we repurchased 4.9 million shares of common stock for $377 million under the stock repurchase program. We have approximately $2.4 billion remaining under the program for repurchases as of March 31, 2023. No duration has been placed on the repurchase program. We reserve the right to discontinue the repurchase program at any time. Refer to Note 10. Stockholders' Equity for further information on stock repurchases.

As of March 31, 2023, we had an aggregate principal amount of $15.7 billion of senior notes issued and outstanding. The indentures governing our various maturities of senior notes contain restrictive covenants. As of March 31, 2023, we were in compliance with all covenants.

As part of our capital allocation strategy, we may decide to repurchase debt or raise capital through the issuance of debt in the form of senior notes. In June 2022, the Company's Board of Directors also authorized a new $1.0 billion senior note debt repurchase program. No repurchases were made during the quarter ended March 31, 2023. As of March 31, 2023, there was $700 million available under the senior note debt repurchase program. Refer to Note 8. Debt for further information regarding the issuance and redemption of senior notes.

The credit agreement underlying our Revolving Credit Facility and Term Loan Facility contains customary covenants as well as financial covenants including a minimum fixed charge coverage ratio and a maximum debt-to-EBITDA ratio. Our maximum debt-to-EBITDA ratio under the credit agreement may not exceed 4.0 to 1.0. As of March 31, 2023, we had $359 million of borrowings outstanding under our Revolving Credit Facility, $2.2 billion of borrowings under our Term Loan Facility, and we were in compliance with all covenants. As of March 31, 2023, there were no limitations on the availability of our Revolving Credit Facility as a result of the debt-to-EBITDA ratio.

We had outstanding letters of credit of $214 million as of March 31, 2023, which were not part of our revolving credit facility. The letters of credit bore weighted interest of 0.6% as of March 31, 2023. In addition, we had outstanding surety bonds of $1.0 billion as of March 31, 2023.

At March 31, 2023, our debt to capital ratio, defined as total debt divided by the sum of total debt and total equity, was 42.1%, compared to 42.7% at December 31, 2022. The debt to capital ratio decrease was driven by net earnings partially offset by stock repurchases in the quarter. We utilize the debt to capital ratio as a measure, among others, of our leverage and financial flexibility.

At March 31, 2023, we had working capital, defined as current assets less current liabilities, of $2.2 billion, compared to $1.7 billion at December 31, 2022. We manage our short-term and long-term investments with the goal of ensuring that a sufficient portion is held in investments that are highly liquid and can be sold to fund short-term requirements as needed.

2023 Expectations

During the remainder of 2023, we expect to receive net dividends from our insurance subsidiaries of approximately $2.0 billion and spend approximately $620 million in additional capital expenditures. In April 2023, we made additional purchases of $200 million through our stock repurchase program.

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

We intend to continue to evaluate strategic actions in connection with our Value Creation Plan, targeting initiatives to improve productivity, efficiencies and reduced organizational costs, as well as capital deployment activities, including stock repurchases, portfolio optimization and the evaluation of refinancing opportunities. In addition to creating shareholder value, this plan encompasses a larger organizational mission to enhance our member and provider experience, improve outcomes for our members, and to initiate new ways of doing business that make Centene a great partner in all aspects of our operations.

REGULATORY CAPITAL AND DIVIDEND RESTRICTIONS

Our operations are conducted through our subsidiaries. As managed care organizations, most of our subsidiaries are subject to state regulations and other requirements that, among other things, require the maintenance of minimum levels of statutory capital, as defined by each state, and restrict the timing, payment and amount of dividends and other distributions that may be paid to us. Generally, the amount of dividend distributions that may be paid by a regulated subsidiary without prior approval by state regulatory authorities is limited based on the entity's level of statutory net income and statutory capital and surplus.

Our regulated subsidiaries are required to maintain minimum capital requirements prescribed by various regulatory authorities in each of the states in which we operate. During the three months ended March 31, 2023, we received dividends of $153 million from and made $87 million of capital contributions to our regulated subsidiaries. For our subsidiaries that file with the National Association of Insurance Commissioners (NAIC), the aggregate risk-based capital (RBC) level as of December 31, 2022, which was the most recent date for which reporting was required, was in excess of 350% of the Authorized Control Level. We intend to continue to maintain an aggregate RBC level in excess of 350% of the Authorized Control Level during 2023.

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

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

The NAIC has adopted rules which set minimum RBC requirements for insurance companies, managed care organizations and other entities bearing risk for healthcare coverage. As of March 31, 2023, each of our health plans was in compliance with the RBC requirements enacted in those states.

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