Item 1. Financial Statements.

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Item 1. Financial Statements.

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In millions, except shares in thousands and per share data in dollars)


	June 30, 2024		December 31, 2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	17,605	$	17,193
Premium and trade receivables	16,587		15,532
Short-term investments	2,609		2,459
Other current assets	1,605		5,572
Total current assets	38,406		40,756
Long-term investments	16,870		16,286
Restricted deposits	1,415		1,386
Property, software and equipment, net	2,041		2,019

Goodwill	17,558		17,558
Intangible assets, net	5,755		6,101
Other long-term assets	1,092		535
Total assets	$	83,137	$	84,641
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY
Current liabilities:
Medical claims liability	$	18,173	$	18,000
Accounts payable and accrued expenses	12,232		16,420
Return of premium payable	1,615		1,462
Unearned revenue	597		715
Current portion of long-term debt	112		119
Total current liabilities	32,729		36,716
Long-term debt	17,516		17,710
Deferred tax liability	665		641
Other long-term liabilities	4,770		3,618
Total liabilities	55,680		58,685
Commitments and contingencies
Redeemable noncontrolling interests	16		19
Stockholders' equity:
Preferred stock, $0.001 par value; authorized 10,000 shares; no shares issued or outstanding at June 30, 2024 and December 31, 2023	—		—
Common stock, $0.001 par value; authorized 800,000 shares; 619,495 issued and 526,001 outstanding at June 30, 2024, and 615,291 issued and 534,484 outstanding at December 31, 2023	1		1
Additional paid-in capital	20,461		20,304
Accumulated other comprehensive (loss)	(646)		(652)
Retained earnings	14,352		12,043
Treasury stock, at cost (93,494 and 80,807 shares, respectively)	(6,817)		(5,856)
Total Centene stockholders' equity	27,351		25,840
Nonredeemable noncontrolling interest	90		97
Total stockholders' equity	27,441		25,937
Total liabilities, redeemable noncontrolling interests and stockholders' equity	$	83,137	$	84,641

The accompanying notes to the consolidated financial statements are an integral part of these statements.

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except shares in thousands and per share data in dollars)

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenues:
Premium	$	35,140	$	33,713	$	70,669	$	67,538
Service	833		1,125		1,641		2,252
Premium and service revenues	35,973		34,838		72,310		69,790
Premium tax	3,863		2,770		7,933		6,707
Total revenues	39,836		37,608		80,243		76,497
Expenses:
Medical costs	30,765		29,347		61,697		58,781
Cost of services	680		877		1,349		1,747
Selling, general and administrative expenses	2,894		3,016		6,112		6,027
Depreciation expense	133		146		268		288
Amortization of acquired intangible assets	173		179		346		362
Premium tax expense	3,962		2,854		8,123		6,865

Impairment	—		18		13		38

Total operating expenses	38,607		36,437		77,908		74,108
Earnings from operations	1,229		1,171		2,335		2,389
Other income (expense):
Investment and other income	463		425		1,008		778

Interest expense	(176)		(181)		(354)		(361)
Earnings before income tax	1,516		1,415		2,989		2,806
Income tax expense	370		360		685		621
Net earnings	1,146		1,055		2,304		2,185
Loss attributable to noncontrolling interests	—		3		5		3
Net earnings attributable to Centene Corporation	$	1,146	$	1,058	$	2,309	$	2,188

Net earnings per common share attributable to Centene Corporation:
Basic earnings per common share	$	2.16	$	1.93	$	4.34	$	3.98
Diluted earnings per common share	$	2.16	$	1.92	$	4.32	$	3.96

Weighted average number of common shares outstanding:
Basic	529,602		548,932		532,385		549,850
Diluted	530,755		550,308		534,517		551,996

The accompanying notes to the consolidated financial statements are an integral part of these statements.

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)

(In millions, unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net earnings	$	1,146	$	1,055	$	2,304	$	2,185
Change in unrealized gain (loss) on investments	(26)		(142)		(107)		111
Change in unrealized gain (loss) on investments, tax effect	6		34		21		(27)
Change in unrealized gain (loss) on investments, net of tax	(20)		(108)		(86)		84

Reclassification adjustment, net of tax	4		2		92		4
Foreign currency translation adjustments, net of tax	—		23		—		46

Other comprehensive earnings (loss)	(16)		(83)		6		134
Comprehensive earnings	1,130		972		2,310		2,319
Comprehensive loss attributable to noncontrolling interests	—		3		5		3
Comprehensive earnings attributable to Centene Corporation	$	1,130	$	975	$	2,315	$	2,322

The accompanying notes to the consolidated financial statements are an integral part of these statements.

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In millions, except shares in thousands and per share data in dollars)

(Unaudited)

Three and Six Months Ended June 30, 2024


	Centene Stockholders' Equity
	Common Stock									Treasury Stock
	$0.001 Par Value Shares	Amt		Additional Paid-in Capital		Accumulated Other Comprehensive Earnings (Loss)		Retained Earnings		$0.001 Par Value Shares	Amt		Noncontrolling Interest		Total
Balance, December 31, 2023	615,291	$	1	$	20,304	$	(652)	$	12,043	80,807	$	(5,856)	$	97	$	25,937
Comprehensive Earnings:
Net earnings (loss)	—	—		—		—		1,163		—	—		(4)		1,159
Other comprehensive earnings, net of $(12) tax	—	—		—		22		—		—	—		—		22


Common stock issued for employee benefit plans	3,882	—		14		—		—		—	—		—		14
Common stock repurchases	—	—		—		—		—		1,983	(151)		—		(151)
Stock compensation expense	—	—		70		—		—		—	—		—		70


Divestiture of non-controlling interest	—	—		—		—		—		—	—		(3)		(3)


Balance, March 31, 2024	619,173	$	1	$	20,388	$	(630)	$	13,206	82,790	$	(6,007)	$	90	$	27,048
Comprehensive Earnings:
Net earnings	—	—		—		—		1,146		—	—		—		1,146
Other comprehensive loss, net of $(5) tax	—	—		—		(16)		—		—	—		—		(16)


Common stock issued for employee benefit plans	322	—		11		—		—		—	—		—		11
Common stock repurchases	—	—		—		—		—		10,704	(810)		—		(810)
Stock compensation expense	—	—		62		—		—		—	—		—		62





Balance, June 30, 2024	619,495	$	1	$	20,461	$	(646)	$	14,352	93,494	$	(6,817)	$	90	$	27,441

Three and Six Months Ended June 30, 2023


	Centene Stockholders' Equity
	Common Stock									Treasury Stock
	$0.001 Par Value Shares	Amt		Additional Paid-in Capital		Accumulated Other Comprehensive Earnings (Loss)		Retained Earnings		$0.001 Par Value Shares	Amt		Noncontrolling Interest		Total
Balance, December 31, 2022	607,847	$	1	$	20,060	$	(1,132)	$	9,341	57,093	$	(4,213)	$	124	$	24,181
Comprehensive Earnings:
Net earnings	—	—		—		—		1,130		—	—		—		1,130
Other comprehensive earnings, net of $61 tax	—	—		—		217		—		—	—		—		217
Common stock issued for employee benefit plans	6,508	—		12		—		—		—	—		—		12
Common stock repurchases	—	—		—		—		—		5,548	(423)		—		(423)
Stock compensation expense	—	—		61		—		—		—	—		—		61
Purchase of redeemable noncontrolling interest	—	—		(12)		—		—		—	—		—		(12)
Balance, March 31, 2023	614,355	$	1	$	20,121	$	(915)	$	10,471	62,641	$	(4,636)	$	124	$	25,166
Comprehensive Earnings:
Net earnings (loss)	—	—		—		—		1,058		—	—		(3)		1,055
Other comprehensive loss, net of $(34) tax	—	—		—		(83)		—		—	—		—		(83)
Common stock issued for employee benefit plans	388	—		9		—		—		—	—		—		9
Common stock repurchases	—	—		—		—		—		6,099	(408)		—		(408)
Stock compensation expense	—	—		56		—		—		—	—		—		56
Purchase of non-redeemable noncontrolling interests	—	—		(3)		—		—		—	—		(24)		(27)
Balance, June 30, 2023	614,743	$	1	$	20,183	$	(998)	$	11,529	68,740	$	(5,044)	$	97	$	25,768

The accompanying notes to the consolidated financial statements are an integral part of these statements.

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions, unaudited)


	Six Months Ended June 30,
	2024		2023
Cash flows from operating activities:
Net earnings	$	2,304	$	2,185
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization	614		650
Stock compensation expense	132		117
Impairment	13		38


Deferred income taxes	40		(160)
(Gain) loss on divestitures, net	(103)		(172)

Other adjustments, net	(11)		68
Changes in assets and liabilities
Premium and trade receivables	(1,059)		(319)
Other assets	(404)		(325)

Medical claims liabilities	173		139
Unearned revenue	(118)		1,895
Accounts payable and accrued expenses	(1,704)		618
Other long-term liabilities	1,838		2,081
Other operating activities, net	4		—
Net cash provided by operating activities	1,719		6,815
Cash flows from investing activities:
Capital expenditures	(337)		(440)
Purchases of investments	(3,434)		(3,199)
Sales and maturities of investments	2,497		2,293

Divestiture proceeds, net of divested cash	959		669

Net cash used in investing activities	(315)		(677)
Cash flows from financing activities:
Proceeds from long-term debt	350		1,281
Payments and repurchases of long-term debt	(565)		(1,322)
Common stock repurchases	(954)		(828)
Proceeds from common stock issuances	25		21

Purchase of noncontrolling interest	—		(85)

Other financing activities, net	(4)		—
Net cash used in financing activities	(1,148)		(933)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	7		(7)
Net increase in cash, cash equivalents and restricted cash and cash equivalents	263		5,198

Cash, cash equivalents and restricted cash and cash equivalents, beginning of period	17,452		12,330
Cash, cash equivalents and restricted cash and cash equivalents, end of period	$	17,715	$	17,528
Supplemental disclosures of cash flow information:
Interest paid	$	352	$	348
Income taxes paid	$	610	$	592


The following table provides a reconciliation of cash, cash equivalents and restricted cash and cash equivalents reported within the Consolidated Balance Sheets to the totals above:
	June 30,
	2024		2023
Cash and cash equivalents	$	17,605	$	17,170
Restricted cash and cash equivalents, included in restricted deposits	110		358
Total cash, cash equivalents and restricted cash and cash equivalents	$	17,715	$	17,528

The accompanying notes to the consolidated financial statements are an integral part of these statements.

CENTENE CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Operations

Basis of Presentation

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

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

Accounting Guidance Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU) which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments will require public entities to disclose significant segment expenses that are regularly provided to the chief operating decision-maker and included within segment profit and loss. The new standard is effective for annual periods beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the effect of the new disclosure requirements.

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

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

2. Acquisitions and Divestitures

Magellan Specialty Health Divestiture

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

Circle Health Group Divestiture

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

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

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

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

3. Short-term and Long-term Investments, Restricted Deposits

Short-term and long-term investments and restricted deposits by investment type consist of the following ($ in millions):


	June 30, 2024								December 31, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Debt securities:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	591	$	—	$	(7)	$	584	$	403	$	—	$	(8)	$	395
Corporate securities	10,554		32		(468)		10,118		9,984		78		(461)		9,601
Restricted certificates of deposit	4		—		—		4		4		—		—		4
Restricted cash equivalents	110		—		—		110		259		—		—		259
Short-term time deposits	586		—		—		586		746		—		—		746
Municipal securities	4,229		7		(184)		4,052		4,135		21		(171)		3,985
Asset-backed securities	1,741		8		(29)		1,720		1,665		8		(35)		1,638
Residential mortgage-backed securities	1,606		2		(129)		1,479		1,503		7		(103)		1,407
Commercial mortgage-backed securities	1,222		2		(79)		1,145		1,149		5		(82)		1,072
Equity securities	17		—		—		17		17		—		—		17
Private equity investments	890		—		—		890		833		—		—		833
Life insurance contracts	189		—		—		189		174		—		—		174
Total	$	21,739	$	51	$	(896)	$	20,894	$	20,872	$	119	$	(860)	$	20,131

The Company's investments are debt securities classified as available-for-sale with the exception of equity securities, certain private equity investments and life insurance contracts. Private equity investments include direct investments in private equity securities as well as private equity funds. The Company's investment policies are designed to provide liquidity, preserve capital and maximize total return on invested assets with a focus on high credit quality securities. The Company limits the size of investment in any single issuer other than U.S. treasury securities and obligations of U.S. government corporations and agencies. As of June 30, 2024, 99% of the Company's investments in rated securities carry an investment grade rating by nationally recognized statistical rating organizations. At June 30, 2024, the Company held certificates of deposit, equity securities, private equity investments and life insurance contracts, which did not carry a credit rating. Accrued interest income on available-for-sale debt securities was $168 million and $153 million at June 30, 2024 and December 31, 2023, respectively, and is included in other current assets in the Consolidated Balance Sheets.

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

The fair value of available-for-sale debt securities with gross unrealized losses by investment type and length of time that individual securities have been in a continuous unrealized loss position were as follows ($ in millions):


	June 30, 2024								December 31, 2023
	Less Than 12 Months				12 Months or More				Less Than 12 Months				12 Months or More
	Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	—	$	205	$	(7)	$	224	$	—	$	79	$	(8)	$	232
Corporate securities	(20)		1,895		(448)		6,017		(6)		658		(455)		6,260
Municipal securities	(11)		959		(173)		2,365		(4)		553		(167)		2,237
Asset-backed securities	(1)		266		(28)		519		(2)		197		(33)		855
Residential mortgage-backed securities	(7)		397		(122)		857		(2)		153		(101)		814
Commercial mortgage-backed securities	(1)		147		(78)		802		(2)		114		(80)		754
Short-term time deposits	—		—		—		—		—		31		—		—
Total	$	(40)	$	3,869	$	(856)	$	10,784	$	(16)	$	1,785	$	(844)	$	11,152

As of June 30, 2024, the gross unrealized losses were generated from 4,626 positions out of a total of 6,830 positions. The change in fair value of available-for-sale debt securities is primarily a result of movement in interest rates subsequent to the purchase of the security.

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

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

The contractual maturities of short-term and long-term debt securities and restricted deposits are as follows ($ in millions):


	June 30, 2024								December 31, 2023
	Investments				Restricted Deposits				Investments				Restricted Deposits
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
One year or less	$	2,428	$	2,403	$	395	$	392	$	2,308	$	2,284	$	566	$	564
One year through five years	7,877		7,546		733		709		7,738		7,431		527		504
Five years through ten years	4,166		3,947		291		278		3,905		3,735		298		283
Greater than ten years	147		143		37		36		155		154		34		35
Asset-backed securities	4,569		4,344		—		—		4,317		4,117		—		—
Total	$	19,187	$	18,383	$	1,456	$	1,415	$	18,423	$	17,721	$	1,425	$	1,386

Actual maturities may differ from contractual maturities due to call or prepayment options. Equity securities, private equity investments and life insurance contracts are excluded from the table above because they do not have a contractual maturity. The Company has an option to redeem substantially all of the securities included in the greater than ten years category listed above at amortized cost.

4. Fair Value Measurements

Assets and liabilities recorded at fair value in the Consolidated Balance Sheets are categorized based upon observable or unobservable inputs used to estimate fair value. Level inputs are as follows:


Level Input:						Input Definition:
Level I						Inputs are unadjusted, quoted prices for identical assets or liabilities in active markets at the measurement date.

Level II						Inputs other than quoted prices included in Level I that are observable for the asset or liability through corroboration with market data at the measurement date.

Level III						Unobservable inputs that reflect management's best estimate of what market participants would use in pricing the asset or liability at the measurement date.

The following table summarizes fair value measurements by level at June 30, 2024, for assets and liabilities measured at fair value on a recurring basis ($ in millions):


	Level I		Level II		Level III		Total
Assets
Cash and cash equivalents	$	17,605	$	—	$	—	$	17,605
Investments:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	58	$	—	$	—	$	58
Corporate securities	—		10,080		—		10,080
Municipal securities	—		3,315		—		3,315
Short-term time deposits	—		586		—		586
Asset-backed securities	—		1,720		—		1,720
Residential mortgage-backed securities	—		1,479		—		1,479
Commercial mortgage-backed securities	—		1,145		—		1,145
Equity securities	14		3		—		17
Total investments	$	72	$	18,328	$	—	$	18,400
Restricted deposits:
Cash and cash equivalents	$	110	$	—	$	—	$	110
U.S. Treasury securities and obligations of U.S. government corporations and agencies	526		—		—		526
Corporate securities	—		38		—		38
Certificates of deposit	—		4		—		4
Municipal securities	—		737		—		737
Total restricted deposits	$	636	$	779	$	—	$	1,415


Total assets at fair value	$	18,313	$	19,107	$	—	$	37,420

The following table summarizes fair value measurements by level at December 31, 2023, for assets and liabilities measured at fair value on a recurring basis ($ in millions):


	Level I		Level II		Level III		Total
Assets
Cash and cash equivalents	$	17,193	$	—	$	—	$	17,193
Investments:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	62	$	—	$	—	$	62
Corporate securities	—		9,564		—		9,564
Municipal securities	—		3,232		—		3,232
Short-term time deposits	—		746		—		746
Asset backed securities	—		1,638		—		1,638
Residential mortgage-backed securities	—		1,407		—		1,407
Commercial mortgage-backed securities	—		1,072		—		1,072
Equity securities	15		2		—		17
Total investments	$	77	$	17,661	$	—	$	17,738
Restricted deposits:
Cash and cash equivalents	$	259	$	—	$	—	$	259
U.S. Treasury securities and obligations of U.S. government corporations and agencies	333		—		—		333
Corporate securities	—		37		—		37
Certificates of deposit	—		4		—		4
Municipal securities	—		753		—		753
Total restricted deposits	$	592	$	794	$	—	$	1,386



Total assets at fair value	$	17,862	$	18,455	$	—	$	36,317

Liabilities
Accounts payable and accrued expenses:
Foreign currency swap agreement	$	—	$	13	$	—	$	13
Total liabilities at fair value	$	—	$	13	$	—	$	13

The Company utilizes matrix-pricing services to estimate fair value for securities which are not actively traded on the measurement date. The Company designates these securities as Level II fair value measurements. In addition, the aggregate carrying amount of the Company's private equity investments and life insurance contracts, which approximates fair value, was $1,079 million and $1,007 million as of June 30, 2024 and December 31, 2023, respectively.

5. Medical Claims Liability

The following table summarizes the change in medical claims liability for the six months ended June 30, 2024 ($ in millions):


	Medicaid		Medicare		Commercial		Other		Consolidated Total
Balance, January 1, 2024	$	10,814	$	3,612	$	3,460	$	114	$	18,000
Less: Reinsurance recoverable	5		—		44		—		49
Balance, January 1, 2024, net	10,809		3,612		3,416		114		17,951

Incurred related to:
Current year	39,398		10,953		12,274		758		63,383
Prior years	(1,136)		(316)		(326)		7		(1,771)
Total incurred	38,262		10,637		11,948		765		61,612
Paid related to:
Current year	30,696		8,093		9,143		633		48,565
Prior years	7,918		2,562		2,367		121		12,968
Total paid	38,614		10,655		11,510		754		61,533
Plus: Premium deficiency reserve	—		85		—		—		85
Balance, June 30, 2024, net	10,457		3,679		3,854		125		18,115
Plus: Reinsurance recoverable	15		—		43		—		58
Balance, June 30, 2024	$	10,472	$	3,679	$	3,897	$	125	$	18,173

The following table summarizes the change in medical claims liability for the six months ended June 30, 2023 ($ in millions):


	Medicaid		Medicare		Commercial		Other		Consolidated Total
Balance, January 1, 2023	$	11,253	$	3,431	$	1,921	$	140	$	16,745
Less: Reinsurance recoverable	7		—		19		—		26
Balance, January 1, 2023, net	11,246		3,431		1,902		140		16,719

Incurred related to:
Current year	40,622		10,083		8,857		773		60,335
Prior years	(1,153)		(191)		(208)		(2)		(1,554)
Total incurred	39,469		9,892		8,649		771		58,781
Paid related to:
Current year	31,837		7,726		6,751		656		46,970
Prior years	7,890		2,357		1,282		137		11,666
Total paid	39,727		10,083		8,033		793		58,636
Balance, June 30, 2023, net	10,988		3,240		2,518		118		16,864
Plus: Reinsurance recoverable	5		—		15		—		20
Balance, June 30, 2023	$	10,993	$	3,240	$	2,533	$	118	$	16,884

Reinsurance recoverables related to medical claims are included in premium and trade receivables. Changes in estimates of incurred claims for prior years are primarily attributable to reserving under moderately adverse conditions. Additionally, as a result of development within "Incurred related to: Prior years," the Company recorded $88 million and $319 million as a reduction to premium revenue in the six months ended June 30, 2024 and 2023, respectively, for minimum health benefits ratio (HBR) and other return of premium programs.

Incurred but not reported (IBNR) plus expected development on reported claims as of June 30, 2024 was $12,337 million. Total IBNR plus expected development on reported claims represents estimates for claims incurred but not reported, development on reported claims and estimates for the costs necessary to process unpaid claims at the end of each period. The Company estimates its liability using actuarial methods that are commonly used by health insurance actuaries and meet Actuarial Standards of Practice. These actuarial methods consider factors such as historical data for payment patterns, cost trends, product mix, seasonality, utilization of healthcare services and other relevant factors.

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

6. Affordable Care Act

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

The Company's net receivables (payables) for each of the programs are as follows ($ in millions):


	June 30, 2024		December 31, 2023
Risk adjustment receivable	$	2,047	$	893
Risk adjustment payable	(3,475)		(2,553)
Minimum medical loss ratio	(675)		(164)
Cost sharing reduction receivable	12		—
Cost sharing reduction payable	(111)		(114)

In July 2024, the Centers for Medicare and Medicaid Services (CMS) announced the final risk adjustment transfers for the 2023 benefit year. Based on the Company's estimate of the final settlement, the risk adjustment net payable was decreased by $1,344 million in the first half of 2024. After consideration of minimum MLR and other related impacts, the net pre-tax benefit recognized was $945 million in the six months ended June 30, 2024 ($78 million in the first quarter of 2024 and $867 million in the second quarter of 2024).

7. Debt

Debt consists of the following ($ in millions):


	June 30, 2024		December 31, 2023
$2,500 million 4.25% Senior Notes due December 15, 2027	$	2,397	$	2,395
$2,300 million 2.45% Senior Notes due July 15, 2028	2,303		2,303
$3,500 million 4.625% Senior Notes due December 15, 2029	3,277		3,277
$2,000 million 3.375% Senior Notes due February 15, 2030	2,000		2,000
$2,200 million 3.00% Senior Notes due October 15, 2030	2,200		2,200
$2,200 million 2.50% Senior Notes due March 1, 2031	2,200		2,200
$1,300 million 2.625% Senior Notes due August 1, 2031	1,300		1,300

Total senior notes	15,677		15,675
Term Loan Facility	2,060		2,115
Revolving Credit Agreement	—		150
Finance leases and other	2		11
Debt issuance costs	(111)		(122)
Total debt	17,628		17,829
Less: current portion	(112)		(119)
Long-term debt	$	17,516	$	17,710

8. Stockholders' Equity

The Company's Board of Directors has authorized a stock repurchase program of the Company's common stock from time to time on the open market or through privately negotiated transactions. The Company is authorized to repurchase up to $10,000 million, inclusive of past authorizations. As of June 30, 2024, the Company had a remaining amount of $4,378 million available under the stock repurchase program.

The following represents the Company's share repurchase activity ($ in millions, shares in thousands):


		Three Months Ended June 30,						Six Months Ended June 30,
		2024			2023			2024			2023
		Shares	Cost		Shares	Cost		Shares	Cost		Shares	Cost
Share buybacks		10,660	$	800	6,028	$	400	11,341	$	851	10,880	$	777
Income tax withholding		44	3		71	5		1,346	103		767	51
Total share repurchases (1)		10,704	$	803	6,099	$	405	12,687	$	954	11,647	$	828

(1)	Excludes share repurchase excise tax of approximately $7 million and $3 million accrued as of June 30, 2024 and 2023, respectively.

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

9. Earnings Per Share

The following table sets forth the calculation of basic and diluted net earnings per common share ($ in millions, except per share data in dollars and shares in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

Earnings attributable to Centene Corporation	$	1,146	$	1,058	$	2,309	$	2,188

Shares used in computing per share amounts:
Weighted average number of common shares outstanding	529,602		548,932		532,385		549,850
Common stock equivalents (as determined by applying the treasury stock method)	1,153		1,376		2,132		2,146
Weighted average number of common shares and potential dilutive common shares outstanding	530,755		550,308		534,517		551,996

Net earnings per common share attributable to Centene Corporation:
Basic earnings per common share	$	2.16	$	1.93	$	4.34	$	3.98
Diluted earnings per common share	$	2.16	$	1.92	$	4.32	$	3.96

The calculation of diluted earnings per common share for the three months ended June 30, 2024 and 2023 excludes 271 thousand shares and 1,519 thousand shares, respectively, related to anti-dilutive stock options, restricted stock and restricted stock units.

The calculation of diluted earnings per common share for the six months ended June 30, 2024 and 2023 excludes 267 thousand shares and 1,611 thousand shares, respectively, related to anti-dilutive stock options, restricted stock and restricted stock units.

10. Segment Information

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

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

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

Segment information for the three months ended June 30, 2024, is as follows ($ in millions):


		Medicaid		Medicare		Commercial		Other/Eliminations		Consolidated Total
Premium		$	20,229	$	5,978	$	8,534	$	399	$	35,140
Service		21		—		1		811		833
Premium and service revenues		20,250		5,978		8,535		1,210		35,973
Premium tax		3,863		—		—		—		3,863
Total external revenues		24,113		5,978		8,535		1,210		39,836
Internal revenues		—		—		—		4,081		4,081
Eliminations		—		—		—		(4,081)		(4,081)
Total revenues		$	24,113	$	5,978	$	8,535	$	1,210	$	39,836

Medical costs		$	18,767	$	5,333	$	6,268	$	397	$	30,765

Cost of services		$	22	$	—	$	—	$	658	$	680

Gross margin (1)		$	1,461	$	645	$	2,267	$	155	$	4,528

(1)	Gross margin represents premium and service revenues less medical costs and cost of services.

Segment information for the three months ended June 30, 2023, is as follows ($ in millions):


		Medicaid		Medicare		Commercial		Other/Eliminations		Consolidated Total
Premium		$	21,895	$	5,665	$	5,734	$	419	$	33,713
Service		—		—		—		1,125		1,125
Premium and service revenues		21,895		5,665		5,734		1,544		34,838
Premium tax		2,770		—		—		—		2,770
Total external revenues		24,665		5,665		5,734		1,544		37,608
Internal revenues		—		—		—		3,789		3,789
Eliminations		—		—		—		(3,789)		(3,789)
Total revenues		$	24,665	$	5,665	$	5,734	$	1,544	$	37,608

Medical costs		$	19,459	$	4,884	$	4,644	$	360	$	29,347

Cost of services		$	2	$	—	$	—	$	875	$	877

Gross margin (1)		$	2,434	$	781	$	1,090	$	309	$	4,614

(1)	Gross margin represents premium and service revenues less medical costs and cost of services.

Segment information for the six months ended June 30, 2024, is as follows ($ in millions):


		Medicaid		Medicare		Commercial		Other/Eliminations		Consolidated Total
Premium		$	41,667	$	11,913	$	16,284	$	805	$	70,669
Service		43		—		2		1,596		1,641
Premium and service revenues		41,710		11,913		16,286		2,401		72,310
Premium tax		7,933		—		—		—		7,933
Total external revenues		49,643		11,913		16,286		2,401		80,243
Internal revenues		—		—		—		8,161		8,161
Eliminations		—		—		—		(8,161)		(8,161)
Total revenues		$	49,643	$	11,913	$	16,286	$	2,401	$	80,243

Medical costs		$	38,262	$	10,722	$	11,948	$	765	$	61,697

Cost of services		$	43	$	—	$	—	$	1,306	$	1,349

Gross margin (1)		$	3,405	$	1,191	$	4,338	$	330	$	9,264

(1)	Gross margin represents premium and service revenues less medical costs and cost of services.

Segment information for the six months ended June 30, 2023, is as follows ($ in millions):


		Medicaid		Medicare		Commercial		Other/Eliminations		Consolidated Total
Premium		$	44,122	$	11,541	$	10,986	$	889	$	67,538
Service		—		—		—		2,252		2,252
Premium and service revenues		44,122		11,541		10,986		3,141		69,790
Premium tax		6,707		—		—		—		6,707
Total external revenues		50,829		11,541		10,986		3,141		76,497
Internal revenues		—		—		—		7,656		7,656
Eliminations		—		—		—		(7,656)		(7,656)
Total revenues		$	50,829	$	11,541	$	10,986	$	3,141	$	76,497

Medical costs		$	39,469	$	9,892	$	8,649	$	771	$	58,781

Cost of services		$	2	$	—	$	—	$	1,745	$	1,747

Gross margin (1)		$	4,651	$	1,649	$	2,337	$	625	$	9,262

(1)	Gross margin represents premium and service revenues less medical costs and cost of services.

11. Contingencies

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

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

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

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

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

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

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