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)


	September 30, 2024		December 31, 2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	14,577	$	17,193
Premium and trade receivables	18,281		15,532
Short-term investments	2,992		2,459
Other current assets	1,559		5,572
Total current assets	37,409		40,756
Long-term investments	17,691		16,286
Restricted deposits	1,452		1,386
Property, software and equipment, net	2,042		2,019

Goodwill	17,558		17,558
Intangible assets, net	5,582		6,101
Other long-term assets	617		535
Total assets	$	82,351	$	84,641
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS' EQUITY
Current liabilities:
Medical claims liability	$	17,995	$	18,000
Accounts payable and accrued expenses	13,338		16,420
Return of premium payable	1,959		1,462
Unearned revenue	658		715
Current portion of long-term debt	111		119
Total current liabilities	34,061		36,716
Long-term debt	17,494		17,710
Deferred tax liability	769		641
Other long-term liabilities	2,618		3,618
Total liabilities	54,942		58,685
Commitments and contingencies
Redeemable noncontrolling interests	13		19
Stockholders' equity:
Preferred stock, $0.001 par value; authorized 10,000 shares; no shares issued or outstanding at September 30, 2024 and December 31, 2023	—		—
Common stock, $0.001 par value; authorized 800,000 shares; 619,945 issued and 510,078 outstanding at September 30, 2024, and 615,291 issued and 534,484 outstanding at December 31, 2023	1		1
Additional paid-in capital	20,522		20,304
Accumulated other comprehensive (loss)	(226)		(652)
Retained earnings	15,065		12,043
Treasury stock, at cost (109,867 and 80,807 shares, respectively)	(8,055)		(5,856)
Total Centene stockholders' equity	27,307		25,840
Nonredeemable noncontrolling interest	89		97
Total stockholders' equity	27,396		25,937
Total liabilities, redeemable noncontrolling interests and stockholders' equity	$	82,351	$	84,641

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

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Revenues:
Premium	$	36,115	$	33,866	$	106,784	$	101,404
Service	784		1,101		2,425		3,353
Premium and service revenues	36,899		34,967		109,209		104,757
Premium tax	5,124		3,075		13,057		9,782
Total revenues	42,023		38,042		122,266		114,539
Expenses:
Medical costs	32,201		29,479		93,898		88,260
Cost of services	692		856		2,041		2,603
Selling, general and administrative expenses	3,057		3,048		9,169		9,075
Depreciation expense	140		148		408		436
Amortization of acquired intangible assets	173		180		519		542
Premium tax expense	5,095		3,156		13,218		10,021

Impairment	—		440		13		478

Total operating expenses	41,358		37,307		119,266		111,415
Earnings from operations	665		735		3,000		3,124
Other income (expense):
Investment and other income	432		214		1,440		992

Interest expense	(176)		(181)		(530)		(542)
Earnings before income tax	921		768		3,910		3,574
Income tax expense	211		293		896		914
Net earnings	710		475		3,014		2,660
(Earnings) loss attributable to noncontrolling interests	3		(6)		8		(3)
Net earnings attributable to Centene Corporation	$	713	$	469	$	3,022	$	2,657

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

Weighted average number of common shares outstanding:
Basic	521,965		539,535		528,912		546,374
Diluted	523,542		541,270		530,915		548,412

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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net earnings	$	710	$	475	$	3,014	$	2,660
Change in unrealized gain (loss) on investments	549		(235)		442		(124)
Change in unrealized gain (loss) on investments, tax effect	(130)		56		(109)		29
Change in unrealized gain (loss) on investments, net of tax	419		(179)		333		(95)

Reclassification adjustment, net of tax	1		57		93		61
Foreign currency translation adjustments, net of tax	—		(22)		—		24
Net unrealized gain on cash flow hedge, net of tax	—		20		—		20
Other comprehensive earnings (loss)	420		(124)		426		10
Comprehensive earnings	1,130		351		3,440		2,670
Comprehensive (earnings) loss attributable to noncontrolling interests	3		(6)		8		(3)
Comprehensive earnings attributable to Centene Corporation	$	1,133	$	345	$	3,448	$	2,667

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

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

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

(Unaudited)

Three and Nine Months Ended September 30, 2024


	Centene Stockholders' Equity
	Common Stock									Treasury Stock
	$0.001 Par Value Shares	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
Comprehensive Earnings:
Net earnings (loss)	—	—		—		—		713		—	—		(1)		712
Other comprehensive earnings, net of $131 tax	—	—		—		420		—		—	—		—		420


Common stock issued for employee benefit plans	450	—		12		—		—		—	—		—		12
Common stock repurchases	—	—		—		—		—		16,373	(1,238)		—		(1,238)
Stock compensation expense	—	—		49		—		—		—	—		—		49




Balance, September 30, 2024	619,945	$	1	$	20,522	$	(226)	$	15,065	109,867	$	(8,055)	$	89	$	27,396

Three and Nine Months Ended September 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
Comprehensive Earnings:
Net earnings	—	—		—		—		469		—	—		3		472
Other comprehensive loss, net of $(34) tax	—	—		—		(124)		—		—	—		—		(124)
Common stock issued for employee benefit plans	213	—		11		—		—		—	—		—		11
Common stock repurchases	—	—		—		—		—		11,620	(781)		—		(781)
Stock compensation expense	—	—		50		—		—		—	—		—		50
Purchase of non-redeemable noncontrolling interests	—	—		(1)		—		—		—	—		—		(1)
Balance, September 30, 2023	614,956	$	1	$	20,243	$	(1,122)	$	11,998	80,360	$	(5,825)	$	100	$	25,395

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

CENTENE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions, unaudited)


	Nine Months Ended September 30,
	2024		2023
Cash flows from operating activities:
Net earnings	$	3,014	$	2,660
Adjustments to reconcile net earnings to net cash provided by operating activities
Depreciation and amortization	927		978
Stock compensation expense	181		167
Impairment	13		478


Deferred income taxes	14		14
(Gain) loss on divestitures, net	(103)		(172)

Other adjustments, net	(2)		158
Changes in assets and liabilities
Premium and trade receivables	(2,737)		(2,329)
Other assets	78		(103)

Medical claims liabilities	(5)		401
Unearned revenue	(58)		1,878
Accounts payable and accrued expenses	(503)		3,127
Other long-term liabilities	(84)		583
Other operating activities, net	6		(4)
Net cash provided by operating activities	741		7,836
Cash flows from investing activities:
Capital expenditures	(490)		(576)
Purchases of investments	(5,770)		(4,729)
Sales and maturities of investments	4,147		4,373

Divestiture proceeds, net of divested cash	959		690

Net cash used in investing activities	(1,154)		(242)
Cash flows from financing activities:
Proceeds from long-term debt	350		2,170
Payments and repurchases of long-term debt	(594)		(1,970)
Common stock repurchases	(2,181)		(1,602)
Proceeds from common stock issuances	37		32

Purchase of noncontrolling interest	—		(87)

Other financing activities, net	(5)		—
Net cash used in financing activities	(2,393)		(1,457)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	7		19
Net increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents	(2,799)		6,156
Cash and cash equivalents reclassified (to) from held for sale	(3)		(36)
Cash, cash equivalents and restricted cash and cash equivalents, beginning of period	17,452		12,330
Cash, cash equivalents and restricted cash and cash equivalents, end of period	$	14,650	$	18,450
Supplemental disclosures of cash flow information:
Interest paid	$	495	$	496
Income taxes paid	$	821	$	759


The following table provides a reconciliation of cash, cash equivalents and restricted cash and cash equivalents reported within the Consolidated Balance Sheets to the totals above:
	September 30,
	2024		2023
Cash and cash equivalents	$	14,577	$	18,190
Restricted cash and cash equivalents, included in restricted deposits	73		260
Total cash, cash equivalents and restricted cash and cash equivalents	$	14,650	$	18,450

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

CENTENE CORPORATION AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Operations

Basis of Presentation

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

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

Accounting Guidance Not Yet Adopted

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

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

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

2. Acquisitions and Divestitures

Magellan Specialty Health Divestiture

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

Circle Health Group Divestiture

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

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

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

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

Collaborative Health Systems Divestiture

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

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

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

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

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


	September 30, 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	$	592	$	6	$	(4)	$	594	$	403	$	—	$	(8)	$	395
Corporate securities	10,808		158		(277)		10,689		9,984		78		(461)		9,601
Restricted certificates of deposit	3		—		—		3		4		—		—		4
Restricted cash equivalents	73		—		—		73		259		—		—		259
Short-term time deposits	875		—		—		875		746		—		—		746
Municipal securities	4,224		32		(114)		4,142		4,135		21		(171)		3,985
Asset-backed securities	1,773		22		(17)		1,778		1,665		8		(35)		1,638
Residential mortgage-backed securities	1,725		24		(81)		1,668		1,503		7		(103)		1,407
Commercial mortgage-backed securities	1,231		10		(52)		1,189		1,149		5		(82)		1,072
Equity securities	15		—		—		15		17		—		—		17
Private equity investments	913		—		—		913		833		—		—		833
Life insurance contracts	196		—		—		196		174		—		—		174
Total	$	22,428	$	252	$	(545)	$	22,135	$	20,872	$	119	$	(860)	$	20,131

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

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

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


	September 30, 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	$	—	$	11	$	(4)	$	163	$	—	$	79	$	(8)	$	232
Corporate securities	(1)		437		(276)		5,025		(6)		658		(455)		6,260
Municipal securities	(1)		287		(113)		2,176		(4)		553		(167)		2,237
Asset-backed securities	—		43		(17)		381		(2)		197		(33)		855
Residential mortgage-backed securities	—		41		(81)		795		(2)		153		(101)		814
Commercial mortgage-backed securities	—		38		(52)		714		(2)		114		(80)		754
Short-term time deposits	—		—		—		—		—		31		—		—
Total	$	(2)	$	857	$	(543)	$	9,254	$	(16)	$	1,785	$	(844)	$	11,152

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

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

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

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


	September 30, 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	$	2,751	$	2,733	$	400	$	399	$	2,308	$	2,284	$	566	$	564
One year through five years	7,795		7,667		685		677		7,738		7,431		527		504
Five years through ten years	4,354		4,318		311		306		3,905		3,735		298		283
Greater than ten years	209		206		70		70		155		154		34		35
Asset-backed securities	4,729		4,635		—		—		4,317		4,117		—		—
Total	$	19,838	$	19,559	$	1,466	$	1,452	$	18,423	$	17,721	$	1,425	$	1,386

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

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 September 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	$	14,577	$	—	$	—	$	14,577
Investments:
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	56	$	—	$	—	$	56
Corporate securities	—		10,649		—		10,649
Municipal securities	—		3,344		—		3,344
Short-term time deposits	—		875		—		875
Asset-backed securities	—		1,778		—		1,778
Residential mortgage-backed securities	—		1,668		—		1,668
Commercial mortgage-backed securities	—		1,189		—		1,189
Equity securities	14		1		—		15
Total investments	$	70	$	19,504	$	—	$	19,574
Restricted deposits:
Cash and cash equivalents	$	73	$	—	$	—	$	73
U.S. Treasury securities and obligations of U.S. government corporations and agencies	538		—		—		538
Corporate securities	—		40		—		40
Certificates of deposit	—		3		—		3
Municipal securities	—		798		—		798
Total restricted deposits	$	611	$	841	$	—	$	1,452


Total assets at fair value	$	15,258	$	20,345	$	—	$	35,603

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 $1,109 million and $1,007 million as of September 30, 2024 and December 31, 2023, respectively.

5. Medical Claims Liability

The following table summarizes the change in medical claims liability for the nine months ended September 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	59,327		16,134		19,211		1,216		95,888
Prior years	(1,247)		(439)		(306)		7		(1,985)
Total incurred	58,080		15,695		18,905		1,223		93,903
Paid related to:
Current year	50,198		13,006		15,773		1,040		80,017
Prior years	8,543		2,713		2,523		120		13,899
Total paid	58,741		15,719		18,296		1,160		93,916
Plus: Premium deficiency reserve	—		(5)		—		—		(5)
Balance, September 30, 2024, net	10,148		3,583		4,025		177		17,933
Plus: Reinsurance recoverable	20		—		42		—		62
Balance, September 30, 2024	$	10,168	$	3,583	$	4,067	$	177	$	17,995

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


	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	60,379		14,680		13,994		1,095		90,148
Prior years	(1,303)		(326)		(256)		(3)		(1,888)
Total incurred	59,076		14,354		13,738		1,092		88,260
Paid related to:
Current year	50,774		12,069		11,575		984		75,402
Prior years	8,517		2,452		1,376		136		12,481
Total paid	59,291		14,521		12,951		1,120		87,883
Balance, September 30, 2023, net	11,031		3,264		2,689		112		17,096
Plus: Reinsurance recoverable	4		—		41		—		45
Balance, September 30, 2023	$	11,035	$	3,264	$	2,730	$	112	$	17,141

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

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

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

6. Affordable Care Act

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

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


	September 30, 2024		December 31, 2023
Risk adjustment receivable	$	1,805	$	893
Risk adjustment payable	(1,705)		(2,553)
Minimum medical loss ratio	(586)		(164)
Cost sharing reduction receivable	10		—
Cost sharing reduction payable	(68)		(114)

In July 2024, the Centers for Medicare and Medicaid Services (CMS) announced the final risk adjustment transfers for the 2023 benefit year. As a result of the announcement, the risk adjustment net payable was decreased by $131 million in the third quarter of 2024, with a total impact of $1,475 million for the nine months ended September 30, 2024. After consideration of minimum MLR and other related impacts, which includes the effect to the 2024 benefit year, the net pre-tax benefit recognized was $920 million in the nine months ended September 30, 2024.

7. Debt

Debt consists of the following ($ in millions):


	September 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	2,302		2,303
$3,500 million 4.625% Senior Notes due December 15, 2029	3,277		3,277
$2,000 million 3.375% Senior Notes due February 15, 2030	2,000		2,000
$2,200 million 3.00% Senior Notes due October 15, 2030	2,200		2,200
$2,200 million 2.50% Senior Notes due March 1, 2031	2,200		2,200
$1,300 million 2.625% Senior Notes due August 1, 2031	1,300		1,300

Total senior notes	15,676		15,675
Term Loan Facility	2,033		2,115
Revolving Credit Agreement	—		150
Finance leases and other	1		11
Debt issuance costs	(105)		(122)
Total debt	17,605		17,829
Less: current portion	(111)		(119)
Long-term debt	$	17,494	$	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 September 30, 2024, the Company had a remaining amount of $3,160 million available under the stock repurchase program. In October 2024, the Company repurchased an additional 5.2 million shares for $380 million.

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


		Three Months Ended September 30,						Nine Months Ended September 30,
		2024			2023			2024			2023
		Shares	Cost		Shares	Cost		Shares	Cost		Shares	Cost
Share buybacks		16,254	$	1,218	11,609	$	773	27,595	$	2,069	22,489	$	1,550
Income tax withholding		119	9		11	1		1,465	112		778	52
Total share repurchases (1)		16,373	$	1,227	11,620	$	774	29,060	$	2,181	23,267	$	1,602

(1)	Excludes year-to-date share repurchase excise tax of approximately $18 million and $10 million accrued as of September 30, 2024 and 2023, respectively.

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

9. Earnings Per Share

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023

Earnings attributable to Centene Corporation	$	713	$	469	$	3,022	$	2,657

Shares used in computing per share amounts:
Weighted average number of common shares outstanding	521,965		539,535		528,912		546,374
Common stock equivalents (as determined by applying the treasury stock method)	1,577		1,735		2,003		2,038
Weighted average number of common shares and potential dilutive common shares outstanding	523,542		541,270		530,915		548,412

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

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

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

10. Segment Information

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

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

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

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


		Medicaid		Medicare		Commercial		Other/Eliminations		Consolidated Total
Premium		$	21,291	$	5,643	$	8,693	$	488	$	36,115
Service		25		—		—		759		784
Premium and service revenues		21,316		5,643		8,693		1,247		36,899
Premium tax		5,124		—		—		—		5,124
Total external revenues		26,440		5,643		8,693		1,247		42,023
Internal revenues		—		—		—		4,290		4,290
Eliminations		—		—		—		(4,290)		(4,290)
Total revenues		$	26,440	$	5,643	$	8,693	$	1,247	$	42,023

Medical costs		$	19,818	$	4,968	$	6,957	$	458	$	32,201

Cost of services		$	23	$	—	$	—	$	669	$	692

Gross margin (1)		$	1,475	$	675	$	1,736	$	120	$	4,006

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

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


		Medicaid		Medicare		Commercial		Other/Eliminations		Consolidated Total
Premium		$	21,619	$	5,430	$	6,451	$	366	$	33,866
Service		—		—		2		1,099		1,101
Premium and service revenues		21,619		5,430		6,453		1,465		34,967
Premium tax		3,075		—		—		—		3,075
Total external revenues		24,694		5,430		6,453		1,465		38,042
Internal revenues		—		—		—		3,978		3,978
Eliminations		—		—		—		(3,978)		(3,978)
Total revenues		$	24,694	$	5,430	$	6,453	$	1,465	$	38,042

Medical costs		$	19,607	$	4,462	$	5,089	$	321	$	29,479

Cost of services		$	—	$	—	$	—	$	856	$	856

Gross margin (1)		$	2,012	$	968	$	1,364	$	288	$	4,632

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

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


		Medicaid		Medicare		Commercial		Other/Eliminations		Consolidated Total
Premium		$	62,958	$	17,556	$	24,977	$	1,293	$	106,784
Service		68		—		2		2,355		2,425
Premium and service revenues		63,026		17,556		24,979		3,648		109,209
Premium tax		13,057		—		—		—		13,057
Total external revenues		76,083		17,556		24,979		3,648		122,266
Internal revenues		—		—		—		12,451		12,451
Eliminations		—		—		—		(12,451)		(12,451)
Total revenues		$	76,083	$	17,556	$	24,979	$	3,648	$	122,266

Medical costs		$	58,080	$	15,690	$	18,905	$	1,223	$	93,898

Cost of services		$	66	$	—	$	—	$	1,975	$	2,041

Gross margin (1)		$	4,880	$	1,866	$	6,074	$	450	$	13,270

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

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


		Medicaid		Medicare		Commercial		Other/Eliminations		Consolidated Total
Premium		$	65,741	$	16,971	$	17,437	$	1,255	$	101,404
Service		—		—		2		3,351		3,353
Premium and service revenues		65,741		16,971		17,439		4,606		104,757
Premium tax		9,782		—		—		—		9,782
Total external revenues		75,523		16,971		17,439		4,606		114,539
Internal revenues		—		—		—		11,634		11,634
Eliminations		—		—		—		(11,634)		(11,634)
Total revenues		$	75,523	$	16,971	$	17,439	$	4,606	$	114,539

Medical costs		$	59,076	$	14,354	$	13,738	$	1,092	$	88,260

Cost of services		$	2	$	—	$	—	$	2,601	$	2,603

Gross margin (1)		$	6,663	$	2,617	$	3,701	$	913	$	13,894

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

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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