2017 Investor Day June 16, 2017 SSID: Centene Corp Password: - - PowerPoint PPT Presentation

2017 Investor Day

June 16, 2017

SSID: Centene Corp Password: welcome2017

2 CENTENE - JUNE 2017 INVESTOR DAY

Introduction

Edmund E. Kroll, SVP, Finance and Investor Relations

3 CENTENE - JUNE 2017 INVESTOR DAY

Forward-Looking Statements

The company and its representatives may from time to time make written and oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act (“PSLRA”) of 1995, including statements in this and other presentations, press releases, filings with the Securities and Exchange Commission (“SEC”), reports to stockholders and in meetings with investors and analysts. In particular, the information provided in this presentation may contain certain forward-looking statements with respect to the financial condition, results of operations and business of Centene and certain plans and objectives of Centene with respect thereto, including but not limited to the expected benefits of the acquisition of Health Net, Inc. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Without limiting the foregoing, forward-looking statements often use words such as “anticipate”, "seek", “target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe”, “hope”, “aim”, “continue”, “will”, “may”, "can", “would”, “could” or “should” or other words of similar meaning or the negative thereof. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in PSLRA. A number of factors, variables or events could cause actual plans and results to differ materially from those expressed or implied in forward-looking statements. Such factors include, but are not limited to, Centene’s ability to accurately predict and effectively manage health benefits and other operating expenses and reserves; competition; membership and revenue declines or unexpected trends; changes in healthcare practices, new technologies, and advances in medicine; increased health care costs; changes in economic, political or market conditions; changes in federal or state laws or regulations, including changes with respect to government health care programs as well as changes with respect to the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act and any regulations enacted thereunder that may result from changing political conditions; rate cuts or other payment reductions or delays by governmental payors and other risks and uncertainties affecting Centene’s government businesses; Centene’s ability to adequately price products on federally facilitated and state based Health Insurance Marketplaces; tax matters; disasters or major epidemics; the outcome of legal and regulatory proceedings; changes in expected contract start dates; provider, state, federal and other contract changes and timing of regulatory approval of contracts; the expiration, suspension or termination of Centene’s contracts with federal or state governments (including but not limited to Medicaid, Medicare, and TRICARE); challenges to Centene's contract awards; cyber-attacks or other privacy or data security incidents; the possibility that the expected synergies and value creation from acquired businesses, including, without limitation, the Health Net acquisition, will not be realized, or will not be realized within the expected time period, including, but not limited to, as a result of conditions, terms, obligations or restrictions imposed by regulators in connection with their approval of, or consent to, the acquisition; the exertion of management’s time and Centene’s resources, and other expenses incurred and business changes required in connection with complying with the undertakings in connection with certain regulatory approvals; disruption from the acquisition making it more difficult to maintain business and operational relationships; the risk that unexpected costs will be incurred in connection with, among other things, the acquisition and/or the integration; changes in expected closing dates, estimated purchase price and accretion for acquisitions; the risk that acquired businesses will not be integrated successfully; Centene's ability to maintain or achieve improvement in the Centers for Medicare and Medicaid Services (CMS) Star ratings and other quality scores that impact revenue; availability of debt and equity financing, on terms that are favorable to Centene; inflation; foreign currency fluctuations; and risks and uncertainties discussed in the reports that Centene has filed with the SEC. These forward-looking statements reflect Centene’s current views with respect to future events and are based on numerous assumptions and assessments made by Centene in light of its experience and perception of historical trends, current conditions, business strategies, operating environments, future developments and other factors it believes appropriate. By their nature, forward-looking statements involve known and unknown risks and uncertainties and are subject to change because they relate to events and depend on circumstances that will occur in the future. The factors described in the context of such forward-looking statements in this presentation could cause Centene’s plans with respect to the Health Net acquisition, actual results, performance or achievements, industry results and developments to differ materially from those expressed in or implied by such forward-looking statements. Although it is currently believed that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct and persons reading this presentation are therefore cautioned not to place undue reliance on these forward-looking statements which speak only as of the date of this presentation. Centene does not assume any obligation to update the information contained in this presentation (whether as a result of new information, future events or otherwise), except as required by applicable law. This list of important factors is not intended to be exhaustive. We discuss certain of these matters more fully, as well as certain other risk factors that may affect Centene's business operations, financial condition and results of operations, in Centene's filings with the SEC, including the annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.

4 CENTENE - JUNE 2017 INVESTOR DAY

Earnings Guidance Policy

Our Company’s policy is, “that the Company undertakes no obligation to update its earnings guidance, other than as part of its quarterly or yearly earnings disclosure, and that silence on guidance by the Company or Company officials should not be interpreted that guidance has or has not changed. In any event, no updated guidance would ever be given that is not previously or simultaneously disclosed in an SEC filing or other broad non-exclusionary means.” “Further, it is Company policy to generally not hold discussions with investors commencing two weeks prior to earnings release.”

5 CENTENE - JUNE 2017 INVESTOR DAY

Strategic Overview

Michael F. Neidorff, Chairman, President & CEO

6 CENTENE - JUNE 2017 INVESTOR DAY

EPS HBR

$

69% increase

Total Revenues

51% increase

Adjusted Diluted

110 bps improvement

Health Benefits Ratio

Q1 2017 Financials

(year-over-year)

EPS

$

42% increase

Total Revenues

40% increase

Adjusted Diluted

2017 5-Year CAGR

(based on the mid-point of 2017 guidance )

7 CENTENE - JUNE 2017 INVESTOR DAY

30,900 employees

WHO WE ARE

• St. Louis

based company founded in Milwaukee in 1984

WHAT WE DO

28 states

with government sponsored healthcare programs

12.1 million members

~300 product / market

solutions

Serving ~900,000 individuals

$46-46.8B

2 international markets

2017 revenue guidance

Envolve Federal Services Commercial

(Marketplace)

Medicare Complex Care Medicaid

*Including 3 implementation markets

8 CENTENE - JUNE 2017 INVESTOR DAY

Continued Operational Success

2017 - #66

2016 - #124 2015 - #186 2014 - #251 2013 - #303 2012 - #453 2011 - #493

9 CENTENE - JUNE 2017 INVESTOR DAY

Healthcare Reform

Haley Barbour

Founding Partner - BGR Group; Former Governor of Mississippi

Richard Gephardt

Centene Board Member; CEO – Gephardt Group; Former Majority Leader of the U.S. House of Representatives

David Schiappa

Partner at the Duberstein Group

Joe Antos

Wilson H. Taylor Scholar in Health Care and Retirement Policy - American Enterprise Institute

Jonathan Dinesman

SVP, Government Relations - Centene

Expert Panel

10 CENTENE - JUNE 2017 INVESTOR DAY

Focused on Vulnerable and Low Income Populations

118M 318M

US Population

Medicare and Medicaid Population

Population Demographics

60% below 400% FPL 76% below 400% FPL

* Source: U.S. Census Bureau | Current Population Survey (CPS) | Last Revised: March, 2016

11 CENTENE - JUNE 2017 INVESTOR DAY

Need for High Quality, Affordable Healthcare Remains Constant

The healthcare industry will continue to strive to:

Improve access Promote appropriate utilization Increase quality outcomes

Leverage Expertise Execute on Growth Strategies Focus on Fundamentals

Centene will continue to:

12 CENTENE - JUNE 2017 INVESTOR DAY

Value Based Provider Partnerships Analytics Infrastructure Integrated Solutions

Business Operations

Multi-product Portfolio Business Model CA Market Update Partnering with State Governments Product Leadership Product Updates and Growth Pipeline International

13 CENTENE - JUNE 2017 INVESTOR DAY

Value Based Provider Partnerships Analytics Infrastructure Integrated Solutions

Business Operations

Multi-product Portfolio Business Model CA Market Update Partnering with State Governments Product Leadership Product Updates and Growth Pipeline International

Leveraging our business model: 15 subsidiaries exceeding $1B in revenue

14 CENTENE - JUNE 2017 INVESTOR DAY

Value Based Provider Partnerships Analytics Infrastructure Integrated Solutions

Business Operations

Partnering with State Governments CA Market Update Product Leadership Product Updates and Growth Pipeline International

15 CENTENE - JUNE 2017 INVESTOR DAY

Value Based Provider Partnerships Analytics Infrastructure Integrated Solutions

Business Operations

CA Market Update Product Leadership Product Updates and Growth Pipeline International

Integration of HNT is on track

• r ahead of schedule

16 CENTENE - JUNE 2017 INVESTOR DAY

Analytics Infrastructure Integrated Solutions

Business Operations

Value Based Provider Partnerships Product Leadership Product Updates and Growth Pipeline International

Furthering our value based partnerships with providers

JV owned health plan with North Carolina Medical Society and the North Carolina Community Health Center Association

17 CENTENE - JUNE 2017 INVESTOR DAY

Analytics Infrastructure

Business Operations

Integrated Solutions Product Leadership Product Updates and Growth Pipeline International

18 CENTENE - JUNE 2017 INVESTOR DAY

Business Operations

Analytics Infrastructure Product Leadership Product Updates and Growth Pipeline International

Data Analysis Data Integration Data Capture

Faster:

Health Interventions Performance Improved Quality Reduced Costs

Results in:

19 CENTENE - JUNE 2017 INVESTOR DAY

Business Operations

Product Leadership Product Updates and Growth Pipeline International

Marketplace Federal Services MLTSS Medicaid Managed Care

National Leading Products

20 CENTENE - JUNE 2017 INVESTOR DAY

Business Operations

Product Updates and Growth Pipeline International Growth Pipeline

• 14 RFP wins in

the past 18 months

• Pipeline remains

robust Medicare Advantage

• Focused on

under 400% FPL population

• Four new

markets in 2017 Marketplace

• Served ~1.2

million exchange members*

• Expand in 3 new

markets and 6 existing markets in 2018

* As of March 31, 2017

21 CENTENE - JUNE 2017 INVESTOR DAY

Business Operations

International

World Economic Forum

22 CENTENE - JUNE 2017 INVESTOR DAY

Poised for Continued Growth

2012 $46.4 billion Today

2017 mid-point revenue guidance

$8 billion Revenue: 28 14 States:

Including 3 implementation markets

$13.6 billion $1.4 billion Market Cap.: 30,900 6,800 Employees: 12 million 2 million Members:

as of June 15, 2017 as of March 31, 2017 as of March 31, 2017 as of June 30, 2012

23 CENTENE - JUNE 2017 INVESTOR DAY

Finance Update

Jeffrey Schwaneke – EVP, CFO & Treasurer

24 CENTENE - JUNE 2017 INVESTOR DAY

(CONTINUING OPERATIONS)

Diluted EPS of $3.41 Total Revenues of $40.6 billion Fortune 500 #66

+ 78% + 18% Revenues

Added 6.3 million members between years

+ 124% Membership Diluted EPS

Adjusted Diluted EPS of $4.43

+ 41% Adjusted Diluted EPS1

Health Benefits Ratio of 86.5%

HBR 240 bps

improvement

2016 Performance

25 CENTENE - JUNE 2017 INVESTOR DAY

Diluted EPS of $0.79 Total Revenues of $11.7 billion

+ 69% + $0.91 Revenues

Added 605K members between years

+ 5% Membership Diluted EPS

Adjusted Diluted EPS of $1.12

+ 51% Adjusted Diluted EPS1

Health Benefits Ratio of 87.6%

HBR 110 bps

improvement

Q1 2017 Performance

26 CENTENE - JUNE 2017 INVESTOR DAY

$

42%

Total Revenues1

EPS

40%

• Adj. Diluted EPS2

CNC

42%

Stock Price3

Delivering Shareholder Value

5 Year Compound Annual Growth Rates

2012-2017(F), excluding stock price

1 Based upon 2017 guidance midpoint. 2 Represents a non-GAAP measure using the guidance midpoint. See Appendix A for reconciliation of non-GAAP measures. The 5 year GAAP diluted EPS CAGR is 37% using the guidance midpoint. 3 5 year stock price CAGR as of June 13, 2017.

27 CENTENE - JUNE 2017 INVESTOR DAY

Source: SEC filings and Yahoo!Finance 2017 analyst estimates. Peer group includes Aetna, Anthem, Cigna, Humana, Molina, United and WellCare.

7% 8% 8% 11% 13% 18% 27% 42%

CNC

Total Revenues CAGR vs. Peers

5 YEAR CAGR, 2012-2017(F)

28 CENTENE - JUNE 2017 INVESTOR DAY

$1.47 $2.31 $3.14 $4.43 2013 2014 2015 2016 2017 (F)

CNC 5 Year CAGR +40%2

Guidance Range $4.50 – $4.90

Adjusted Diluted Earnings Per Share1

(FROM CONTINUING OPERATIONS)

1 Represents a non-GAAP measure. See Appendix A for reconciliation of non-GAAP measures. 2 Based on 2017 guidance range mid-point.

29 CENTENE - JUNE 2017 INVESTOR DAY

Note: CAGR from June 13, 2012 – June 13, 2017. Source: Yahoo!Finance 1 Peer group includes Aetna, Anthem, Cigna, Humana, Molina, United and WellCare.

13% 27% 42%

Stock Price CAGR vs. Peers

S&P Composite Peer Group1 CNC

5 YEAR CAGR, JUNE 2012-2017

30 CENTENE - JUNE 2017 INVESTOR DAY

2.6 2.9 4.1 5.1 11.4

$8.1 $10.9 $16.6 $22.8 $40.6

2012 2013 2014 2015 2016 2017(F)

Membership Total Revenues

Guidance Mid-point $46.4

Total Revenues/Membership Growth

($ IN BILLIONS, MEMBERSHIP IN MILLIONS)

31 CENTENE - JUNE 2017 INVESTOR DAY

• 500

1,000 1,500 2,000 2014 2015 2016 Q1 2017

Large/Small Group & Individual Off-Exchange Health Insurance Marketplace

Commercial Membership

Key Drivers:

• Health Net acquisition
• Growth in Health Insurance

Marketplace

• Reached over 1 million

exchange members in Q1 2017

Commercial Expansion Driving Growth

(MEMBERSHIP IN THOUSANDS)

• States with large/small group & individual off-exchange membership

32 CENTENE - JUNE 2017 INVESTOR DAY

2,000 4,000 6,000 8,000 2014 2015 2016 Q1 2017

Medicaid Membership

Key Drivers:

• Health Net acquisition
• Product and market growth
• Medicaid expansion

Medicaid Driving Growth

(MEMBERSHIP IN THOUSANDS)

States with business implementation in process

33 CENTENE - JUNE 2017 INVESTOR DAY

2015: $22.8 Billion 2016: $40.6 Billion 2017(F): $46.4 Billion1

88.9% 86.5% 8.3% 9.2% 2015 2016 2017(F)

HBR

• Adj. SG&A

2 1

Commercial and Medicare growth driving changes in HBR & SG&A

Diversifying Revenues

Medicaid Medicare/Duals Commercial Specialty/Government

2 Adjusted SG&A expense excludes certain items. See Appendix A for reconciliation of non-GAAP measures. 2017(F) excludes Health Net acquisition related expenses of $5 - $8 million and the Penn Treaty assessment expense of $47 million.

84% 2% 4% 10% 72% 13% 9% 6% 68% 17% 9% 6%

1 Midpoint of guidance range.

34 CENTENE - JUNE 2017 INVESTOR DAY

TANF, CHIP & Foster Care 64% Commercial 17% Other 7% Medicare/Duals 3% ABD 8% LTC 1%

TANF, CHIP, Foster Care

• Avg. PMPM $200–$600

Commercial

• Avg. PMPM $375

Duals

• Avg. PMPM $2,250

Long-Term Care

• Avg. PMPM $3,600

At-Risk Membership Characteristics

Other/Service

Lower HBR

ABD

• Avg. PMPM $900

Higher HBR

Medicare

• Avg. PMPM $1,000

35 CENTENE - JUNE 2017 INVESTOR DAY

As of Q1 2017

Membership Revenue Medicaid: TANF, CHIP & Foster Care 61% 39% ABD & LTC 9% 29% Behavioral Health 5% 2% Commercial 20% 19% Medicare & Duals 3% 10% Correctional 2% 1% 100% 100%

At-Risk Membership and Premium Revenue

36 CENTENE - JUNE 2017 INVESTOR DAY

December 31, 2015 December 31, 2016 March 31, 2017 Cash and investments $3,978 $9,118 $10,340 Total assets 7,339 20,197 21,362 Debt: Senior notes, at par 925 4,600 4,600 Revolving credit agreement 225 100 100 Mortgage notes 67 64 63 Other debt & cap. leases 4 (109) (116) Total debt 1,221 4,655 4,647 Total stockholders’ equity 2,168 5,909 6,084 Debt to capital ratio, excl. non recourse debt 34.7% 43.7% 43.0%

Balance Sheet

($ IN MILLIONS)

Reduced leverage by 130 basis points subsequent to the acquisition of Health Net

37 CENTENE - JUNE 2017 INVESTOR DAY

Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 42.0% 42.5% 43.0% 43.5% 44.0% 44.5% 45.0%

Strategically manage our balance sheet

Debt to capital ratio expected to be in low 40%’s by Q4 2017

Note: excludes non-recourse mortgage note

Leverage

Continue to reduce our debt-to-capital ratio Aligning financial statement exposure through interest rate swaps

38 CENTENE - JUNE 2017 INVESTOR DAY

Balance March 31, 2017 March 31, 2017 Effective Interest Rate1 $1,400 million 5.625% Senior Notes, due February 2021 $1,400 5.47% $1,000 million 4.75% Senior Notes, due May 2022 $1,008 3.98% $1,000 million 6.125% Senior Notes, due February 2024 $1,000 5.48% $1,200 million 4.75% Senior Notes, due January 2025 $1,200 4.10% Revolving credit agreement $100 4.50% Total Debt/ Weighted average rate $4,708 4.78%

1 Including impact of any interest rate swaps.

Senior Notes and Revolver

Centene’s S&P rating upgraded to ‘BB+’ from ‘BB’ in May 2017

($ IN MILLIONS)

39 CENTENE - JUNE 2017 INVESTOR DAY

$6.0B $4.3B

Investment Portfolio Q1 2017

$2.7B $2.0B

Total Debt Q1 2017

Swapped Floating Rate Debt at 1 or 3 month LIBOR

Floating rate debt expense offset by short-term investment income

Cash & Investments highly correlated to LIBOR rate

Impact of Short-Term Interest Rates

40 CENTENE - JUNE 2017 INVESTOR DAY

Estimated Impact of Change in 3-Month LIBOR

As of March 31, 2017.

($7 ) ($14) ($20) ($27) $11 $22 $32 $43

Interest Expense Interest Income

+$4 +$8 +$12 +$16

Annual Net Favorable Pre-tax Impact

Impact of Short-Term Interest Rates

+75 bps +50 bps +25 bps +100 bps

($ IN MILLIONS)

41 CENTENE - JUNE 2017 INVESTOR DAY

32.7% 36.7% 34.9% 36.7% 0.3% 0.4% 2.1% 3.3% 9.9% 11.5% 14.8% 2014 2015 2016 2017(F)

Nondeductible Compensation ACA Health Insurer Fee All Other Income Tax

42.9% 51.8% 48.6% 39-41%

2017 nondeductible compensation represents approx. $38M or $0.211 per diluted share of income tax expense.

Effective Tax Rate

1 Based on 2017 guidance range mid-point.

42 CENTENE - JUNE 2017 INVESTOR DAY

Timeline – uncertain based on current environment

Immediate tax deduction for capital expenditures Corporate tax rate from 35% to 15%-20%

Potential implications of proposed tax reform

Eliminate net interest expense deduction

Proposed Income Tax Reform

43 CENTENE - JUNE 2017 INVESTOR DAY

Effective Tax Rate Corporate Tax Rate Net Interest Addback Compensation Deductions Annualized Rate Outlook with Proposed Reforms

Tax Reform Healthcare Reform

39-41%

Potential Implications of Tax & Healthcare Reform

18-25% (15-20%) +2% (3%)

In addition, we would benefit from a one-time deferred rate change of ~15% in the year tax reform is enacted (>$100 million after tax).

44 CENTENE - JUNE 2017 INVESTOR DAY

$792 $1,534 $129 $270

2015 2016 2017 (F)

HIF Impact

$1,804 $921

Guidance Range $1,800 to $2,000

Adjusted EBITDA1

1 Represents a non-GAAP measure. See Appendix A for reconciliation of non-GAAP measures. 2 Based on 2017 guidance range mid-point.

YOY Increase 45% 96% 5%2

• Adj. EBITDA as %
• f Revenue

4.0% 4.4% 4.1%2 ($ IN MILLIONS)

45 CENTENE - JUNE 2017 INVESTOR DAY

Low High

Total Revenues $46,000 $46,800 GAAP diluted EPS $3.75 $4.15 Adjusted Diluted EPS1 $4.50 $4.90 HBR% 87.0% 87.5% Selling, general & administrative (SG&A)% 9.1% 9.6% Adjusted SG&A%1 9.0% 9.5% Effective Tax Rate 39.0% 41.0% Diluted Shares (in millions) 176.9 177.9

1 Represents a non-GAAP measure. See Appendix A for reconciliation of non-GAAP measures. Adjusted SG&A% excludes Health Net acquisition related expenses of $5 - $8 million and the Penn Treaty assessment expense of $47 million.

2017 Guidance

($ IN MILLIONS, EXCEPT PER SHARE DATA)

46 CENTENE - JUNE 2017 INVESTOR DAY

Update: Markets

Christopher Bowers, EVP - Markets

47 CENTENE - JUNE 2017 INVESTOR DAY

State Health Plan Membership Growth

0.0 1.0 2.0 3.0 4.0 5.0 6.0

3.7M 0.5M <15k 0.1M

4.4M

(in millions)

Total Membership (as of 1/1/16)

*excludes Correctional, Behavioral Health, Federal Services, ASO and Envolve membership

Medicaid Complex Care Commercial Medicare

48 CENTENE - JUNE 2017 INVESTOR DAY

State Health Plan Membership Growth

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0

Medicaid Complex Care Commercial Medicare 5.7M, ~50%  0.8M, ~60%  0.3M, ~2,600%  1.9M, ~1,800% 

Total Membership (as of 3/31/17)

8.7M, ~100%

(in millions)

*excludes Correctional, Behavioral Health, Federal Services, ASO and Envolve membership

49 CENTENE - JUNE 2017 INVESTOR DAY

Increasing Scale and Diversification

HEALTH PLANS BY PREMIUM SIZE 12 1 10 12

Under $1 billion Over $1 billion

2017(P) 2012

50 CENTENE - JUNE 2017 INVESTOR DAY

Key Membership Drivers in 2017

12/31/16 2017(P)

Marketplace New States (NE, NV) Existing Market Expansions Organic Growth

2017 Growth Areas ~9% 

*excludes Correctional, Behavioral Health, Federal Services, ASO and Envolve membership

51 CENTENE - JUNE 2017 INVESTOR DAY

2017 Market Updates

State Start Date Product Mix Estimated Market Size Number

• f Plans

Membership NE 1/1/17 All populations

(acute only –LTSS & I/DD)

228,000 3 plans 79k* MO 5/1/17 Medicaid 737,500 3 plans 280k** NV 7/1/17 TANF, CHIP, Medicaid Expansion 425,000 4 plans ~35k**

*as of March 31, 2017 **Estimates

52 CENTENE - JUNE 2017 INVESTOR DAY 52

Managing Market Level Trends

53 CENTENE - JUNE 2017 INVESTOR DAY

Centene Playbook to Offset Trends

Trends

HBR Initiatives Payment Integrity Public Policy Engagement Quality Management Risk Adjustment Actuarial Coordination

54 CENTENE - JUNE 2017 INVESTOR DAY

Centene Medicaid Rate Experience

2014 2015 2016

• Est. Cost Trend

1.5%-2.5% Net Rate Increase 0-1% Health Benefits Ratio Consistent HBR performance

Playbook strategies maintain HBR levels despite increasing trends

55 CENTENE - JUNE 2017 INVESTOR DAY

Plan Example - Large Traditional Medicaid Product

Strategies to Offset to Medical Trend

• ED utilization reduction of ~5% (onsite ED Diversion)
• Improved Rx utilization by 12% to mitigate inflationary pressures
• Incremental payment integrity strategies

56 CENTENE - JUNE 2017 INVESTOR DAY

Continue to Generate Strong Growth Through:

• Expansion and retention of

existing business

• Acquisition of new business
• Broader product penetration

Managing and offsetting rate pressures and cost trends through our comprehensive playbook of Health Plan tools and strategies

57 CENTENE - JUNE 2017 INVESTOR DAY

Business Unit Update

Steven Sell, CEO & Plan President - CA Market

58 CENTENE - JUNE 2017 INVESTOR DAY

California: Progress Update

 Improved financial performance  Improved operational performance  Well positioned for the future

15 Months after the Merger Close

59 CENTENE - JUNE 2017 INVESTOR DAY

A Large Market….

• 39M Californians
• Over 27M in risk-based care models*

In All Segments….

• Medicaid, Medicare, Duals
• Employer Group, Individual
• Military, Correctional
• Specialty

With Strong Stakeholder Alignment.

• Physicians, Medical Groups, Hospitals
• CDI, DMHC, DHCS, CMS, CovCA
• Brokers, GA’s and Consultants

California: Market Overview

* Does not include self-insured population (approx. 6M) or Medicare FFS population (approx. 3.5M)

60 CENTENE - JUNE 2017 INVESTOR DAY

Improved Financial Performance

• No Premium Deficiency Reserves taken for 2017
• On track to meet all merger-related synergy targets
• Successfully managing Medicaid Expansion rates
• Expertise in managing heavily capitated population
• Applying rigor to management of Fee For Service costs

Leveraging Best of Both Model Financial Performance

61 CENTENE - JUNE 2017 INVESTOR DAY

Operational Performance

• Processing improvements
• Medical cost reduction initiatives
• Expanded fraud, waste & abuse capability
• Enhanced case management
• Insourcing care management to Centene

systems & processes

• Concurrent review

Medical Management Claims Management

62 CENTENE - JUNE 2017 INVESTOR DAY

Operational Performance cont’d

• Improved Covered CA Net Promoter Score
• Positive member satisfaction trend
• Network is stable
• Maintaining low medical cost trend
• Improved management of FFS providers
• Risk Adjustment improvements

Provider Engagement Quality & Customer Experience

63 CENTENE - JUNE 2017 INVESTOR DAY

California Market Culture

Local Accountability and Control Employee Engagement and Development Performance Orientation

64 CENTENE - JUNE 2017 INVESTOR DAY

• Medicaid
• Duals/MMP
• Correctional Health

Well Positioned for the Future

Medicaid Plan with ~2M lives and 19% market share Market share statewide with ~3M lives

#1 11%

Power of MCO Portfolio A Market Leader

12% Market Share in Sacramento 29% Market Share in the Central Valley 18% Market Share in Los Angeles County

*as of March 31, 2017

65 CENTENE - JUNE 2017 INVESTOR DAY

Update: Products

Jesse Hunter, EVP - Products

66 CENTENE - JUNE 2017 INVESTOR DAY

Product Focus

National Product Leadership Multi-Product Strategy Marketplace Update Medicare Update

67 CENTENE - JUNE 2017 INVESTOR DAY

Product Focus

National Product Leadership Multi-Product Strategy Marketplace Update Medicare Update

68 CENTENE - JUNE 2017 INVESTOR DAY

Product Objective

Envolve Health Federal Services Commercial

(Marketplace)

Medicare Complex Care Medicaid

Market leading products focused on government sponsored healthcare programs

69 CENTENE - JUNE 2017 INVESTOR DAY

Demonstrating Product Leadership

1st or 2nd in Membership

National Market leading position across Products

1987 2007 2008 2013 2014 2017 1984

70 CENTENE - JUNE 2017 INVESTOR DAY 70

AHIP

Product Thought Leadership

MHPA MACPAC MLTSS AMSUS ECHBC National MLTSS Health Plan Association Medicaid and CHIP Payment and Access Commission Association of Military Surgeons

• f the United States

America’s Health Insurance Plans Medicaid Health Plans of America Envolve Center for Health Behavior Change

71 CENTENE - JUNE 2017 INVESTOR DAY

Product Focus

National Product Leadership Multi-Product Strategy Marketplace Update Medicare Update

72 CENTENE - JUNE 2017 INVESTOR DAY

Multi-Product Strategy

Medicaid

Medicare & Duals MSO Correctional Marketplace

73 CENTENE - JUNE 2017 INVESTOR DAY

Product Focus

National Product Leadership Multi-Product Strategy Marketplace Update Medicare Update

74 CENTENE - JUNE 2017 INVESTOR DAY

Membership Demographics

93% 7%

2015* 2016 2017

93%

* 2015 does not include Health Net

7% 9% 91% 78% 22%

2015* 2016 2017

85% 12% 8% 90% 3% 2% Subsidized Unsubsidized

Premium Subsidies

Silver Bronze Gold & Platinum

Metal Tier

75 CENTENE - JUNE 2017 INVESTOR DAY 75

Peak Membership 2014 76,000 2015 167,000 2016 683,000 2017 1,200,000

2017 Marketplace Footprint

Centene State Centene HIM Membership

#1 National Carrier

• n Marketplace

76 CENTENE - JUNE 2017 INVESTOR DAY

Carrier Exit Case Study – Broward County, FL

Carrier’s market exit resulted in a large number of auto- assignments, including 18,000 members assigned to Ambetter

Premi mium m Subs bsidy dy Cost Sharing ng Redu eduction To Total Enrollees ees Members Auto Assigned to Ambetter 83.6% 70.0% 18,114 Auto to Assi ssignments s that E Effectua uated w d with h Ambetter 95. 95.1% 84. 84.9% 6, 6,56 564 All Ne New Ambette tter M Members 92. 92.9% 79. 79.8% 55,202 202

77 CENTENE - JUNE 2017 INVESTOR DAY

Path to 2018

5/1 - 6/21

Initial State Filings

5/1 - 8/16

DOI Reviews, Negotiations and Revisions May Dec. Nov. Oct. Sept. Aug. Jul. Jun.

8/1 - 8/16

Rate Finalization by DOIs and Handoff to CMS

8/20

Court Date for CSRs

9/16 - 9/27

FFM QHP certification signing

10/12

Feds FFM QHP certification signing

11/1 – 12/15

Open Enrollment

2 1 7

78 CENTENE - JUNE 2017 INVESTOR DAY

• 2018 “business as usual” approach based on ACA
• Plan design and pricing reflect market variability and need for flexibility
• Pursue strategic expansion and membership growth
• Strive to maintain our price advantage
• Deliver targeted profit margin

Centene State Centene HIM Membership New HIM Markets in 2018 HIM Expansion Markets

2018 Marketplace Positioning

79 CENTENE - JUNE 2017 INVESTOR DAY

Product Focus

National Product Leadership Multi-Product Strategy Marketplace Update Medicare Update

80 CENTENE - JUNE 2017 INVESTOR DAY

2017 Medicare Profile Products

MA / MAPD D-SNP I-SNP

80

• Membership: 328,000 (March 31, 2017)
• $3B Medicare Platform (2016)
• Multi-product
• Multi-state
• 4 Star Parent Organization Rating

Centene State Centene Medicare Market

MMP C-SNP Med. Supp. EGWP

81 CENTENE - JUNE 2017 INVESTOR DAY

Medicare Strategy

Geography Beneficiary Plan Design

Focus on CNC Markets Focus on individuals under 400% FPL Creating low

• r no cost

premium plans

82 CENTENE - JUNE 2017 INVESTOR DAY

Operationalizing Strategies and Insights

Test and Learn Model

• Brand: New national brand
• Network: Expand non-Medicaid

provider network & increase focus

• n value based purchasing
• Sales and Marketing: Targeted

broker relationships and community depth

83 CENTENE - JUNE 2017 INVESTOR DAY

2018 Outlook

Focused Growth Strategy

• Submitted 11 new market LOIs originally and plan to enter six

new markets

• Launch two D-SNP focused markets
• Additional growth investment in new 2017 markets
• Launch targeted 2018 markets that align with network, plan

design, and sales opportunity Medicare to represent 20%+

• f total Centene growth

Longer-term Expectations:

84 CENTENE - JUNE 2017 INVESTOR DAY

Industry Leading Multi-Product Portfolio

Ability to leverage multi-product portfolio Demonstrated commitment to national product leadership Focused on diversified growth across government healthcare landscape

85 CENTENE - JUNE 2017 INVESTOR DAY

Value in Experience

• C. David Minifie, Chief Experience Officer & EVP

86 CENTENE - JUNE 2017 INVESTOR DAY

Transforming the Health of the Community, One Person at a Time

OUR PURPOSE | why we do what we do OUR BRAND PILLARS | How we go about doing it

Focus on the

Individual

Whole Health Active Local Involvement

87 CENTENE - JUNE 2017 INVESTOR DAY

Focus on the

Individual

What are the challenges

• ur consumers face on the

road to better health?

KNOWN & UNKNOWN PRESENT & FUTURE DIRECT & INDIRECT

88 CENTENE - JUNE 2017 INVESTOR DAY

MEMBERS AND THEIR FAMILIES, PROVIDERS & CAREGIVERS

an expansive consumer ecosystem, includes

89 CENTENE - JUNE 2017 INVESTOR DAY

Changing Landscape

HISTORICAL BUSINESS CONSUMER REALITY

• Auto-assignment
• State Government
• Product
• Transaction
• Consumer Choice
• Individual Consumer
• People
• Engagement

Satisfaction drives results

More Likely to Renew More Likely to Recommend More Likely to Forgive More Likely to Try a New Offering 92% 88% 67% 57%

90 CENTENE - JUNE 2017 INVESTOR DAY

91 CENTENE - JUNE 2017 INVESTOR DAY

Learning More About Our Consumers

Sophisticated Segmentation Research

Detailed Mapping & Targeting

TO WHERE THEY ARE FROM WHO THEY ARE

92 CENTENE - JUNE 2017 INVESTOR DAY

Local Still Matters

93 CENTENE - JUNE 2017 INVESTOR DAY *Figures represent Ambetter membership only (does not include Covered CA members)

94 CENTENE - JUNE 2017 INVESTOR DAY

Adults 65+

Includes those who are about to “age-in,” as well as switchers.

95 CENTENE - JUNE 2017 INVESTOR DAY

• Brand matters; hard to break in with well-entrenched

competitors

• Overall Medicare-eligible carrier switching is small in any
• ne year (about 6%)
• Major switch triggers are: bad customer

experience, PCP falling out of plan, Rx price changes

• Age-ins shop for: brand, price/cost, doctor, formulary
• Providers can be very influential, as can brokers/agents

The Consumer: Highlights

96 CENTENE - JUNE 2017 INVESTOR DAY

Emotional Journey to Get to a Medicare Plan Decision

“Do I qualify for Medicare?” “What does MA cover?” “Do I need other coverage?” “What are my options?” “What plan is best for me?” “How do I enroll?”

Most feel confusion, uncertainty & anxiety Our goal: guided, confident & relieved

97 CENTENE - JUNE 2017 INVESTOR DAY

98 CENTENE - JUNE 2017 INVESTOR DAY

• The name Allwell is simple, clear and

easy to understand.

• Individuals feel that the name conveys

the concepts of “good health and being taken care of.”

• Tested well against competitor brands

already in market. CONSISTENTLY PERFORMED WELL IN RESEARCH AMONG MEDICARE ELIGIBLES Medicare consumers prefer a brand with a local extension, with 61% of consumers preferring a local brand name.

99 CENTENE - JUNE 2017 INVESTOR DAY

Local, flexible and scalable brand architecture

Trusted, local partner for all Texans and their community

Covers full range of government- sponsored Medicaid & Children’s Health Insurance Plans (CHIP)

STATE-BASED MARKET BRAND PRODUCT BRAND FOR MARKETPLACE PRODUCT BRAND FOR MEDICARE EXTENSIONS FOR CONSUMER CATAGORIES

100 CENTENE - JUNE 2017 INVESTOR DAY

Transforming the Health of the Community, One Person at a Time

OUR PURPOSE | why we do what we do OUR BRAND PILLARS | How we go about doing it

Focus on the

Individual

Whole Health Active Local Involvement

101 CENTENE - JUNE 2017 INVESTOR DAY

Question and Answer

Break

SSID: Centene Corp Password: welcome2017

2017 Investor Day

103 CENTENE - JUNE 2017 INVESTOR DAY

Growth and Diversification

Cynthia Brinkley, EVP - Global Corporate Development

104 CENTENE - JUNE 2017 INVESTOR DAY 104

$677B

Addressable Markets Pipeline

$798B $100B $9B $105B $175B

Correctional Healthcare Health Insurance Marketplace Federal Services Medicaid Medicare International

*Data based on Congressional Budget Office projections and Company estimates for FY 2019

$1.86 trillion*

105 CENTENE - JUNE 2017 INVESTOR DAY 105

Correctional Healthcare Health Insurance Marketplace Federal Services Medicaid Medicare International

$249 billion

Targeted Pipeline

106 CENTENE - JUNE 2017 INVESTOR DAY

2018 Revenue Visibility

2017P 2018P

• HIM and Medicare

Market Expansions

• Full Year of MO & NV
• PA Go-live
• IL, MS, MA

Reprocurements

• New Envolve Contracts
• HIF Return
• CA In-Home Support

Services (IHSS) carve-

• ut

GROWTH DRIVERS

$50B+ $46.4B

2018P

$51B+

*2017 mid-point of guidance range

107 CENTENE - JUNE 2017 INVESTOR DAY

Growth Verticals

Existing Markets New Markets Specialty Products Medicare Advantage M&A

108 CENTENE - JUNE 2017 INVESTOR DAY

Growth Verticals

Existing Markets New Markets Specialty Products Medicare Advantage M&A

109 CENTENE - JUNE 2017 INVESTOR DAY

2017 Success

North Central Region Integrated Physical and Behavioral Health

• Awarded May 22nd ; Go-Live January 1, 2018

110 CENTENE - JUNE 2017 INVESTOR DAY

Existing Market - Pending Announcements

MississippiCAN Reprocurement

RFP submitted Apr. 7th

MassHealth Reprocurement

RFP submitted Apr. 13th

ICP & Family Health Plan Reprocurement

RFP submitted May 15th

111 CENTENE - JUNE 2017 INVESTOR DAY

Existing Market - Reprocurements

CHIP Rural Service Area Reprocurement

RFP due July 2017 Go-Live September 2018

STAR+PLUS Reprocurement

RFP anticipated August 2017 Go-Live February 2019

STAR and CHIP Reprocurement

RFP anticipated in 2018 Go-Live January 2020

Statewide Medicaid Managed Care and Long Term Care Reprocurement

RFP anticipated last week of June Go-Live January 2019

Acute Care Reprocurement

RFP expected early November 2017 Go-Live October 2018

KanCare Reprocurement

RFP anticipated late 2017 Go-Live January 2019

112 CENTENE - JUNE 2017 INVESTOR DAY

Existing Markets

HIM Membership Growth (Peak)

112

Centene State Centene HIM Market (2018) New HIM Market (2018) HIM Expansion Market (2018) Centene Medicare Market (2017) 2015

167,000

2016

683,000

2017

1,200,000 328,000

Medicare & Duals Members (Q1 2017)

113 CENTENE - JUNE 2017 INVESTOR DAY

Growth Verticals

Existing Markets New Markets Specialty Products Medicare Advantage M&A

114 CENTENE - JUNE 2017 INVESTOR DAY

New Markets

Heritage Health

Went live 1/1/17

Managed Care Program

7/1/17 go-live

Community HealthChoices

Phased in from 1/1/18 to 1/1/19

HealthChoices

1/1/18 go-live

115 CENTENE - JUNE 2017 INVESTOR DAY

Growth Verticals

Existing Markets New Markets Specialty Products Medicare Advantage M&A

116 CENTENE - JUNE 2017 INVESTOR DAY

Specialty Products

Addressing market needs and driving external revenue growth via an integrated platform that leverages the strength of Centene’s specialty solutions REPRESENTATIVE CLIENTS

Population health technology, risk stratification, care coordination and project management support

117 CENTENE - JUNE 2017 INVESTOR DAY

Correctional Healthcare Services

Existing Markets

117

Leveraging managed care expertise to deliver clinical efficacy and cost efficiency to correctional systems

* CA represents Health Net correctional healthcare business and not Centurion NM MS MN MA VT TN CA FL

118 CENTENE - JUNE 2017 INVESTOR DAY

Growth Verticals

Existing Markets New Markets Specialty Products Medicare Advantage M&A

119 CENTENE - JUNE 2017 INVESTOR DAY

Medicare Advantage

GROWTH STRATEGY

• Targeting low-income enrollees

<400% FPL

• Building upon the strength of

Centene’s local approach

• Leveraging parent
• rganization’s 4-Star rating
• Entering new markets
• Expansion in current markets

120 CENTENE - JUNE 2017 INVESTOR DAY

Growth Verticals

Existing Markets New Markets Specialty Products Medicare Advantage M&A

121 CENTENE - JUNE 2017 INVESTOR DAY

M&A Strategic Objectives

CAPABILITY

M&A targets that add capabilities for existing service offerings

SCALE

Add scale to existing operations and increase our geographic footprint

VALUE CREATION

Generating appropriate returns on our investments for our shareholders

CONSISTENT CRITERIA & FINANCIAL DISCIPLINE

122 CENTENE - JUNE 2017 INVESTOR DAY

In Summary… Scale Momentum Robust Pipeline

WE ARE A GROWTH COMPANY

123 CENTENE - JUNE 2017 INVESTOR DAY

Healthcare Policy Update

Panel Discussion

124 CENTENE - JUNE 2017 INVESTOR DAY

Healthcare Policy Update

Haley Barbour,

Founding Partner - BGR Group; Former Governor of Mississippi

Richard Gephardt

Centene Board Member; CEO – Gephardt Group; Former Majority Leader of the U.S. House of Representatives

David Schiappa

Partner at the Duberstein Group

Joe Antos

Wilson H. Taylor Scholar in Health Care and Retirement Policy – American Enterprise Institute

Jonathan Dinesman

SVP, Government Relations - Centene

125 CENTENE - JUNE 2017 INVESTOR DAY

Question and Answer

126 CENTENE - JUNE 2017 INVESTOR DAY

Finance Update: Appendix A

127 CENTENE - JUNE 2017 INVESTOR DAY

Reconciliation of GAAP Earnings from Continuing Operations to Adjusted Diluted EPS: 2012 2013 2014 2015 2016 Q1 2016 Q1 2017 GAAP Earnings from continuing operations 89 $ 161 $ 268 $ 356 $ 559 $ (15) $ 139 $ Amortization of acquired intangible assets 5 6 16 24 147 9 40 Health Net acquisition related expenses

• 27

234 189 5 California minimum medical loss ratio change

• (195)
• Charitable contribution
• 50
• Debt extinguishment
• 11
• Penn Treaty assessment expense
• 47

Income tax effects of adjustments (2) (2) (6) (20) (79) (87) (34) Adjusted Earnings from Continuing Operations 92 $ 165 $ 278 $ 387 $ 727 $ 96 $ 197 $ Diluted shares outstanding (in thousands) 107,429 112,494 120,360 123,066 163,975 129,531 175,836 GAAP diluted EPS from Continuing Operations 0.83 $ 1.43 $ 2.23 $ 2.89 $ 3.41 $ (0.12) $ 0.79 $ Adjusted Diluted EPS 1 0.86 $ 1.47 $ 2.31 $ 3.14 $ 4.43 $ 0.74 $ 1.12 $ Reconciliation of GAAP diluted EPS to Adjusted Diluted EPS: GAAP diluted EPS Amortization of acquired intangible assets 2 Health Net acquisition related expenses 3 Penn Treaty assessment expense 4 Adjusted Diluted EPS 1 $0.54 - $0.58 $0.02 - $0.03 $0.17 $4.50 - $4.90 $3.75 - $4.15 Annual Guidance December 31, 2017

Included in this presentation is Adjusted Diluted EPS. Management believes that this non-GAAP financial measure provides information that is useful to investors in understanding period-over-period

• perating results and enhances the ability of investors to analyze Centene’s business trends and performance. This non-GAAP financial measure should not be considered in isolation, or as a substitute

for the corresponding GAAP financial measure and may not be comparable to similar measures used by other companies. A reconciliation of this non-GAAP financial measure with the most directly comparable financial measure calculated in accordance with GAAP follows: 1 Adjusted Diluted EPS is defined as GAAP diluted net earnings from continuing operations before amortization of acquired intangible assets, Health Net acquisition related expenses, and the tax impact of such adjustments, calculated on a per share basis. In 2016, Adjusted Diluted EPS excludes debt extinguishment costs and the impact associated with the retroactive change in the minimum MLR calculation and associated charitable contribution. In Q1 2017, Adjusted Diluted EPS excludes the Penn Treaty assessment expense. We believe these adjustments are not indicative of future performance. 2 The amortization of acquired intangible assets per diluted share presented are net of the income tax benefit estimated to be $0.31 to $0.35 for the year ended December 31, 2017. 3 The Health Net acquisition related expenses per diluted share presented are net of the income tax benefit estimated to be $0.01 to $0.02 for the year ended December 31, 2017. 4 The Penn Treaty assessment expense per diluted share is net of the estimated income tax benefit of $0.09 for the year ended December 31, 2017.

Reconciliation of Non-GAAP Measures

($ IN MILLIONS, EXCEPT PER SHARE DATA)

128 CENTENE - JUNE 2017 INVESTOR DAY

Reconciliation of GAAP Earnings from Continuing Operations to Adjusted EBITDA: 2015 2016 GAAP Earnings from continuing operations 356 $ 559 $ Interest expense 43 217 Income taxes 339 599 Depreciation and amortization 112 281 Non-cash stock compensation expense from continuing operations 71 148 Adjusted EBITDA 1 921 $ 1,804 $ Reconciliation of GAAP Selling, General & Administrative expenses (SG&A) to Adjusted SG&A: 2015 2016 GAAP selling, general and administrative expenses 1,802 $ 3,676 $ Health Net acquisition related expenses 27 234 Penn Treaty assessment expense

• Adjusted selling, general and administrative expenses

1,775 $ 3,442 $

Included in this presentation is Adjusted EBITDA and Adjusted SG&A. Management believes that these non-GAAP financial measures provide information that is useful to investors in understanding period-over-period operating results and enhance the ability of investors to analyze Centene’s business trends and

• performance. These non-GAAP financial measures should not be considered in isolation, or as a substitute for the corresponding GAAP financial measures and

may not be comparable to similar measures used by other companies. A reconciliation of these non-GAAP financial measures with the most directly comparable financial measure calculated in accordance with GAAP follows. Note the Company could not provide a reconciliation of 2017(F) without unreasonable efforts. As such, it has been excluded from the reconciliation below.

1 Adjusted EBITDA is defined as net earnings (loss) from continuing operations attributable to Centene before interest expense, income taxes, depreciation and amortization, adjusted to exclude non-cash stock compensation expense from continuing operations and certain other non-cash items, if applicable, that we believe are not indicative of future performance.

Reconciliation of Non-GAAP Measures

($ IN MILLIONS, EXCEPT PER SHARE DATA)

Thank You!

SSID: Centene Corp Password: welcome2017

2017 Investor Day