Good morning, and thank you for joining the 2021 annual stockholders meeting for Centene Corporation. Today's meeting will be conducted by Mr. Michael Neidorff, Chairman, President, and Chief Executive Officer. Mr. Neidorff, please begin. Good morning, and welcome to the 2021 annual stockholders meeting of Centene Corporation. 2020 was an unprecedented year as we navigated the global COVID-19 pandemic. My fellow board members and I are proud to have helped guide the company through key business decisions during this time, while always maintaining our focus of supporting the company's valued members, employees, stockholders, and our state and federal customers. Thank you for joining us this morning, and we look forward to answering any questions after we conclude the business portion of the meeting. I am pleased to say that we have each of our directors attending this meeting. Joining us today are Orlando Ayala, Jess Blume, James Dallas, Robert Ditmore, Fred Eppinger, The Honorable Richard Gephardt, John Roberts, Lori Robinson, David Steward, Governor Tommy Thompson, and William Trubeck. In addition, our senior management team is also on the line and involved in today's meeting. We're also joined by Dan Rockwood of KPMG, Jay Nouss of Bryan Cave Leighton Paisner of L.A. A shorter name, Jay. Nancy Hoffman as our Inspector of Elections. I would like to now advise you of the legal requirements necessary for today's meeting and to explain the procedures we will follow this morning. First, this meeting is held pursuant to the notice dated March 12th, 2021, which was mailed to all stockholders as of February 26th, 2021, the established record date. An affidavit of mailing this notice has been filed with the company's records. A list of the stockholders on the record date is available for your review on the web portal for stockholders. Second, Ms. Hoffman has been appointed Inspector of Elections. Ms. Hoffman has examined the proxies and reports that more than 518 million shares of common stock are present in person or through representation by proxy. This represents over 89% of the 582 million shares entitled to vote at the meeting. On that basis, we have a quorum, and we can proceed with the transaction of business. Third, stockholders of record may vote today until the polls close during this meeting. If you have previously provided your proxy, your shares will be voted accordingly. If you have not voted or have previously voted and wish to change your vote, please log in as a shareholder by entering the 16-digit control number you received with your proxy materials and enter your votes prior to the polls closing during the meeting. Fourth, the voting polls are now open. They will remain open throughout the meeting and will close when the formal portion of the meeting concludes. At the end of the meeting, we will announce the preliminary results of the voting on each matter. The proposals will be presented in the order outlined in the proxy statement. Please note that this meeting is being recorded. However, no one attending the webcast or telephone is permitted to use any audio or visual recording device. At this point, I'd like to remind everyone of the rules of conduct for the meeting. A copy of the rules, along with the agenda, are posted on the website portal. The first matter to be voted on is the election of directors. The four nominees for election as Class 2 directors until the 2024 annual meeting are Jessica L. Blume, Frederick H. Eppinger, David L. Steward, William L. Trubeck. The board recommends a vote for each of the nominees on the ballot. The second matter to be voted on is the advisory resolution to approve the compensation of the company's named executive officers. The board recommends a vote for the proposal. The third matter to be voted on is the ratification of the selection of KPMG as the company's independent registered public accounting firm for the current fiscal year. The board recommends a vote for the proposal. The fourth matter to be voted on is an amendment to increase the number of authorized shares under our 2012 stock incentive plan, as well as to extend the terms of the plan and to provide for the maximum of shares that may be issued pursuant to the exercise of ISOs under the plan. The board recommends a vote for the proposal. The fifth matter to be voted on is the amendment and restatement of the company's certificate of incorporation to eliminate super majority voting provisions. The board recommends a vote for the proposal. The sixth matter to be voted on is a stockholder proposal from Mr. John Chevedden. The full text of the proposal is set forth in the company's proxy. I understand that Ms. Kim Franklin, a representative of the stockholder, will present the proposal, and I'd like to invite her to do so. Operator, please unmute Ms. Franklin's line. Good morning. I hope you can hear me. Yes. Proposal six, elect each director annually. Shareholders ask that our company take all the steps necessary to reorganize the board of directors into one class, with each director subject to election each year for a one-year term. Reluctant management support for this proposal is appreciated. This proposal can be in place for our 2022 annual and would thus mean that each director would stand for election to a one-year term in 2022. Three-year director terms currently in place at Centene have been found to be one of six entrenching mechanisms that are negatively related to the company performance according to What Matters in Corporate Governance by Lucian Bebchuk, Alma Cohen, and Allen Ferrell of the Harvard Law School. This is an additional best practice good governance proposal in the same spirit as the 2020 simple majority vote proposal, which received 93% Centene shareholder support in 2020, and is on the ballot today as a management proposal. Arthur Levitt, former Chairman of the Securities and Exchange Commission, said, In my view, it's best for the investor if the entire board is elected once a year. Without annual election of each director, shareholders have far less control over who represents them. A total of 79 S&P 500 and Fortune 500 companies worth more than $1 trillion also adopted this important proposal topic since 2012. Annual election of each director could make directors more accountable and thereby contribute to improved performance and increased company value at virtually no extra cost to shareholders. Thus, it was not a surprise that this proposal topic won 96% support at United Therapeutics Corporation in 2019. Annual election of each director can be a step to make the corporate governance of Centene more competitive and unlock shareholder value. Please vote yes. Elect each director annually, proposal six. Thank you very much. Franklin, we appreciate your interest in our company. The board recommends a vote for the proposal. If any stockholder would like to submit a question regarding any of the proposals, please submit your question through the web portal. Please note that we will be closing the polls at the conclusion of any questions. If you have not yet voted and would like to, please do so in the next few minutes or few moments. We now pause for one minute for any questions. We have questions on the line today. The first question, what is the total CEO pay for 2020 and for 2019? Bob, if you would, please. Yes. To answer the question, as stated in our 2021 proxy in the summary compensation table, for 2019, Mr. Neidorff's total compensation was $26.4 million. For 2020, his total compensation was $24.9 million. Thank you. The next question. Mr. Chairman, the Carpenter Pension Funds held a collective position of 668,245 shares of the company's common stock. As long-term investors, I would first like to note that we support the classified board structure combined with the majority vote director election standard structure the company has in place. Board accountability is related to the election vote standard, not election frequency, as confirmed by recent academic studies. My question relates to the executive compensation plan. The long-term incentive component of the plan uses four different instruments, PSUs, RSUs, options, and a cash LTIP, some with common metrics to deliver the majority of compensation. Could you or the chair of the Compensation Committee discuss the rationale for this approach? Thank you. Do that, please. These metrics reflect our pay-for-performance culture, and they are reflective of the long-term view that we have of our stock. The cash LTIP is designed to prevent high dilution. The PSUs are used from a pre-tax margin and a revenue growth to reflect what are important metrics to our shareholders. The RSUs are used as retention, and stock options reflect how we perform against the performance of these total shareholders, the stock market. That's all I have, Michael. Thank you. Are there any further questions? Further questions at this time. Okay. There being no further questions, this concludes the business items on the agenda for the annual meeting. The polls are now closed. We now have the preliminary results of the meeting, which I will ask Ms. Hoffman to read. Ms. Hoffman, please unmute your line. The preliminary report of the results of the meeting shows that each of the nominees named in the proxy statement has been elected. The advisory resolution to approve executive compensation has been approved. The selection of KPMG as the company's independent registered public accounting firm for the current fiscal year has been ratified. The amendments to the company's 2012 stock incentive plan, as amended, have been approved, and the amendment and restatement of the company's certificate of incorporation has been approved, and the stockholder proposal to elect each director annually has been approved. Thank you, Ms. Hoffman. We will be reporting the final vote results on a Form 8-K to be filed within four business days. There is no further business to come before the meeting, the formal part of this meeting is now adjourned. I will now invite Jennifer Gilligan, Senior Vice President, Finance and Investor Relations, to review the safe harbor provisions, after which I will present my Chairman's report and answer appropriate questions from stockholders. Excuse me. The slides referenced in my Chairman's report can be found in the materials section at the bottom of this visual or virtual meeting site. Ms. Gilligan, please unmute your line. Thank you. Please note that various remarks we make today may constitute forward-looking statements. Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the risk factors section of our most recent quarterly report. These forward-looking statements represent our expectations as of today, and we disclaim any obligation to update them. 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. It is company policy to generally not hold discussions with investors commencing two weeks prior to earnings release. I will now proceed with a brief presentation, after which I'll be happy to take questions on it. The first slide we're looking at, who we are, I think is one of my favorite slides. It tends to show just who we really are. We're 69,100 employees strong. In fact, I think that's grown to where it's even more than that today. We're number 42 on the Fortune 500 list. As we continue to move up the air, it gets more verified. On the Fortune 500 global list in 2020, we're number 127. On the Fortune's Change the World list, the Blue Ribbon Company in 2020. We have given guidance that we will achieve $121.1 billion in 2021. We have cash on hand and investments, $25.6 billion. We're in all 50 states, three foreign countries internationally. We're involved with Medicaid, Marketplace, Medicare, and Correctional, so a lot of all government services related. One out of every 15 Americans, or 25 million, are covered by Centene and its subsidiaries. Across all our markets in all states, there's in excess of 450 different products and contracts. It's very diversified. We remind our investors that that diversification gives a certain amount of security. For those that operate large funds, at any given time, you can have one of your stocks that's an issue. That's okay, there's offsetting. That's where we are. At any given time, we can have a contract that has a problem or an issue worth fixing. On balance, we have the diversification to protect your investment. Now, this is also one of my favorite charts. What do these major corporations all have in common? From P&G, FedEx, UPS, Pfizer, Coca-Cola, Pepsi, Facebook, Morgan Stanley, all of them, even the [Arkeb] market. The one thing they have in common is they're all smaller than Centene Corporation in revenue. We're going to have to do something about that. I don't think people realize what our total scale and size is. If we look at the next slide, they are all smaller than Centene, and that says a lot. The five-year compounded annual growth rate is also a nice number to look at. Total revenues, 37%. Adjusted diluted EPS, 26%, and the stock price, 13%. We're going to be working hard to see if we can have that stock catch up to where it really should be in its true value. If we look at the 2020 recap, revenues were up 49%, the adjusted diluted EPS 13%, and membership 67%. All good metrics and demonstrate the kind of growth we received. 2021, we expect revenues to be up 15% in the first quarter, they have been, to $30 billion. Adjusted diluted EPS up 90% to $1.63, and that's because of some of the expenses we had in the first quarter last year with the acquisition of WellCare. Membership was up 1.3 million members at 5%. Now, as the denominator gets larger, we have to expect the percentages to be a little lower. We also have announced that Centene and Magellan will be coming together, hopefully early in the second half of the year. This deepens our whole health capabilities. Centene is really clearly a leader in the government services healthcare space. The behavioral health, which gives us the kind of scale and expertise we need, it allows you to treat the whole person. Behavioral health, we are seeing more and more, is something that is really undertreated. It's underserved. This puts us in a very strong position to be able to achieve that. The internal and external specialty benefits and pharmacy will also increase as a result of this. It's something we can grow and take beyond where it is. As some of our people like to talk about, we have a lot of Petri dishes, which is a nice way to say we have spots where we can test things and do things with all the various plans. This will give Magellan an opportunity to do that. I also want to emphasize that they will be part of Healthcare Enterprises, which is an independent subsidiary of ours with an independent board, so that there'll be the firewalls and the comfort other users of their services, other companies, will know that they're protected and the integrity of their information is protected. Very important. We also see creating value and earnings accretion as a result of this. It's a good mix. We've looked at it for a long time and finally got to a point where it made sense to do it at this time. There are strategies in place to continue leading in the environment in which we are. It's evolving. There's the accelerated technology, and we are going to become a major leader. We're becoming a technology company that does healthcare. That's where it is with the digitalization and all the things. That's essential. That's the path to the future. We're making the investments and have the capability to do that. It will also ensure that the customers have a better experience, that they'll be more delighted, is the term that our IT people like to use. It will help us with innovative solutions, and we're becoming more and more an innovative company and being recognized for that. Very importantly, it's going to drive organizational efficiencies. Margin growth is a key focus of ours going forward. Importantly, we are still very much a growth company. We are focused on value creation. I like to tell people that our runway of growth is so long that if this was a space shuttle, it could do touch and goes in aviation parts. The next generation of technology will focus. We have Interpreta, we have Quartet, we have Apixio. What it's really going to do is, member experience will be improved, provider payments will be accelerated and be more accurate. There'll be interoperability, and care management will be materially better. The doctors will have more information, real time, that will clearly improve the quality of care they can provide. We also have been busy from an M&A standpoint, still are. One time, Fortune called us a mergers and acquisition machine. We're not quite as rapid as that, but we have significant ones that have been very successful. Apixio was completed this past December for $215 million, and it is sensational. It gives us the capability, and them the capability, to take medical records and transform them into an electronic format. It also helps with risk adjustments. They're able to read the files. Even when we've had nurses look at it, they go in and look at it, we've been able to improve on it from there. PANTHERx Rare deals with orphan drugs. It's a pharmaceutical company, goes into our specialty pharma, and we acquired that for just under $900 million. It helps to flesh out and build on our specialty pharma, which is doing very well, becoming significant. I'd like to also just quickly point out that we are positioned for long term. It's a $2.2 trillion addressable market we're looking at in total. We have federal services, you have the Medicare, which is $810 billion. We've demonstrated we have the platform now to grow that. We grew it dramatically, 43% this past year, $1 billion of incremental revenue. The Medicaid at $705 billion, continue to be a leader there. Marketplace, $148 billion, clear leader there. We announced today we added over 320,000 lives in the first quarter of the year since January. We've reestablished our leadership. Internationally, we are a leading health company with our joint ventures in Spain and England, and we have little laboratory operations for [audio distortion]. In summary, we are very much still a growth company. We've demonstrated the ability to convert opportunities into CNC or Centene revenue. The opportunities across markets, products, specialty, we cross-sell, we're building strong leadership in these markets, we're indigenous to the markets. We have the compelling runway for margin expansion, and I cannot emphasize enough that we are focused on margin. That's my brief report that I wanted to give you today. Let you know that the state of the business is solid. We're well-positioned with management and with products and capabilities and systems growing to take us into the future in the balance of this decade and beyond. I'm very pleased with that. I'd like to see if there's any questions for anyone, and if there are none, we'll. There are no further questions. There being no further questions, our 2021 annual meeting has now concluded. I want to thank you for your interest in our company. Look forward to talking to you next year, if not before. Thank you.
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