Good day, and welcome to the Centene Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on any touchtone phone. To withdraw your question, please press star then 2. Please note today's event is being recorded. I would now like to turn the conference over to Jennifer Gilligan, Senior Vice President, Investor Relations. Please go ahead, ma'am. Thank you, Rocco, and good morning, everyone. Thank you for joining us on our Fourth Quarter 2021 Earnings Results Conference Call. Michael Neidorff, Chairman and Chief Executive Officer, Sarah London, Vice Chairman, Brent Layton, President and Chief Operating Officer, and Drew Asher, Executive Vice President and Chief Financial Officer of Centene, will host this morning's call, which also can be accessed through our website at centene.com. Any remarks that Centene may make about future expectations, plans, and prospects constitute forward-looking statements for the purpose of the Safe Harbor Provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in Centene's most recent Form 10-Q, filed on October 26, 2021, and other public SEC filings, including the risks and uncertainties described with respect to the potential impacts of COVID-19 on our business and results of operations. Centene anticipates that subsequent events and developments may cause its estimates to change. While the company may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. The call will also refer to certain non-GAAP measures. A reconciliation of these measures with the most directly comparable GAAP measures can be found in our Fourth Quarter 2021 Press Release, which is available on the company's website under the Investor section. With that, I would like to turn the call over to our Chairman and CEO, Michael Neidorff. Michael? Mr. Neidorff, this is the operator. You're on mute, perhaps. Can you hear me now? Yes, sir. Can you hear me now? Loud and clear, sir. Okay, I'll start over. Good morning and welcome to our Fourth Quarter 2021 Earnings Call. I'm joined today by Sarah London, Brent Layton, and Drew Asher. We had a strong ending to 2021. Our portfolio is performing well as we executed across our three major product lines during the fourth quarter, building on our strong foundation and extending our market leading position in government-sponsored healthcare. Our membership grew 4% to 26.6 million individuals, driven by increases in Medicaid, strong growth in Medicare, and good performance in our marketplace business. We also welcomed the Magellan team to Centene earlier this last month, with the acquisition successfully closing exactly one year after we announced this transaction. We are pleased to welcome the Magellan team, led by Ken Fasola and Jim Murray. There is a dire need for mental health care in this country. Two years into it, this pandemic and the acquisition of Magellan will allow us to expand our reach to provide increased access to behavioral health. In addition, Magellan will give us the capabilities to innovate and reimagine behavioral health, significantly enhancing our ability to provide integrated physical and mental health care to all our members. Also, in January, we welcomed five new board members to our board as part of our board refreshment process who bring significant industry and various leadership experience. Bob Ditmore, John Roberts, and Tommy Thompson have retired from the board, and I want to thank them for their many years of service and contributions to Centene. As I look back on the onset of the pandemic, I am pleased with how we navigated the uncertainty, served our members, and grew the business and diversified our healthcare enterprise. Just this year, we have added $14 billion in revenue. We have accelerated our plans for our value creation and have a clear pathway ahead to expand our margins and deliver strong multi-year earnings growth. We have the right team and the right strategy with significant opportunities ahead. Finally, I want to thank all our employees who continue to step up and serve our members during the surge in the Omicron. I couldn't be prouder of the critical role that we have played in ensuring that our communities stay strong and healthy with the highest quality care, particularly during the pandemic. Now, you probably hear I have a little frog in my throat, so I'm gonna turn this over to Sarah London, who will help manage us through the question and answer period, and I'll participate as I want to. Sarah. Great. Thank you, Michael, and good morning, everyone. As Michael noted, we delivered a strong fourth quarter performance, creating positive momentum as we start the new year and successfully executed on key operational objectives, including the introduction of new marketplace products for the 2022 open enrollment period, repositioning that business for success in a constantly evolving landscape. The delivery of another strong annual enrollment period in Medicare Advantage as the value we provide for beneficiaries continues to resonate in the market. Continued progress on our value creation plan, including refining margin expansion opportunities and advancing the execution of our highest priority initiatives. On today's call, Brent will comment on our core businesses, including how we are carrying our Q4 momentum forward into 2022. Then Drew will provide details on our fourth quarter performance and financial outlook. Before I turn it over to them, let me provide a brief update on the value creation progress. From a structural perspective, we have added important talent and leadership to our value creation office. As we announced in early January, Jim Murray, who served as Magellan's President and COO, has transitioned to take on the new role of Chief Transformation Officer, leading the day-to-day management of the VCO. Jim brings experience in operating discipline and a track record for successful execution, adding another important layer of accountability to our value creation program. We are thrilled to have him on board. Now to the details. As we mentioned at our December Investor Day, 2022 is largely a year of foundational execution, and we plan to provide guideposts on our operational progress, incremental though some may seem, as a way of bringing you on the journey with us and offering a view into the work underway. While we are only one month into Q1, we have already made progress on some of those key guideposts. First, our pharmacy platform consolidation project. As a reminder, the strategy here is to outsource administrative PBM functions to an external partner, thereby allowing us to reduce our three PBM platforms down to one and to focus that technology on the clinical member and provider engagement capabilities that are most important to differentiating the overall member experience. This will drive SG&A savings across the technology footprint and allow for more efficient investment in process automation. Coming into 2022, we had eight remaining state-specific programs that had not yet been consolidated on our external PBM platform. We successfully migrated three of these on January 1 and another on February 1 as planned. We are targeting the fourth migration for March 1, and the remaining three are scheduled for later in Q2. Overall, we are on track to be fully consolidated in time to issue our planned PBM RFP against our full $38 billion of pharmacy spend. I am pleased to say that work is well underway to prepare for the RFP release this summer, and we look forward to maximizing value for the enterprise through that process. Since December, we have also made good progress on the efforts we outlined around standardizing and rationalizing core operations. We initiated phase I of our call center standardization, including process mapping, as well as beginning the formal enterprise transition of our telephony infrastructure to the cloud. As we mentioned before, this will offer more convenient ways for our members to interact with us and get the information they need. We are starting with our Medicare and Marketplace products and expect this work to be completed in early Q3. We also kicked off phase II of our utilization management work, which involves building an enterprise-shared services function to serve all three major product lines with a primary focus on enhancing quality and productivity. We completed the Medicare transition and now have the Marketplace transition in motion. Lastly, back in October, we formally updated our work at home policies as we have learned how to deliver the same level of productivity and service to our members in a more flexible workplace environment. The shift to work at home and enhanced flexibility will have a meaningful impact on our ability to recruit and retain talent, but it also means we need to reevaluate our real estate footprint, something Drew mentioned during the December Investor Day. We have already evaluated approximately 25% of our facility locations and see opportunities for a material downsizing of our footprint. Expect updates on that work as we get through the full real estate portfolio. Finally, I want to touch on the capital allocation pillar of our value creation plan, and particularly the portfolio review process. Closing out the story on USMM, we used the proceeds from that majority divestiture to execute $200 million in share repurchases in December. We are aggressively working our way through the non-core portfolio with a consistent, rigorous, and strategic evaluation process. We will continue to provide updates on this work as it progresses. While the value creation work is critically important, it is also complex. Let me assure you that we have full organizational commitment to our value creation objectives and are laser-focused on leveraging Centene's size and scale to unlock significant value for our stakeholders. Let me also take this opportunity to thank our leaders and our teams throughout the organization, from our local market CEOs and operational leaders to frontline staff and clinical experts, for their enthusiasm, agility, and willingness to think differently and work differently in service of our members. Overall, our businesses are performing well. We are building on the strength of our core business lines, and we are making meaningful progress on our commitment to margin expansion, all while delivering for our members, state partners, employees, and shareholders. I'd now like to turn the call over to Brent for some insights on our core business line performance during Q4. Thank you, Sarah. Good morning, everyone. I'm happy to be here today to talk about our performance of our core business lines. Over the past two years, we've discussed how Centene's size and scale and our ability to be nimble has allowed us to manage through this pandemic. We remain well-positioned to provide quality services in a pandemic environment or a return to more normalized utilization. Government-sponsored healthcare continues to grow in the U.S., and Centene continues to gain momentum across all of our product lines. Our Medicaid business is still growing, with membership increasing to 15 million as we closed out 2021. This growth was aided by the ongoing suspension of redeterminations, which I will talk about more in a moment. We continue to see success in our Medicaid business, such as our new contract in Nevada. In Medicare, we ended the year with more than 1.2 million members across 33 states. As we mentioned last month, we experienced strong growth during the open enrollment period and remain on track to meet our 2022 expectations. We benefited from the combination of WellCare's product expertise and Centene's strong provider network and geographic footprint. In 2022, Centene offers plans in 327 new counties as well as three new states. We continue to see significant opportunity within Medicare as our expanding footprint makes Centene's product offering available to more than 75% of the country's eligible beneficiaries. Finally, in Marketplace, membership was more than 2.1 million at the end of the year, and we are pleased with our open enrollment results. For 2022, we're excited about our product offerings, which have evolved to meet the demands of our members for greater flexibility, accessibility and affordability. At the same time, we're further expanding our reach, offering Marketplace product in five new states. This year, Ambetter is in 49% of all counties in the U.S. This product and geographic expansion translated to solid growth during the open enrollment period. What makes the sustained momentum in Marketplace more impactful is the fact that we never participated in a race to the bottom with our rates. We remain committed to returning Ambetter margins back to their long-term pre-tax target of 5%-7.5%. I think the initiatives we undertook in Marketplace in 2021 and the pricing discipline showed clear evidence of our ability to execute on our margin goals across all of our business lines. Before handing the call over to Drew, I wanted to provide a quick update on our thinking of redeterminations. We continue to work closely with our state partners to understand the timing and how to best support the transition. Our current outlook continues to reflect the return of redeterminations in May, but again, this will not be universal and the timing will vary state by state. The continuity of care of our members that roll off Medicaid remains a top priority. Our breadth of products and services provides Centene a great opportunity to deliver this continuity of care at a low cost through our Marketplace capabilities. We currently offer exchange products in 25 of our 29 Medicaid states. Overall, we're pleased with our competitive position of our portfolio heading into 2022. With that, let me turn the call over to Drew. Thank you, Brent. This morning, we reported Q4 2021 results, including $32.6 billion in revenue, an increase of 15% compared to Q4 2020, and adjusted diluted earnings per share of $1.01 in the quarter and $5.15 for the full year. These results are at the top end of our 2021 adjusted earnings guidance provided at our December Investor Day. Let's start with revenue for the quarter. Total revenue grew by $4.3 billion compared to Q4 2020, primarily due to strong organic Medicaid and Medicare membership growth during 2021. Total membership increased to 26.6 million, up 4% compared to a year ago. Our Q4 consolidated HBR was 87.9%, consistent with our expectations. As promised, beginning with today's earnings release and each quarter going forward, you will be able to see the HBR components that drive the overall consolidated HBR, Commercial, Medicaid, and Medicare HBRs. In Commercial, you can see the high HBRs in the Q2 and Q3 timeframe, driven by the risk adjustment items we covered at our June Investor Day, and the Delta variant in the third quarter, as we discussed on the Q3 call. Structurally, Medicaid, in the high eighties, has the highest absolute HBR of the three business lines. Medicare, inclusive of our Medicare Advantage and PDP businesses, posted a 2021 HBR in the mid to high 80s. As we've said before, we believe there's an opportunity to lower the Medicare HBR as we look to 2023 and beyond. At an investor conference on January 10 this year, we provided insights about the Omicron variant and related COVID inpatient authorizations rising in the back half of December. As an update for January, COVID inpatient authorizations continued to climb and peaked, at least for now, in mid-January. Interestingly, with the Delta variant, Marketplace was the highest peak of our three business lines, and Medicare was the lowest. With Omicron, Medicare was the highest peak, and Marketplace was the lowest. Fortunately, the acuity and therefore severity we are seeing with Omicron is lower than the Delta variant, and measures like average length of stay and resulting costs per admit are lower than during prior variants. This seems consistent with the lower acuity seen in the national data. One more item on trend, influenza cases so far continue to be very low compared to a typical year. Moving to other P&L and balance sheet items, our adjusted SG&A expense ratio was 9.2% in the fourth quarter compared to 9.7% last year. This was in line with our expectation that our SG&A rate would be the highest in the fourth quarter of the year because of open enrollment spending in both Medicare and Marketplace. Year-over-year improvement reflects leveraging expenses over higher revenues. Some of you have asked about our SG&A rate and our mix of businesses, so let me give you some perspective relative to the midpoint of adjusted 2022 SG&A guidance of 8.05%. First of all, it's important to remember that we have and will continue to calculate our SG&A rate and margin metrics off of premium and service revenue, which excludes the forecasted $6 billion of pass-through revenue. As we covered at Investor Day, we're breaking out depreciation from SG&A in 2022 and reporting it on a separate income statement line. We expect depreciation to run a little under $700 million for 2022. On an absolute basis, Magellan increases our SG&A rate by approximately 20 basis points. Our international businesses increase it by a little over 30 basis points, and our other healthcare enterprise businesses increase it by about 10 basis points, meaning the midpoint of our adjusted SG&A rate for 2022, excluding those businesses, would be in the mid-sevens, and our value creation plan is focused on driving that lower over time. Cash flow provided by operations was $675 million in the quarter, primarily driven by net earnings. We continue to maintain a strong liquidity position of $2.3 billion of domestic unregulated cash on our balance sheet at quarter end. Furthermore, we closed our $2.6 billion Magellan transaction right after year-end, which used our available unregulated cash. Our goal continues to be to build cash at parent beginning in the back half of 2022 for additional share buybacks and debt paydown. On that topic, as Sarah mentioned, during the fourth quarter, we repurchased approximately $200 million of our stock using proceeds from the sale of our majority stake in US Medical Management. Debt at quarter end was $18.8 billion. Our debt-to-cap ratio was 40.9%, excluding our non-recourse debt. Our medical claims liability totaled $14.2 billion at quarter end and represents 52 days in claims payable compared to 51 in Q3. Our balance sheet remains strong, and we expect it to strengthen even further as we improve margins and generate cash flow. As we begin 2022, we're building on the positive momentum from our fourth quarter results as well as our organizational commitment to the value creation plan. We are reiterating our full year 2022 financial guidance, including expectations for adjusted earnings per share of $5.30-$5.50. As you think about the seasonality of 2022 earnings, it looks like consensus is about 58% of Adjusted EPS in the first half of the year and 42% in the back half, and that's a pretty good proxy for our estimates. As you heard from Brent, we are pleased with our execution in the annual enrollment periods for Medicare and Marketplace and are well-positioned to achieve our 2022 membership expectations. Overall, our 2021 performance demonstrates the strength and agility of our organization. As Sarah touched on, we have a lot of work in motion to drive our multiyear financial commitments in the value creation plan. We look forward to updating you on our progress as we move through the year. Thank you for your interest. Operator, Rocco, can you please open the line for questions? Absolutely. Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star then 1 on your touchtone phone. If you're using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. Today's first question comes from Josh Raskin at Nephron Research. Please go ahead. Hi. Thanks. Good morning. I just wanted to follow up on the process around potential divestitures and non-core assets, and I understand the complexity, Sarah, that you mentioned. I think I'm specifically interested if there's an opportunity to include certain PBM assets as part of this, RFP process that you're starting, and then if you could just remind us on thoughts on international as well. Yeah, absolutely. You know, as we've said, there are no exceptions to the portfolio review process. We're being very clear-eyed about all of those non-core assets. We really used USMM to codify that process, and then we've been prioritizing sort of the largest and most independent of the assets, which is why you heard an update on international. As I'm sure you can appreciate, sort of specific updates on execution phase are not always gonna be able to be shared incrementally, so we'll definitely share updates with you that we can as we have them. You know, on the PBM front, our strategy there overall has not changed. You know, the various PBM assets, including the inbound Magellan assets, are going through that portfolio review process, and I think will be subject to the same criteria as all the other assets. Stay tuned for more updates on that. Great. Just a quick follow-up, can you just remind us any RFPs that are coming up in the next year or two where Centene is the incumbent? Well, first of all, we're waiting to hear our award in Louisiana, so still waiting on that. No timetable or update, but waiting on Louisiana's award. We are anticipating the California RFP to be released this month, and we've been preparing for that. Okay, thanks. Thank you. Our next question today comes from Stephen Baxter at Wells Fargo. Please go ahead. Hi. Thanks. So the commercial MLR and the new disclosures improved quite meaningfully versus Q3, so obviously that runs against the typical seasonality here. Appreciating the commentary on Omicron. I was hoping you could talk a little bit about how utilization versus baseline levels trended from Q3 into Q4. Then I guess, also whether there's any kind of revenue impacts to consider since it looks like PMPMs were up a little bit, and then any impact from, you know, stuff like favorable development you flagged. Just trying to understand the moving parts versus core utilization in the quarter. Thank you. Yeah, sure. Thanks. Yeah, Q3, as I said in my remarks, that's when we got hit with the Delta variant, largely sort of peaking in August. Marketplace, which is the vast majority of that commercial line item, sort of took it the hardest in terms of the relative peaks, compared to prior variants. It was the opposite of that with the Omicron variant, which started in the back half of December. I think that's the, you know, largely the Q3 to Q4 progression that you're observing in that table. Nothing else notable in terms of, you know, prior period development. You know, we seek to reestablish at similar levels, you know, based upon consistent reserve methodology. I think that was the driver that caused that. Rocco? Yes, sir. Our next question today comes from Kevin Fischbeck at Bank of America. Please go ahead. Great, thanks. I just was wondering if you could talk a little bit about the exchange environment, at least one of your competitors scaling back pretty significantly, kind of highlighting irrational pricing on the exchanges. I think you talked about being able to improve margins this year. Can you just kind of help us or remind us where your margin target is for this year versus that long-term target, and, you know, how much of getting to that long-term target is based upon what you have in control or whether some of that is based upon, you know, if you agree that some people are irrational, that pricing, broadly speaking, you know, kind of returning to a normalized rate? Yeah. Good questions, and they're all around Marketplace. As we sat here over the summer of 2021 and, you know, with new product development, we're thinking about how to respond to competition and continuing to hone our portfolio for Marketplace. Coupling that with a more disciplined financial bid approach, at least for those bids that were still open in that timeframe, we expect, you know, meaningful movement in that HBR going from 2021 to 2022. I'll sort of walk you back to our Investor Day and, you know, the conference that we were at on January 10. We expect about a 500 basis point improvement year to year in our commercial. That commercial line, you know, that's we price for and expect to execute on a pretty meaningful improvement, which still won't get us to our final destination, that 5%-7.5% pre-tax zone for Marketplace. It'll be a meaningful movement. Of course, there were some things that we got hit with in 2021 that won't reoccur. That will be part of it. We made conscious decisions on pricing, which is why we're so pleased to be 2 million+ in terms of membership coming out of the open enrollment period. Thank you. Our next question today comes from A.J. Rice at Credit Suisse. Please go ahead. Yes. Hi, everybody. Thanks for the question. I think in the prepared remarks, it was mentioned that Medicare margins, HBR, you think, will improve in 2023 and beyond. I guess I would just wonder if you could flesh out more, what are the levers to allow that to happen? Is it an expectation about improvement in star ratings? Is it an expectation of some of the rapid growth you've seen recently, some of those members maturing? Give us a little flavor for how you have the visibility in 2023 and beyond improving. Maybe my follow-up would be just to flesh out, I know Brent mentioned the California RFP. There's been some discussion in the press about potentially a preemptive deal with Kaiser. Just any assessment of the RFP process, anything different about that you'd like to call out or highlight or give us perspective on? A.J., I'll start, and then I'll kick it over to Drew. In regards to, I think the announcement you're talking about is Kaiser Permanente. We do not subcontract with Kaiser Permanente in California, so it does not change our RFP strategy or any of our approach in the procurement that will be forthcoming. I'll turn over to you, Drew. Yeah. On Medicare, yeah, A.J., it's sort of a comprehensive project plan which touches a number of the areas you mentioned. It's not just pulling clinical initiatives, and we've got a slate of dozens of those initiatives that, you know, we've brought from other experiences and we've seen work in other places. It's also the bid process and quite frankly, having a little bit more of a discipline and a trade-off between growth and margin. What I'm pleased at is our base of business. It will be 50% higher coming off of the 2021 and 2022 open enrollment period. Expect growth to slow considerably in Medicare, but that's a heck of a base to then approach the margin expansion opportunity. You know, the bid process, you know, pushing towards margin will be a multiyear effort. We're not gonna try to go get it all in one year because we've got to balance the attractiveness of our products. You're right to mention Stars. Stars will be a little bit more volatility over the next few years. The Star scores that were released in 2021, called the rating year 2022, which result in 2023 revenue, look good. Now we were aided by the disaster relief provisions. Between that and some other, you know, operational challenges, the Star scores that are released in October of 2022, called the rating year '23 Star scores, which result in 2024 revenue, we expect, as I mentioned on the third quarter call, those to drop. We've got a lot of work to do to improve our execution around Stars as we look at what we can impact today are essentially the rating year 2024 Stars for revenue in 2025. We'll have to manage through that, those cycles, but there are a number of levers to pull in clinical initiatives. Just as Brent mentioned earlier, harnessing the assets of the combined company and continue to push for excellent operational execution. Thank you. Our next question today comes from Scott Fidel with Stephens. Please go ahead. Hi. Thanks. Good morning, everyone. Actually just quickly wanted to tack on to A.J.'s question and just on the Medicare margin side, just wanted to get your initial thoughts on the advanced notice that just came out for 2023. Seemed pretty solid from my perspective, but just interested in how that reinforces, you know, your confidence on sort of getting at that margin improvement in MA. And then just as a follow-up, just appreciate, you know, the color that you've given us on the year-over-year expected change in MLR for commercial. Just interested if there's anything you'd want to call out for us in thinking about Medicare and Medicaid MLRs in 2022 versus 2021. Obviously, now we're all going to be, you know, tracking those metrics closely now that you're providing them. Just if there's anything you want to call out ahead of time, that would be helpful as well. Thanks. Oh, yeah, absolutely. In fact, point you back to the Investor Day slide where we gave a specific bridge by major line of business of HBR progression, you know, from 2021 to 2022. If you do the math, that shows the impact on the entire HBR. If you sort of divide that by the percentage that that business represents, you get to the 500 basis points in commercial. Medicare, we expect around flat. You know, once again, we didn't price to improve, nor do we think it will degrade in 2022, and that creates an opportunity for 2023 and beyond in Medicare. In Medicaid, we talked about the last few times, you know, we were in public forums talking about a reversion to the mean and utilization returning to a more normalized HBR in Medicaid, which would be up about 130 basis points year-over-year. You see that represented in that waterfall from our Investor Day slides at 90 basis points, but that applies to the entire HBR. It's 130 if you just isolate Medicaid itself. With the advance notice, I think what it does demonstrate is bipartisan support for the Medicare program, and agreed to those, you know, those rates and elements so far, we expect to be workable for next year. Thank you. Our next question today comes from Justin Lake at Wolfe Research. Please go ahead. Thanks. Good morning. I actually wanted to follow up, Drew, on your comments around Medicaid, specifically when you talked about margin normalization. You know, a 130 basis point move is pretty significant in Medicaid. Can you give us an idea where those margins were in 2021 and where you expect them to kind of normalize in 2022 to start off? I think you'll have to orient yourself to the HBRs and sort of track in that manner. Don't forget, we also had pharmacy carve-outs in a couple of our states. Yep. That was not insignificant, you know, the impact of that, especially in California. That was sort of a progression, you know, a mathematical progression right off the top. Yeah, we're making forward estimates of, you know, we see returning at least emergency room access for Medicaid on the emergent side. Things that are truly emergent, that has returned. The non-emergent, you know, we think, you know, there's still an opportunity to keep some of that suppressed and redirect members to their PCPs and physicians. You know, it's a culmination of forward estimates and a view into the rate, you know, sort of the rate environment for Medicaid. Okay. Maybe, you know, again, I don't want to pin you down on, you know, the 10 basis points, but for instance, one of your peers talked about making margin target closer to 4%. Most of the others talk about, you know, kind of a midpoint closer to 3%. Maybe you can help us just kind of orient to that in terms of what you think normal is. Yeah. Going back to our June Investor Day, where we first laid out our North Star margin goal of 3.3% after tax and sort of explained that's 4.4 pre-tax. You know, Medicaid is gonna be a little bit below that, but it can't be too far below that 'cause it's over 60% of our business. So maybe that helps you frame, you know, in your models, the different businesses. Medicare would be above the average, and then Marketplace, the highest of the three at the 5%-7.5% pre-tax zone, as far as long-term targets. Thank you. Our next question today comes from Matt Borsch of BMO. Please go ahead. Yes, maybe if I could just continue on the Medicare Advantage product. Should we take as you know from what you're saying that you're gonna be more conservative or you plan to be in your approach on bidding Medicare Advantage for 2023? Associated with that, to follow up, if you could just talk about the level intensity of competition that you're seeing in Medicare Advantage today. I'll tackle the first piece, and then Brent, who's really close to this on a daily basis, in competition can follow up. I think, Matt, by definition, if we're going to be seeking to expand margin, obviously there's a trade-off there. You shouldn't expect us to grow 30% like we did last year in terms of membership, which was just a phenomenal, you know, top-line result. Now we've got to convert some of that to deliver on margin. Yeah, by definition, we will be pushing margin harder in 2023, 2024, and 2025 bids than we did in the 2021 and 2022 bids. That's just sort of the opportunity that stands in front of us. There's always gonna be competition, whether it's Medicare Advantage or whether it's Marketplace. I would say, though, that the smaller players in Medicare Advantage really did not have a minimal impact in regards to our results and our growth. We feel good about our positioning and over 2022 and ongoing. Thank you. Our next question today comes from Ricky Goldwasser with Morgan Stanley. Please go ahead. Yeah. Hi, good morning. As we think about MA in 2022, from what we saw, you meaningfully invested into very rich benefits. How should we think about sort of Medicare margins in 2022? Maybe you can give us some baseline that we can think of as we're thinking of that margin expansion opportunity in 2023 and beyond. If you can comment on just what you're seeing for core utilization versus baseline, and how is that factored into 2022 guidance, you know, in terms of just use of ER acuity and acuity levels. Thank you. Yeah, Ricky, I think I'd ask you to orient to the Medicare HBR that we disclosed for 2021, and our expectation of that being, you know, sort of in the zone of flat, consistent 2021 to 2022. That's, as we explained at Investor Day, it's one of the pieces that our guidance is predicated on. Yeah, every one on utilization, every wave, Omicron or every COVID wave since the beginning, there's the deferrable services are less and less impacted. Doesn't mean we don't think there are, you know, channel checks tell us that there are surgeries that are being rescheduled for February that would've otherwise been done in January. The providers are getting more and more resilient in terms of being able to manage both. There's been a continuing return to call it normal utilization over the past 6-9 months. Some areas aren't fully there. Like I mentioned, the non-emergent emergency room, which is good, and hopefully that's a structural change for the industry. We're certainly working with our members and our physicians to try to get members to engage directly with their physicians for non-emergent services. But all of that's factored into the progressions of our HBRs that we laid out at Investor Day. Thank you. Our next question today comes from Steven Valiquette with Barclays. Please go ahead. Great, thanks. Good morning, everybody. A question around Medicare Advantage, and obviously the early CMS data looks promising for Centene's MA membership growth for 2022. Just given the greater than average industry volatility in this year's Medicare AEP, just curious if you can remind us just on Centene's profile on how much of your typical MA membership growth is maybe driven by internal sales efforts versus reliance on external channels. Do you expect any notable changes in that mix going forward, just given some of the volatility that we're seeing and other trends across the MA marketing efforts? Thanks. Yeah. We're not really seeing that volatility you're referring to. I mean, we've got multiple channels. The Medicare team over the past four or five years has developed multiple channels. You know, the W-2 workforce or going back, you know, a long ways back, and then more recently, the last three or four years, tele-digital. We actually created our own direct-to-consumer, in, you know, proprietary internal capability. That's another channel. We've got the brokerage channel, which we honed probably a few years ago after the Universal American acquisition. You know, we've been working on this for a number of years, and then, you know, the merger with Centene gave us, as Brent mentioned, access to a much broader footprint and, quite frankly, network, just to complement, you know, what WellCare had built along the way. You know, just to give you one data point, our, you know, I think what you're getting at is sort of that distribution channel of tele-digital and telemarketing. You know, it's about half of our sales. It was about half of our sales last year, too. Not a real change in the distribution of where we're getting our growth from. Thank you. Our next question today comes from Dave Windley at Jefferies. Please go ahead. Hi, good morning. Thanks for taking my question. I was wondering in Medicaid, if you're able to do analytics that would either tell you explicitly or give you hints as to which members were likely to be redetermined off when that turns back on, and if you can see that, what are the relative claims patterns of those people or the HBR on that subgroup versus the whole? Thanks. Yeah, no, obviously, we've been thinking about that. While there are some characteristics, you know, we don't have good employment data on those that may have, you know, gotten employment since they originally qualified for Medicaid. You know, there's some cohorts such as moms post-delivery in some states, you know, depending on state eligibility rules that they might have otherwise rolled off at a certain point postpartum. We can look at some of that, but it's not like you've got a cohort that we're getting, you know, with a rate cell that says, you know, to be redetermined in the future, so we can make estimates of that. We've seen, you know, over time, the impact of eligibility going up and down the FPL scale. We think we're well prepared for that time when it comes. You know, we'll see if it pushes out past our May first assumption, which our guidance is built on. The teams are really focused on, you know, 25 out of 29 states being prepared. I think Brent can probably add some color, some interesting color for you guys on our engagement with states on that topic. Yes. I mean, we have been in constant contact, well into starting last year with both the federal government and obviously our state partners. As Drew said, you know, we've really built a platform between our exchange through to Medicaid. From that standpoint, whether it's network and communication and planning, we're preparing for this. Whenever that date is, we believe that we have the ability to really be a solution as people wanna, you know, obviously, states want to make sure their citizens have health insurance coverage. We've been working with them, and we're preparing for it. Thank you. Our next question today comes from Nathan Rich at Goldman Sachs. Please go. Hi, good morning. Thanks for the questions. Drew, could you maybe just remind us whether the 2022 guidance includes any expected savings from the value creation plan? I think going back to the December Analyst Day, the SG&A bridge had 15 basis points of leverage on the core business, but I wasn't sure if that included anything, specifically from the program. It sounds like the company is tracking well against the early guideposts that you laid out, especially around pharmacy. I guess, you know, I'd just be curious, is there potential to see savings from some of those actions, this year as we think about progression over the balance of the year? Yeah, it's a really good question on sort of the jump-off point because we're crystal clear internally also. The midpoint of $5.40 for 2022 is a jump-off point upon which we will pull levers to get the $2 of opportunity, including the SG&A bucket, that $700 million SG&A bucket that we laid out at Investor Day. Those should be incremental, largely, you know, showing up in 2023 and 2024, but incremental to the jump-off point of the $5.30-$5.50 guidance. Sarah can give you an update on some of those activities. Yeah. As you noted, you know, we are making good progress. We are very focused on hitting those EPS targets for 2022, 2023 and 2024. You know, we'll always look for upside, but I think the way we look at it, you don't get to kick the extra point if you don't score the touchdown first. We're staying really focused on our goals first and foremost in year. Thank you. Our next question today comes from Gary Taylor at Cowen. Please go ahead. Hi, good morning. Well, first, I just want to say hello to Michael and wish him well, but I did wanna see if there was any updates you can provide- Thank you. I'm still here listening, so thank you. Oh, thanks. Hi, Michael. Wondering if there's any update on CEO search and process timing you can provide. I know there are five new board members in January, but is that likely a first half or second half announcement? Is there any visibility for investors outside of, you know, we'll just wake up one day and we'll see who the CEO is? Well, let me start that. There's a process we're going through. We're following good governance. We're looking at various candidates, and they recognized that some time ago, earlier than what was publicized, I had talked about them. I'd spoken to the board about my desire to step down as CEO. The process is in place. I don't need to say too much more than that, or we'll be getting over our skis. There's a clear process, and I hope to see it resolved over between now and mid-year at the latest. Thank you. Ladies and gentlemen, our next question today comes from Calvin Sternick with J.P. Morgan. Please go ahead. Yeah. Hi, good morning. Just wanted to ask on the exchanges and the enhanced subsidies and, you know, any update on legislation, and timing for something to get done there. Just any sense for, you know, the likelihood that something will get done there in 2022. Thanks. Yeah. You'll start. You'll start it, and then let Brent pick up. Michael, I'll start that, then I'll let Jonathan Dinesman speak from there. I mean, it's clearly a priority of the Biden administration. This has clearly had an impact. It's clearly led to large enrollments from that standpoint. We do anticipate that there'll be many efforts, and we anticipate future legislation. Jon, I'll let you add to that, sir. Yes. You know, the one thing that's important is it had strong support, coming out of the House, also maintained that strong support in the Senate. You know, there's a clear recognition, especially by the Democrats, that this was critical to strengthening the ACA, and even the Manchin proposal included this. Anybody who guesses on timing is really doing a guess, but we still feel, like, confident that if there is a bill that passes, that this will be included. Thank you. Our next question today comes from George Hill at Deutsche Bank. Please go ahead. Yeah. Hey, good morning, guys, and thanks for taking the question. Just on the PBM project, I guess as the project continues to press along, are you able to give us any more color maybe on which parts you feel like you wanna insource versus feel like outsource? Do you feel like this is a complete outsourcing project, or you guys hold on to higher value projects like formulary network management? Just kinda as we think about the scope of the RFP and the outsourcing project, just kinda, you know, what stays and what goes. Yeah, it's a great question. Yeah, I would say we have a pretty strong operating hypothesis going into the RFP about what pieces we wanna partner for and what we wanna keep in-house, but we're also doing a pass at that work through the lens of value creation to make sure that, you know, we still feel like that hypothesis holds. I think some of that will also be informed, quite frankly, by the conversations that we have with potential partners through the RFP process. I would say on balance, keeping those capabilities that allow us to create a differentiated experience for our members and prior providers is always gonna be the priority. Thank you. Ladies and gentlemen, this concludes our question and answer session. I'd like to turn the conference back over to the management team for any final remarks. Thank you. I wanna thank everybody for joining us today, and we look forward over the course of the year to continue to report our results. Clearly, I believe we have the right product mix, the right strategy for those products. The margin expansion program is clear, and everyone in the organization knows what has to be done. Most importantly, we have the right team working on these things to bring it home. I'm really looking forward to the results for the balance of the year. Thank you for participating. Thank you, sir, and thank you all for your participation on today's conference. Today's call is now concluded. You may disconnect your lines and have a wonderful day.