Joshua Raskin - Lehman Brothers Tom Carroll - Stifel Nicolaus Darren Miller - Goldman Sachs Scott Fidel - Deutsche Bank North America Carl McDonald - Oppenheimer & Co Greg Nersessian - Credit Suisse John Rex - J.P. Morgan Matt Perry - Wachovia Capital Market

Good morning. My name is Crystal, and I will be your conference operator today. At this time, I would like to welcome everyone to the Centene Corporation Q2 2008 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session. (Operator Instructions) I will now turn the conference over to Mr. Edmund Kroll, Senior Vice President of Finance and Investor Relations for Centene Corporation. Please go ahead sir.

Thank you Crystal and good morning everyone. I am Ed Kroll, Senior Vice President of Finance and Investor Relations for Centene Corporation. Thank you for joining our earnings call for Q2 this morning. You should have a copy of the press release that we’ve issued this morning. If you have not received it, please call Libby Abelt in our New York office at 212-759-5665 and it will be sent to you immediately. Michael Neidorff, Chairman and Chief Executive Officer; and Eric Slusser, Executive Vice President and Chief Financial Officer of Centene Corporation, will host this morning’s call. The call is expected to last about 45 minutes and may also be accessed through our website at www.centene.com. A replay will be available shortly after this call’s completion, also on our website at centene.com or by dialing 800-642-1687 in the U.S. and Canada or 706-645-9291 from abroad and entering the access code 51471537. Any remarks that Centene may make about future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in Centene’s Form 10-Q dated today July 22, 2008, and other public SEC filings. Centene anticipates that subsequent events and developments will 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. With that I will turn the call over to our Chairman and CEO Michael Neidorff. Michael?

Thank you Ed. Good morning everyone and thank you for joining this morning's call. The start time of our earnings call today is 30 minutes earlier than as usual for Centene. As was the case in Q1 we changed it to avoid scheduling conflicts and accommodate our stock holders, other investors and analysts. We expect to return to our usual time next quarter. We were pleased with the progress our Q2 results show, especially at the HBR line. Our goal is to continue to make our earnings growth more predictable and visible to you while maintaining an appropriate level to top line growth. Our team is focused on enhancing profit margins to move us back into our long-term target range of 4% to 6% on a pre-tax basis. Our disciplined portfolio approach to managing our existing and potential growth opportunities should, at the time allow us to continue to fully participate in the growth as a Managed Medicaid category. To emphasize these points, I want to reaffirm some strategic comments I made at our investment day last month. Centene’s corporate strategy is based on a disciplined and sustainable approach. We remained focused on margin expansion, diversification of our product line and built organic growth and grow through selective acquisitions. We are committing to long-term investors who recognized we have a long run way for our business model. However, we do recognize that the market in the street sensitivity to the short-term and we will provide guidance in the manner that minimizes volatility and enhances visibility. I will briefly review the highlights of the quarter and then turn the call over to Eric for his comments on the financials. Consistent with our policy over the last several quarters, we have the members of our senior management team available to answer your…

Thank you Michael, and good morning everyone. Before I recap the highlights of the 2008 second quarter, I would like to remind you that the first quarter 2008 results included $20.8 million of premium revenue and $0.28 of diluted earnings per share for the retroactive 2007 rate increases and adjustments in Georgia. This is important to keep in mind when comparing our sequential quarter performance. Now I will discuss the second quarter results. In summary, we are pleased with the quarter’s financial performance, largely driven by continued company-wide discipline HBR improvement and new business initiatives. While we still have work to do to get our consolidated profit margin firmly within our 4% to 6% target range. The ground work we have laid in terms of better controls, new management additions and greater efficiencies is increasingly given us confident that we will their and producing a more predictable profit strain going forward. Revenue, net of premium taxes grew to 837.9 million, which represents 18.4% growth compared to the second quarter of 2007. This increase was primarily driven by three main factors. First; the April 1 2008, startup of our new Texas Foster Care contract, Second; rate increases in our health plans especially in Georgia and finally, membership growth in our Texas, South Carolina and Ohio markets. Our reported consolidated health benefits rate ratio or HBR as we call it was 83.3% for the second quarter of 2008 compared to 83.6% in the 2007 second quarter and 85.2% for the 2008, first quarter after adjusting the 2008 first quarter for the effect of the previously mentioned Georgia rate increase. Including the effect of the Georgia rate increase, our reported first quarter HBR was 83%. The improved HBR year over and year in the second quarter resulted primarily from better medical management result…

(Operator Instructions) Your first question comes from the line of Josh Raskin, with Lehman Brothers.

Good morning Michael. Two questions for you, one the Texas membership even if I take out, the sequential increase from the Foster Care, I think it was that total of 58,000 it sounds like 32 of that was Foster Care, that looked a lot stronger than we were looking for, what were some of the drivers for the Texas growth?

Eric, you want to pick out some of that.

Other than Foster Care most of the membership growth was in shift in care needs, it was strong.

The EPO product showed a lot of growth.

But there was no change in sort of the competitive landscape or anything like that in the environment that you could point to?

No.

Okay. Second question just on, Foster Care, you had mentioned obviously the impact on the HBR, as you look through to conservative levels. I think you’ve talked about sort of that 90% range, back when we were talking about Georgia in the first couple of our quarters. Is this fair to say that Foster Care somewhere in that ballpark?

No, we’ve booked at 90%. That’s pretty much our model -- don’t go with your X, would we expect to book any new products less than 90%. So, that’s kind of the. models we used for the first six months till we get adequate claims experience.

And then just last question on the increase in revenues, how much of that is Arizona versus Celtic?

Estimated about, we took it up $60 million it’s about a 48, then 10--50 to 10 type split.

50 to 10 okay…

50 to Celtic, 10 to Arizona approximately

Your next question comes from the line of Tom Carroll with Stifel Nicolaus.

A couple of things, starting with Foster Care, I think it would just be Tom, very premature to make any assumptions based on 45 days of claims dated that’s coming to the shop by this point in time. So, really I think it’s just way too early. The only thing I can tell you is that we have our passport products, which is the electronic medical records and the number of hits we seeing on that, says its working very well for us in that regards. The providers are using it. We see as a very passive indication that – that the structure is appropriate.

The providers are using it. We see as a very passive indication that – that the structure is appropriate.

The providers are using it. We see as a very passive indication that – that the structure is appropriate.

Your next question comes from the line of Darren Miller with Goldman Sachs.

Eric, I wanted to get just a little color in terms of how much the Ohio market improved on an MCR basis and then maybe if you could spike out how much of that was improvement, because first quarter had flu and then how much is due to some of the efforts that you’ve being doing to that market?

Yeah, as we look at it, measuring the impact of flu was very difficult, so trying to quantify that is next to just about impossible. What I can tell you is quarter-over-quarter the HBR improved in the 10 percentage points range. So using the example that if was a 130 average last quarter, it’s down to 93 this quarter, those weren’t the actual numbers, but it lets you understand what I meant by percentage points. We did see a pretty substantial reduction. Certainly there was seasonality in the first quarter. We see it and we see it every year, we saw the flu season, but we believe that giving the level of focus and the new medical management efforts, the termination of the region, the termination of the provider in the Illinois, at least all of those we can clearly measure and show the change in membership from those and the changes that that has taken place since those steps have had a very positive impact. So we would like to believe based on what we’re seen that a significant amount of it is due to those increase medical management efforts and case management efforts that we were talking about in the programs that were put in place in Q1 based on the results that we saw.

Mary, did you have some added chat you wanted to give it to us?

Especially with the intensive case management and the prevention of admissions and readmissions, if you look at Q2 2007 and compare it to Q2 2008 admissions for 1000 are down 14.6%, days per 1000 are down 12.3%. So, we feel all efforts of strengthening the core processes around care management and case management are working.

Your next question comes from line of the Scott Fidel with Deutsche Bank. Scott Fidel – Deutsche Bank North America: First, how do you plan to report the Celtic environment on the membership schedule and how many members did you actually end up requiring from that that will show up in the 3Q results?

We’re not ready to announce the membership yet, but that will be reported as a component of our specialty segment. So, it will rollup to the specialty segments and as we get into the third quarter, we will discuss in more detail Celtic sense it will be integrated with the business and consolidated to that point, but for now we will just wait until we get the third quarter results before we give a lot of specifics around that, a lot of additional specifics. Scott Fidel – Deutsche Bank North America: Okay, and then just relative to the Foster Care contract, you mentioned that runs had a bit of lower DCP. Is that because you process more of the claims electronically or maybe just talk about the reason for that and what type of DCP does that business run out relative to the aggregate DCP.

Mainly, just because of the rules around the program and Texas pays faster than generally the rest of our Centene entities. It’s really no more than that. Scott Fidel – Deutsche Bank North America: Okay and then just thinking about EPS in the back half of the year. I know your are not giving quarterly guidance but anything seasonally that we should think about and think about the 3Q relative to the 4Q in terms of maybe any budget and investments or cost that you have or in terms, how the revenues streams that come online in terms of how 3Q might look relative to 4Q?

Well we talked about the revenue streams from both Celtic and the new Arizona market. As we sit here today there is no unusual large things, we continue to invest in our systems infrastructure that we talked about in our Investor Day. As always there is that fourth quarter, we start to see some seasonality ramp that we saw in last year. Certainly last year we saw it more than in the previous year’s, but I think you have to, as you move into the cold and flu season especially with your ABD population we have to be concerned about that, but beyond that the only others things out there again, as I have talked about Georgia rates. We will also have our Taxes rate increase but that doesn’t come until September 1, so there is nothing really to report on that right now, but those are really kind of the remaining impacting things as we moved forward into the third and fourth quarter.

There was some small minimal cost associated with the start up of the Arizona plant effective October 1, which will be reflecting the expenses in Q3, but based into and all part of our existing guidance, no tactics around that so. Scott Fidel – Deutsche Bank North America: Okay and then just with the Celtic. Did that look in terms of seasonality like what we typically see with an individual commercial plan, in terms of with the deductible ramp and then you see that, the pick up in the utilization after people burn through detectible and that’s something to think about in terms of seasonality. Maybe more for ’09 in the back half of the year or is it just not that big enough to really move the needle much?

Yes, I think we’re still working with Celtic on the impact and your comparison to the rest of our business with respect. The seasonality and other factors, but want we did notice that Celtic has continued to be as if history continues to be conservative in the way that they book their medical expenses. So we have not seen anything adverse with respect to their performance in Q1.

And we are also now starting to work with them on other products and opportunities that tie into the uninsured populations, so some of what you’ve traditionally have seen is the seasonality may shift a little bit.

Your next question comes from the line of Carl Mcdonald with Oppenheimer. Carl McDonald - Oppenheimer & Co: Could you comment on the M&A environment in Medicaid, willingness to sellers to sell in the current economic environment? Were valuations expectations are and would be willing to take the debt-to-cap?

Yes, Jesse Hunter here, I mean, obviously your acquisitions are an important part of our criteria, on our growth criteria’s and we continue to look at that in a disciplined way and, we’ve spent through a handful of these various economic cycles in the past and while there is some moderation, I would say activity in the down cycle. We have not seen our pipeline joining up by any means. We continue to have, as we’ve said for a number of quarters now more things to evaluate that we could reasonably execute. So we have not seen any adverse effects from the economics and as we talked about before there is a possibility for decrease year membership and further growth opportunities in Medicaid in the down economy. So we think that continues to create opportunities longer term.

As I indicated the investor conference to issue equity given were the stock price is at , but going forward as we look at deals again we are not going to pass up anything trying that we see as a good opportunity. So we are willing to take the short-term leverage on any type of transaction. As I indicated the investor conference to issue equity given were the stock price is at , but going forward as we look at deals again we are not going to pass up anything trying that we see as a good opportunity. So we are willing to take the short-term leverage on any type of transaction. Carl McDonald - Oppenheimer & Co: Could you provide an update on the timing of the MSS systems realignment?

Your next question comes from the line of Greg Nersessian with Credit Suisse. Greg Nersessian – Credit Suisse: Yes, good morning. My first question is; was it the admin fees were down a couple of million bucks sequentially. Is there something seasonal in there or was this under contractual. If you could just - I guess what is the appropriate run rate going forward for that, for that number?

You say admin; you are talking about G&A? Greg Nersessian – Credit Suisse: No, the admin fees, the service fees, they were $20.5 million in the first quarter and there were $18.5 million in the second quarter?

Hold on just a second. Greg Nersessian – Credit Suisse: The fee based revenue.

Service fees, I’m sorry, excuse me. Nothing, we’ve continually seen some decline there mostly as we’ve lost a couple of corporate customers, large corporate customers in one of our specialty businesses that we continue to see some decline that’s driving the year-over-year decline in that. Greg Nersessian – Credit Suisse: Is that the pharmacy fees?

No, that is mostly it’s Nurtur I believe, our health management business. Greg Nersessian – Credit Suisse: Okay and then there was an increase…

Greg Nersessian – Credit Suisse: So, was that 18.5, that changed above ride for the run rate going forward?

Yes. Greg Nersessian – Credit Suisse: Okay, and then, there was a jump in the accounts payable on the balance sheet, just sequentially. Does that have to do with this change in the banks or what regard?

Yes approximately $30 million of that is due to that issue, because when we had to re-clash that account, you basically increased your cash and accrued it your accounts payable line items. So $30 million of that change is due to that entry we had to make at the end of June. Greg Nersessian – Credit Suisse: And then my question was just, I guess bigger picture. Starting to hear some rumblings about the second stimulus bill that includes an FMAP adjustment for State Medicaid ages, I guess if you could just comment on, in your conservations with the States currently in the absence of the any of that kind of federal relief are you seeing States contemplating any changes to average ability levels, or anything like that that may impact your enrollment going forward or any benefit designed changes that that I are worth mentioning?

No, the only thing we are hearing is more and more discussion about of alternative approaches to cover the uninsured and as a very high, there is lot of activity in that. Greg, there is 25-30 states that have some various legislation they are looking at in that area. So, in contrary I think they are just trying to figure that out and I think we continually to view the industry as a part of solution, that saving some money. So, we’ve not heard anything specific in our states, Mark anything you were aware of?

No, at this point we haven’t heard anything as detailed as a changing eligibility or benefit structure. I think it is a little too early.

Your next question comes from the line of John Rex with J.P. Morgan.

Two questions here. First, give your early thoughts on the rate renewal process for Texas, I guess that’s coming up here and it’s a non Foster Care Texas and just what your expectations are in terms of the net increases there?

Nothing else to add, its just ongoing negotiations, but we expect don’t to be ready by September 1.

We’ve had the ability to work with the State constructive. With the market sharing approach they take, we find that to be a very constructive approach, so we’ll just continue to work through as we have historically.

Okay and then on Georgia, so I guess with draft rates and if you aware of those and is the net impact, is that sufficient to improve the loss ratio there, is it maintain. Just kind of what’s the broad view on the impact on loss ratio on that market with the rates that you’ve seen so far?

Well, this is Mark Eggert. We’re anticipating some improvement, but modest and we’re still negotiation with the States, so it’s a little early yet to know how we’re going to come up.

No, so like just want to make sure understand that could be, you said the rates are into CMS for approval, but then you said you are also negotiating the state. Help me understand kind of where it is in the process?

Well we haven’t been presented an amendment from the state, so there is no final agreement about what the rates will be. We are still negotiating with them, if it requires returning to CMS then we expect that to happen.

Well, I think what’s important is, the rates always help off course that its supposed to, but of the medical management and the other things we’ve been doing in our State that makes the material deference in the margin. So I think it’s a combination of things John that’s that allowed and this is, and then it’s all built into the existing guidance.

I would say in (inaudible) we tend to look at it, if the benefit of portfolio is. I’m not going to disclose what will -- how we feel about what the States taking us about until we resolve it and finalize I mean that’s not a signal I want to sent, that we want to sent, but I would say across our whole book of business, our average rates are reflecting our expectations.

And what’s left in South Carolina in terms of the fee-based businesses, I mean with respect that you acquired there. So you seem kind of -- this is all risk bases you are showing it now and I think we had fee-based before. Help me understand kind of what’s left to run that side?

Jesse?

As you recall we acquired a couple of the fee-based or risk sharing agreement. At this point all of those numbers have been fully converted to risks, so there is no remaining fee-based business.

Okay, so this is it and then has there been -- kind of when you think about that membership that you acquired, can you give us a sense on kind of what you converted and then I assume this is a combination of conversion from what you acquired and also just new enrollment that you’ve added, is that fair?

That is fair, I mean obviously…

How would you think about kind of what effectively converted from the acquisitions?

Well I think we talked about this at the investor conference a month or so ago and basically what we looked at is, in the neighborhood -- I don’t know the exact numbers -- in the neighborhood of 18,000 members that we converted and when we looked at it, we also talked about what that meant from a net price perspective in terms of the acquired membership which was $475 a member. We wish we had more yes, but it turned out to be a very efficient to enter the market.

(Operator Instructions) And your next question comes from the line of Matt Perry with Wachovia Capital Market.

Hi, good morning. I have just a couple of questions; first, I mean you’ve received a rate increase in Ohio and it sounds like your in negotiations in Georgia and Texas and I know you don’t want to disclose kind of how those negotiations are going, but can you comment at all on whether the weak economy has kind of had any impact on rate discussions in those states or any other states as you see it now?

That is we are typically, we’re focused on our utilization on encounters and data and what’s required to maintain actuary sound rates and that’s the focus we’ve been taking and I think the state tends to be look at it in that manner and so we’re not seeing -- obviously we’re sensitive to the economic environment. Some of the income tax issues will continue to hit the states, but the property taxes I think tend to hit more at the county and city level. Some of the sales taxes, county and city level, so there’s a combination of things there, but once again when you apply the solution Matt, that tends to help.

Okay, and then just the second and final question I have is Congress past -- I think it was last week, a Medicare bill which was previously thought might be very challenging to past; do you have any kind of renewed optimism or more or change in outlook about an SCHIP bill getting passed anytime in the next several months?

I think to speculator -- our planning assumptions are that to do that pre-election maybe difficult and so we’re not building a lot of SCHIP expectation into our planning assumptions.

At this time there are no questions in queue.

Well, we want to thank everybody for your time, attention and look forward to talking to you in another 90 days or so. Thank you.

This concludes today’s conference call. You may now disconnect.