Good morning. My name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to the Centene Corporation Second Quarter Earnings 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 call over to Mr. Kroll, Senior Vice President of Investor Relations and Finance. Mr. Kroll, you may begin your conference.

Thank you, Michelle, and good morning everyone. I am Ed Kroll, Senior Vice President of Finance and Investor Relations at Centene Corporation. Thank you for joining our second quarter earnings call this morning. Michael Neidorff, our Chairman and Chief Executive Officer, and Bill Scheffel, Executive Vice President and Chief Financial Officer of Centene will host this morning’s call. The call is expected to last approximately 45 minutes and may also be accessed through our website at centene.com. A replay will be available shortly after the call’s completion, also at centene.com or by dialing 800-642-1687 in the US and Canada or overseas at 706-645-9291. The access code for both of those is 15407585. Any remarks that Centene may make about future expectations, plans and prospects constitute forward-looking statements for the 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 28, 2009, 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. And with that, I would like to turn the call over to our Chairman and CEO, Michael Neidorff.

Thank you, Ed. Good morning, everyone, and thank you for joining Centene's second quarter earnings call. I will briefly review some of the highlights of the quarter and then turn the call over to Bill Scheffel who will walk you through the financial details. But first, I would like to take a moment to briefly discuss Centene's view of the ongoing federal health-care reform process in Washington DC. We continue to believe that budget realities will ultimately limit reform driven changes to those that are affordable. One cannot help but notice the influence of the conservative Democrats in the house and the moderate Democrats in the Senate to slow down the process and act responsibly in a financially disciplined and policy centric manner. Recent public opinion polls show increasingly that Americans are wary of too much government intrusion in healthcare and of the higher taxes that would be necessary to fund it. The focus must be access to affordable care for all. Centene is an agile organization and we believe that we are well positioned as any managed-care organization to work effectively in a post reform environment, given our focus on helping underserved, vulnerable populations gain better access and cost efficient health care through our wide array of products due to our unique multiline strategy. Our new contract in Massachusetts offers evidence of our ability to meet needs of different markets and customers in a dynamic fashion. We are well versed at operating as a government contractor and while there are no guarantees, it is difficult to imagine a type of health reform under which our skills, flexibility and focus will not be valued. Importantly, if there is no mini reform enacted, under our current strategic plan, we see a very long runway ahead of us to reach our growth…

Thank you, Michael, and good morning. As I begin I would like to remind everyone that the financial results discussed will be in the context of continuing operations and therefore exclude our New Jersey health plan and also include the consolidation of the operations of Access Health Solutions of Florida beginning January 1, 2009. Prior to January 1, Access was presented under the equity method of accounting and earnings were included in other income. I would like to point out at the beginning of this quarter we have presented a subtotal for premium and service revenue in our income statement to better enable the readers to understand our revenues before the impact of premium taxes. Premium taxes are an item we don't control and can vary from state to state as I will discuss later. We believe calculating the health benefits ratio based on premium revenue and the G&A ratio based on premium and service revenues is a more conservative and representative presentation of these ratios. For the quarter ended June 30, 2009, premium and service revenue grew to 931.3 million which is an increase of 16.1% over the second quarter of 2008. Earnings per diluted share from continuing operations were $0.47 for the second quarter of 2009 compared to $0.40 in the second quarter of 2008. This represents a 17.5% increase year over year. The revenue increase was driven by significant membership growth in each of our states, the acquisition of certain assets of Amerigroup's healthcare line on March 1, 2009, the initial conversion of Florida Access Health Solution's members to the full risk Sunshine State Health Plan model beginning on February 1, 2009, the commencement of the Arizona acute care contract in Yavapai County on October 1, 2008, the July 1, 2008 acquisition of Celtic, the health insurance…

Thank you, Bill. Michelle, we are ready for questions.

Okay. (Operator instructions). Your first question comes from Daryn Miller from Goldman Sachs. Your call is open. Daryn Miller – Goldman Sachs: Hi, good morning.

Good morning. Daryn Miller – Goldman Sachs: Hi. Quick questions. I'm sorry if I missed it, did you guys make any comment on the duration effect some competitors are seeing, higher utilization, new lives coming into the Medicaid program?

We took a look at it and while there is some, a few basis points here and there in some markets, there's nothing meaningful there and we just – we have not seen it to that extent. Now I bifurcate that and distinguish it where we have a brand new market we enter of course, there you have the case of new members having not had any healthcare, a lot of pent up demand there. And that is why we book at 90% and will roll it through anywhere from two to three, four quarters. But in the existing market, the additions we have seen, we have taken a look at it, and we're not seeing it to any meaningful effect. Daryn Miller – Goldman Sachs: That is great. Again sorry if I missed this, did you guys comment on Georgia rates?

We did not. We are still in negotiations with it. We believe that the state is working hard to try and resolve it earlier all the time but I'm not prepared to say if it is going to fall this quarter or next quarter, but we should see it before the end of the year. Daryn Miller – Goldman Sachs: Okay. Would you expect that to be retro July 1?

Yes, it will be retro to July 1. Daryn Miller – Goldman Sachs: Great. Thank you very much guys.

Thank you.

Your next question is from Greg Genova [ph] from Deutsche Bank. Your line is now open. Greg Genova – Deutsche Bank: Hi. Good morning.

Good morning. Greg Genova – Deutsche Bank: Can you talk about Wisconsin? I know the state has talked about making some changes there, including changing, putting the program out to bid next year, can you talk about what is going on there, what you guys are expecting?

We have been in discussions with them. The industry has been in discussions with them. Nothing has been stated in terms of what they actually will do. The last talks were a RFP to be effective for July 10 which expired. I mean a lot of the states we have procurement where we do RFPs on an ongoing basis. So that is where it is now. Mark, would like to add more to it? Mark Eggert, who head up health plans.

The only thing I would add is the informal discussions we have had have centered on southeast portion of the state so discussions are really procurement only for the counties in the Southeast. Greg Genova – Deutsche Bank: Okay. And is that a decent part of your membership there or not really?

It is probably somewhere just under 50% of our total membership. Greg Genova – Deutsche Bank: Okay. And then can you talk about the new revenue guidance and what the behind that if there are certain markets maybe Texas that was strong or the reasons for the increase in revenue guidance?

I think if you look at our second quarter actual and you start analyzing it and look at the rate increases, we expect to have in the second half of the year from Georgia and Texas additional membership coming from conversion of members in Florida, all of that is what leads to the numbers that we're currently giving out. Greg Genova – Deutsche Bank: Okay, great. Last one would be in Com Care, you said I think enrollment is going to pretty much be pretty stagnant for the rest of the year. Do you have maybe an enrollment that you have right now, that is probably just a few thousand lives I guess but maybe just where you guys are right now even though it is obviously very early?

It is very early. It is July 1. In fact as we normally we discuss membership at the end of the quarter – well, Jesse, you want to add something?

Right. So Greg, I think Michael referred to some changes that are happening at the state level with respect to – the biggest one being the temporary suspension of the auto enrollment feature for the Com Care product. So that obviously has an impact on us as a new plan and as a bidder where there was a preference for auto enrollment. So at this point we are well under a thousand lives. Greg Genova – Deutsche Bank: Okay. Thanks guys.

And I want to come back on the Wisconsin thing. The glass could be half full or half-empty. It also gives us an opportunity to maybe see a narrowing and pickup more membership. So it is a two edged sword, Greg. Greg Genova – Deutsche Bank: Thanks guys.

Your next question comes from Tom Carroll from the company of Stifel. Your line is now open. Tom Carroll – Stifel: Hi good morning. A couple of quick comments here. Are you guys doing anything differently this year in preparation for a potentially higher utilization flu season related to H1N1?

I think we are doing a couple of things. One is we have our programs that we have had in place and we used earlier this year where the plans work with the physicians and a whole series of pandemic things I mentioned we did with the bird flu a couple of years ago. And so we are continuing those programs, we are monitoring it, working with the CDC as everyone does to understand where it is to put in place. We cannot forecast specifically, nobody can, what the total impact is. We will only be ready, have things ready, ensure that the Tamiflu and other things are properly used when needed and ensure that those that need it get it. We have got to work on the vaccination programs and as the government defines how it is done, if it is through government offices, we will make sure people get there. If it is to through other locations, just ensure that our population gets it. The other thing we're doing that is really important is we've had in place policies and practices for our own offices if somebody is exposed to the swine flu. But what would sort of – when somebody reported – has happened in one of our markets, we had the isolation program and just how to handle it so as to minimize disruption to our operations as well .so we are ready to the extent we can. We have – we see normalized flu that comes in place late third quarter, fourth quarter, and some in the first quarter of next year and beyond the normalized type flu which took place below our forecast, but there is not a whole lot more we can do there, considering there needs to be a little bit more testing, and we tried to consider those kinds of things. But based on what we saw this year, it was minimal. We looked at what the impact was in our markets and looking at CDC, there were approximately 12,500 incidents in our specific markets that they have reported confirmed flu. We saw the greatest impact in people who had concerns going for testing that they have thought they might have it. And our calculations looking at the CPT codes and things during that period was about $1.5 million of expenses incurred there for us overall market. And with the majority of that in Texas at the border state where people have the greatest concern. So we have looked at that everyway we can and we're going to continue to do it in that fashion, Tom. Tom Carroll – Stifel: So it is fair to say that it is perhaps on the radar screen, a bit more intently this year than it has been in prior years? That is fair? Okay.

Absolutely, it is there and what is important to us is we have to continue to estimate what is the impact of the testing. Somebody thinks they have it, so they're going to go get tested. It is probably hundred dollars per test or something of that nature. So you just kind of think that through and try to anticipate a reasonable level but beyond that it is just be ready. Tom Carroll – Stifel: And just as a clarification on the comment you made about Georgia and Texas, you said there were going to be rate increases, you just didn't know what they where yet, but you are expecting a positive number, is that correct?

We are looking for a modest single-digit rate increases in Texas which is effective September 1 and to have a real impact in Q4, those comments. And Georgia is a July 1 and the one-year of course where we got really – they didn't sign the papers till January, we never forget that one. But we this past year they got it a little earlier, they recognized the impact it had, and so we expect we will see it late Q3, but as we think it through, we see it in Q4 probably. Tom Carroll – Stifel: But again the states have given you comfort that it will be a positive number as opposed to a slight negative? Okay.

Yes. Mark, you have been in the negotiations.

Yes. I mean the discussions we had with Georgia involved increases in the rate, very modest as Michael said, and we're still working through it. We don't have any final numbers. Tom Carroll – Stifel: Excellent, thank you.

Your next question is from Greg Nersessian from Credit Suisse. Your line is open. Greg Nersessian – Credit Suisse: Thank you. Good morning. Just the increase in the premium taxes this quarter, sorry if I missed that, but did you isolate I guess which state that is from or what that relates to?

Wisconsin, Bill, you want to comment, please?

We said Wisconsin instituted a hospital assessment. During the quarter, we recorded a 84.7 million for that, which essentially represented the entire amount for the states fiscal year ended June 30, 2009. We expect this to continue going forward, but we expect it to be on a more normalized quarterly basis where we would get roughly one fourth of that amount each quarter going forward.

Greg, I commented that is why for several years now, as I recall, we have always reported medical loss ratio, G&A, net of those premium taxes, and net of interest income, because some states has varied amounts. And so we want to be able to be as transparent as possible so that you can really see it is no different than ensuring that medical expenses are in appropriated columns, that type. Greg Nersessian – Credit Suisse: So what would be the like normalized run rate for premium taxes going forward, not just Wisconsin, but the whole consolidated amount?

It will very. It will vary by the states and the products within the state. I mean some states still have – I think there is some sort of (inaudible).

In some states, you have 5% to 6% rates, and some start some stop. But if you look at what we recorded this quarter, I would say three quarters of the $84 million was sort of prior periods, and they paid us in the second quarter, so that would be a more normalized amount.

If I pull that out… Greg Nersessian – Credit Suisse: And a quarter of 84 million to what your previous run rate of premium taxes were added to that?

Or take second quarter's actual and take three quarters of the 84 out. Greg Nersessian – Credit Suisse: Okay.

So, if you think about it, and you just, if you just remove the premium tax in the calculation which we have you the information to do it, if we grow membership in Wisconsin or Georgia at a faster rate with their higher premium taxes, that is going to affect that count. So if you grow faster in a state that has no premium taxes, it is going to pull down. That is why it is hard to say the normalized amount. That is not something that we are – that we control. Greg Nersessian – Credit Suisse: I mean I was just trying to ballpark. It doesn't really affect the numbers anyway, I was just trying to ballpark how to model it going forward. Second question, the prior period reserve development in the go forward was significantly higher, looks like about 26 million higher sequentially on a rolling 12 month basis, I guess could you isolate what that relates to, I guess the highest level we have seen in some time?

Right. I think first of all I remind everyone that what that does is we are demonstrating the reserve adequacy as of June 30, 2008, looking at it a year later. So I think that the number has been higher than normal for two reasons. First, that at June 30, 2008, we had reserves initially established related to new products for foster care and South Carolina, and so those were conservatively set and have obviously developed positively since then. And then second, what we have seen is, we received a much higher level of payments from third parties for coordination of benefits. We have been – we have increased our efforts here over the last year to increase the payments that we have received from third party payors and this has resulted in a significantly higher amount of these payments which were not originally anticipated, and so we would expect that going forward that our efforts to collect on third-party payor coordination of benefit amounts will continue and that really is what represents a lot of the increase between what would be a normal amount and what was recorded this quarter. Greg Nersessian – Credit Suisse: So was it I guess – could you quantify how much of the reserve development you reported this quarter would you characterize as sort of not recurring, as sort of kind of the one-time benefit, either related to those new markets or the coordination of benefits item you know that you wouldn't expect to sort of continue on a normalized basis, on a permanent basis?

I think (inaudible) something here, but if you look at it what we have tried to do using the rolling four quarters, so different – one looks at investments over four quarters, this is as Bill started out, this is a look back at 2008, and it is just a confirmation that reserving has been conservative and that is does impact specifically what we do this quarter. We don't look at that and say what we have – what it can do. We just use the same methodology every quarter on how we reserve and so we will have a look next year in this time that will confirm that what we did in our normal methodology because these are all estimates we do all the time that, yes, we were adequately reserved to that point. Bill, anything you want to add to that?

You know clearly with respect to the coordination of benefits, those efforts are ongoing. I think we have probably benefited higher at this point in time because as we initially started those efforts, say went back and farther back and where we could recover since Medicaid is supposed to be the payor of last resort. And so that amount is probably high than now and will be going forward.

But that has not influenced what we have booked this quarter. we used the same methodology we always use. We had three actuaries look at it. We have our – so it has not changed all the days claims payable, we are up several days. So those are discrete separate calculations. One is just this look back is a confirmation and (inaudible) gee, you know, you are conservative, and you understand why back in that period it was so much higher. Greg Nersessian – Credit Suisse: I will just make my ultimate question is you went into some new markets last year which you know I think you have appropriately identified, you had to be very conservative, you set your reserves you know in a conservative fashion, and it is turned out that you were right that those reserves were set conservatively even if have got the benefit of you know a look back period. You are now where you can say, we didn't need that level of reserve conservatism, you are making an adjustment in this period. I guess my question is, is that, you're not viewing that as sort of a one-time thing related to those new markets? Do you think that this level of reserve development is sustainable going forward?

I think what we're saying is that we do have a methodology we use every quarter for our reserving. Now a year from now reversing how well we reserved this year and what we look at next quarter would be still a four quarter rolling average as opposed to one snapshot. So it does not impact – we didn't – we don't look at that and determine how we are going to reserve this quarter. we book our reserves for this quarter based on what we see (inaudible) everything for this quarter and our IBNR and then later on subsequent to all that being done, we've run that number, and that is how (inaudible) it is just a reassurance that we were more than conservative or put it in now way – we don't know what it is going to look like for the next three quarters until we run it again next quarter, and that would say, it could continue, we may see it come off, if we had turned out to be a little less conservative. So it is… Bill?

We continue to reserve in a conservative manner in new markets as we go into Florida and do these things. That is continuing and so which new market we are in in any one year so changes but the methodology continues to be the same and we would expect that to continue going forward.

We don't look at that at all. You can't look at that and say, gee, you have excess reserves a year ago, so you can take it down now, because we have been reserving every quarter since then. And so if you try to make a judgment of what you did four quarters ago, you would be – you could create real problems for yourself this quarter. So you use the same methodology that is nothing more than a confirmation of a year ago, that the only value it has for us and for all us, it says we did a year ago what we told you we did. Greg Nersessian – Credit Suisse: Okay, thanks.

Thank you.

The next question is from Matt Perry from Wells Fargo. Your line is open. Nakomie Smith – Wells Fargo: This is Nakomie Smith [ph] for Matt Perry. All of my questions have been asked. Thank you.

(Operator instructions). Your next question is from John Ruskin [ph] from Barclays capital. Your line is open. Joshua Raskin – Barclays Capital: It is Joshua. I apologize if I missed the question but just wanted to hear swine flu any impact that you saw in the second quarter and then any expectations for you know a more than normal or a higher than normal flu season in the fall?

Good morning JOSH. We commented that we had looked and saw 12,500 incidents of flu the CDC reported in our markets. We looked at it and the only thing that we were able to find of any magnitude of normal medical expense was about $1 million of expense that was quoted as testing for the flu. So there was nothing to show in the second quarter. Going forward we commented that we have all our pandemic and epidemic policies practices in place. The medical management people are trained to work with the providers. They know what to expect from us as we identify and we have gone further. We have a program for the company employees that works through do everything we can to protect them, our staff and to ensure continuity of service to providers and members. Joshua Raskin – Barclays Capital: Got you, okay. And the million and a half quoted as testing, did that come through as provider, as physician claims, or was that…

Yes (inaudible). Joshua Raskin – Barclays Capital: Okay, so you have already…

And some lab expense. Joshua Raskin – Barclays Capital: Got it. So you have already seen the business, so there'll be no sort of additional expense to, even if this was mostly in June, you wouldn't expect more to come through, it sounds like…

Well, may be within the normal lags that we build in there, in the reserving that we have done for. What Congress said that there'll be a – that they say there could be a worse flu season this year, maybe going to the second year. Until things these, things mutate (inaudible) real experts on our Board, Tommy Thompson and others have really have dealt with this for a long time, and so we're taking their advice in terms of how to go about it. Joshua Raskin – Barclays Capital: Perfect, perfect. And then just second question on the M&A environment, you know I think a lot of reform discussion, you have talked about Medicaid expansion. I don't think there's anything certain in reform, but it certainly feels like most of the proposals include some form of growth and opportunity in the Medicaid space. Do you see some of the sort of smaller competitors, the local plans, looking to access sort of your scale, your size in terms of opportunities for the future, you know if you think there will be a active M&A environment I guess over the next couple of years?

I think there is always a chance that we might be a able to consolidate some of them. But right now we have such a runway with opportunities and the knowledge we're gaining in working with the Connector of Massachusetts, really puts us in a strong position to talk to other states about how it works. I think it is a model that makes a lot of sense because of the continuity of care and a continuum as people move to the different products to be able to keep the same network as a real, as a significant opportunity to contain costs, because they're not changing doctors because they are in a different network. So it is – and I think it puts us all in a very strong position, all this puts Centene where we would like to be. Joshua Raskin – Barclays Capital: Okay, thanks.

There are no more further questions at this time. You may go ahead you’re your closing remarks.

We thank you and we will talk to you at the end of Q3. Thank you.

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