Good morning and welcome to the Centene 2016 Fourth Quarter and Year-End Financial Results Conference Call. Please note this event is being recorded. I would now like to turn the conference over to Ed Kroll, Centene's Senior Vice President of Finance and Investor Relations. Please go ahead.

Thank you, Carey, and good morning everyone. Thank you for joining us on our 2016 fourth quarter and full-year earnings results conference call. Michael Neidorff, Chairman and Chief Executive Officer, and Jeff Schwaneke, Executive Vice President and Chief Financial Officer of Centene, will host this morning's call. The call should last approximately 45 minutes and also may 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 877-344-7529 in the U.S. and Canada, or in other countries by dialing 412-317-0088. The playback code for both dial-ins is 10098783. 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 most recently filed Form 10-K dated February 22, 2016, the Form 10-Q dated October 25, 2016, 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. Please mark your calendars, our next Investor Day will be on Friday, June 16 in New York City. And with that, I'd like to turn the call over to our Chairman and CEO, Michael Neidorff. Michael?

Thank you, Ed. Good morning everyone and thank you for joining Centene's fourth quarter and full year 2016 earnings call. During the course of this morning's call, we will discuss our fourth quarter and full year 2016 financial results and provide updates on Centene's markets and products. Additionally, we will bring you up to date on the Health Net integration and discuss the changing healthcare regulatory landscape. Let me begin with fourth quarter and full year 2016 financials. We were pleased to conclude the year with a strong fourth quarter, marked by solid top and bottom line growth. Membership at quarter end was 11.4 million recipients, representing an increase of 6.3 million beneficiaries over the fourth quarter of 2015. Fourth quarter results increased 89% year-over-year at the revenue level to $11.9 billion. 2016 revenues grew 78% year-over-year to $40.6 billion, ahead of our guided range. The revenue increases were primarily attributable to the Health Net acquisition. The fourth quarter HBR improved 320 basis points year-over-year and 220 basis points sequentially to 84.8%. The 2016 HBR improved 240 basis points year-over-year to 86.5%. These improvements were primarily related to the product mix shift from the addition of Health Net and a California minimum MLR change. We reported adjusted fourth quarter diluted earnings per share of $1.19 compared to $0.97 in the same prior period of last year, representing growth of 23%. Adjusted 2016 diluted earnings per share were $4.43 compared to $3.14 reported in 2015, representing an increase of 41%. Lastly, 2016 operating cash flows came in very strong at $1.9 billion or 3.3 times net earnings. Please note, there are several moving parts related to the adjusted numbers, including the California minimum MLR change I just mentioned. Jeff will provide further details on these during his prepared remarks. A quick…

Thank you, Michael, and good morning. Earlier today, we've reported our fourth quarter and full-year 2016 results. For the full year, total revenues were $40.6 billion and adjusted diluted earnings per share were $4.43. The increase in the top and bottom lines compared to 2015 was the result of the acquisition of Health Net, growth in the Health Insurance Marketplace business and the full year effect of product and market expansions in 2015 and 2016. Membership grew to 11.4 million members, an increase of 124% between years. For the fourth quarter, total revenues were $11.9 billion, an increase of 89% over Q4 of 2015, and diluted earnings per share were $1.45, compared to $0.91 last year and adjusted diluted earnings per share was $1.19, compared to $0.97 last year. As highlighted in our press release issued this morning, adjusted diluted EPS for the fourth quarter and full year excludes the following items: the acquisition costs associated with the Health Net transaction, amortization of acquired intangible assets, the favorable pre-tax effect of $195 million of additional revenue associated with the retroactive contract amendment received in the fourth quarter that changed the minimum MLR calculation under California's Medicaid expansion program. This amount relates to periods prior to the acquisition date for legacy Health Net business, and periods prior to 2016 for the legacy Centene business. A charitable contribution to the company's foundation of $50 million in connection with the additional revenue from a change in the California minimum MLR previously noted, and debt extinguishment costs of $11 million, associated with the early redemption of the Centene and Health Net senior notes that were scheduled to mature in the first half of 2017. Additionally, the fourth quarter and full year results also include a net benefit of $0.03 and $0.05 per diluted share,…

We will now begin the question-and-answer session. The first question comes from Sarah James of Piper Jaffray. Please go ahead. Sarah E. James - Piper Jaffray & Co.: Thank you. I wanted to follow up on some comments you made for 2017 guidance. So initially, you had talked about flu peaking earlier and maybe a little higher, so how does that compare to what you have in guidance? And then, it sounded like you said that you built in some conservatism on health insurance exchange expectations to 2017. So, if you could help us understand what that means.

Sure. Sarah E. James - Piper Jaffray & Co.: Seems I might have some question there.

Yeah. I'd be happy to. Yeah. I'll start off and Jeff and others can add to it. There's been reports out on the flu, so I wanted to ensure that you all understood we've been tracking it. Last year was a very low base, so it's higher than last year. It is peaking earlier. It's all contained within the guidance that we've given you. And so, it's not a surprise. I was only really trying to just clarify it to avoid any confusion later, Sarah. As it relates to the second part of your question, we took an approach of being conservative in looking at the exchanges and the costs. Why? Because everybody was doing it anyway and we said, let's just build it in to people who are comfortable that we've done, it's that the, we could still achieve our range that we originally talked about the high end. And it's just being extremely conservative. It's still a great year with lot of upside, and we said everybody is so concerned about this now. As I said, early indications and it's one month, so it's – but it's importantly – you look at the demographics of the population that is very consistent with what we've had success within the past. So, it was just the case of saying, let's be conservative. It's much better to meet and beat than later on saying that it didn't quite come out as we expect. So it's just the comfort zone, I think for investors and ourselves. Sarah E. James - Piper Jaffray & Co.: Got it. And other aspects of your health insurance product maybe either in the benefit design or in the provider contracts such as risk sharing, that give you comfort around markets like Arizona on the health insurance exchange and being able to control costs in advance where you're just the only one or one of two?

Right. So I think, first of all, in Arizona, there were two issues going back. We had the Health Net PPO product which went away December 31. We then went back in and we entered with our design product that we have used everywhere and contrary to what people think, I mean, in the insurance business an ideal world is where you do a carry or replace. It ensures you get the full balanced book of business and that's something we've learned a long time ago. So as it relates to Arizona and going in by example in any of the new markets, we've used our same design – product design, we've used our same network approach to it and we've been very consistent. And when we took that any experience we had in Arizona through the old business and look at it through our lens, it said, it should perform consistent with our expectations of any of our businesses. And 90% plus of it is in the silver tiers we said, which is the area we have the most success and with the subsidized members. So it's very consistent. Sarah E. James - Piper Jaffray & Co.: Thank you.

The next question comes from Michael Newshel of Evercore ISI. Please go ahead.

Thanks. Good morning. Can you quantify?

Good morning.

Good morning. Can you quantify any benefit from the California minimum MLR adjustment that was related to the first three quarters of 2016 that may have been included in the fourth quarter?

Yes. So, just a quick thing on that. If you recall the minimum MLR in California actually ended on July 1, actually June 30. So, the minimum MLR rebate provisions, I think, they began in January 2014 and then went all the way up through June 30 of 2016. And in the third quarter, we had mentioned that we had roughly $0.09, I think in the guidance for the full year which really represented the current year effect for our California Health & Wellness plan, and then subsequent to the acquisition date for the Health Net plan. So, in total, it was around 200 – a little over $220 million of benefit for us for the full year, so that's little over $25 million of its effectively in the adjusted diluted earnings per share number, pre-tax.

We recognize only that portion in the areas affected at or impacted...

In 2016.

2016.

Right. And just one more clarification on the revenue guidance given that it was unchanged. Can you just clarify whether that includes the Pennsylvania HealthChoices contract win?

Yeah. Yeah. Obviously, we have – it does and obviously we have an $800 million range on that, so it's early in the year contracts start dates, et cetera, et cetera. We just thought it prudent to just keep the same guidance range with $800 million spread we have on the range.

Got it. And can you give us a any view on like what the sort of full annualized run rate of revenue would be in that contract? Do you have any visibility from state and how they are going to allocate lives?

No. We do not have visibility at this time. I can give you a range of membership. I'd say we're looking at maybe 75,000 to 100,000 members, so hopefully that's helpful, but more to come obviously when the state finalizes its allocation methodology.

And it's still a period when always period was taking place, you are not really having discussions about it, so.

Yeah, understood. All right. Thank you very much.

The next question comes from Josh Raskin of Barclays. Please go ahead.

Thanks. Good morning, guys.

Good morning.

Michael, just wanted to follow-up on the North Carolina JV that you guys created. I certainly understand with the potential RFP coming out, why you guys would be so active early here. But could you just walk us through the economics? Is that kind of look any different than your typical awards? I know you said that the physicians have some ownership stake in it as well. So, is there some sort of non-controlling interest that you guys have to disburse distributor, how does that work?

So, it's going to be – it's an 80/20 joint venture with us having the 80. It's certainly – typically we've done in other markets very successfully. We work with the physicians on the medical policies and practices. The financial side of things we manage. And it will – in the end, ensure their involvement on how medicine is practiced, which is something we've always subscribed to in all markets. So there's no change there. But, yes, we think it's particularly important with the state that as large as that and as new as it is to really I've called it out and we want to doctors understanding that they will have every opportunity to view the medical policies and practices. And then – but from a financial standpoint, we will be managing that for.

Okay. Is there an exclusivity with the providers or I assume they'll be able to participate with other plans when the RFP is live.

Well, I think history has shown true if they wish to provide with others, that's fine. But doctors tend to prefer or like the brands that that involve with. So we'll wait and see how that unfolds.

That makes sense. And then just lastly on the health insurance in the marketplace, you mentioned 90%, I think, were sort of known. The other, call it, 100,000 or so lives that came from other plans, do you have color on the demographics for those individuals at all? Did they come from plans that exited or did you just take share from plans that remained? Is there any color on that 100,000?

I think we have some of it. Jesse, you want add to it, you have the more detail?

Yeah, Josh. This is Jesse. So, we have some visibility on those. Obviously, we don't get into the specificity of which carrier in terms of exits and the like. And I think when we look at the pieces here, the most relevant data point is what Michael mentioned before that in aggregate, our key demographics, subsidy levels, metal tier, age, gender, up and down the line are almost entirely in line with our prior experience.

Okay. All right. And that's inclusive of that extra hundred?

That includes – that represents 100% of the members that we have for 2017.

We did not see anything so far that says, we're getting – we attracted any different members that we typically have, and other people in the room here are shaking their head yes.

Okay. All right. Thanks, guys.

The next question comes A.J. Rice of UBS. Please go ahead.

Thanks. Hi, everybody.

Hi.

First of all, let me ask you about the Health Net synergies. I know you guys said you're generally tracking your expectations and presumably a lot of what you'll realize in 2017 is the result of actions already taken into 2016. I wonder when you think about 2017 and actions still to be done to capture more synergies. What's still left to be done with respect to Health Net integration and so forth?

Well, we're still working through the operational systems, the claims payment, some of the medical management things being put in place. And Mark Brooks is doing an outstanding job for us in that area and working through very methodically. Some of them will be bringing back from offshore, some of the claims payment. That something is nothing to do with the current political environment. We announced that we will be doing that with the acquisition almost two years ago now. So that's consistent with our approach. So, those kinds of things and actually when we look at it, we're more efficient in our automated claims payment here in the U.S. and when it is offshore. So, we see all those things still to come to bear. But I keep encouraging and I think the senior management encourage everybody that's involved with the execution, it's not how fast, it's how well, it's on target. I think what was important to us and what I highlighted before, the things that have been integrated, the cultural thing, the HR, the general ledger where we're moving the IBNR system to ours running parallel in the first quarter, and then we'll be putting in our system, those kinds of things. It's really work the way one would expect it to and then some, and I'll gratuitously take advantage of your questions rolling one other thing. It gives us a great deal of confidence in our ability to take on a fairly large acquisition, one that was not simple and had some issues and integrated effectively, and so it's all worked on schedule.

That's great. And let me just ask on – some of the other companies are talking about how they're going to think about 2018 for the health insurance exchanges, given the moving parts in Washington, you're in the unique position, if you're still actually making money on the exchanges, a lot of the others are not. Any early thoughts about 2018 and the changing landscape, and how you're going to think about exchange participation, I know you've got to start thinking about it in the spring pretty seriously?

I had – we had our board meeting yesterday. And as you know, we have a couple of very knowledgeable board members. In our discussions, everybody is of one mind, you maintain business as usual and as I try to say in my prepared remarks, this is a population that I think everybody is going to work very hard to minimize the transition, the impact on the states and on the recipients. And our approach is going to be what it was this past year, continue to move ahead very effectively and – I'll go back and say that in 2008 when President Obama was elected, there were lot of concerns of what was going to happen? We said, business as usual. And we're just going to adapt to where it has to be and we're just going to continue down on 2018. We'll have this current exchange program or wherever we move to and we're comfortable we have the capability just to continue to do it. I'm not backing off at all in other words.

Okay, great. Thanks a lot.

The next question comes from Gary Taylor of JPMorgan. Please go ahead.

Hi. Good morning.

Good morning.

Just a couple of questions. First on the donation to the California Foundation, I presume that's just part of your corporate responsibility commitment to the state of California and there wasn't any contractual obligation to do that.

Yeah. That's actually not. It's just to the Centene Foundation. That's not specific to California.

Okay.

Yeah, we've done this in the past. I think if you go back last year, anytime we usually have these kind of one-time benefits, we usually do some of the charitable contribution to our foundation.

We don't expect much credit for one-time gains and so that's an opportunity to build up a foundation that over time will help to ensure our ability to the earnings up. We're not there yet to maintain our commitment to all our communities across the country.

Thank you. And then my second one was just, of the roughly 1 million exchange enrollment, would you be willing to give us the total for California and Arizona at this point?

We said Arizona just to about 100,000, and I don't know that we've specified in California.

Yeah. I think the way to I think – yeah, excuse me, Gary. The way to think about kind of those two markets on the legacy Health Net side as we – Michael touched on Maricopa previously. So we have 100% of that market. It was directionally 100,000 members last year, so that's consistent with what we're seeing for 2017. And then on the California front, I'd say pretty – it's relatively consistent with what Health Net had seen historically, so I think kind of mid 100,000 range.

But I think what...

Meaning – between 100,000 and 200,000.

What's really significant, how will this work, because I've been carefully following that with the our California people, that the – on the PPO, there was a shift in the population, that some of the – the book of business has really become balanced and we have about the same number this year as we did last year. We have – it achieved what it should. We expect our high utilizes, but we expect to balance, so it's a nice – every indication is it's a nice balanced book of business which is why we said we fully expected to be breakeven or less. Chris, anything you would add to that?

No, Michael. I think you hit it right on the head. I think we're really happy with the way the benefit changes have moved the product.

And I want to call out the state and everyone else that understood the issues and helped us to do it. And we were able to effect the pricing and just create the right environment the way it should be. We took a much smaller price increase than what you originally heard about.

Okay. Thank you.

The next question comes from Lance Wilkes of Sanford C. Bernstein. Please go ahead. Lance Arthur Wilkes - Sanford C. Bernstein & Co. LLC: Yeah. Good morning.

Good morning. Lance Arthur Wilkes - Sanford C. Bernstein & Co. LLC: I wanted to ask a little bit about the long-term care business and if you could comment a little bit on both pipeline, if you're expecting any sorts of delays with respect to risk, or repeal and replace. And also, what sort of MLR trends are you seeing in that business?

I'll just comment that there's been a couple of states that we're in force now that have talked about delaying the re-procurement for a year. I think Kansas and there was one other one, which is five. I mean we're in force there and, some say it's business as usual. They want to do that, we can live, either way it's fine with us. Though the MLR, I don't know how it's...

Yeah. As far as the MLR – this is Jeff. Hey, Lance. So, I think we've historically said that usually long-term care products are underwritten close to the mid-90s, it's a little bit below the mid-90s range because of the size of the premium. So we're seeing, I mean that's consistent with our experience, relatively close to where the state's underwriting the program.

And the SG&A is lower because once again the size of the.

Premium. Yeah. Lance Arthur Wilkes - Sanford C. Bernstein & Co. LLC: That totally makes sense. And then, in North Carolina and in the other places where you've taken kind of a similar approach in partnering with physicians, understand the 80/20 sort of split on the overall economics. Do you enter into a capitation or is there some sort of an upside and downside arrangement with the physicians as far as medical costs in those instances?

Well, there have been, or ways to do some of that risk. We are moving to risk type contracting. And those are things yet to be worked out. We're in the early stages of those discussions, but it will be done in a way that's very balanced and fair to both sides and we've had great success with that. We have a shared risk where the physicians are taking on the ambulatory risk and we share in the inpatient/outpatient services. So, we have some model that I don't want to, for competitive reasons at this point, get too specific. But we have the systems capability we're developing, and continue to look at risk sharing with providers, but not at the global cap level. We've seen too many people have issues with that. Lance Arthur Wilkes - Sanford C. Bernstein & Co. LLC: Great. Thanks a lot.

The next question comes from Kevin Fischbeck of Bank of America Merrill Lynch. Please go ahead.

Great. Thanks. Just wanted to ask on the individual business. I think previously you talked about having about $300 million of kind of making a net payable position on the risk adjusters, risk corridor, minimum MLR.

Right.

Is that where you kind of ended the year or did anything changed around that?

Jeff?

Yeah. Total around the year-end is going to be around $425 million of risk adjustment payable. You'll see that in our 10-K.

I guess the number I think that I remember hearing is kind of all of those things combined. Is that all combined or just the risk adjusted payables of $425 million?

That's just risk adjustment payable. So obviously, we'll have a receivable on the reinsurance, right, kind of goes the other way. Yeah.

Yeah. And risk corridor and MLR, you'll be in a payable position as well?

Yeah. Those are relatively inconsequential as far as you look at the whole year. I mean, the majority of it's going to be in the risk adjustment payable and the reinsurance receivable.

Okay. And then as far the MA rollout, it wasn't clear to me, you're saying that the MA business was going to be profitable. Was that related to the four new states were going to be profitable or is that including the existing California business?

Well we were kind of in the totality of it, in totality. We said from the beginning, we're going to go very cautious in the new states. I mean it's just the way we do it. We did that with the exchange, get the experience, understand it. It's as much we have – we think we have a lot of capabilities at headquarters, but you really need to get your state employees. Those that are executing day-in day-out, get them very comfortable, train on just how they're doing it and then you end up with a much more successful longer term growing business. So it's just really taking that approach, Kevin.

Yeah. No, that makes sense. And I guess maybe just a last question then. As far as, I know you said there's not a lot of membership in those four new states, but any color on the demographics of how that's shaking out?

Jesse?

Yeah. Kevin, this is Jesse. So, not a lot that we would be – that was kind of worth sharing it at this point. As Michael mentioned in his other comments, we've talked about consistently our focus is on making sure that we have a product that is attractive for the lower income seniors. So that will continue to be the focus as we apply the test-and-learn approach that we've talked about.

All right, great. Thanks.

The next question comes from Matthew Borsch of Goldman Sachs. Please go ahead. Matthew Borsch - Goldman Sachs & Co.: Yeah, I was hoping you could a little bit about the outlook for the commercial group business. Maybe give us a sense of how enrollment fared coming into Jan 1 and whether you think profitability will be stable 2017 versus 2016 or up or down?

Yeah. As I said, we say commercial there's two aspects to it, there's what California is doing in small and large group and then there's the exchange. We kind of say that's all commercial. So, the exchange business, I think we've talked about and you have the sense. We're still very committed to the commercial business in California, large and small group, and Jeff probably has a few numbers on it, he can share and help us.

Yeah. So, a couple of things. If you recall, we took a lot actions in 2016 to improve the performance on the small group business. So I think our expectation is, is that that's going to be more profitable heading into 2017. Large groups have been very consistent. It's been a profit contributor in 2016, and we have the same expectations for 2017. Matthew Borsch - Goldman Sachs & Co.: And how about the enrollment change going into the new year? What does that look like, large group and small group?

I think if you just look at our press release and you look at the fourth quarter commercial, you'll notice membership's down. Some of that's just a normal attrition of the exchange members, but the other component of that is lower membership in the small group and a little bit lower membership in the large group. And you have to remember, a bulk of those blocks renew for January 1. A large part of that business renews in December for January 1. So I think what you've seen is our actions around pricing and other network actions take effect. And so, the membership will be a little bit lower as we jump off the year. It's still in line with our forecast we projected this, but more profitable. Matthew Borsch - Goldman Sachs & Co.: Okay. Thank you.

The next question...

We're still very committed to that business. Don't misread that.

The next question comes from Dave Windley of Jefferies. Please go ahead.

Hi. Thanks for getting me in. Couple questions around pricing. First, is there any health insurer fee holiday benefit to 2017 earnings and kind of what was your strategy about the holiday, how did you apply that money? And then, what dialogue, what information are you getting from your Washington lobby, your contacts, in terms of prospects for having that holiday extended or the health insurer fee permanently removed as you think about pricing for 2018?

Yeah. So, this is Jeff. I mean, specifically, for the largest part of our business, there is no effect, right, on the Medicaid side. Those are predominantly pass through with the gross up et cetera, et cetera. I mean – I think we've talked about the Medicare before and I mean we just took that into totality in our pricing, right. So I don't see it as any benefit as far as that is concerned. And then on the – Michael, if you want to...

Yeah. We're talking – we're very active in D.C., talking about all aspects of this business, and we think that the tax – call the taxes as the fees, are on the table for discussion. And particularly in the Medicaid business, we've been demonstrating that it's very circular. If we pay $1 in, because the actuarial soundness of rates by the time the state has to gross it up to keep our rates and they get reimbursed, it's costing them money. So we're showing them that. And we're also explaining that as they look at all these things, somewhere in the commercial, in other words, it finds its way into the pricing and they're talking about reducing the price of insurance, so that's on the table. At this point, there's no fixed or set anchoring on any particular point. It's all up in the air. So I'm not going to commit one way the other. I'll just say that we continue to work on it and I want to be cautiously optimistic we'll get a positive solution.

And Michael, the kind of similar vein but different book of business. On your marketplace business, you talked about business as usual. Do you have any sense of whether – what the administration is going to do with co-pay assistance, the cost of – the out-of-pocket cost assistance for members and whether that will stay? Do you have confidence that that's going to be a stable environment for you to continue in the marketplace?

Yes I do. I think – nobody – if you eliminate that support, that's the same as doing away with the product. I don't know if anybody wants to see that large number of people are back out on the street so to speak without insurance. And I think they will be – we believe strongly that that will be maintained.

Okay. Thank you.

In some point.

The next question comes from Justin Lake of Wolfe Research. Please go ahead.

Thanks. Good morning.

Good morning.

Just couple of questions. First the 900,000 that you talked about in terms of the individual membership, can you breakdown – we know 100,000 came from other plans. Out of the 900,000, how many are the members that were with Centene last year and how many are completely new to the company?

Well we had 500,000 last year, like.

I don't want to get too specific in terms of retention rates and other things on that, Justin. But I would say, as Michael is referencing, we had – with over 0.5 million lives last year and our retention rate was actually, I think it was the highest year that we have had of any of the subsequent years. Our retention rate was higher from 2016 to 2017 than we've had in the past. So I'd say, at least in line and I'd say a little bit better than what we've seen historically.

Can you give me a historical ballpark? I just don't remember on top of my head.

So, well over 80%.

Got it. And then just on the pipeline broadly. Can you give us some color in terms of what you're seeing out there or what you focused on that you expect either is kind of out there in the market or expected to come to market in 2017 that will fuel 2018 and 2019 growth? Thanks.

And we have this in common, but we know that Oklahoma has an RFP out there, we're looking at. We know that North Carolina is working, we've talked about that. Cindy, anything else you want to add?

No, that's right. I mean we still remain optimistic about the pipeline and what out there and we'll continue to evaluate these opportunities as they arise.

Yeah.

Great. Thank you.

Yeah, that works. Jesse, you made a very important point.

Yeah. I think one thing just in general that we've seen over the last approaching a decade now, states have moved, the higher acuity more complicated populations in the advantage care and there's has been a lot of demonstrated success around that. So if you think about this environment where there's going to be more flexibility at the state level and more focused on cost containment while improving quality. I think you would look at long-term care, other complex populations being a real catalyst for more opportunity at the state level.

And we really prefer – I mean we planned on that. We have the systems and the capability to manage that population and we can safe to say there's a lot of money there while improving outcomes.

The next question comes from Scott Fidel of Credit Suisse. Please go ahead. Scott Fidel - Credit Suisse Securities (USA) LLC: Thanks. I just had one question. Just related to, there was an interesting proposal in the Florida Governor's budget to allow Medicaid MCOs to potentially shift the range at which they contract with hospitals to a lower range relative to FFS. I think it had been in 100% to 120% previously, and they're proposing it, shifting that down to 90% to 110%. Just interested if you have any more details on that, and whether you see an opportunity for that in terms of lowering your rates with the hospitals, and then also how that may actually work through the Medicaid rates. Thanks.

Chris?

Thanks, Michael. Yeah, we've had an opportunity to take a little bit of a look at this at this point in time. But I think right now, it's just, as you mentioned, it's in the Governor's budget. We're talking with the health plan to see what we think the impacts and something like this would be. But from our particular standpoint, we don't see a really big impact in this particular proposal at this point in time. Scott Fidel - Credit Suisse Securities (USA) LLC: Okay. Thanks.

The next question comes from Tom Carroll of Stifel. Please go ahead. Thomas Carroll - Stifel, Nicolaus & Co., Inc.: Hey, guys, good morning.

Good morning. Thomas Carroll - Stifel, Nicolaus & Co., Inc.: Yeah, just a quick one here. As we look at the high end of your guidance, what does that assume about the California PPO performance?

It assumes break even. I mean, what we've said is we expect it to be roughly breakeven. We said that at December Investor Day, and that's still our message today. Thomas Carroll - Stifel, Nicolaus & Co., Inc.: Yeah. Thank you for that.

Which is a huge improvement.

Yeah, right. Thomas Carroll - Stifel, Nicolaus & Co., Inc.: Understood. You have a relatively wide range, so I didn't know.

Yeah. Thomas Carroll - Stifel, Nicolaus & Co., Inc.: I'm trying to get a sense of – I know you said at least breakeven, so at least breakeven is the high end of your guidance. So, if you do better than breakeven, you are coming in at the higher end of your guidance range all else equal, is that fair?

To the extent, that amount of population impacts it, yeah. Thomas Carroll - Stifel, Nicolaus & Co., Inc.: Okay, great. Thank you.

Thank you.

The next question comes from Ralph Giacobbe of Citigroup. Please go ahead.

Thanks. Good morning.

Good morning.

Just wanted to ask about margin profile of the company at this point. It's been lifted a bit partially due to the Health Net deal. But as you look ahead, I mean, do you still see opportunity for margin expansion? How do you view a range kind of target margins? And just maybe talk about the impact of higher acuity populations coming on as we look to the out years?

So I think we're on record of saying that margin expansion is still a short and longer term objective of ours. And the higher acuity populations, as we said, we had the systems and capability, and I think that would – the more of that we have we can enhance it. Jeff, you want anything to add?

Yeah. I think what we've always held this long-term pre-tax margin of between 3% and 5%. I think, obviously, there's a lot of opportunity of margin. We've talked about synergies and the run rate synergies and executing on those. I think we still have room to go as far as systems and the operational systems that Michael mentioned before. Additionally, there's always investment income. Right now, interest rates are relatively low. So there's a lot of thing, I think, out there for the opportunity to expand margins in the future.

Okay. That's helpful. And then just last one here. As you sort of expand presence on the exchange, have you expanded your provider networks, have providers started to come to you to want to sort of be included in your networks? And then, I guess, have you seen any pressure on provider rates sort of as a result of having to expand?

I think our mindset is – our population is 400% of the federal poverty level and below, and we're very focused. We're not trying to continue to grow beyond that except in California where we have the large group business and they have historically the relationships to support that. But if any of the providers that fit within our traditional provider group want to join, we'll be happy talk to, but we refined that the network we have is very adequate for the population we're attracting and serving.

Thank you.

The next question comes from Christine Arnold of Cowen. Please go ahead.

Thank you very much. Two questions. We added about 500,000 public exchange members entering this year. It looks like you've got 200,000 plus with California and Arizona. Were there other big areas of growth that you'd like to call out as areas where you've increased your presence? And then the retroactive minimum MLR, does that change your view of how the Health Net business was doing when you acquire it? Are you not looking at the Health Net business and saying, gee, we thought they were losing X, but after this retroactive adjustment, it looks like it's doing better. And how do we think about that in terms of the Health Net run rate?

Okay. Jesse, you want to take the population?

Yeah. Christine, in terms of the markets where we've had stronger presence on the marketplace in 2017, so not surprisingly that matches up with where we have just a stronger presence generally at the local level. So states like Texas, in addition to the California and Arizona markets, so Texas, Florida, Georgia, those are all markets where we have a meaningful marketplace presence in 2017.

Yeah. And this is Jeff. I'll answer your second question. It doesn't change our views because ultimately, the minimum MLR ended in June 30 and they were accruing to that level. And in July 1, there was a rate reduction in the Medicaid expansion rates, sizable rate reduction, really in combination with eliminating the minimum MLR. So it doesn't change our views on the profitability of that product going forward.

So, those two things were a wash.

Yeah.

Close.

Close. Yeah. More or less.

Okay. Thank you.

The next question comes from Ana Gupte of Leerink Partners. Please go ahead.

Yeah. Thanks. Good morning – for squeezing me in. On the guidance, so, you talked about flu. I was wondering if you had the leap year tailwinds in the guidance as well across your – I mean, Medicaid and commercial book?

Yeah. I think we talked about that at our December Investor Day. So, yes, I mean we mentioned that. So that was in – I mean, nothing's changed since our December Investor Day.

Okay. So, it is in there then? Because I'd offset the flu meds then, correct, more or less?

Predominantly. I mean, last year was a moderate level of flu. So, there's a lots of puts and takes. Obviously, we're managing over 300 products, 29 states, so I mean it's a $46 billion business this year.

Yeah. It's huge, agreed. That's impressive. The second question on the rate notice on MA. Can you give us any thoughts on what this means for Health Net and your expansion states, Florida and Georgia and the others for 2018? What are you lobbying for from here on?

Right. Jesse?

Yeah. I'm not sure we'd comment a lot on that, Ana. Just other than to say that the preliminary view is in line with expectations. Our analysis is pretty consistent with lot of the reports that we've seen that have come out over the course of last week. So, there are some variability from state-to-state. So we're not in a position to get into that, just yet. But I think it's a good starting point, it's how I would characterize it.

Okay. And the final one is on the Trump Executive Order that the news that came out last night and this morning, how do you see impacting? Is that going to impact your 2017 margins favorably and then what does it look like for 2018 on the...

I've been up early rehearsing for you Ana. Can you tell what Trump said last night?

I believe he is expanding the age underwriting bands to some degree and there's has been an Executive Order, I think, there's more flexibility on consumer cost sharing provider networks. I think that kind of covers it. There's no state...

We've been talking about the band, so he is showing us. So, I mean any of these things he does that improves it, there's going to be a lot of discussion about it. So it's all good. I mean, I'm just comfortable that we have our proposals into the decision makers. They understand it. They understand how big we are in this business, so it carries some weight. They're soliciting some of our opinions. We have a very active Washington office. So, any of these things that expand that correct some of the things, that needed corrected will only help us.

Okay, great. Thanks for fitting me in.

Thank you.

This concludes our question-and-answer session. I would now like to conference back over to Michael Neidorff for any closing remarks.

I want to thank you all for participating and I will tell you, I look forward to, for you to have more this kinds of calls with the kind of the results we delivered this past quarters. So, off to 2017 we go. Have a great year, everybody.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines. Have a great day.