Good day, and welcome to the Centene Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. [Operator Instructions] Please note, today's event is being recorded. I would now like to turn the conference over to Jennifer Gilligan, Senior Vice President, Investor Relations. Please go ahead, ma'am.

Thank you, Rocco, and good morning, everyone. Thank you for joining us on our Fourth Quarter 2021 Earnings Results Conference Call. Michael Neidorff, Chairman and Chief Executive Officer; Sarah London, Vice Chairman; Brent Layton, President and Chief Operating Officer; and Drew Asher, Executive Vice President and Chief Financial Officer of Centene, will host this morning's call, which also can be accessed through our website at centene.com. Any remarks that Centene may make about future expectations, plans and prospects constitute forward-looking statements for the purpose of the safe harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in Centene's most recent Form 10-Q filed on October 26, 2021, and other public SEC filings, including the risks and uncertainties described with respect to the potential impacts of COVID-19 on our business and results of operations. Centene anticipates that subsequent events and developments may cause its estimates to change. While the company may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. The call will also refer to certain non-GAAP measures. A reconciliation of these measures with the most directly comparable GAAP measures can be found in our fourth quarter 2021 press release, which is available on the company's website under the Investors section. With that, I would like to turn the call over to our Chairman and CEO, Michael Neidorff. Michael?

Can you hear me now?

Yes, sir.

Can you hear me now?

Loud and clear, sir.

Okay. I'll start over. Good morning, and welcome to our Fourth Quarter 2021 Earnings Call. I'm joined today by Sarah London, Brent Layton and Drew Asher. We had a strong ending through 2021. Our portfolio is performing well as we executed across our 3 major product lines during the fourth quarter, building on our strong foundation and extending our market-leading position in government-sponsored health care. Our membership grew 4% to 26.6 million individuals, driven by increases in Medicaid, strong growth in Medicare and good performance in our Marketplace business. We also welcome the Magellan team to Centene earlier last month, with the acquisition successfully closing exactly 1 year after we announced the transaction. We are pleased to welcome the Magellan team led by Ken Fasola and Jim Murray. There is a dire need for mental health care in this country. 2 years into it, this pandemic and the acquisition of Magellan will allow us to expand our reach to provide increased access to behavioral health. In addition, Magellan will give us the capabilities to innovate and reimagine behavioral health, significantly enhancing our ability to provide integrated physical and mental health care to all our members. Also, in January, we welcomed 5 new Board members to our Board as part of our Board reflection process, who bring significant industry and various leadership experience. Bob Ditmore, John Roberts and Tommy Thompson have retired from the Board. And I want to thank them for their many years of service and contributions to Centene. As I look back on the onset of the pandemic, I am pleased with how we navigated the uncertainty, served our members and we grow -- and grew the business as a diversified health care enterprise. Just this year, we have added $14 billion. We have accelerated our plans for our value creation and have a clear pathway ahead to expand our margins and deliver strong multiyear earnings growth. We have the right team and the right strategy with significant opportunities ahead. Finally, I want to thank all our employees who continue to step up and serve our members during the surge of the Omicron. I couldn't be prouder of a good role that we have played in ensuring that our -- stay strong and healthy with the highest quality care, particularly during the pandemic. And you'll probably hear, I have a little frog in my throat, so I'm going to turn this over to Sarah London, who will help manage us through the question-and-answer period and I'll participate as I want to. Sarah?

Great. Thank you, Michael, and good morning, everyone. As Michael noted, we delivered a strong fourth quarter performance creating positive momentum as we start the new year and successfully executed on key operational objectives, including the introduction of new Marketplace products for the 2022 open enrollment period, repositioning that business for success in a constantly evolving landscape, the delivery of another strong annual enrollment period in Medicare Advantage, as the value we provide for beneficiaries continues to resonate in the market and continued progress on our value creation plan, including refining margin expansion opportunities and advancing the execution of our highest priority initiatives. On today's call, Brent will comment on our core businesses, including how we are carrying our Q4 momentum forward into 2022. Then Drew will provide details on our fourth quarter performance and financial outlook. Before I turn it over to them, let me provide a brief update on the value creation progress. From a structural perspective, we have added important talent and leadership to our value creation office. As we announced in early January, Jim Murray, who served as Magellan's President and COO, has transitioned to take on the new role of Chief Transformation Officer, leading the day-to-day management of the VCO. Jim brings experience in operating discipline and a track record for successful execution, adding another important layer of accountability to our value creation program. We are thrilled to have him on board. Now to the details. As we mentioned at our December Investor Day, 2022 is largely a year of foundational execution, and we plan to provide guideposts on our operational progress, incremental though some may seem, as a way of bringing you on the journey with us and offering a view into the work underway. And while we are only 1 month into Q1,…

Thank you, Sarah. Good morning, everyone. I'm happy to be here today to talk about our performance of our core business lines. Over the past 2 years, we've discussed how Centene's size and scale and our ability to be nimble has allowed us to manage through this pandemic. We remain well positioned to provide quality services in a pandemic environment or a return to more normalized utilization. Government-sponsored health care continues to grow in the U.S., and Centene continues to gain momentum across all of our product lines. Our Medicaid business is still growing with membership increasing to $15 million as we closed out 2021. This growth was aided by the ongoing suspension of redeterminations, which I will talk about more in a moment. We continue to see success in our Medicaid business, such as our new contract in Nevada. In Medicare, we ended the year with more than 1.2 million members across 33 states. As we mentioned last month, we experienced strong growth during the open enrollment period and remain on track to meet our 2022 expectations. We benefited from the combination of WellCare's product expertise and Centene's strong provider network and geographic footprint. In 2022, Centene offers plans in 327 new counties as well as 3 new states. We continue to see significant opportunity within Medicare as our expanding footprint makes Centene's product offering available to more than 75% of the country's eligible beneficiaries. Finally, in Marketplace, membership was more than 2.1 million at the end of the year, and we are pleased with our open enrollment results. For 2022, we are excited about our product offerings, which have evolved to meet the demands of our members with greater flexibility, accessibility and affordability. At the same time, we're further expanding our reach, offering Marketplace product in 5 new…

Thank you, Brent. This morning, we reported fourth quarter 2021 results, including $32.6 billion in revenue, an increase of 15% compared to the fourth quarter of 2020 and adjusted diluted earnings per share of $1.01 in the quarter and $5.15 for the full year. These results are at the top end of our 2021 adjusted earnings guidance provided at our December Investor Day. Let's start with revenue for the quarter. Total revenue grew by $4.3 billion compared to the fourth quarter of 2020, primarily due to strong organic Medicaid and Medicare membership growth during 2021. Total membership increased to $26.6 million, up 4% compared to a year ago. Our Q4 consolidated HBR was 87.9%, consistent with our expectations. As promised, beginning with today's earnings release and each quarter going forward, you will be able to see the HBR components that drive the overall consolidated HBR, commercial, Medicaid and Medicare HBRs. In commercial, you can see the high HBRs in the Q2 and Q3 time frame, driven by the risk adjustment items we covered at our June Investor Day and the Delta variant in the third quarter, as we discussed on the Q3 call. Structurally, Medicaid in the high 80s has the highest absolute HBR of the 3 business lines. And Medicare, inclusive of our Medicare Advantage and PDP businesses, posted the 2021 HBR in the mid- to high 80s. As we've said before, we believe there's an opportunity to lower the Medicare HBR as we look to 2023 and beyond. At an investor conference on January 10 this year, we provided insights about the Omicron variant and related COVID inpatient authorizations rising in the back half of December. As an update for January, COVID inpatient authorizations continue to climb and peaked, at least for now, in mid-January. Interestingly, with the…

[Operator Instructions] Today's first question comes from Josh Raskin at Nephron Research.

I just wanted to follow up on the process around potential divestitures and noncore assets, and I understand the complexities, Sarah, that you mentioned. I think I'm specifically interested if there's an opportunity to include certain PBM assets as part of this RFP process that you're starting, and then if you could just remind us on thoughts on international as well?

Yes, absolutely. So as we've said, there are no exceptions to the portfolio review process. We're being very clear-eyed about all of those noncore assets. We really used USMM to codify that process. And then we've been prioritizing sort of the largest and most independent of assets, which is why you heard an update on international. And as I'm sure you can appreciate for specific updates on execution phase are not always going to be able to be shared incrementally. So we'll definitely share updates with you that we can as we have them. On the PBM front, our strategy there overall has not changed. And so the various PBM assets, including the inbound Magellan assets, are going through that portfolio review process and I think will be subject to the same criteria as all the other assets. So stay tuned for more updates on that.

Great. And just a quick follow-up. Can you just remind us any RFPs that are coming up in the next year or 2 where Centene is the incumbent?

Well, first of all, we're waiting to hear our award in Louisiana. So still we don't have no timetable or update but waiting on Louisiana's award. We are anticipating the California RFP to be released this month, and we've been preparing for that.

And our next question today comes from Stephen Baxter at Wells Fargo.

So the commercial MLR and the new disclosures improved quite meaningfully versus Q3. So obviously, that runs against the typical seasonality here. I appreciate in the commentary on Omicron. I was hoping you could talk a little bit about how utilization versus baseline levels trended from Q3 into Q4? And then I guess also, whether there's any kind of revenue impact to consider since it looks like PMPMs were up a little bit? And then any impact from stuff like favorable development you flagged. Just trying to understand the moving parts first quarter utilization in the quarter.

Yes, sure. Thanks. Q3, as I said in my remarks, that's when we got hit with the Delta variant largely, sort of, peaking in August. And Marketplace, which is the vast majority of that commercial line item, sort of took at the hardest in terms of the relative peaks compared to prior variants. And it was the opposite of that with the Omicron variant, which started in the back half of December. So I think that's the -- largely the Q3 to Q4 progression that you're observing in that table, nothing else notable in terms of prior period development. We seek to reestablish at similar levels based upon consistent reserve methodology. So I think that was the driver that caused that.

Sir, our next question today comes from Kevin Fischbeck of Bank of America.

Just wondering if you could talk a little bit about the exchange environment of one of your competitors, scaling back pretty significantly kind of highlighting irrational pricing on the exchanges. So I think you talked about being able to improve margins this year. Can you just kind of help us -- remind us where your margin target is for this year versus that long-term target? And how much of getting to that long-term target is based upon what you have in control or whether some of that is based upon -- if you agree that some people are rational, that pricing, broadly speaking, kind of returning to a normalized rate?

Yes. Good questions and they're all around Marketplace. As we sat here over the summer of 2021, with new product development, we're thinking about how to respond to competition and continuing to hone our portfolio for marketplace. Coupling that with a more disciplined financial bid approach, at least for those bids that were still open in that time frame, we expect meaningful movement in that HBR going from 2021 to 2022. I'll sort of walk you back to our Investor Day and the conference that we were at on January 10. We expect about 500 basis point improvement year-to-year in our commercial. So that commercial line, that's -- we price for and expect to execute on a pretty meaningful improvement, which still won't get us to our final destination, that 5% to 7.5% pretax zone for Marketplace. So it's -- it will be a meaningful movement. And of course, there were some things that we got hit with in 2021 that won't reoccur. That will be part of it, but we make conscious decisions on pricing, which is why we're so pleased to be 2 million-plus in terms of membership coming out of the open enrollment period.

Our next question today comes from A.J. Rice at Crédit Suisse.

Yes. I think in the prepared remarks, it was mentioned that Medicare margins, HBR, you think, will improve in '23 and beyond. I guess I would just wonder if you could flesh out more what are the levers to allow that to happen. Is it an expectation about improvement in STARS ratings? Is it expectation of some of the rapid growth you've seen recently, some of those members maturing? Give us a little flavor for how you have the visibility in '23 and beyond by improving it. And maybe my follow-up would be just to flesh out, I know Brent mentioned the California RFP, there's been some discussion in the press about potentially a preemptive deal with Kaiser. And just any assessment of the RFP process? Anything different about that, that you'd like to call out or highlight or give us perspective on?

A.J., I'll start, and then I'll kick it over to Drew. In regards to, I think, the announcement you're talking about is Kaiser Permanente, we do not subcontract with Kaiser Permanente in California. So it does not change our RP strategy or any of our approach in the procurement that will be forthcoming. I'll turn it over to you, Drew.

Yes. Then on Medicare, yes, A.J., it's sort of a comprehensive project plan, which touches a number of the areas you mentioned. So it's not just pulling clinical initiatives, and we've got a slate of dozens of those initiatives that we brought from other experiences, and we've seen work in other places. It's also the bid process, and quite frankly, having a little bit more of a discipline and a trade-off between growth and margin. And what I'm pleased at is our base of business is 50, 5-0 -- will be 50% higher coming off of the 2021 and 2022 open enrollment period. So expect growth to slow considerably in Medicare, but that's a heck of a base to then approach the margin expansion opportunity. And so the bid process, pushing towards margin will be a multiyear effort. We're not going to try to go get it all in 1 year because we've got to balance the attractiveness of our products. You're right to mention STARS. s will be a little bit more volatility over the next few years. The STARS scores that were released in '21 called the rating year '22, which result in 2023 revenue, looked good. Now we were aided by the disaster relief provisions. And between that and some other operational challenges, the STAR scores that are released in October of 2022, called the rating year '23 STARS scores, which resulted in 2024 revenue, we expect, as I mentioned on the third quarter call, those are to drop. And we've got a lot of work to do to improve our execution around STARS as we look at what we can impact today are essentially the rating year 24 stars for revenue in '25. So we'll have to manage through that -- those cycles, but there are a number of levers to pull in clinical initiatives and just, as Brent mentioned earlier, harnessing the assets of the combined company and continue to push for excellent operational execution.

And our next question today comes from Scott Fidel with Stephens.

Actually, just quickly wanted to tack on to A.J.'s question. Just on the Medicare margin side. Just wanted to get your initial thoughts on the advanced notice that just came out for 2023, seemed pretty solid from my perspective. But just interested in how that reinforces your confidence on sort of getting that margin improvement in MA? And then just as a follow-up, just appreciate the color that you've given us on the year-over-year expected change in MLR for commercial. Just interested if there's anything you'd want to call out for us in thinking about Medicare and Medicaid MLRs in 2022 versus 2021. Obviously, now we're all going to be tracking those metrics closely now that you're providing them. So just -- that you want to call out ahead of time, that would be helpful as well.

Yes, absolutely. In fact, pointing you back to the Investor Day slide where we gave a specific bridge by major line of business of HBR progression from 2021 to 2022. And so if you do the math, that shows the impact on the entire HBR. So if you sort of divide that by the percentage that, that business represents, you get to the 500 basis points in commercial. Medicare, we expect around flat. Once again, we didn't price to improve nor do we think it will degradate in 2022, and that creates an opportunity for '23 and beyond in Medicare. And then in Medicaid, we talked about the last few times, we were in public forums talking about a reversion to the mean and utilization returning to a more normalized HBR in Medicaid, which would be up about 130 basis points year-to-year. You see that represented in that waterfall from our Investor Day slides at 90 basis points, but that applies to the entire HBR. It's 130 if you just isolate Medicaid itself. And then with the advanced notice, I think what it does demonstrate is bipartisan support for the Medicare program and agree those rates and elements so far we expect to be workable for next year.

And our next question today comes from Justin Lee at Wolfe Research.

I actually want to follow up through on your comments around Medicaid specifically. When you talked about margin normalization, 130 basis point move is pretty significant in Medicaid. Can you give us an idea where those margins were in '21 and where you expect them to kind of normalize in '22 to start off?

I think you'll have to orient yourself to the HBRs and sort of track in that manner. And don't forget, we also had pharmacy carve-outs in a couple of our states. So that was not insignificant. The impact of that, especially in California, so that was sort of a progression, a mathematical progression right off the top. And then, yes, we're making forward estimates of -- we see returning at least like emergency room access for Medicaid on the emergent side, so things that are truly emerging, that has returned. The non-emergent, we think there's still an opportunity to keep some of that suppressed and redirect members to their PCPs and physicians. So it's a culmination of forward estimates and a view into the right sort of rate environment for Medicaid.

Okay. Maybe -- again, I don't want to pin you down on the 10 basis points. But for instance, one of your peers talked about making margin target closer to 4%. Most of the others talk about kind of a midpoint closer to 3%. Maybe you can help us just kind of orient to that in terms of what you think normal is.

Yes. Going back to our June Investor Day, where we first laid out our North Star margin goal of 3.3% after tax and sort of explained that 4.4% pretax. Medicaid is going to be a little bit below that, but it can't be too far below that because it's over 60% of our business. So maybe that helps you frame in your models the different businesses. Medicare would be above the average. And then Marketplace, the highest of the 3 at the 5% to 7.5% pretax as far as long-term targets.

And our next question today comes from Matt Borsch of BMO.

Yes. Maybe if I could just continue on the Medicare Advantage product. Should we take as -- from what you're saying that you're going to be more conservative or you plan to be in your approach on bidding Medicare Advantage for 2023? And then associated with that, as a follow-up, if you could just talk about the level and intensity of competition that you're seeing in Medicare Advantage today.

I'll tackle the first piece, and then Brent is really close to this on a daily basis, and competition can follow up. I think, Matt, by definition, if we're going to be seeking to expand margin, obviously, there's a trade-off there. You shouldn't expect this to grow 30% like we did last year in terms of membership, which was just a phenomenal, top line result. But now we've got to convert some of that to deliver on margins. So yes, by definition, we will be pushing margin harder in '23, '24 and '25 bids than we did in the '21 and '22 bids, and that's just sort of the opportunity that stands in front of us.

There's always going to be competition, whether it's Medicare Advantage or whether it's Marketplace. I would say, though, that the smaller players in Medicare Advantage really did not have a meaningful impact in regards to our results and our growth. But we feel good about our positioning and -- over '22 and ongoing.

Our next question today comes from Ricky Goldwasser with Morgan Stanley.

So as we think about MA in 2022, from what we saw, you meaningfully invested into very rich benefits. So how should we think about sort of Medicare margins in 2022? Maybe you can give us some baseline that we can think of as we're thinking of that margin expansion opportunity in '23 and beyond? And then if you can comment on just what you're seeing for core utilization versus baseline and how is that factored into '22 guidance in terms of just use of ER acuity -- and acuity levels?

Yes, Ricky, I think I'd ask you to orient to the Medicare HBR that we disclosed for 2021, and our expectation of that being sort of in the zone of flat, consistent '21 to '22. That's -- as we explained at Investor Day, it's one of the pieces that our guidance is predicated on. And then, yes, every -- on utilization, every wave, Omicron or every COVID wave since the beginning, there's a -- the deferrable services are less and less impacted. It doesn't mean we don't think there are channel checks tell us that there are surgeries that are being rescheduled for February that would have otherwise been done in January, but the providers are getting more and more resilient in terms of being able to manage both. So there's been a continuing return to, call it, normal utilization over the past 6 to 9 months. Some areas aren't fully there. Like I mentioned, the nonemergent emergency room, which is good, and hopefully, that's a structural change for the industry. We're certainly working with our members and our physicians to try to get members to engage directly with their physicians for nonemergent services. But all of that's factored into the progressions of our HBRs that we laid out at Investor Day.

And our next question today comes from Stephen Valiquette with Barclays.

Great. So question around Medicare Advantage. Obviously, the early CMS data looks promising for Centene, the MA membership growth for '22. But just given the greater than average industry volatility in this year's Medicare, AEP. Just curious if you can remind us just on Centene's profile on how much of your typical MA membership growth is maybe driven by internal sales efforts versus reliance on external channels. And do you expect any notable changes in that mix going forward, just given some of the volatility that we're seeing and other trends across the MA marketing efforts.

Yes. We're not really seeing that volatility you're referring to. I mean we've got multiple channels. The Medicare team over the past 4 or 5 years has developed multiple channels, the W2 workforce are going back a long ways back. And then more recently, next -- in the last 3 or 4 years, Teledigital. We've got -- we actually created our own direct-to-consumer proprietary internal capability. That's another channel. We've got the brokerage channel, which we honed probably a few years ago after the Universal American acquisition. So we've been working on this for a number of years. And then the merger with Centene gave us, as Brent mentioned, access to a much broader footprint, and quite frankly, network just to complement what WellCare had built along the way. So just to give you one data point, our -- I think what you're getting at is sort of that distribution channel of Teledigital and telemarketing. It's about half of our sales, but it was about half of our sales last year, too. So not a real change in the distribution of where we're getting our growth from.

And our next question today comes from Dave Windley at Jefferies.

I was wondering in Medicaid, if you're able to do analytics that would either tell you explicitly or give you hints as to which members were likely to be redetermined off when that turns back on, and if you can see that what are the relative claims patterns of those people or the HBR on that subgroup versus the whole?

Yes. No, obviously, we've been thinking about that. And while there are some characteristics, we don't have good employment data on those that may have gotten employment since they originally qualified for Medicaid. There's some cohorts such as moms post delivery in some states depending on state eligibility rules that they might have otherwise rolled off at a certain point postpartum. So we can look at some of that, but there's not -- it's not like you've got a cohort that we're getting with a rate sell that says, "to be redetermined in the future", so we can make estimates of that. And we've seen, over time, the impact of eligibility going up and down the FPL scale. But we think we're well prepared for that time when it comes. We'll see if it pushes out past our May 1 assumption, which our guidance is built on. And the teams are really focused on 25 out of 29 states being prepared. And I think Brent can probably add some color, some interesting color, for you guys on our engagement with states on that topic.

Yes. I mean we have been in constant contact well starting last year with both the federal government, and obviously, our state partners. And as Drew said, we've really built a platform between our exchange through to Medicaid. And from that standpoint, whether it's network and communication and planning, we're preparing for this. So wherever that date is, we believe that we have the ability to really be a solution as people want to -- obviously, states want to make sure their citizens have health insurance coverage, and we've been working with them and we're preparing for it.

On our next question today comes from Nathan Rich of Goldman Sachs.

Drew, could you maybe just remind us whether the '22 guidance includes any expected savings from the value creation plan? I think going back to the December Analyst Day, the SG&A bridge had 15 basis points of leverage on the core business, but I wasn't sure if that included anything specifically from the program. And then it sounds like the company is tracking well against the early guideposts that you laid out, especially around pharmacy. I guess I'd just be curious, is there a potential to see savings from some of those actions this year as we think about progression over the balance of the year.

Yes, it's a really good question on sort of the jump-off point because we're crystal clear internally also the midpoint of $5.40 for 2022 is a jump-off point, upon which we will pull levers to get the $2 of opportunity, including the SG&A bucket, that $700 million of SG&A bucket that we laid out at Investor Day. So those should be incremental largely showing up in '23 and '24, but incremental to the jump-off point of the $5.30 to $5.50 guidance. And Sarah can give you an update on some of those activities.

Yes. As you noted, we are making good progress. We are very focused on hitting those EPS targets for '22, '23 and '24. And we'll always look for upside. But I think the way we look at it, you don't get to kick the extra point if you don't score the touchdown first. So we're staying really focused on our goals, first and foremost, in year.

And our next question today comes from Gary Taylor at Cowen.

Well, first, I just want to say hello to Michael and wish him well, but I did want to see if there was any updates you can provide. Wondering if there's any update on CEO search and process timing you can provide another 5 new Board members in January. But is that likely a first half or second half announcement? And is there any visibility for investors outside of -- we'll just wake up 1 day and we'll see who the CEO is?

Let me start that. There's a process we're going through. We're following good governance. We're looking at various candidates, and they recognize that some time ago, earlier when this was publicized, I'd talked about them. I spoke to the Board of my desire to step down as CEO, and the process is in place. And I think -- there's too much more than that. We're beginning over our SKUs. So it's a clear process. And I hope to see results over -- between now and midyear at the latest.

Ladies and gentlemen, our next question today comes from Calvin Sternick with JPMorgan.

Just wanted to ask on the exchanges and the enhanced subsidies and any update on legislation and timing for something to get done there and just any sense for the likelihood that something will get done there in 2022.

Jon, do you want start with that, and then let Brent pick up?

Michael, I'll start that and then I'll let Jon Dinesman speak from there. I mean it's clearly a priority of the Biden administration. This has clearly had an impact. It's clearly led to large enrollments from that standpoint. We do anticipate that there will be many efforts, and we anticipate future legislation. But Jon, I'll let you add to that, sir.

Yes. The one thing that's important is it had strong support to coming out of the house, also maintain that strong support in the Senate. So there's a clear recognition, especially by the Democrats that this was critical to strengthening the ACA and even the mansion proposal included this. So anybody who guesses on timing is really doing a guess, but we still feel like confident that if there is a bill that passes that this will be included.

And our next question today comes from George Hill at Deutsche Bank.

Yes. Just on the PBM project, I guess, as the project continues to press along, are you able to give us any more color maybe on which parts do you feel like you want to in-source versus feel like outsourced? Do you feel like this is a complete outsourcing project? Or you guys hold on the higher-value projects like formulary network management? Just kind of as we think about the scope of the RFP and the outsourcing project, just kind of what stays and what goes?

Yes, it's a great question. I would say we have a pretty strong operating hypothesis going into the RFP about what pieces we want to partner for and what we want to keep in-house, but we're also doing a pass at that work through the lens of value creation to make sure that we still feel like that hypothesis holds. And I think some of that will also be informed, quite frankly, by the conversations that we have with potential partners through the RFP process. But I would say, on balance, keeping those capabilities that allow us to create a differentiated experience for our members and providers, is always going to be the priority.

Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to the management team for any final remarks.

Thank you, all. I want to thank everybody for joining us today. And we really look forward over the course of the year to continue to report our results. Clearly, I believe we have the right product mix, the right strategy for those products. The margin expansion program is clear, and everybody in the organization knows what has to be done. And most importantly, we have the right team working on these things to bring you good health. So it's a -- I'm really looking forward to the results about the year. Thank you for participating.

Thank you, sir, and thank you all for your participation on today's conference. Today's call has now concluded. You may disconnect your lines, and have a wonderful day.