Good morning everyone, and welcome to the Centene Corporation Third Quarter 2022 Earnings Results Conference Call. [Operator Instructions] Please also note today's event is being recorded. At this time, I would like to turn the conference call over to Jennifer Gilligan, Senior Vice President of Finance and Investor Relations. Ma'am, please go ahead.

Thank you, Jamie, and good morning, everyone. Thank you for joining us on our third quarter 2022 earnings results conference call. Sarah London, Chief Executive Officer; 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-K filed February 22, 2022 and other public SEC filings. 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 within those directly comparable GAAP measures can be found in our third quarter 2022 press release, which is available on the company's website under the Investors section. Company is unable to provide a reconciliation of its 2023 and 2024 adjusted diluted EPS targets to corresponding GAAP measures without unreasonable efforts due to the difficulty of predicting the timing and amounts of various items within a reasonable range. Finally, please mark your calendars for our upcoming Investor Day on December 17 at New York City. Invitations and necessary registration information will be send out shortly. With that, I would like to turn the call over to our CEO, Sarah London. Sarah?

Thank you, Jen, and thanks everyone for joining us this morning as we discuss our third quarter results. During our time today, I will review the highlights of our financial and operational for Q3, and address some of the more recent developments shaping our view of 2023 and beyond. Then Brent will offer comments around the core businesses and share updates on our strong positioning relative to 2023, Medicare and marketplace enrollment. Finally, Drew will provide details of our overall financial performance and update our full year 2022 outlook. First, the quarter. We reported third quarter adjusted EPS of $1.30 slightly ahead of our expectations. Our strong results were driven by continued organic growth in Medicaid and Medicare, the continued impact of marketplace bid discipline as well as strategic capital deployment in the form of share and bond repurchases. We now expect Centene's full year 2022 adjusted EPS to be within a range of $5.65 to $5.75 as we've raised the bottom end of the guidance range by $0.05 to reflect strong third quarter results, and taking into account continued investments to yield future returns. Since our initial issuance of the 2022 adjusted EPS guidance, we have now raised the midpoint 5.5% or $0.30, driven by government program growth and the successful execution of several key value creation initiatives. Drew will cover the quarter and our financial outlook in more detail shortly. Our strong year-to-date performance provides positive momentum as we prepare the organization for 2023 and beyond. With successful Medicaid reprocurements in Mississippi, Nebraska and Texas this quarter, our business development team continues to execute well, demonstrating their powerful market knowledge and delivering solid results. While we were disappointed with the results in the California RFP process, we remain confident in the quality of our RFP response and in…

Thank you, Sarah, and good morning. We are pleased to have made so much progress in 2022 both organizationally and operationally. While some of the benefits will take time to materialize externally, the internal advancements are tangible. There in the third quarter, we received results from several RFPs. In August, we received mixed results in California as we are were awarded contracts in nine counties including San Diego. We have also been awarded a sole source contract in Imperial County. As Sarah mentioned, we've appealed the state's notice of awards, and we'll provide updates on the process as appropriate. In August, we were also informed of our successful bid to continue to serve the state of Mississippi's Medicaid managed care program, including entry into the chip program. We've been a part of the Medicaid program since its inception and are pleased to continue our relationship with the state. In another of our longstanding markets, we reprocured the Star Health Medicaid program at Texas. We've held this contracts since 2008, when in collaboration with the Texas Health and Human Service Commission and the Department of Family and Protective Services. Our health plan Superior became the first managed care organization in the country to provide statewide sole source Medicaid coverage to children in foster care. To round out the quarter, we were fortunate to win the reprocurement of our statewide managed care contract in Nebraska. We look forward to continue to serve our membership in the Heritage Health program. In our existing Medicaid business, membership has increased to 15.7 million members at the end of third quarter and we continue to see an uptick in our fee activity. As the PHE has been extended to February, our Medicaid growth continues to be aided by the ongoing suspension of eligible redeterminations. As you…

Thank you, Brent. Today we reported third quarter 2022 results of $35.9 billion in total revenue, an increase of 11% compared to the third quarter of 2021 and adjusted diluted earnings per share of $1.30. Based upon performance in the quarter, we're raising our 2022 adjusted earnings guidance to a range of $5.65 to $5.75 by lifting the bottom of the range $0.05. Year-to-date, our guidance midpoint is up $0.30, or 5.5% since our original 2022 guidance provided in December of 2021. Total revenue grew by $3.5 billion compared to the third quarter of 2021 driven by: one, strong organic growth throughout the last year in Medicaid primarily due to the ongoing suspension of eligibility redeterminations and Missouri Foster Care that commenced 7/1/22. Number two, the January 2022 acquisition of Magellan and three strong Medicare membership growth. This was partially offset by the July 2022 Panther divestiture. Our Q3 consolidated HBR was 88.3%. Medicaid at 90.2% was right on track in the quarter consistent with normal seasonality and back-to-school encounters. 48% of our Medicaid members are under 18 years old. Medicare at 83.9% was better than expectations in the quarter, driven by favorable health care affordability initiatives consistent with our efforts to improve execution. Year-to-date, the Medicare HBR is trending better than our original expectation, which we assumed would be roughly flat to 2021. That should bode well for our baseline as we look ahead to 2023 and 2024. The commercial HBR of 84.2% improved 450 basis points quarter over prior year quarter consistent with our original full year goal of an approximate 500 basis point HBR improvement in 2022 compared to 2021. Commercial performance in 2022 has been driven by disciplined pricing actions, initiatives executed in 2022 and as expected a reduction in COVID and pent up demand costs…

And our first question today comes from Josh Raskin from Nephron Research. Please go ahead with your question.

Hi, thanks. Good morning. I was wondering if you could talk a little bit more about the key factors and decision to move the PBM to Express Scripts, sort of what got you over the hurdle of moving? And I was curious if you were attracted by any of the other services that are offered by Evernorth that's part of it? I'm specifically interested in specialty as well. And then I know part three of one question, but anyway to size the relative outperformance versus previous expectations just on the economics of the deal.

Yes, thanks, Josh. So, first, I would say that we were very pleased with how competitive the process turned out to be and the fact that we had in multiple very good options. As we said, we were able to achieve savings exceeded expectations without feeling like we were sacrificing quality and execution. And we carried forward into the process all of the criteria that we talked about in earlier calls in terms of operational execution, level of partnership, a sense of quality performance, innovation. We have ahead of us significant operational undertaking, but I have to give major credit to our team for spending a lot of the time during the RFP process doing preparation work in order to give us maximum optionality in the consideration. So we're feeling good about moving forward with core services and the ability to continue to expand the relationship, if that makes sense.

Yes, Josh, on the economics, I'm sure you can appreciate. We don't like disclosing sort of proprietary cost structure elements, but it did exceed our expectations, which I think you can surmise by our willingness to take on the operational challenge of moving. And that was sort of baked into the macro view I provided on 2024.

Okay. Understood. Thanks.

And our next question comes from Stephen Baxter from Wells Fargo. Please go ahead with your question.

Yes. Hi. Thank you for the question and all the color. I think you said you'll be targeting 60% of your Medicare Advantage membership in four star or better contracts. Apologies if I missed it, but what was the timeframe you think it will realistically take to get there? And assuming that it is a multiyear process, do you think it's reasonable to expect most of the improvement to be concentrated in the next cycles and some of those metrics are still in front of you to be measured? How do you think we should think about maybe more even pacing on that? Thank you very much.

Yes. Thanks, Stephen, for the question. So it is -- we do see that goal of the 60% in Four-Star or at least 60% in Four-Star over the next three cycles. So keeping in mind the fact that Star results are released in October. And I think we see the progress over that time period to be sort of fairly equal steps and are, again, like I said, pleased with what we are seeing in terms of the real-time data that we're tracking and meaningful operational improvement over the course of 2022 so far.

Jamie, next question.

Our next question comes from Justin Lake from Wolfe Research. Please go ahead with your question.

Thanks. Good morning. Just a couple of things here. First, I appreciate your comments on 2024. Can you be -- just give us a little bit more color in terms of when you say the $0.20 to $0.25 to $0.50 of headwinds potentially, does that assume -- is that net of everything? Meaning, like, for instance, if I were to think about your guidance in 2024 there's some -- looked like there was some conservatism just in terms of the buildup when you gave it initially, plus the tailwinds minus the headwinds. Are you saying when you add all of that together, if everything happens the way it looks today, meaning the appeal is not successful, for instance, that number would be $0.25 to $0.50 too high. First. And then secondly, can you just give us an update on California in terms of the timing? My understanding is the state has to make a decision or the arbiter has to make a decision on the appeal. And then there's also a lawsuit that are in place that a judge would need to roll on. So maybe you can give us a color on that timing. Thank you.

Yes, I will take part one, Justin. As we sit here, 16 months removed from that first look into 2024 back in June of 2021, we obviously know a fair amount more than we did then. And so yes, what I covered was meant to capture everything we know now. And I think you pointed out the biggest swing factor, obviously, is California, a pretty sizable piece of business for us in L.A. and Sacramento and current counties. So that would be the swing factor of that $0.25 to $0.50. It's a net view, but that's the biggest swing factor that would get us back into that $7.50 plus.

And then in terms of timing on the appeal, the department is currently considering all of the appeals that have been submitted across RFP respondents. And the next step is what we consider to be a fairly procedural ruling. And then from there, we would move into the courts with a lawsuit.

And our next question comes from Lance Wilkes from Bernstein. Please go ahead with your question.

Yes. See, I just wanted to get a clarification on the PBM, the kind of expected timing of the savings, if they're all hitting in '24 if you're getting a portion of that in '24 and more in '25. And then just understanding the length of contracts on that. And then if there's anything to tell us about mitigation strategies on the Star ratings, like any opportunity to shift people to other if you have dual plans in the state or anything like that, that would be helpful, too. Thanks.

Yes, on the PBM contract, it's a multiyear contract. And so you're right, we get the stair step benefit. Quite frankly, that we'd always anticipated. The concept of a stair step effect of 1/1/24 with either a renewal or a new PBM contract. And then we negotiate multiyear guarantees and inflators. And so think of it as sort of a gradual improvement thereafter. So over the next, call it, few years after the commencement of the contract.

And then on Stars, I would say there are probably three ways to think about mitigation. The first and most important is making sure that we position 2023 bids in order to maximize benefit stability across 2023 and 2024. And given that we had early visibility into headwind, we were able to do that. The second, of course, is creating the important tailwinds in 2024 in order to make up for the revenue hit. And then the most important one is making sure that our performance in Stars dates of service of 2022 as strong as possible so that we're creating maximum tailwinds for the Stars revenue as we head into 2025, as Drew referenced. And again, on that latter point, having the strong predictive data that allowed us to see the impending impact of the 2021 issue is equally giving us visibility to meaningful improvement in our operational performance on Star in 2022 so far.

And our next question comes from A.J. Rice from Credit Suisse. Please go ahead with your question.

Thanks. Just first one cleanup on the PBM contract. I know this is one of the biggest contracts, it's changed [indiscernible] in a while. And sometimes, historically, when there's been a big contract change, the customer gets some help on the transition period. Is there any support that you're going to get from your new PBM on next year that impacts the results as you make the transition? And then my more meaningful long-term question is on the reverifications. Obviously, there's been another delay in the -- or extension of the PAG since I think you last time updated your thoughts on reverifications. There's also the chatter about the economy slowing down. Maybe give us your updated thoughts about how much of the reverifications you might absorb next year versus slipping into '24, if you have any updated thoughts.

Okay. Yes, two good questions. On the first one, yes, it's very customary as you pointed out, A.J., that the winning RFP PBM covers the transition costs. So there's a negotiated pool of cost coverage for the actual sort of operating and consulting cost and execution costs that will take during 2023 to convert as of 1/1/24. Quite frankly, similar concept we had back in 2015. And your second question, so yes, another 3 months go by, and we are targeting our construction of our forecast and our 2023 operating plan is assuming a 2/1 commencement of redeterminations, but that has moved since last quarter. So right now, if you look back at right before the pandemic, we've grown about 3 million members in Medicaid, a little over 3 million, so call it about $12.5 billion of revenue. And so the last time we talked, we were estimating $7 billion to $7.5 billion would be the amount that would be sort of given back due to redeterminations, bumped that up a little bit now to $7.5 billion to $8 billion. So it's about 62% of that revenue that we've gained. But as each quarter goes by, I think the long-term prognosis of the company, we benefit because we don't give back 100% of that incremental revenue we've grown, at least in our estimates. So the time has been really good to be able to work with the states to plan for not just ensuring that there's continuity of coverage for Medicaid recipients but also to make sure our marketplace business, which is well-positioned in '25 of our Medicaid markets to be the recipient of some of those members. Your question about '23 versus '24, based upon a 2/1 commencement date, the midpoint of that revenue is $7.75 billion, probably $4 billion to $4.5 billion of that would hit in '23 and then the balance largely in '24, but let's see what happens with the PHE date, and we'll have to update you if that moves.

And I would just …

Okay, great.

Sorry, I was just going to add quickly on the recession point. It's hard to estimate exactly what the impact of that will be partly because we are still watching that trend. But in general, during a recession, more folks rely on the health safety net and managed care growth. And so that may be an input as we see what the overall impact of redeterminations is as they unfold.

Okay, great. Thanks so much.

And our next question comes from Kevin Fischbeck from Bank of America. Please go ahead with your question.

Great. Thanks. I wanted to go into, I guess, the state rate update and backdrop. You guys for a while, talked about redeterminations and kind of the confidence that states will give you appropriate rates if the risk pool does get worse. I'd just like to hear kind of what you think happened in Florida and whether any other states are talking about rate cuts in front of that? Because that one to me kind of bothered me a little bit heading into next year, making me wonder if we are about to see additional states come in with rates. So any color on how you're thinking about that?

Yes. In Florida, they never put in a COVID era risk corridor. And so I'm sure that was a consideration for them. But believe me, we pushed back on that. We didn't think that the minus 4.5% on behalf of the participants, the industry in Florida was appropriate. And the good news with Florida is historically they're very good listeners, and it's our job to show data. And if we can show the data mid cycle or certainly by 10/1/23, we get another buy at the Apple and Florida has been a great partner for us and really expect to have a continuing strong and economically viable arrangement in Florida in the long run.

Other states looking to for cuts?

Yes. If you go back, let me frame the answer in terms of what we shared with you at Investor Day, the 1.3% is what we had built in is our composite rate into the 2022 plan that we shared with you in December of 2021. That's closer to 0.9% to 1%, and most of that difference is Florida. So the rest of the portfolio is sort of in the zone of right on track.

Our next question comes from Scott Fidel from Stephens. Please go ahead with your question.

Thanks. Good morning. Wanted to just maybe flesh out the exchange marketplace a bit more for 2023. As you mentioned, obviously, some pretty major competitive changes in the marketplace, particularly with Bright exiting and looks like Friday is exiting at least Texas as well. So maybe walk us through how meaningful you think, I guess, the jump ball on membership could be. And then also, your comfort just with your pricing, if you do end up getting a big bolus [ph] of members from some of these other carriers, whether you're confident that your pricing is positioned to still achieve your targeted exchange markets. Thanks.

Yes. Thanks for the question. In general, we see the marketplace exit as an overall positive, but I'll let Brent walk through the why and how we're feeling about pricing and positioning.

There is no doubt that there is a great opportunity for us here. We've been in the exchange program from day 1. We've never exited. We've continued to provide strong provider networks, good customer service and very stable pricing with good distribution. So we do see this as an opportunity from the standpoint. At the same time, we think that there's; one, the membership that would potentially come over from some of our competitors were exiting, but also just overall growth as we head into the upcoming open enrollment. So we feel positive about the opportunities. We've spent many, many years working very closely with our state regulators, which have given us an opportunity to work through this challenge that they face as people have exited, but that partnership allows us also to continue to work on a daily basis of getting strong customer service.

And our next question comes from Calvin Sternick from JPMorgan. Please go ahead with your question.

Yes, hi. Good morning. Maybe ask one just on utilization. Can you give us a little color on utilization trends in the quarter by product line and how those sort of compared to pre-pandemic levels, and I guess, whether you've seen any notable shifts quarter-over-quarter?

Good question. So let me hit COVID first, then I'll get to your non-COVID, which I think is more of the line of your questioning. So COVID was slightly higher than Q2, which was, as you may recall, down from Q1. So -- and there was a very shallow peak in August. So really sort of consistent, slightly higher than Q2. The non-COVID, which is what you're asking about is really in line with normal seasonality and pre-COVID movements, like from Q2 to Q3. We don't see any signs of pent-up demand at the magnitude that we saw in 2021. And we also track a basket of potentially deferrable services, and that's flat to Q2. So pretty stable macro. And yes, there's a couple of pockets of continued, call it, minor suppression. I'd point to non-emergent ER still a little suppressed, which is good news, obviously. And then while we had a really good quarter in Medicare underneath that, I'd say, ER and urgent care are a little high, offset by a little bit favorable inpatient in Medicare. So just something we are watching in Medicare, but obviously, it didn't affect the aggregate results, which were really strong in Medicare in the quarter.

If I could just ask on the Medicare and commercial side. Are you seeing any change from inflation on consumers' willingness to sort of access care?

With the subsidies, think about our government programs business and the cost sharing that most of our members avail themselves of, I think it's probably a different population than if we had a national account business. So no -- yes, no signs of that yet.

And our next question comes from Michael Ha from Morgan Stanley. Please go ahead with your question.

Thank you, guys. Just on MLR real quickly. It looks like the street might have been a little bit too low in Medicaid MLR for the quarter, but it sounds like it was directly in line with your internal expectations. Is that right? And on MA, very strong performance sequentially improving 170 bps. You mentioned some favorable affordability initiatives, but it just seems unusually strong for third quarter. I was wondering if you could help drill down a bit on that. And then one last one on the PBM contract. Of your $35 billion in drug spend, how much of that is currently sitting with CVS Caremark [ph]? Thanks.

All right. Let me see if I can remember all three questions. Almost all of it is the answer to your last question. We have about $40 billion plus or minus of gross spend and almost all of that is with Caremark. On Medicaid, yes, we are right on the nose. We are right at our expectation, both in our plan as well as our six plus six forecast, which is that midyear reforecast. So right on track on Medicaid. And in Medicare, pleased with the performance. There's a whole slate of clinical initiatives and call them sort of initiatives to help improve quality and the affordability of health care. And so it could be anything from clinical initiatives or provider contracting or execution on chart chase for risk adjustment. So it's sort of like the nuts and bolts execution that we've got a whole slate of initiatives that will continue to drive into all of our businesses. We just happen to do really well in Medicare so far this year.

Got it. Thank you.

And our next question comes from Nathan Rich from Goldman Sachs. Please go ahead with your question.

Thanks. Good morning. First, if I could just ask a quick clarification on the $0.25 to $0.50 potential headwind. Does it include incremental capital deployment benefits from buybacks and debt repayment? And could you maybe just talk about generally how you're thinking about the capital deployment piece of the long-range plan? And then as a follow-up on the MA business, I think you had previously talked about margin improvement in 2023. So I think, highlighted some of the investments you're making in light of the recent STAR scores. So does that change the margin trajectory for that business over the next few years? Thank you.

Yes. We will talk a lot more at Investor Day about capital deployment. But yes, the third bucket of our value creation plan is always contemplated heavy deployment of share buyback, but debt management as well as you saw this quarter. We bought back 370 [ph] million face of our bonds for $300 million and cut out some future interest expense along the way. But we'll cover more of capital deployment at Investor Day. So the answer to your first question is yes, it's contemplated in that -- in the 2024 macro view I provided. And then, I guess, since we've already sort of bless the current consensus. The answer to your second question, which is we've contemplated investments necessary to drive performance in our 2023 buildup, and we still expect margin expansion in Medicare for 2023.

Yes. And again, I think we've pointed in the past to the fact that the marketplace progression is a good proof of our ability to expand margin and still grow and innovate in a product line as well as being positioned to take advantage of market opportunities like we are in marketplace. So that is still the plan for 2023, and we feel good about how our bids are positioned for that. And then as we go through 2024, we're going to want to make sure that we reduce member abrasion that was part of how we designed the bids. And then as we look to 2025 and pick up the tailwinds of Star, the ability to revisit sort of the margin and growth balance on a go forward basis.

Our next question comes from Gary Taylor from Cowen. Please go ahead with your question.

Hey, good morning. I just had a quick question, and I wanted to pass on a clinic question I still get a lot including this morning. My quick one was just on the Florida rate cut, which you said was, I think, worse than you had thought yet you maintained. Actually raised the low end of this year and blessed and maintain what you had said about 2023. So my question was just other operational offsets anything specific that allows you to uphold the guidance despite that cut. And then the client question, I still get all the time is really around redetermination, adverse selection risk. I know, Drew, you've talked a lot about that low utilizer bucket and keeping an eye on that, et cetera. But anything sort of updated there that is underpinning that the confidence on the Medicaid MLR on margin for '23 would be helpful, I think. Thanks.

Okay. The answer to your first question, it's really the beauty of having a very broad portfolio of multiple lines of business, being in 30 states now for Medicaid. I mean that helps a lot. So you're not ultra, ultra dependent on any single state, although Florida is a pretty big one for us. So I think it's the execution of the value creation plan and the levers that the team is pulling that has enabled us to power through that isolated item. And in the portfolio, there's things that are going to be better than you expected and things that won't come in exactly where you had expected. So we're pretty pleased to be able to still be targeting that low sixes zone for 2023. On redeterminations, we continue to look at the data, sort of nothing different than what we've said in past earnings calls at our June Investor Day. I don't want to minimize that as an important lever that we will be tracking. It's our job to educate states and provide data to the extent that a rate modification would be necessary in a post redetermination world. So there's work to do in there, but we are ready to do so. I think I described on the prior call, we've got -- we've actually developed a common template across all of our health plans. We've got the data sources available and we are ready to go in and make the arguments and we've warmed up our state partners to acknowledge that it's going to be something that they are going to track also. So I don't want to minimize that as either a risk or something that we really have to work hard to execute on, but we are ready, and our state partners are generally good listeners.

Our next question comes from Steven Valiquette from Barclays. Please go ahead with your question.

Great. Thanks. Good morning, everybody. So just a follow-up on the utilization trends. I think if I heard you right, you mentioned that you're not really seeing any notable pent-up demand of traditional non-COVID utilization in '22 versus what you saw in '21. So I guess as we just sort of think about the puts and takes for utilization for '23, do you still factor in the possibility of pent-up demand utilization in any cost categories for next year, whether it's led to procedures or other areas? Or do you just think the Canopy, this is just not going to happen now, and it's all in the rearview mirror as far as the whole notion of pent-up demand? Thanks.

Yes, I think we are going to assume it's going to be a blend. I mean, there are some pockets where we do expect some normalization. But when I say pent-up demand, it's really the sort of the flood that we saw in Q2 of 2021, especially in the marketplace. And we don't expect something like that to occur again. Providers have become very resilient of managing through and we saw that in Omicron. They were able to manage through that very well without any residual meaningful pent-up demand coming out of that Q1, early Q1 Omicron variants. So we are going to make forward trend assumptions that we think about not just future COVID costs, future COVID vaccine costs, but also sort of flu normal trend, a normal flu season meaning sort of a pre-COVID era flu season. So all of that is fungible and our forward estimates of trend. But yes, we are thinking about sort of all of those legs of the stool.

Okay, got it. Okay. Thanks.

And our next question comes from George Hill from Deutsche Bank. Please go ahead with your question.

Hey, good morning and I appreciate you guys sneaking me in. Drew, just two things I wasn't clear on is, number one, is there any recourse left for the Florida rate cut or is that decision final? I was just a little confused by the commentary as to whether or not we are done there or something goes forward. And maybe just I had a quick -- I will do PBM for [indiscernible] well I will ask. Can you provide any color on kind of what was kind of the incremental thing that drove the decision change from CVS to ESI? And I typically try to rank order these things like price, service, access formulary. Just would love to know kind of what was the needle mover in the [indiscernible]? Thank you.

Yes, I can take the PBM question first and then kick it over to Drew on Florida. I think like I said, we were really happy with how competitive the process was. We thought everybody showed up with strong bids. Obviously, economics matter a lot. But we look across the whole slate of criteria. And it was really sort of the aggregate calculus that made the decision, not any one individual thing. Again, I think the market has good strong competition. We feel good about the go forward partnership and the ability to sort of innovate how our PBM functions are administered.

And then on Florida, yes, the cake is baked for the 10/1 sort of rate change. But my reference was we are constantly reviewing data with not just the state representatives but also their actuaries and we will continue to do so over the next year. And then we expect the renewal of that rate no later than 10/1/23. One question you didn't ask, but we've got a couple of notes coming in on just to be clear on the $0.25 to $0.50 is net of the tailwinds that I laid out. So that was a macro overall view of 2024, where this team, we are committed to driving to the $7.50 plus, but we also have -- we don't have perfect information, including California. And that view is net of tailwinds, but it includes headwinds such as Star.

Very helpful. Thank you.

And ladies and gentlemen, that will conclude our question-and-answer session. At this time, I'd like to turn the floor back over to Sarah London for any closing remarks.

Thanks so much. Thanks, everyone, for your time this morning. Great questions. We look forward to seeing many of you at our December Investor Day and look forward to the opportunity to share more about Centene's strategy for long-term profitable growth. Have a great day.

And ladies and gentlemen, the conference has now concluded. We do thank you for joining today's presentation. You may now disconnect your lines.