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? 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 three 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 welcomed the Magellan team to Centene earlier last month, with the acquisition successfully closing exactly one year after we announced the transaction. There is a dire need for mental health care in this country. Two years into this pandemic, 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 five 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 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 the role that we have played in ensuring that our members 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 one month into Q1, we have already made progress on some of those key guideposts. First, our pharmacy platform consolidation project. As a reminder, the strategy here is to outsource administrative PBM functions to an external partner, thereby allowing us to reduce our three PBM platforms down to one and to focus that technology on the clinical, member and provider engagement capabilities that are most important to differentiating the overall member experience. This will drive SG&A savings across the technology footprint and allow for more efficient investment in process automation. Coming into 2022, we had eight remaining state-specific programs that had not yet been consolidated on our external PBM platform. We successfully migrated three of these on January 1 and another on February 1 as planned. We are targeting the fourth migration for March 1 and the remaining three are scheduled for later in Q2. Overall, we are on track to be fully consolidated in time to issue our planned PBM RFP against our full $38 billion of pharmacy spend. I am pleased to say that work is well underway to prepare for the RFP release this summer, and we look forward to maximizing value for the enterprise through that process. Since December, we have also made good progress on the efforts we outlined around standardizing and rationalizing core operations. We initiated Phase 1 of our call center standardization, including process mapping as well as beginning the formal enterprise transition of our telephony infrastructure to the cloud. As we mentioned before, this will offer more convenient ways for our members to interact with us and get the information they need. We are starting with our Medicare and Marketplace products and expect this work to be completed in early Q3. We also kicked off Phase 2 of our utilization management work, which involves building an enterprise shared services function to serve all three major product lines with a primary focus on enhancing quality and productivity. We completed the Medicare transition and now have the Marketplace transition in motion. Lastly, back in October, we formally updated our work-at-home policies, as we have learned how to deliver the same level of productivity and service to our members in a more flexible workplace environment. The shift to work at home and enhanced flexibility will have a meaningful impact on our ability to recruit and retain talent, but it also means we need to reevaluate our real estate footprint, something Drew mentioned during the December Investor Day. We have already evaluated approximately 25% of our facility locations and see opportunities for material downsizing of our footprint, expect updates on that work as we get through the full real estate portfolio. Finally, I want to touch on the capital allocation pillar of our value creation plan and particularly the portfolio review process. Closing out the story on USMM, we used the proceeds from that majority divestiture to execute $200 million in share repurchases in December. We are aggressively working our way through the noncore portfolio with a consistent, rigorous and strategic evaluation process. We will continue to provide updates on this work as it progresses. While the value creation work is critically important, it is also complex. Let me assure you that we have full organizational commitment to our value creation objectives and are laser-focused on leveraging Centene's size and scale to unlock significant value for our stakeholders. But let me also take this opportunity to thank our leaders and our teams throughout the organization from our local market CEOs and operational leaders to frontline staff and clinical experts for their enthusiasm, agility and willingness to think differently and work differently in service of our members. Overall, our businesses are performing well. We are building on the strength of our core business lines, and we are making meaningful progress on our commitment to margin expansion, all while delivering for our members, state partners, employees and shareholders. I'd now like to turn the call over to Brent for some insights on our core business line performance during Q4.

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 two 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 three 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 products in five new states. This year, Ambetter is in 49% of all counties in the U.S. This product and geographic expansion translated to solid growth during the open enrollment period. And what makes the sustained momentum in Marketplace more impactful is the fact that we never participated in a race to the bottom with our rates. We remain committed to returning Ambetter margins back to their long-term pretax target of 5% to 7.5%, and I think the initiatives we undertook in Marketplace in 2021 and the pricing discipline showed clear evidence of our ability to execute on our margin goals across all of our business lines. Before handing the call over to Drew, I want to provide a quick update on our thinking of redeterminations. We continue to work closely with our state partners to understand the timing and how to best support the transition. Our current outlook continues to reflect a return of redeterminations in May. But again, this will not be universal and the timing will vary state-by-state. The continuity of care for members that roll off Medicaid remains a top priority. Our breadth of products and services provide Centene a great opportunity to deliver this continuity of care at a low cost through our Marketplace capabilities. We currently offer exchange products in 25 of our 29 Medicaid states. Overall, we are pleased with our competitive position of our portfolio heading into 2022. With that, let me turn the call over to Drew.

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 three 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 Delta variant, Marketplace saw the highest peak of our three business lines and Medicare was the lowest. With Omicron, Medicare was the highest peak and Marketplace was the lowest. Fortunately, the acuity, and therefore severity we are seeing with Omicron is lower than the Delta variant, and measures like average length of stay and resulting cost per admit are lower than during prior variants. This seems consistent with the lower acuity seen in the national data. One more item on trend, influenza cases, so far, continue to be very low compared to a typical year. Moving to other P&L and balance sheet items. Our adjusted SG&A expense ratio was 9.2% in the fourth quarter compared to 9.7% last year. This was in line with our expectation that our SG&A rate would be the highest in the fourth quarter of the year because of open enrollment spending in both Medicare and Marketplace. Year-over-year improvement reflects leveraged expenses over higher revenues. Some of you have asked about our SG&A rate and our mix of businesses. So let me give you some perspective relative to the midpoint of adjusted 2022 SG&A guidance of 8.05%. First of all, it's important to remember that we have and will continue to calculate our SG&A rate and margin metrics off of premium and service revenue, which excludes the forecasted $6 billion of pass-through revenue. And as we covered at our Investor Day, we're breaking out depreciation from SG&A in 2022 and reporting it on a separate income statement line. We expect depreciation to run a little under $700 million for 2022. On an absolute basis, Magellan increases our SG&A rate by approximately 20 basis points. Our international businesses increased by a little over 30 basis points and our other healthcare enterprise businesses increased it by about 10 basis points, meaning the midpoint of our adjusted SG&A rate for 2022, excluding those businesses would be in the mid-7s, and our value creation plan is focused on driving that lower over time. Cash flow provided by operations was $675 million in the quarter, primarily driven by net earnings. We continue to maintain a strong liquidity position of $2.3 billion of domestic unregulated cash on our balance sheet at quarter end. Furthermore, we closed our $2.6 billion Magellan transaction right after year-end, which used our available unregulated cash. Our goal continues to be to build cash at parent beginning in the back half of 2022 for additional share buybacks and debt paydown. On that topic, as Sarah mentioned, during the fourth quarter, we repurchased approximately $200 million of our stock using proceeds from the sale of our majority stake in U.S. Medical Management. Debt at quarter end was $18.8 billion. Our debt-to-cap ratio was 40.9%, excluding our nonrecourse debt. Our medical claims liability totaled $14.2 billion at quarter end and represents 52 days in claims payable compared to 51 in Q3. Our balance sheet remains strong, and we expect it to strengthen even further as we improve margins and generate cash flow. As we begin 2022, we're building on the positive momentum from our fourth quarter results as well as our organizational commitment to the value creation plan. We are reiterating our full year 2022 financial guidance, including expectations for adjusted earnings per share of $5.30 to $5.50. As you think about the seasonality of 2022 earnings, it looks like consensus is about 58% of adjusted EPS in the first half of the year and 42% in the back half, and that's a pretty good proxy for our estimates. And as you heard from Brent, we are pleased with our execution in the annual enrollment periods for Medicare and Marketplace and are well positioned to achieve our 2022 membership expectations. Overall, our 2021 performance demonstrates the strength and agility of our organization. As Sarah touched on, we have a lot of work in motion to drive our multiyear financial commitments in the value creation plan. We look forward to updating you on our progress as we move through the year. Thank you for your interest. Operator, Rocco, can you please open the line for questions?

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 two 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 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 it 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 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.

Could you discuss the competitive exchange environment where one of your competitors is significantly scaling back, which suggests irrational pricing on the exchanges? You mentioned improving margins this year. Could you remind us of your margin target for this year in relation to your long-term target? How much of achieving that long-term target depends on what you can control, and do you agree that some pricing is returning to a normalized rate?

Yes, those are great questions and they all relate to the Marketplace. During the summer of 2021, as we developed new products, we considered how to address competition and refine our Marketplace portfolio. Along with a more disciplined approach to financial bids for the open opportunities at that time, we anticipate significant progress in our HBR from 2021 to 2022. Reflecting on our Investor Day and the conference on January 10, we expect around a 500 basis point improvement year-over-year in our commercial segment. We plan to price and deliver a substantial improvement in that area, although it won't fully reach our ultimate goal of a 5% to 7.5% pretax margin for the Marketplace. This progress will be considerable, and we will not face certain challenges from 2021 again. Pricing decisions are made intentionally, which is why we are pleased to see over 2 million members 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. Regarding Medicare, it involves a comprehensive project plan that addresses several areas mentioned. This includes not only clinical initiatives, of which we have many that we've adapted from successful experiences elsewhere, but also the bid process. We are striving for a better balance between growth and margin. I am pleased to say that our base of business is 50% higher compared to the open enrollment periods of 2021 and 2022. While we expect growth in Medicare to slow, we have a strong foundation to pursue margin expansion opportunities. The bid process and margin focus will take multiple years; we won't try to achieve everything in one year because we must also maintain the appeal of our products. You rightly pointed out the volatility associated with STARS. The STARS scores released in 2021 for the rating year 2022, which impacts 2023 revenue, were favorable, aided by disaster relief provisions. However, due to operational challenges, we anticipate the STARS scores released in October 2022 for the rating year 2023, which will affect 2024 revenue, to decline. We have significant work ahead to enhance our performance regarding STARS as we focus on influencing the rating year 2024 scores for revenue in 2025. We'll need to navigate through these cycles, but there are various strategies we can employ in our clinical initiatives and, as Brent previously mentioned, leverage the resources of our combined company to ensure outstanding operational execution.

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

I wanted to quickly add to A.J.'s question regarding the Medicare margin. I'd like to hear your initial thoughts on the recent advanced notice for 2023, which seemed solid to me. How does that strengthen your confidence in achieving margin improvement in Medicare Advantage? Additionally, I appreciate the insights you've shared about the year-over-year expected change in medical loss ratio for commercial plans. Is there anything specific you would highlight regarding Medicare and Medicaid MLRs in 2022 compared to 2021? Given that we'll be closely monitoring those metrics now that you're providing them, any advance comments would be helpful.

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 degrade 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 it's important to focus on the HBRs and monitor them accordingly. Also, we had pharmacy carve-outs in a few states, which were quite significant, particularly in California. This represented a mathematical progression from the outset. Additionally, we anticipate the return of emergency room access for Medicaid, especially for urgent issues. However, for non-urgent cases, we believe there's still a chance to maintain some limitations and guide members to their primary care physicians. Overall, this reflects a combination of forward estimates and an understanding of the appropriate rate environment for Medicaid.

Okay. I don't want to hold you to the 10 basis points, but one of your peers mentioned a margin target closer to 4%. Most others seem to suggest a midpoint around 3%. Could you help us understand what you consider to be normal in this context?

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 at 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 three 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. Can you clarify if we should interpret your comments as indicating a more conservative approach to bidding on Medicare Advantage for 2023? Additionally, could you discuss the current level and intensity of competition in the Medicare Advantage market?

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 the Marketplace. However, the smaller players in Medicare Advantage did not have a significant impact on our results and growth. We feel confident about our positioning as we move forward.

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

As we consider Medicare Advantage in 2022, based on what we've observed, you have substantially invested in rich benefits. How should we approach the Medicare margins for 2022? Could you provide a baseline for us to think about regarding margin expansion opportunities for 2023 and beyond? Additionally, could you share your insights on core utilization compared to baseline and how this influences the guidance for 2022, particularly in relation to emergency room acuity and acuity levels?

Yes, Ricky, I would like to refer you to the Medicare HBR we reported for 2021, and we expect it to remain relatively flat from 2021 to 2022. As we mentioned during Investor Day, this forms a key part of our guidance. Regarding utilization, each COVID wave, including Omicron, shows that the impact on deferrable services is decreasing. While we do know there are surgeries being postponed to February that were scheduled for January, providers are increasingly able to manage both. Over the past six to nine months, we have seen a steady return to what can be termed normal utilization, although some areas are still catching up, such as non-emergent emergency room visits, which we hope signals a structural change in the industry. We are actively encouraging our members to engage with their physicians for non-emergent services. All of these factors have been incorporated into our HBR projections that we presented 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.

We're not really experiencing the volatility you're mentioning. Over the past 4 or 5 years, our Medicare team has established multiple sales channels, including the W2 workforce, which has been in place for a long time. More recently, we've developed our own direct-to-consumer capability through Teledigital. Additionally, we have the brokerage channel that we refined a few years ago following the Universal American acquisition. We've been focusing on this for several years now. The merger with Centene, as Brent noted, has allowed us to expand our footprint and network, enhancing what WellCare had built previously. To give you a data point, the distribution channel through Teledigital and telemarketing accounts for about half of our sales, which was the same last year. Therefore, there hasn't been a significant change in the sources of our growth.

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, we've been considering that. While there are some characteristics, we lack reliable employment data on individuals who may have secured jobs since they first qualified for Medicaid. Certain groups, like mothers after delivery in specific states, might have eligibility changes depending on those states' rules, potentially affecting their status postpartum. We can analyze some of this, but we don't have a clear cohort with a set timeline for re-evaluation to make accurate estimates. We've noticed changes in eligibility related to the Federal Poverty Level over time. However, we believe we are well-prepared for when that situation arises. We will see if it extends beyond our May 1 assumption, which is reflected in our guidance. Our teams are focused on being ready in 25 out of 29 states. I think Brent can provide additional insights on our discussions with states regarding this matter.

Yes, we have been in regular contact since last year with both the federal government and our state partners. As Drew mentioned, we have developed a platform linking our exchange to Medicaid. From this perspective, in terms of network, communication, and planning, we are getting ready for this. Regardless of when that date comes, we are confident in our ability to provide a solution as states aim to ensure their citizens have health insurance coverage. We have been collaborating with them and are making the necessary preparations.

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.

I want to say hello to Michael and wish him well. I would like to know if there are any updates regarding the CEO search and the timing of the process. We are expecting five new Board members in January, but will the announcement likely come in the first half or second half of the year? Is there any visibility for investors, or will it just be a surprise when we find out who the CEO is?

I want to begin by saying that we are currently going through a process while adhering to good governance. We are evaluating various candidates, and it's important to note that I had previously mentioned my intention to step down as CEO to the Board. The process is underway and there is more to it. We are reviewing our SKUs as part of this clear process, and I anticipate that we will see results by 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 for joining us today. We look forward to continuing to report our results throughout the year. I believe we have the right mix of products and the appropriate strategy for those products. Our margin expansion program is clearly defined, and everyone in the organization is aware of what needs to be done. Most importantly, we have the right team in place to ensure strong outcomes. I am eager to see the results as the year unfolds. Thank you for your participation.

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.