Sarah London
Chief Executive Officer at Centene
Thanks, Jen and good morning, everyone. Today, we reported a strong finish to a very productive 2023. Fourth quarter results include adjusted earnings per share of $0.45, generating full-year 2023 adjusted EPS of $6.68. The quarterly and full-year EPS results were slightly ahead of internal expectations and provide the organization with positive momentum as we head into 2024. We've been planning for and talking about 2024 for a while and now that we're here, we're focused on positioning each of our lines of business for long-term growth, while continuing the important work to fortify our platform as we prepare for 2025 and beyond.
Specifically, we are working through the tail of the redeterminations process, positioning Centene to resume organic enrollment growth in Medicaid and to pursue new program opportunities from a position of strengths. We are solidifying our Medicare Advantage footprint, thanks to an annual enrollment period that largely hit the mark with respect to our target membership, including sales, retention and disenrollments, and we are capturing a powerful growth opportunity in marketplace, demonstrated by the increased revenue guidance we issued this morning.
We recognize that amid these opportunities, we still have valuable bottom-line work to do and we are approaching that work with the same focus and disciplined execution that is defined the first two years of this management team's tenure. In fact, the Centene wasted no time setting the tone for 2024 by successfully delivering what we believe to be the largest ever PBM platform migration and improving our pharmacy cost structure on behalf of our customers and members. We have processed more than 40 million scripts so far through ESI and are pleased with the way this massive undertaking has rolled out.
There is always a period of issue management after a change of this magnitude and the teams have worked tirelessly and collaboratively to prioritize member access to care during this transition. We will continue to closely monitor end-to-end processing and customer service as we move through the year.
Additionally, in January, Centene closed the divestiture of Circle Health, the last of our international assets, and the company can now focus solely on our domestic core businesses. Circle marks the 10th divestiture since we began the portfolio review process in late 2021 and we are pleased to have purposefully streamlined our enterprise while keeping the portfolio of divestitures net accretive to earnings and generating cash for deployment.
In a broader context of value creation, our SG&A initiatives remain on track to exceed our original savings goals and we continue to identify opportunities to drive operating efficiency through modernization and process improvement. Annual enrollment periods for both Marketplace and Medicare also contribute to our confidence in Centene's 2024 positioning. Continued pricing discipline in Marketplace and the deliberate actions we took to align our 2024 Medicare bids with our strategic focus on lower income and complex members, yielded the intended results on both fronts.
Marketplace growth was more robust than anticipated, fueled by better-than-anticipated overall market growth as individual commercial offerings continue to gain traction with an expanding consumer set. As such, we expect to deliver both growth and our planned margin expansion in Marketplace in 2024. Together, these dynamics position us well to achieve our 2024 adjusted earnings per share guidance of greater than $6.70.
With that, let's click deeper into each of our core business lines. Within Medicaid, we have delivered important proof points around the power of incumbency while navigating the unprecedented dynamics of redeterminations. In December, we were awarded the Arizona LTSS contract that will expand our footprint in serving complex populations in that state. That same month, we added approximately 90,000 members to our care and coverage through the successful go live of Medicaid expansion in North Carolina. And in early January, we successfully reprocured our New Hampshire contract, earning the top score in the Granite State among competitors. Our uniquely local footprint fosters important and trusted relationships with the communities and state partners we serve and continues to differentiate us as we retain and grow our largest business.
Turning to redeterminations, the process continues to track largely in line with our expectations. As of year end, we were approximately 80% of the way through the projected member transitions and consistent with our modeling, we ended 2023 right around 14.4 million Medicaid members. Our health plan Presidents, along with our Medicaid actuarial teams, continue to work in concert with our state partners to monitor the risk pool impact of membership changes and calibrate rates to match acuity in the near term. To that end, we received some, but not all of the outstanding 2023 retrospective rate adjustments we mentioned during our December Investor day before year end and we still feel good about our 2024 Medicaid guidance as we sit here in early February.
While Medicare has been a hot topic for the industry of late, we are pleased that the annual enrollment period played out largely as expected for Centene and our 2024 financial projections for Medicare remain unchanged from investor Day. Duals or D-SNP members have grown as a percentage of our Medicare enrollment as thoughtful benefit design changes allowed us to invest in and effectively refocus our book on members to whom we have the strongest ability to provide long-term value. We expect D-SNP members to represent more than 35% of our Medicare Advantage membership by year end, an important step relative to our strategic plan.
As an organization, we remain laser focused on advancing our Medicare quality agenda. We made progress on a number of initiatives in 2023 that create positive momentum as we continue to execute in 2024. This includes expanding our member outreach capacity, which ultimately allows us to conduct over 1.1 million preventive service outreach calls, reach 80% more members, and schedule 62 more appointments year over year. At the same time, we invested in digital data and provider connectivity, successfully deploying direct EMR connectivity to over 640,000 provider practices. And finally, we continued to drive core administrative and customer experience performance, with service levels remaining in the high-90s through Q4.
All of these efforts are important contributors to our long-term Stars performance goals. In 2024 as planned, we will continue to invest in this space with an obvious focus on Medicare Advantage Star ratings, but with an approach that will drive benefit across lines of business. With respect to Medicare utilization, as you heard from us in December, our 2024 bids incorporate a level of elevated medical trend related to non-inpatient services. To date, based on our full-year and fourth quarter claims experience, we continue to view our pricing posture as adequate to support our 2024 Medicare outlook.
Preliminary Medicare Advantage rates for 2025 were released last week. Bearing in mind, the continued expectation for the multiyear phase-in of the risk adjustment model change that was finalized in 2023, we view the preliminary rates as insufficient with respect to general medical cost trend expectations. Drew will provide some additional thoughts on the preliminary rate in a moment. As this audience is well aware, we will receive final Medicare Advantage rates for 2025 in early April and at the time of our first quarter call, we will have a better directional sense for bids strategy related to next year.
Finally, Marketplace. As you've heard from us with increasing enthusiasm in recent months, Marketplace presents Centene with a unique opportunity for simultaneous revenue growth and margin expansion in 2024. Overall, market growth was stronger than expected during this open enrollment period and we successfully captured our target market share of the expanded pie, netting to stronger-than-expected OEP results for the company. Within our 4.3 million member footprint as of January, our market share increased to roughly 26%, up from 23% previously, serving as another proof point of our leadership in the space. This strong enrollment result is driving the $2.5 billion increase to our full-year 2024 premium and service revenue guidance.
Membership mix continues to skew slightly younger, consistent with the year-over-year trend we saw last year and distribution across metal tiers is consistent with our expectation, with silver plans representing the majority of our enrollment. One driver of overall Marketplace growth has been members impacted by Medicaid redeterminations. On that front, we continue to track towards the top half of our previously provided guidance range of 200,000 to 300,000 redetermined lives captured by Ambetter. Ultimately, the individual commercial market represents a strategic opportunity for Centene and we are excited to enable the expanding reach of these offerings as the demands of the market evolve.
While the dynamic businesses Centene operates in continue to ebb and flow, the strength and diversification of our government-sponsored healthcare platform creates resiliency. We see tremendous opportunity for our core products, both near and long-term. We will continue to execute against these opportunities to improve health outcomes for our members, generate profitable growth and drive shareholder return.
Before I turn it over to Drew, I want to take just a moment to thank the entire Cen team for how you showed up in 2023 on behalf of our members and our partners. I am honored to work alongside you in 2024 as we make this company stronger every day and transform the health of the communities we serve, one person at a time.
With that, I will hand the call over to Drew for more details around our financial performance and 2024 outlook.
