Sarah M. London
Chief Executive Officer at Centene
Thanks, Jen, and thanks everyone for joining us this morning. As an enterprise, Centene is stepping into 2025 with a clear strategy, compelling embedded earnings power and positive momentum within each of our lines of business.
We have delivered significant operational improvements and see exciting opportunity ahead as we continue to modernize our platform, automate our administrative processes through the deployment of AI and leverage our unparalleled data to create insights that make our business better, improve the quality of healthcare for our members and transform how the healthcare system serves millions of Americans.
Today, we reported fourth quarter adjusted diluted EPS of $0.80 and full-year 2024 adjusted diluted EPS of $7.17, strong results that demonstrate the durability of our earnings power and position the company to execute against our strategic goals in 2025.
Driven by better-than-expected results during the Medicare annual enrollment period and a program expansion in Medicaid, we are lifting our full-year 2025 revenue guidance by $4 billion. Our outlook for full-year 2025 adjusted diluted EPS remains unchanged as greater than $7.25, and we are pleased with the trajectory we are on at this early-stage in the year.
To that end, let's talk about the opportunities in each of our business lines and how we are positioned for 2025. First, Medicaid. Today, we serve 13 million Americans across our Medicaid portfolio, offering critical access to vital medical services and support for some of this country's most vulnerable and complex populations.
Post-COVID-era eligibility redeterminations generated significant membership transition within the Safety net program, but that chapter is now coming to a close. In 2025, we expect improved membership stability and a gradual return toward equilibrium with respect to rates and the risk profile of our members.
We continue to have constructive dialog with our state partners, providing us with confidence in our ability to command rates that will support a return to target Medicaid margins. This is visible through a strong result for 1/1/125 effective rates where we were able to achieve a mid-4% composite rate adjustment. We continue to expect a full-year 2025 composite rate adjustment of 3% to 4%.
While we have been focused on supporting our members and state partners through the redeterminations process, Centene's local Medicaid teams never stopped working to develop innovative care programs and solutions to promote access for our unique member base. For Centene, transforming the health of the communities we serve means bringing care to our members, ensuring it is local, integrated and sustainable and working to influence positive health outcomes for our members as early as possible in the care journey, in some cases before they are even born.
To this end, in Nevada, we are actively working to address the challenges of rural healthcare access for expectant moms. Our Silver Summit team is distributing tablets to support increased prenatal and postpartum telehealth visits for mothers in rural counties. We have also sponsored telehealth training with a particular focus on postpartum behavioral health support.
Another great example of innovative programming comes from our Meridian team in Illinois, where we are taking a food is medicine approach to supporting members with uncontrolled high blood pressure. Members have access to a 12-week comprehensive program that includes nutrition counseling along with four weeks of medically tailored meals, followed by four weeks of healthy food boxes, followed by four weeks of fresh produce vouchers. The goal is to build-in sustain the changes in eating habits that will support long-term hypertension control.
As we move through 2025, we are looking-forward to turning the page on the redeterminations era, returning to overall Medicaid program stability and working closely with our state partners on innovations that deliver not only health-care, but also better health within our communities.
Turning to Medicare. We are pleased to be generating material progress within our Medicare business. The most recently released Starz results published during fourth quarter 2024 and applicable to Benefit Plan year 2026 are an excellent window into our notable advancement. Within these results, 55% of our members are associated with 3.5 star plans or better, up from 23% last year.
We continued to operate and execute with increased precision throughout 2024, driving year-over-year improvement in many of our core administrative measures. We also continue to make progress closing care gaps for our members with year-over-year performance improvement in our HEDIS rates as well as medication adherence. And in a credit to our team's leadership and effort around continuous improvement, 1/1/125 go-live for Medicare was the smoothest I've ever seen at. We expect these and other advancements in our processes and key metrics to support STAR's results as we take on 2025.
As you've heard from us before, we pruned our Medicare Advantage footprint coming into 2025 to better align with our Medicaid presence and capabilities, enhancing our ability to leverage Centene's size, scale and expertise. With this refined footprint and refreshed products, we produced very good results relative to our expectations during the 2025 annual enrollment period. We now expect Medicare enrollment in the low-to-mid 900,000.
This product design, successful management of our distribution channels and local market knowledge contributed to the better-than-expected results. It is still early, but based on things we can know today, such as demographics and retention levels, we are pleased with the membership mix we are carrying into 2025, including a duals mix around 40%.
Amid program changes related to the Inflation Reduction Act, Medicare Part-D presented Centene with a nice growth opportunity in 2024 and the team executed well against that strategic plan. Part-D or PDP is positioned to be a larger business for us once again in 2025, both by revenue and membership.
During open enrollment, we went to-market with a deliberate focus on value for our members, including premium affordability. This plan complemented by the CMS demonstration program yielded strong AEP results that are expected to generate 2025 revenue of approximately $16 billion, better than our previous expectations. Here too, we are early relative to observed experience, but as we look at factors such as member demographics and product selection, we remain confident in the financial objectives we set forth at December's Investor Day, including a 1% target margin for the PDP business in 2025.
And finally, a brief comment on the Medicare Advantage advance rate notice released last month for the 2026 revenue year. While the information is not final, we are pleased to see the potential for a positive directional shift in funding for this important program, including the incorporation of a higher-level of base rate medical cost trend. Final rates are expected in April, and we will continue to assess the various program changes anticipated for 2026 and the funding necessary to maintain compelling plans and create value for seniors as we build-out our preliminary 2026 strategy.
Within our Medicare segment's 2024 performance as a strong jump-off point, we are excited to build upon the operational progress we made last year while taking important steps on our path towards breakeven in Medicare Advantage in 2027.
Finally, marketplace. Across our footprint, our marketplace team has demonstrated consistently strong results through disciplined pricing, strong distribution relationships as well as unmatched local knowledge of the marketplace population. Ambetter delivered an outstanding performance in 2024 and carried that momentum into their 12th open enrollment period, once again executing well on fundamentals and positioning our portfolio of products for another year of strength in 2025.
According to CMS, enrollment across the ACA market grew roughly 13%. But given in program integrity changes such as FTR or failure to report and the agent of record lock, our focus has been on effectuated membership. For Ambetter, January effectuated enrollment turned out to be a little stronger than what we had incorporated into our outlook for the business at our Investor Day in December, driven by strong member retention. Overall affection rates to date are directly in-line with historical norms for Ambetter, which positions us for a peak marketplace membership during the first-quarter, slightly above 5 million members.
Looking down one-level deeper, the demographic of our effectuated membership is similar to the member mix in 2024. Our book is expected to be roughly 51% female with an average age of 39.4, continuing a year-over-year trend of slightly younger membership. At the same time, our metal tiers shifted slightly towards silver. While we have been near 70% silver over the last few years, in 2025, we expect to have nearly 75% of our membership in silver plans, consistent with earlier years of the program. As a reminder, our outlook continues to provide for an anticipated return to the pre-COVID era membership seasonality with net attrition down to the mid 4 million by year end.
Overall, we are pleased with the early indicators around our marketplace business and believe that we positioned ourselves well in 2024 by being the first carrier to introduce an agent of record lock. Our view through January suggests a more muted impact to membership from the program integrity changes than originally anticipated, but we believe some may require a longer-tail to play-out and that it will be a few months until effectuated enrollment results are fully understood. As you would expect, we will continue to closely monitor effectuation rates, voluntary member terminations and other trends within our book as we move through the first-quarter.
As we think about future trends in the individual market, I did want to call-out the strong results we saw during open enrollment in our Georgia markets. We were pleased to be able to support Commissioner King and the State of Georgia as they made their transition to being a state-based exchange, and we are excited to see how Georgia Access provides a model for advancing the growth of the individual market both on and off-exchange, which includes access to ICHRA.
As we shared in December, we continue to view ICHRA as the future of health insurance for working Americans and is an important part of Centene's future earnings power. In January, we announced the addition of Allen Silver to our leadership team. Allen is now President of Ambetter Health Solutions, which focuses on ICHRA or individual coverage health reimbursement arrangements. Alan previously led retiree medical and ICHRA initiatives at Willis Tower's Watson, and we are thrilled that he has joined our team.
As we turn the page to a new year, it is important to acknowledge the incredible amount of hard work and tenacity from the SEN team that enabled Centene to deliver on our financial commitments in 2024. The countless obstacles and macro-level challenges faced by our team and our industry at large required focus and execution by colleagues from across our organization. As a result of staying tightly aligned to our strategic goals and our mission, we are now well-positioned to capitalize on the important opportunities that we see ahead of us in 2025 and beyond.
In 2025, we expect to collaborate with our state partners to achieve better alignment for Medicaid rates and member acuity. Our Medicare Advantage business, following successful execution during AEP will focus on key operational initiatives to drive us forward on our journey to breakeven in 2027. And as the category leader, our marketplace team will once again offer access to high-quality and affordable healthcare this year to approximately 5 million Americans.
There is significant earnings power embedded in this business with between $3 and $4 of adjusted EPS opportunity to unlock over-time, we are eager to achieve our next set of enterprise milestones, deliver on our commitments to our members and generate shareholder value in 2025 and beyond.
With that, I'll turn it over to Drew.
