Centene Corporation (CNC) Earnings Call Transcript & Summary

Good morning, and thank you for joining us here at the 40th Annual JPMorgan Healthcare Conference. I'm Cal Sternick and I'll be moderating today's discussion. I'm pleased to have with me here this morning from Centene, Sarah London, who is Vice Chairman and President of Healthcare Enterprises and Executive Vice President of Advanced Technology; and Executive Vice President and Chief Financial Officer, Drew Asher; as well as SVP and Head of IR, Jen Gilligan. So thank you all for joining us. For those listening on the conference webcast, there is an ask-a-question feature if you'd like to submit a question to the queue. Before we get started, I'm going to turn it over to Centene for some introductory remarks. Sarah, Drew, the floor is yours.

Great. Thank you, Cal. Good morning, everyone. I'm glad to kick off the conference, sad that we can't all be together in person, but I hope that we will get back to that soon. And in the meantime, I hope you're all staying safe and healthy. I'm going to keep my remarks brief this morning because we've shared a lot recently about our focus coming into 2022, particularly at our December Investor Day just a few weeks ago. During that meeting, we highlighted the strength of Centene's foundation in Medicaid, Medicare and Marketplace and our dedication to focusing on and growing through the strength of that platform. We also provided a more detailed road map for our value creation plan, which is focused on leveraging Centene's size and scale to unlock significant value for our stakeholders. As part of this, we set a new EPS target range for 2024 that is built from our 3 pillars of value creation: SG&A savings, gross margins and capital allocation. And finally, we dove into specific operational examples and offered guideposts that the investor community can use to track our progress during 2022 and beyond. So with that backdrop, let me focus on where we stand today. Relative to our core businesses, we are entering 2022 with strong momentum. Medicaid, Medicare and Marketplace continue to perform well. Government-sponsored health care remains an important and growing segment in this country, and our performance reflects that underlying growth as we expect to reach over $135 billion in projected revenues in 2020. I'm pleased to share that both open enrollments for Marketplace and Medicare have been successful for us, and we are tracking to the trends we discussed back in December. Our Ambetter offering continues to be the largest exchange insurer. At Investor Day, we noted that we would be plus or minus 2 million lives at the '22 peak. And while we still had a few more days remaining in open enrollment, at this point, we are comfortable with slightly above the 2 million mark. This is Centene's ninth enrollment season, and we have leveraged what we know about our customers to differentiate our offerings and better provide for their needs. So we believe the results we are seeing demonstrate the success of our local approach, an effective extension of the product choices we offer our members and the overall strength of our provider network. We're also pleased to share that we are seeing nice member retention. Medicare also saw strong growth during this enrollment period, driven in part by our 2022 geographic expansion, which includes 3 new states: Massachusetts, Nebraska and Oklahoma. Our current guidance is based upon mid-teens membership growth in Medicare Advantage, and we are in very good shape in the annual enrollment period. This is our second year that we've gone to market with our WellCare brand, and our results demonstrate the strength of our platform, which combines WellCare's product expertise with Centene's strong provider relationships and expansive geographic footprint. Value creation continues to be a foremost priority for the company, and we continue to make good early progress. Drew, Brent and I are working very closely to ensure we are focused on and advancing the highest priority initiatives across the enterprise to deliver on our value creation goals. There are a number of upcoming milestones that we've laid out for 2022 including initiating standardization of call center management, our pharmacy platform consolidation initiative, strategically pricing 2023 bids as well as making real estate optimization decisions among other initiatives. We are also continuing our portfolio review process, and we expect to share updates as that work progresses. To that end, we did complete $200 million in share repurchases that we identified last month using proceeds from the sale of our majority take in U.S. Medical Management. If you missed our presentation from December that included all of these details and milestones, I encourage you to go to our IR website, but we also plan to provide updates on our progress during quarterly earnings calls. Before I wrap up, we are pleased to have recently announced the successful close of our acquisition of Magellan. When we announced the transaction a year ago, we didn't know where we would be in the pandemic a year later. But I think it's clear to everyone that behavioral health needs are as acute as ever across the country. Thanks to the talent and expertise within Magellan, we believe this partnership will allow Centene to deliver better health outcomes at lower costs for complex high-cost populations through the further integration of physical and mental health care. We also believe it will enhance our ability to offer tailored programs for more specialized and acute behavioral subpopulations. Magellan will continue to operate independently, and I'm pleased to welcome their talented leadership team to Centene, including CEO, Ken Fasola. As we announced last week, Jim Murray, who had been Magellan's President and COO, will transition to take on day-to-day management of our value creation office. Brent, Drew and I all believe Jim's experience and operating discipline will add important momentum to our value creation program, and we are thrilled to have him on board. Overall, our businesses are performing well, and we are building on our strong foundation across Medicaid, Medicare and Marketplace, and we are focused on doing even better, driving forward on our value creation plan and delivering for our members, state partners, employees and shareholders. Thank you again for joining us this morning. Drew and I very much look forward to the discussion. And with that, I'll turn it back to you, Cal.

Thanks, Sarah. So first off, maybe we'll start off talking about utilization. Just given everything that's going on with Omicron right now. So we've seen a new high in daily cases reported the CDC, but the hospitalization rate appears to be lagging if we compare it to the Delta wave. So just curious, what sort of impact are you seeing from Omicron on your business? And could you maybe give us a sense for how it's impacting Medicaid, Medicare Marketplace and then maybe bucketed out by direct COVID costs versus any impact on non-COVID utilization?

All right, Calvin. Thanks for the question, and glad to be here as well. So let me take you back to December 10. So a month ago, we gave an update sort of intra-quarter update that we are on track and feeling good through October, November. And then December, we actually haven't closed it yet. Tomorrow is day 6, but obviously, we've got all sorts of data available at our finger kits daily throughout each month. So I'll give you some insights as of year-end, so as of 12/31. And if I stack up a rolling 7-day, we look at inpatient ops specific for COVID. And if I stack up a graph of Omicron next to the graph of Delta back in August, which remember was a pretty severe spike. We're about 60% up that graph as a whole through the end of December. Medicare is actually a little bit above that. And interestingly, commercial or Marketplace is below that average of sort of 60% of that slope. Now we can't predict the future and don't know sort of the steepness or the duration of Omicron. But I guess in context, I'd point you back to that August time period, pretty severe spike in Delta, where we manage through it, sort of, given our scale and diversified platform, manage through that, in our opinion, pretty well. So we'll have to see how this plays out, close the books tomorrow, and we'll be reporting in early February, but so far manageable.

Are you seeing any impact on non-COVID utilization? Because I know with previous waves, there's sort of been a decline in non-COVID. Is it just too early to tell still? Or are you may be seeing something similar or perhaps maybe less of a steep decline so far?

Yes, there's always a little bit of a trade-off. I mean we give credit to the hospitals, companies, if you look at the public company data or the surgery centers, they became pretty resilient in the middle of 2021 with that -- we saw that in the Delta phase. But there always is a little bit of crowd out, especially in inpatient when COVID ramps up.

Understood. So maybe sticking on the utilization theme. You talked about some pent-up demand in the Marketplace business continuing on into 2022. Can you talk about the expectations for sort of utilization in terms of seasonality versus what we've seen historically? And then, I think, Medicaid has generally lagged some of your other businesses relative to baseline levels. Can you talk about expectations for Medicaid utilization over the course of 2020?

Yes. Another good question and a relevant one. So when we -- we're always making forward assumptions. And so we're baking in COVID estimates. And some of this goes back to the summer of '21 when you're forecasting out '22 with like Marketplace and Medicare when you're bidding on sort of the next calendar year. But we have COVID assumptions. We've got non-COVID assumptions. We've got pent-up demand assumptions, as you mentioned, influenza, which continues to look really good. And so every dollar of trend, we assume in our 3 business lines, they're fungible, right? Because they sort of add up to that forward view of trend. And then we layer on pricing relative to Medicare and Marketplace where we've actually filed bids or rates in the case of Medicaid, benefit changes, mix changes to sort of get to that forecast of HBR. And so once again, going back to some of the Investor Day commentary in Marketplace where we had intentional margin expansion efforts with respect to the bids that we filed throughout the summer and call it, early fall, I guess, largely the summer of 2021. What we laid out at Investor Day, looking forward, was a reduction in that HBR to the tune of 70 bps across the entire portfolio of Centene as a whole. But if you do the math, you get to 500 basis points, plus or minus, an expectation of a decrease in Marketplace HBR. And that sort of lines up with that conscious decision we made. And to Sarah's point, really pleased that we could sort of eliminate the minus from that plus or minus $2 million and sort of cut for $2 million, maybe a little bit above $2 million in terms of the volume. So still being able to maintain the volume when we took the first meaningful step of action in Marketplace. In Medicaid, on the flip side, the impact of Medicaid HBR year-to-year, we expect to be 90 basis points on the entire company. You do the math, it's actually 130 for the business line itself where we are assuming. And we've seen throughout '21, and we anticipate more return to a normal utilization. Even we've seen ER usage start ticking up, still not at the pre-pandemic level, but that's starting to return to normal utilization, a 1.3% composite rate increase like we covered at Investor Day. And then just on the mix element, the carve-out of pharmacy is not insignificant in terms of the impact on the HBR in California, Ohio. So those are sort of the drivers looking ahead at that change in the Medicaid HBR. And then the Medicare HBR, and there's been a lot of sort of [indiscernible] in the industry about Medicare coming out of the AEP. We are anticipating pretty stable HBR Medicare Advantage. If you look once again at the graph we showed at Investor Day, actually a 5 basis point improvement on the entire company. That's driven by PDP, but Medicare Advantage, really stability is what was anticipated in the bids that were filed that first Monday in June of '21. So a consistent HBR, a little bit of improvement in PDP, which is only about a $2 billion business for us. And as Sarah said, really pleased with what we saw coming out of the annual enrollment period and in very good shape for that mid-teens growth rate.

Great. So you mentioned the MLR improvement in Medicaid. When we think about redeterminations resuming and the members that you've gained specifically because of redeterminations, the positive determinations rather, do you have any sense for how the acuity of those members compares to, say, some of the members you gain from more traditional Medicaid channels? Just trying to get a sense for whether the members rolling off over the course of the year is a positive, negative or net neutral from MLR perspective.

Yes. Actually, back on Medicaid, we anticipate that HBR going up. So if I said, improved and I sort of...

Sorry. [indiscernible]

We sort of anticipate that plus or minus 130 basis points, the Medicaid HBR ourself. And the good news for all the listeners out there we'll be disclosing the 3 major business line HBRs actually in early February. So it's a basis of comparison a little bit deeper than you've had here before with just the aggregate HBR. So you'll be able to track some of this Medicaid, Medicare and commercial, which is largely Marketplace. So yes, we absolutely -- we have data to sort of look at performance by cohorts. Conventional wisdom would tell you so that the further up you go up the FPL ladder, the less acuity there is. Some of that was adjusted for when the states took action on rates, factor that in. And so that will have to be factored in as that business exits. But yes, it probably performs a little bit better than the average, just based upon the nature. Although, you don't exactly know every. You can't tag every single member, whether they are going to be redetermined or not. There are certain sort of characteristics of those that you -- those cohorts that you expect to be more subject to redetermination than others, but it's not like it's a discrete population that stands on its own.

Got it. So I think you talked about before, about 2.4 million members you've gained during the pandemic and about half of those rolling off through redeterminations. And I know that the pacing of the roll-off isn't going to be linear but besides the timing or the extension of the public health emergency period, what are some of the key milestones we should be looking for at a federal level and at the state level, to really get a sense for how different states could move or progress in their Medicaid redetermination processes?

Yes, sure. Just once again, a little bit of this is a repeat, but just to reset the table for those that may not have been able to catch the entire Investor Day, December 10. You're right, we have grown through 9/30, we had grown 2.4 million members in Medicaid since the beginning of the pandemic, March of 2020, and we had forecast at least based upon what we saw at the time, you sort of have to put a stake in the ground and get a budget done and get guidance out that the redeterminations would commence 5/1. State by state, we evaluate it based upon our feet on the ground and discussions with regulators as well as looking at potential federal legislation to see a slope line in the rate of redetermination. We expect to differ state by state. So that's sort of what went into the guidance, which resulted in a $2 billion revenue deduct beginning 5/1 for the back 8 months of the year, that's embedded in our guidance. And then I was asked a good question at Investor Day, what does that mean for 2023? And that would be an additional 2.5 to 3 on top of that 2 sort of if we're still at the assumption of half of the 2.4 million members, the 1.2 million you referenced, Calvin, if that continued to the '23. So that sets the table for the discussion. What to look for going forward, really one of the keys is that linkage between the public health emergency and the maintenance of effort provisions, meaning the, I guess, prohibition on redeterminations. Those are linked today, the bill back better plan, which we all know is sort of still struggling in D.C., was going to delink them, but they're linked today. So I think that's something to look for any guardrails look for like in the build back better plan there was that 1/12 per month restriction for the May to September time period. Any guardrails on the speed of redeterminations is something to look for. But think about it's really just a timing matter. I mean states need to get back to redetermining and reverifying their roles, and they will. And so it's just a matter of how that slopes into '22 or '23. We're well positioned, 25 out of our 29 states, as we -- as Brent talked about at Investor Day, we are really well positioned with the Marketplace product. Really one of the reasons why Centene originally got into the Marketplace on individual business as members go in and out of Medicaid. So good capture potential and we'll adjust as we learn more throughout 2022, as legislation continues to make its way through the process.

Got it. So if we stick on build back better for a moment. One of the elements of that as well, it proposed to phase down the enhanced FMAP over a few months. Would there be any impact to your rates if that ends the same quarter as a public health emergency? Just what do you see happening with the enhanced FMAP versus what is assumed in your current guidance?

Don't think the FMAP would directly impact us. Obviously, the hospital P&L in the long run sort of might make its way into negotiations. Government programs were sort of closer to the 10 in terms of tying reimbursement to whether it's Medicaid fee schedules or Medicare fee schedules. Obviously, the provider has got a decent bump coming out of the debt relief bill. So the 3% that was part of that 3% fee schedule positive for providers. Essentially, replacing some of the 3.75% that was that temporary relief during 2021. So that's sort of a win in the provider's column. So we'll have to track all of that as we get into '22 and see what happens with build back better or maybe a skinny down version which a lot of the experts are predicting might be the outcome.

Yes. So one of the elements of that was the extension of the enhanced Marketplace subsidies. But right now, those are scheduled to expire at the end of 2022. Is there another vehicle that they can use to extend the subsidies through to 2025? And if the subsidies were to expire at the end of this year, how would that impact the way that you guys think about pricing and competition in the Marketplace business in 2023?

Yes. I mean I can weigh in on that. Because they are part of the ARP, we need a statutory provision to extend them. But I think there's a lot of sort of political momentum and good reason to continue them. We have seen that they've had a tremendous impact enhancing both the access and affordability to health care. So we're obviously very supportive of any means by which those would get extended because I think they've had a really positive impact on the population. And again, just making health care accessible to more members. But as with any policy issue, we track that very closely and what vehicle it may or may not get attached to and then have to make adjustments accordingly and figure out how to make that into pricing. But I think we're hopeful that there's good momentum behind that, sort of broadly speaking from a political perspective.

Okay. So maybe stick on the Marketplace for a minute. CMS recently proposed a rule that would require plans to offer standardized plan options in the Marketplace business and a standard cost-sharing structure. What sort of impact do you think that rule, if any, and if it's implemented, would have on competition in the Marketplace business?

Yes. I mean I can weigh that a little bit, and Drew, obviously, follow up. I think, in general, the move to standardization can be very helpful to make the shopping experience easier for members, right, as they're trying to understand the different benefit profiles and compare options. And we all know that shopping for health insurance isn't the easiest thing. So driving to standards across sort of major criteria, we are big believers that, that sort of consumer experience needs to get better and better. It's something we're very focused on as well as sort of simplifying and understanding of what member benefits are. So there's obviously good benefit to driving broad standardization. Again, I actually think it's something that probably happens naturally regardless rather than necessarily needing to be done through regulation. The hard part about sort of forcing that is that these are complex plans with lots of different components. So the risk is if you're not thoughtful about how you enforce that, you actually sort of lose the nuance that might be important to members as they go through that shopping experience, and they end up on the other side without fully understanding a true apples-to-apples comparison. So again, I think, the spirit of it is good. The devil is definitely going to be in the details about how it gets implemented, and we're going to need to be really thoughtful to make sure that our members still have a very clear shopping experience and understand our benefits relative to others. So we're watching it closely, TBD, but there's some good logic to it. The implementation is going to be important.

Understood. So when we talked at the Investor Day, your guidance doesn't assume that you're going to recapture a big chunk of redetermined Medicaid members into your Marketplace products, but it seems like there are several tailwinds that should benefit you guys like the enhanced subsidies and the fact that a lot of these individuals were previously uninsured. Just wondering if you could elaborate a bit on the guidance and just trying to get a sense for are you guys being conservative by not projecting a big contribution. Or are there other reasons why you wouldn't expect a meaningful conversion of Medicaid members to Marketplace products?

Well, we're certainly prepared for the opportunity with being in 25 out of our 29 states, and it's not just capturing our redetermined members, but others. And there's -- there are a number of Medicaid players that don't participate in the Marketplace. So obviously, those would be up for grabs as well. I think there are so many variables here, and we first need to see the legislation that even prompts the return of redeterminations and then thinking about partial year and just we felt it was more appropriate to not put a slug of TBD into the budget into guidance. Plus, a number of these redetermined members, if they're redetermined because they now have employment and they now exceed the FPL level that previously qualified them for Medicaid. They may be in the employer group market. Some members, once they -- if they are pushed off of the Medicaid roles, unfortunately, they'll be uninsured and they may stay uninsured or if they fall below that 100% of FPL, at least today, in those non-expansion states, there is an option for that the coverage gap population. So but we're geared up. As Sarah mentioned at Investor Day, we met with all 29 of our health plans. Actually, we have 30 health plans because we have 2 in North Carolina, but in 29 states and so we met with all 30 of those management teams, and they're all on top of the opportunity and discussions with regulators, as Brent said at Investor Day, the regulators, they want their citizens to have coverage even if it's not directly through the Medicaid program. So we think they'll largely be collaborative in the effort. But I just thought it was the right call, given all those variables, not to bake something in, for instance, in the fourth quarter.

Got it. So maybe to transition to Medicare for a bit and to sort of bridge that gap here. You mentioned before that you've seen some good growth in the AEP and OEP so far. Specifically, you said very good shape on the Medicare Advantage business. Just wondering, does that -- or should we interpret that as being in line with some of your guidance before for mid-teens growth? Or are you perhaps dragging a little bit better?

Well, we'll see as we get through the first quarter, but we don't take using the words very good lightly. So obviously, those words were chosen specifically feeling good coming out of the annual enrollment period, and you're right with the start of the OEP. And so you might say, why are you guys growing mid-teens, why do you feel good about that. Well, if you think about what we've been able to do, so set aside, obviously, benefits drive consumer decision. But as Sarah mentioned, we expanded the portfolio geographically, both network as well. I think this is a year where, while last year, we took advantage of the combination of Centene, everything Centene had built in the footprint and then the WellCare Medicare capabilities. Every year that goes by, you further hone that and you get the benefits of that merger. This year, we did a lot of rebranding. Obviously, we have an awesome ambassador that you've seen in our commercials. We've sort of continued to work on the distribution channels, and there's been a lot of talk about the telemarketing and digital channels. We attacked that about 4 years ago pretty hard and built relationships with a whole portfolio of these teledigital and telemarketing enterprises. And so every year that goes by, you get better at that relationship and the data exchange and the handoffs and things like that. So that -- we get over half of our sales through those channels. But of course, it's across a diversified group. So it takes a little bit of time to develop that cadence over the last few years. And we find that they're more interested in new business than churning business. So I think there's a lot of execution that we can feel good about. I will say we did set out to expand margin this year, and that's reflected in that stable HBR expectation. And that will be an opportunity, as we mentioned at Investor Day, for '23, '24, '25 in terms of driving margin expansion. And obviously, that will have an impact on growth. So when I step back and think about, all right, we get the margin expansion opportunity '23 and beyond in Medicare Advantage. But looking back, these last 2 years, if you compound the 2 growth rates from 2021 and 2022, we will have grown this business organically almost 50%, maybe more than 50%, so say, plus or minus 5-0. And that's a heck of a base to then try to expand margin on as we look ahead. So there's a benefit to this outsized growth in '21 and '22 that we will try to take advantage of as we look at '23 and beyond.

Great. So one of your competitors actually spoke recently about the -- about competition in Medicare Advantage. Just curious if you could maybe talk about some of the pricing and competitive dynamics that you've seen in 2022 and perhaps how that compares to other years.

Yes. We've got competition every year. I've asked the specific question of our team. Sarah and I sort of kept up with them throughout an enrollment period and Brent's on top of it every day because that's sort of his passion. And while there's some new entrants, there always are. And so that didn't really seem to be as big of an industry headwind as maybe I've read about recently, but we've got to sort of respect and respond to competition as well. Look, we expect the Medicare Advantage market to be extremely competitive. And it is, it is. It's a very attractive market with a penetration opportunity. And once again, we'll have a much larger business upon which to expand margin as we get into '23 and beyond. Star scores we need some work on. And so that's you'll probably get to ask me what the CFO is worried about, and that's one area where you've got a 3-year cycle. So all the stuff that we're doing today and a lot of the technology that we're implementing and the process improvement that we're doing today and maybe we did the last quarter, and we're working on is for 3 years from now, revenue 3 years from now, 2025. So I would like to remind investors that while the -- the rating year 2022, so revenue year 2023 Star scores, we're pretty pleased with. Over 50% of our members should be in 4-star contracts, the rating year 2023, revenue year 2024 with the expectation that the disaster provisions will sunset as we look at, quite frankly, some of our own execution in the back half of 2020, the first half of '21, we expect to step back with those Star scores. I mentioned that on the Q3 call and then in the rating year 2024 Star scores, which we're working on right now, dates of service 2022. That will be 2025 revenue if you're tracking me here, this 3-year sort of window from execution to revenue in Stars, there'll be a meaningful recovery. And so we'll be hitting our stride with like what we're going to do this year that will impact those STARS scores. So something else I wanted to mention as we talk about how enthusiastic we are about the annual enrollment period to be balanced and tell you what some of the challenges are in Medicare that we will tackle and do better on.

That's super helpful. And you did beat me to the punch there because my next question was going to be what concerns you in Medicare. So thank you for that. So maybe switching to the value creation plan. Specifically, the PBM RFP, that's one of the big opportunities that you cited. Overall, the value creation plan is about $2 a share of earnings growth through 2024. And I think the SG&A and gross margin components are about $1.50 of that. So as we think of some of the different elements of that $1.50, how does the savings from pharmacy stack up relative to some of those other items?

Yes. So I can weigh in on that. And obviously, Drew has deep experience in the pharmacy business, so I know he'll have a perspective. We talked about this a bunch that there are a couple of different components to the savings that are driven out of pharmacy. Obviously, the RFP is a big one. But it is a little bit longer term in terms of the horizon of the value creation agenda. So the nearer-term goals, and they actually -- there are a number that were sort of stacked up in those guideposts that we gave out for 2022 because they are more operational a little bit more under the hood, but the kinds of things that we feel like it's important to expose so that folks understand that we are knocking those down as we go through the year that then accrue to financial value in '23 and beyond. So the first one is the platform consolidation. So we have multiple PBM platforms, getting those down to a single platform and then being able to focus that platform on the subset of operational capabilities that we want to keep in-house, which are those clinical and member and provider engagement capabilities that are the most important to differentiating the overall member experience and the outcomes and then being able to outsource the more sort of administrative commoditized functions to our current partner and obviously consolidating all of our business on single partner will then make that RFP process more seamless and allow us to bring the full sort of $35 billion of spend that we have against that leverage against that process. And then the other one is really streamlining our operating model and pharmacy. We've talked a bit about this, but pharmacy is one example, but there are a number of different examples across the company where our -- we see opportunity in what has been a very decentralized model mapping to our local approach to actually pull that into more of a center of excellence. And pharmacy is a great example because the sort of clinical knowledge that you need to have at a macro enterprise level is extensible across all markets and then allowing for market-based execution where there is a need to customize. So we see a bunch of SG&A opportunity, obviously, in that bucket. So SG&A from that perspective and the platform consolidation and gross margin in that RFP opportunity. And we really think that being able to take that out to bid with sort of the full power of our spend is going to have a significant contribution to that middle pillar.

Got it. So if I were to sort of oversimplify things here a little bit. I mean I think we're seeing main models really emerge in the health plan space right now, and it really seems to be focused on do you want to own care delivery assets or own care management services. And you guys obviously just closed Magellan. So you have a big behavioral health platform now. How would you characterize Centene's strategy? And can you talk a bit about why you think that is the best model and the best approach for you guys going forward?

Yes. So we are a little bit of a yes and I think, to that question in part because of the diversity of our portfolio. But let me start by saying that owning and being expert in care management is a core competency and always will be a core competency. That said, I think that you can think about fulfilling that core competency through sort of ownership of capabilities and assets or through real expertise in coming up with the right construct for members and then being able to plug in best-in-breed assets into an ecosystem and coordinate those effectively for members. And so I would say our focus has been a little bit more on the latter with the idea that, that allows us to stay innovative, right? So we can sort of plug and unplug the best partners as this industry disrupts in each service area. We're able to -- we talk a lot about the fact that the 29 plans that we have allow us to experiment and test. We constantly have pilots with start-ups that are out there that are thinking about different models. We're very rigorous about how we test those. So we don't want to bring anything to members that is unproven, but it does allow us to really stay current and a creative discipline in the organization of always thinking ahead about what is the absolute best service at the lowest cost that we can provide our members. And it's our job to think about what is that right programmatic framework and how do we seamlessly bring all of these partners together. So I would say that's sort of main focus. I will say, however, that in each market, there are -- it is a little bit case by case relative to care delivery assets. And so if you think about we own CMG down in Florida, they have been a phenomenal test bed for us on a number of fronts. They were taking risk in Medicaid decades ago. They've started taking risk across both lines of business. So they've been a great partner to sort of test things with, and it makes a lot of sense to own a provider in that market. Other markets, that's not the case. We've repositioned USMM as a partner in different markets. So relative to the care delivery assets, I think, you'll see us taking a case-by-case approach based on what in each market helps our core products and the health plans best.

Perfect. And that brings us right up to time. So with that, I'd like to say thank you to Sarah, Drew and Jen for your time this morning, and thank you to everyone on the other side for listening.

Great. Thanks so much, Cal.

Appreciate it.