Prompt:
Human: In the fourth quarter, we continue to effectively leverage the favorable market conditions and achieve strong quarterly results, which topped off a great year with record core income.
Before I provide details, let me offer a few highlights on both periods.
Our gross written premiums, excluding our captive business, grew by 16% in the fourth quarter and 10% for the full year.
Importantly, the overall P&C rate increase remained at 8% in the fourth quarter, consistent with the third quarter, leading to a full-year rate increase of 9%, which was well above long-run loss cost trends.
The all-in combined ratio was 92.9% for the quarter and 96.2% for the year, each representing the best ratios in five years.
Underlying combined ratio was 91.2% for the quarter and a record low of 91.4% for the full year.
All of this led to record core income of just over $1.1 billion for the year, up 50% in core earnings per share of $4.06 per share.
Drilling down on the details starting with the fourth quarter, our P&C operations produced core income of $353 million, or $1.29 per share.
Our Life & Group segment produced core income of $6 million, and our Corporate & Other segment produced a quarter loss of $94 million, mainly impacted by a non-economic charge related to asbestos and environmental.
As usual, Larry will provide more details on Life & Group and the Corporate segments.
In the fourth quarter, the all-in combined ratio was 92.9% percent, a half a point lower than the fourth quarter of 2020, and the lowest all-in quarterly combined ratio since 2016.
Pretax catastrophe losses in the quarter were $40 million or 2 points of the combined ratio, compared to $14 million in the prior year period.
P&C's underlying combined ratio of 91.2%, the 1.4 points improvement over last year's fourth quarter result.
The underlying loss ratio in the fourth quarter of 2021 was 60.1%, which is down 0.3 points compared to the fourth quarter of 2020.
Excluding the impacts of COVID in the prior year quarter, the underlying loss ratio improved by 0.8 points as we continue to recognize some of the margin built in the current accident year from the earned rate increases, as we did last quarter.
For P&C overall, prior period development was favorable by 0.3 points on the combined ratio.
Turning to production, gross written premium, excluding our captive business, grew by 16% in the fourth quarter, which was twice as high as the first half of the year.
Net written premium grew by 11% for the quarter, an increase of 6 points from the third quarter.
New business grew by 28% in the quarter, and the overall written rate increase was 8%, while earned rate in the quarter was 10%.
In addition, retention of 83% was higher than it's been all year.
The strong production results were broad-based across all the operating segments.
In terms of the business units, the all-in combined ratio for specialty was 89.9% and the underlying combined ratio was 90.1%, a half-point improvement compared to last year.
The underlying loss ratio improved by 0.9 points to 59.1%.
The expense ratio increased by 0.5 points to 30.9 from a one-time to up, and Larry will provide more detail in the discussion on expenses.
Gross written premium ex captives grew 15% in the fourth quarter, with 58% growth in new business.
This is the sixth consecutive quarter of double-digit growth in specialty.
We also achieved an overall rate increase of 11%, up 1 point from the third quarter.
We achieved higher rate in management liability, and our affinity programs, and stable rate in our healthcare business.
In addition, retention improved to 3 points to 83%.
Turning to commercial, the all-in combined ratio was 94.9% in the quarter, including 2.9 points of cat.
This was the lowest all-in combined ratio in four years.
The underlying combined ratio was 92.2% this quarter, which was the lowest on record, and was 1.4 points lower than the fourth quarter of 2020, and 2.4 points lower, excluding the COVID frequency impacts that lowered the loss ratio in 2020.
The underlying loss ratio of 61.4% improved by 0.3 points compared to the fourth quarter 2020, excluding the COVID frequency impacts.
As we referenced last quarter, the underlying loss ratio for commercial was higher in the latter half of 2021, resulting from mix change between Property & Casualty net earned premium due to the new property quota share treaty we purchased in June.
Expense ratio improved 2.3 points to 30.4% this quarter.
Commercial achieved that 19% growth in gross written premiums ex captives, with 16% growth in new business.
Rate at 5% was only slightly below the third quarter, and excluding work comp, the rate change was +7% in the quarter, which was consistent with the third quarter.
Retention was up 2 points to 84%, which was the highest of any quarter this year.
Retention were strong in all of our commercial business units, and middle-market retention improved to 85%, which is the highest level since prior to the pandemic.
Exposure change was +2% in commercial this quarter as a result of increases in payrolls, and sales volumes as the economy continues to improve.
This is the highest exposure increase since the first half of 2019.
For International, the all-in combined ratio was 94.8% in the quarter.
The underlying combined ratio improved by 4.2 points to another record low of 90.9% this quarter.
The expense ratio improved at 2.6 points to 32.4%, and the underlying loss ratio improved 1.6 points to 58.5%.
We are very pleased with the improvement in our international results, which highlights our disciplined approach to the reunderwriting and catastrophe exposure reduction we executed.
International achieved a 9% growth in gross written premium and new business growth of 15%.
Rates were up 13% this quarter, achieving double-digit rate for the seventh consecutive quarter and 9 of the last 10 quarters.
In addition, retention at 82% was the strongest quarterly retention in over three years.
Now, let me provide some perspectives on the full-year performance.
As I mentioned before, core income was a record for the year increasing 50%, so a little over $1.1 billion or $4.06 per share, and net income for the year was just over $1.2 billion or $4.41 per share.
This compares to $735 million and $690 million in 2020 respectively.
The increase from the prior year is attributed to significantly improved underlying underwriting gain, and while still substantial a lower level of cat loss compared to 2020, as well as higher net investment income driven by limited partnership returns.
The all-in combined ratio was 96.2%, with 5.1 points of catastrophe loss and 0.3 points of favorable prior period development.
This is the lowest calendar year combined ratio in five years, and a significant accomplishment considering the heavy levels of catastrophe lost again this year.
That losses were $397 million pre-tax in 2021, compared to $550 million last year.
But catastrophe losses in 2021 were actually higher than the $355 million catastrophe result in 2020 when you account for the COVID cat charge we incurred in 2020.
Our P&C underlying underwriting profit for the full year increased 31% to $667 million, and the underlying combined ratio improved to 1.7 points to 91.4%.
It's the fifth consecutive year of improvement in the underlying combined ratio.
The underlying loss ratio in 2021 was 60%, down 0.2 points compared to 2020.
Excluding the impacts of COVID in the prior year, the underlying loss ratio improved 5.6 points.
The expense ratio improved 1.5 points for the full year.
All three operating segments produced a strong underlying results in 2021.
For specialty, the underlying combined ratio of 89.7% was the best on record and 1.6 points lower in 2020.
Commercial produced an underlying combined ratio of 92.6% in 2021, which is also a record and 1.3 points lower than 2020.
Multiple years of reunderwriting initiatives in our international portfolio of paid off, an underlying combined ratio of 92.1% in 2021, three and a half points lower in 2020.
Turning to production for the full year, gross written premium growth ex captives was 10% this year.
We achieved strong new business growth of 19%, and a full year rate increase of 9%.
Retention was 82% for the full year.
Net written premium grew by 5% for the year, in terms of the wider spread between gross and net written premium for the year compared to 2020.
This is a function of the new property quota share treaty agreement, which was on a risk-attaching basis, causing the spread to widen.
He'll be transitioning with Larry through the first quarter, and we'll be handling the earnings calls after the first quarter.
We are excited to have Scott on board.
I will provide some additional information on the results, as Dino indicated.
Starting with core income for the fourth quarter, our P&C operations produced a core income of $353 million, as Dino indicated.
A key contributor to the strong result was our pre-tax underlying underwriting income of $167 million, a 22% increase from the fourth quarter of 2020.
In addition, our catastrophe losses were relatively modest at $40 million pre-tax, despite the fact that estimated cat losses for the industry were significantly above the 10 year median for fourth quarter events.
For full-year 2021, the record core income of $1.106 billion produced an ROE of 9.1% up substantially from 2020 6.1%.
Our Q4 expense ratio was a key component of our higher underlying underwriting profits.
For the fourth quarter of 2021.
The expense ratio was 30.8%, which was 1.2 points lower than the fourth quarter of 2020.
In specialty, the expense ratio increased slightly in the quarter by half a point compared to a year ago due to recognition of higher profit sharing in the quarter for one of our profitable programs.
In commercial, the expense ratio improved by 2.3 points this quarter, largely from growth in net earned premium.
International also showed significant year-over-year improvement of 2.6 points, driven by net earned premium growth and lower acquisition cost.
On an annual basis, the expense ratio was 31.1% in 2021, one and a half points lower than full year 2020.
We believe 31% is a reasonable run rate going forward as we continue to make investments in talent, technology, and analytics.
The expense ratio improved for each segment for specialty, improving 0.8 points from 31.3% to 30.5%.
Commercial improving almost 20.4 points from 33% in 2020 to 31.1% in 2021.
In international improving 20.4 points from 35.5% for 2020 to 33.1% for 2021.
Moving to a prior period development, for the fourth quarter, the overall Property & Casualty net prior period development impact on the combined ratios was 0.3 points favorable compared, to no impact in the prior year quarter.
Favorable development was driven by surety and especially segment from more recent action years, somewhat offset by management and professional liability.
In the commercial segment, stable development, and worker's compensation was offset by unfavorable development in auto and general liability.
In international, favor will develop in our commercial classes was offset by unfavorable development in our specialty classes.
In terms of our covered reserves, we made no changes to our overall COVID catastrophe loss estimates during the quarter.
We continually review our COVID reserves, and our previously established estimate of ultimate losses, ALAE remains appropriate.
The majority of the loss estimate remains in IBNR.
For the full year 2021 over, our development was favorable by three-tenths of a point, compared to 0.7 points favorable in 2020.
The pay to incurred ratio of 0.89 was elevated in Q4 relative to the first three quarters of 2021, due largely to pay out of catastrophes that occurred in prior quarters.
However, the 0.89 ratio remains at the lower end of our pre-pandemic range.
The ratio, which fluctuates quarter to quarter, has been consistently lower over the past two years, with several factors driving that, including our growth in underlying underwriting profits.
We have also had lower non-cash paid losses across several product lines, where we have taken significant underwriting actions such as our medical malpractice, and excess liability lines that we have previously discussed with you.
The slowdown in the court dockets has also contributed to the lower-paid losses.
On a full-year basis to pay to improve ratio was 0.70.
Moving to on our Property & Casualty segments, a corporate segment produced a core loss of $94 million in the fourth quarter, which compares to a $49 million core loss in the fourth quarter of 2020.
The loss for fourth quarter 2021 was predominantly driven by our annual asbestos and environmental reserve review completed during the quarter.
The results of the review included a non-economic after-tax charge of $48 million, driven by the strengthening of reserves associated with higher defense and indemnity cost on existing accounts.
In compares to last year's non-economic after-tax charge of $39 million.
From a core income perspective, the impact of the fourth quarter 2021 charge was a reduction of approximately $0.18 per share versus an approximate reduction of $0.14 per share impact in the fourth quarter of 2020.
Following this year's review, we have incurred cumulative losses of $3.4 billion, which is well within the $4 billion limit of our last portfolio transfer cover that we purchased in 2010.
Importantly, pay losses are at $2.2 billion.
You will recall from previous year's reviews, that there is a timing difference with respect to recognizing the benefit of the COVID relative to incurred losses, as we can only do so in proportion to the pay losses recovered under the treaty.
The loss recognized today will be recaptured over time through the amortization of a deferred accounting game, as paid losses ultimately catch up with incurred losses.
As of year in 2021, we have $429 million of deferred gain that will be recaptured over time.
In addition to the impact from our annual investment, asbestos and environmental reserve review, net investment income in the fourth quarter attributed to our core corporate segment is down $13 million after-tax on a year over year basis due to loss portfolio transfer agreement we entered into the end of last year related to legacy excess worker's comp reserves.
We also strengthen our legacy mass tort IBNR reserves this quarter by $16 million on an after-tax basis.
The Life & Group we had core income of $6 million for the fourth quarter of 2021, which is $20 million lower than last year's fourth quarter, as those results benefited from favorable commodity experience driven by the pandemic.
I wanted to comment on the approaching change in GAAP accounting methodology related to long-duration targeted improvements are LDTI, which will apply to our Life & Group businesses.
We will adopt this new accounting guidance effective January 1st, 2023, and we'll apply it as of January 1st, 2021.
We are working diligently on this implementation and intend to discuss the impacts on our first quarter call.
We do expect the impact of this change will be a material decrease in accumulated other comprehensive income, predominantly being driven by the difference between the expected interest rates from our investment strategy, and the liability discount rate assumptions required under this accounting change.
This accounting pronouncement applies only to GAAP basis financial statements and has no statutory accounting or cash flow impacts on the businesses.
As a result, this accounting change is due by us, and the industry as non-economic as none of the fundamentals of the businesses are changed by it.
Total pre-tax that investment income was $551 million in the fourth quarter, essentially the same as last year's fourth quarter.
The results included income of $108 million from our limited partnership, or LP and common stock portfolios as compared to $140 million on these investments for the prior year quarter.
The strong LP returns for the quarter across both.
the P&C, and Life & Group segments were significantly driven by private equity funds and reflected the lag reporting results from the third quarter.
As a reminder, our private equity funds, which comprise approximately two-thirds of our LP portfolio, primarily report results on a three-month lag basis, whereas our hedge funds are on a real-time basis.
Our fixed income portfolio continues to provide consistent net investment income stable relative to the last few quarters, and the prior year quarter.
While the current low-interest rate environment continues to be a headwind, the impact on our net investment income has been mitigated by our strong operating cash flows, which have been driven by our growth in premium volume, strong underwriting profitability, and the slower payout of losses that I previously discussed.
Pretax that investment income for the full year 2021 was $2.2 billion, compared to $1.9 billion for 2020.
The increase was largely driven by our LP and common stock investments, which had pre-tax returns of $402 million for 2021, compared to $144 million for 2020.
The returns from our fixed income securities portfolio was essentially the same for 2021 as it was for 2020, as our higher asset base offset the lower average portfolio year.
Our average book value has increased $1.4 billion from the year in 2020.
On a pre-tax effective income, yield decreased 20 basis points.
To give a sense of magnitude of the increase in our operating cash flow in the fourth quarter, operating cash flow was strong once again at $643 million, and then our full year basis increased approximately $860 million from full-year 2020 after adjusting for the payment to purchase our excess workers' comp LPT agreement.
From a balance sheet perspective, the unrealized gain possession of a fixed income portfolio was $4.4 billion at year-end, down from $4.8 billion at the end of the third quarter, reflecting the slightly higher interest rate environment.
Fixed income invested assets that support our P&C liabilities, and Life & Group liabilities had effective durations of 4.9 years and 9.2 two years, respectively, at year-end.
Our balance sheet continues to be very solid.
At year-end, shareholder's equity was $12.8 billion for $47.20 per share.
Shareholder's equity, excluding accumulated other comprehensive income, was $12.5 billion, or $46.02 per share, an increase of 10% from year in 2020 adjusting for dividends.
We have a conservative capital structure, with a level leverage ratio of 18%, and continue to maintain capital above target levels in support of our ratings.
We are still digesting the potential changes to the S&P Capital model.
Although, we do not currently see this fact changing, our course the final version of the model has not been determined, and S&P has determined the deadline for companies to provide feedback.
We continue to work with them to fully understand the potential impact of the proposed changes.
Finally, we are pleased to announce we are increasing our regular quarterly dividend 5% to $0.40 per share, which will be payable on March 10th to shareholders of record on February 22nd.
In addition to the increase in our regular quarterly dividend, we are declaring a special dividend of $2 per share, also payable on March 10 to shareholders of record on February 22nd.
Before opening the call to the Q&A session.
I'd like to offer a few comments about how we perceive the marketplace dynamics might evolve in 2022.
Most importantly, we see pricing remaining favorable with overall rate increases, persisting above the long-run loss cost trends for most of 2020 to in light of the oft-quoted headwinds like social inflation, and economic inflation, and elevated cat activity.
All of the headwinds are still present, there has been no significant change since last quarter.
The uncertainty these factors create a lot of cost trends have only been exacerbated by the Omicron variant, which has slowed the full return of court activity in docket logs to a pre-pandemic level.
Which is why we have continued to prudently recognize margin improvement in our current accident year loss ratio.
And although written rate increases in the last eight to ten quarters have allowed us to make up most of the lost ground from 2015, when the rate versus loss cost trend started to become a headwind.
It can easily become insufficient if loss cost trends increase further.
And this is why we are focused on pushing for more rate and where needed additional improvements in terms and conditions.
As I mentioned earlier, our pricing remains stable for the third quarter at 8 points, while retention increased 2 points.
So even though rates have moderated from their high watermark in the fourth quarter of 2020, we believe the pace down will be slower than the pace rates increased.
Finally, as seen by our increasing overall growth, as well as our growth in new business as the year progressed, we are bullish about our continued prospects at meaningful levels of quality business to our portfolio in 2022.
 Assistant:

Chosen response:
compname announces full year 2021 net income of $4.41 per share and record core income of $4.06 per share.
qtrly net catastrophe losses were $40 million pretax versus $14 million in prior year quarter.
book value per share at quarter end $47.20 at dec 31, 2021 versus $46.82 at dec 31, 2020.


Prompt:
Human: Centene anticipates that subsequent events and developments may cause its estimates to change.
Additionally, please mark your calendars for our upcoming 2022 guidance meeting to be held on December 10.
We will invite sell-side analysts to participate in person in New York, and ask others to participate virtually.
Brent Layton has a conflict that could not be avoided, but you can expect him to join us on future calls.
First, on the quarter, we were pleased with the results and the fact that the matrix was straightforward with minimum noise.
In the quarter, we generated revenue of $32.4 billion and HBR of 88.1% and adjusted earnings per share of $1.26.
Drew, provide additional context.
Overall, the numbers reflect a return to a normal utilization while still covering reasonable amounts of COVID costs which seem to have peaked in August.
Importantly, our performance provides a strong foundation for our value creation plan and we remain committed to our margin goals.
Further supporting our strategic progress during the quarter, we announced a series of organizational changes including a point Sarah London as Vice Chairman of the Board of Directors and Brent Layton as the company's President and Chief Operating Officer.
We do not plan to replace his position, as we continue to work on refreshing and streamline the Board to a size of 9 to 13 members.
Turning to the current landscape.
Overall, the portfolio is performing well.
We delivered a strong membership increase in Medicaid are positioned for continued growth in Medicare and we continue to stay the course in marketplace.
Sarah, will provide further detail.
We are working closely with states and the timing redetermination, which has so far been extended until January with the opportunity for additional extensions three months at a time.
In addition, we look forward to offer members who will no longer qualify for Medicaid, the opportunity to enroll in our marketplace for us.
We expect that advanced premium tax credits will keep costs in line for these members, and we value the opportunity support continuity of care and preserve, provide relationships which in the long-term leads to higher quality care, which is much more cost effective.
Looking ahead of 2022, there are several additional factors we continue to monitor and evaluate.
These include the pace of the RFP pipeline, ongoing growth in Medicare, the opportunity for improvement in marketplace license, as well as the COVID landscape overall.
We will provide full details on these factors and their potential impacts, as headwinds and tailwinds at our Investor Day in December.
In addition, we are committed to achieving an investment grade rating and a disciplined capital allocation framework that takes into consideration our priorities including investing in our business debt management and share repurchases.
Before I close, I would like to highlight the importance of vaccine mandates in stopping the transmission of COVID and protecting those who cannot yet safely receive inoculations, particularly the immunologically compromised, and young children for whom vaccine access is getting closer, but still pending.
Centene has been a leader on this critical issue mandating vaccinations, as an additional employment.
We also continue to support our members in assessing the vaccine to a national outreach and campaigns and creative participation such as the Pro Football Hall of Fame NESCO.
In closing, we are pleased with our third quarter results and has the same momentum across the enterprise.
We remain focused on executing across the value creation playbook, we have in place.
As always, we intend and continue to provide transparent updates, as we progress through our initiatives and I look forward to seeing many of you at our December Investor Day.
I'm going to provide highlights of our product line performance before touching on the early progress we are making around our value creation plan.
During the quarter we continue to build on our market leading position and are experiencing solid growth and good outcomes.
In Medicaid our business continues to perform well, membership increased to $14.8 million aided by continued suspension of redeterminations and the go-live of our business in North Carolina.
In marketplace with more than 90% of our membership receiving some form of subsidy we maintain our low income focus and our commitment to providing healthcare access and affordability to our members.
At the end of the third quarter our marketplace membership was $2.2 million, and we are pleased with the progress of our clinical initiatives as we head into the fourth quarter.
Looking ahead, our 2022 marketplace offerings reflect a diverse and evolving needs of our Ambetter consumers.
We are introducing a group of new products designed to optimize flexibility, access and affordability.
In addition, we plan to grow our coverage map by entering five new states with marketplace products.
As we continue to monitor policies and plans around the return of Medicaid redeterminations we believe that our enhanced footprints within both Medicaid and marketplace positions Centene well to support our members with options for coverage continuity.
In Medicare Advantage, we continue to see a compelling growth opportunity for the company.
We are expanding Centene's footprint to reach $48 million Medicare eligible adults across the country, which is more than 75% of eligible beneficiaries.
Today, Centene serves more than 1.2 million Medicare Advantage members across 33 states.
Beginning in 2022, the company expects to offer plans in 327 new counties, representing a 26% increase and three new states including Massachusetts, Nebraska and Oklahoma.
Now turning to our value creation plan.
As as we outlined this past June, we have embarked on our strategy to leverage Centene's size and scale and drive margin expansion through SG&A efficiencies, medical management initiatives and strategic capital deployment.
We are focused on generating sustained growth and margin expansion.
And although it is still very early seeing the enterprisewide commitment from the outset has given me confidence that we are on the right track to achieve our goal.
Brent, Drew and I are leading this effort and we believe, we now have an organizational structure in place to drive this forward across our business and functions.
On the SG&A front, we have identified opportunities across the company where we believe we can be more efficient.
This isn't about cost cutting, it's about positioning the company for long-term success.
For example, we piloted new technology within our call centers for use by Centene employees.
This technology trial yielded significant reductions in cycle times, and now will be rolled out enterprisewide.
Another opportunity we've mentioned is a value creation target is pharmacy.
As we alluded to in June, we are now taking steps toward consolidating down to a single PBM platform, and rationalizing those platforms we view as non-essential.
We began this work in Q3, and look forward to providing more detail around this overall program in December.
In addition, we are progressing on the review and potential sale of certain non-core assets, as part of our portfolio optimization process, which has taken on an increased focus as part of the value creation plan.
Again, we are in the very early stages, and as we continue to leverage our size and scale to our benefit these are just a few of the many levers we are pulling to achieve our adjusted net income margin target of at least 3.3%.
Let me remind you that as we progress through these and other initiatives, particularly in 2023 and 2024, we anticipate seeing a greater impact pushing us toward our goal.
Before handing the call over to Drew, let me provide a quick update on the Magellan transaction.
We are still awaiting one final regulatory approval in California, and continue to expect the deal to close by the end of 2021.
We continue to work with the regulators to move the transaction to completion.
Our Q3 consolidated HBR was 88.1%, right on track with our full year guidance.
Consistent with national data our COVID costs peaked in late August, drop throughout September and the sharp drop of COVID costs continues in October.
While the delta variant has a higher peak, as measured in authorizations compared to January 2021, it peaked and fell rather quickly.
With our diversified enterprise we were able to manage through this given our steady performance in Medicaid and Medicare.
Accordingly, we are maintaining the midpoint of our consolidated HBR range for 2021 just shrinking the width of the range since we're three quarters through the year.
Our adjusted SG&A expense ratio was 8.6% in the third quarter with higher short term variable incentive compensation costs compared to Q2 given the positive trajectory of the business.
While we are getting some SG&A leverage on our growth in 2021, there is a lot more to come over the next few years, as we execute on the value creation plan.
One item to point out from a mix standpoint circle, a well positioned ASC like hospital enterprise and England has an SG&A rate in the '30s on service fee revenue of approximately $1.4 billion.
This has an approximate 30 basis point mathematical impact on our consolidated SG&A rate for Q3 2021 and going forward.
Continuing on the highlights of the quarter, cash flow provided by operations in the third quarter was strong at $1.8 billion.
With respect to unregulated cash we had $2.7 billion at quarter end, which includes the $1.8 billion we borrowed to partially fund the Magellan transaction.
We expect to need approximately $2.3 billion of unregulated cash to close Magellan in the fourth quarter.
Debt at quarter end was $18.8 billion, our debt to cap ratio was 41.2% inclusive of Magellan financing and excluding our non-recourse debt.
Our medical claims liability totaled $14.1 billion at quarter end and represents 51 days in claims payable compared to 48 in Q2.
This three-day increase was driven by the timing of state-directed payments, claims payments and state fee schedule changes.
You will see a couple of items in our GAAP to adjusted earnings per share reconciliation, a $309 million one-time gain as a result of our acquisition of the remaining 60% of circle in early July 2021 and a write-down of our investment in RxAdvance of $229 million in the quarter, as we are simplifying our pharmacy operations, both of these are non-cash items.
Before we get to updated 2021 guidance I wanted to comment on the recently announced rating year 2022 star scores.
This will drive 2023 Medicare revenue.
We are certainly pleased with over 50% of membership in 4-star contracts and our first 5-star contract, rating year 2022 benefited from the continuation of disaster provisions due to COVID with an expectation of those provisions sunsetting and upon reviewing the in-process results of our quality program we expect rating year 2023 scores to drop, followed by a subsequent jump in rating year 2024 scores.
This essentially has the effect of providing some fungible investment dollars for calendar year 2023.
We've updated our full-year 2021 outlook including a narrowed adjusted earnings per share guidance range of $5.05 to $5.15.
This outlook incorporates revenues within a range of $125.2 billion to $126.4 billion increased by the inclusion of Circle and expected state-related pass through payments of $500 million.
It includes an expected HBR of 87.6% to 88% and then SG&A ratio of 8.2% to 8.6% 20 basis points higher than the prior guidance with the largest driver being the mix math on Circle as we just discussed.
While we still have a quarter to go to finish 2021, the strength of our diversified enterprise has enabled us to manage through the volatility of COVID, pent-up demand and resulting 2021 marketplace pressure.
This enterprise strength will only improve, as we execute on the value creation plan over the next few years.
With regards to 2022, consistent with our public comments in September, we continue to expect modest adjusted earnings per share growth next year.
We look forward to providing more details around 2022 expectations and going more in-depth into the long-term value creation drivers during our December 10 Investor Day.
 Assistant:

Chosen response:
centene q3 adjusted earnings per share $1.26.
q3 adjusted earnings per share $1.26.
q3 revenue rose 11 percent to $32.4 billion.
qtrly health benefits ratio of 88.1%.
september 30, 2021 managed care membership of 26.5 million, an increase of 1.4 million members, or 5%, compared to september 30, 2020.
sees 2021 total revenues $125.2 billion - $126.4 billion.
sees 2021 adjusted diluted earnings per share $5.05 - $5.15.
sees 2021 hbr of 87.6% - 88.0%.


Prompt:
Human: To access the call on the Internet, please log into the Capital One website at capitalone.com and follow the links from there.
In the fourth quarter, Capital One earned $2.6 billion or $5.35 per common share.
For the full year, Capital One earned $2.7 billion or $5.18 per share.
Included in earnings per share for the quarter were two small adjusting items, which are outlined on the slide.
Net of these adjusting items, earnings per share for the quarter was $5.29.
Full-year 2020 adjusted earnings per share was $5.79.
In addition to the adjusting items in the quarter, we recorded an equity investment gain of $60 million or $0.10 per share related to our equity stake in Snowflake.
For the full year, the investment gain was $535 million or around $0.89 per share.
Turning to Slide 4, I will cover the quarterly allowance moves in more detail.
In the fourth quarter, we released $593 million of allowance, primarily in our card business.
Economic assumptions underlying our allowance included unemployment of around 8% at the end of 2021 and the impacts of the $900 billion stimulus package passed in December.
The release was driven by the strong credit performance we have observed and by the new stimulus bill.
In our allowance, we continue to assume that the relationship between the economic metrics and credit quickly reverts to a historical norm, and we've added significant additional qualitative factors for COVID-related uncertainty.
In our commercial business, we charged off certain energy loans and released allowance for these specific reserves that were previously established for those loans.
Turning to Slide 5.
You can see the allowance coverage levels declined modestly from the prior quarters across our segments but remained well above pre-pandemic levels.
Our Domestic Card coverage is now at 10.8%, while our branded card portfolio coverage is 12.7%.
Recall that the difference between these metrics is driven by loss-sharing agreements in our partnership portfolios.
Coverage in our consumer and commercial businesses also remained elevated at 3.9% and 2.2%, respectively.
Moving to Slide 6, I'll discuss our liquidity position.
You can see our preliminary average liquidity coverage ratio during the fourth quarter was 145%, well above the 100% regulatory requirement.
Our liquidity reserves from cash, securities and Federal Home Loan Bank capacity declined slightly from the third quarter to end the year at approximately $144 billion, including about $41 billion in cash driven by continued strong deposits.
Turning to Slide 7.
You can see that our net interest margin increased 37 basis points quarter over quarter to 6.05%.
The increase was largely driven by higher card loan revenue margin as strong credit results led to lower suppression, the impact of third and fourth-quarter deposit pricing actions and a modest decline in our cash balance, which was partially offset by lower yields on cash and securities.
Lastly, turning to Slide 8.
I will cover our capital position.
Our Common Equity Tier 1 capital ratio was 13.7% at the end of the fourth quarter, up 70 basis points from the third quarter and 150 basis points higher than a year ago.
We continue to estimate that our CET1 capital need is around 11%, which includes a buffer over our capital requirements under the SCB framework of 10.1%.
As we close out 2020, we have approximately 270 basis points or around $8 billion of capital in excess of our CET1 target.
Following the latest stress test results released by the Federal Reserve last month and in light of the strong capital position I just described, we expect to restore our quarterly dividend back to $0.40 per share in the first quarter, pending board approval.
Our board of directors has also authorized the repurchase of up to $7.5 billion of the company's common stock inclusive of share repurchase capacity of up to approximately $500 million in the first quarter based on the Fed's current trailing four-quarter average earnings rule.
The timing and amount of stock repurchase activity will be informed by our outlook on the economy, as well as actual forecasted levels of capital, earnings and growth.
While he will be here through March 15, this will be Scott's last earnings call.
You've built strong relationships with our shareholders and across the investment community, and you've always brought their external perspectives to our work inside of Capital One.
You've been a key advisor and partner for me and for the board and a strong leader in our company.
I'm particularly grateful for the legacy you've built, transforming finance technology, strengthening processes and controls, building a great team of talented leaders, including your successor, Andrew Young.
We will miss you, and I'm sure you will continue to do great things.
With that, let me turn to our Domestic Card business.
Exceptional credit performance was the biggest driver of Domestic Card financial results in the quarter.
The Domestic Card charge-off rate for the quarter was 2.69%, a 163-basis-point improvement year over year and a 95-basis-point improvement from the sequential quarter.
The 30-plus delinquency rate at quarter end was 2.42%, 151 basis points better than the prior year.
The delinquency rate was up 21 basis points from the linked quarter, consistent with typical seasonal patterns.
Fourth-quarter provision for credit losses improved by $1.1 billion year over year, driven by the allowance release that Scott discussed and lower charge-offs.
Several factors are driving continued credit strength.
Consumers are behaving cautiously, spending less, saving more and paying down debt.
These behaviors have been amplified by the cumulative effect of unusually large government stimulus and widespread forbearance across the banking industry.
Our own long-standing resilience choices put us in a strong position going into the pandemic.
And our strategic investments in digital technology and transformation are paying off in enhanced capabilities and underwriting that are powering our performance and response to the pandemic.
Strikingly strong consumer credit has persisted throughout 2020, even after the expiration of several parts of the CARES Act.
Uncertainty about future credit trends remains high, especially in the context of an evolving pandemic that is difficult to predict.
As Scott discussed, that uncertainty informs our allowance for credit loss.
We believe that each incremental month of favorable credit reduces the cumulative losses through the downturn rather than just delaying the impact.
At the end of the fourth quarter, Domestic Card ending loan balances were down $20.1 billion or 17% year over year, driven by three factors: cautious consumer behavior, reduced spending and demand for new credit, and drove payment rates to historically high levels.
Our marketing pullbacks at the outset of the downturn put additional pressure on loan balances, and we moved a partnership portfolio to held-for-sale in the third quarter.
Excluding the impact of the move to held-for-sale, ending loans declined about 15%.
Fourth-quarter average loans declined 16% year over year.
On a linked quarter basis, the expected seasonal ramp drove ending loans up by about 3%.
Purchase volume continued to rebound from the sharp declines early in the pandemic.
For the full year, purchase volume was down 2% in 2020.
Fourth-quarter purchase volume was essentially flat compared to the prior-year quarter.
That compares to a year-over-year decline of about 30% in the first weeks of the pandemic.
Quarterly purchase volume increased 10% from the sequential quarter, consistent with the expected seasonality and the continued rebound.
Despite the rebound, purchase volume growth is still down compared to the double-digit growth we were seeing before the pandemic.
Fourth-quarter revenue declined 7% year over year as a result of the decrease in average loans, partially offset by higher revenue margin.
The revenue margin was up 121 basis points year over year to 16.91%, largely driven by two factors: strong credit drove lower revenue suppression; and year over year, net interchange revenue in the numerator of the margin is essentially flat, while average loan balances, the denominator of the margin calculation, are down 16%.
Noninterest expense was down $186 million or 8% from the fourth quarter of last year, largely driven by our choice to pull back on Domestic Card marketing when the pandemic hit.
Total company marketing trends are largely driven by Domestic Card.
Fourth-quarter marketing for the total company was down 21% year over year.
On a sequential quarter basis, total company marketing increased significantly in the fourth quarter.
Looking ahead, future marketing will be impacted by how things play out with the pandemic and the economy.
In the midst of the pandemic, we're finding opportunities, and we are leaning into them.
These opportunities are enhanced by our tech transformation.
The ultimate level of our 2021 marketing will depend on our continuing real-time assessment of the marketplace.
Slide 12 summarizes fourth-quarter results for our Consumer Banking business.
Driven by our auto business, ending loans increased 9% year over year.
Average loans grew 10% for the fourth quarter and 9% for the full year.
When the COVID downturn began, we tightened our underwriting box in auto to focus on the most resilient asset.
We believe that several factors drove our growth.
The auto market rebound has been stronger for larger franchise dealers, the part of the market where we're focused.
Our digital products and services drove growth in direct-to-consumer originations and growth with dealers who want to provide a low-touch car buying experience in response to social distancing.
And our dealer relationship strategy put us in a strong position to grow high-quality auto loans.
Fourth-quarter auto originations were down 2% year over year.
Competition picked up late in the third quarter and continued to increase in the fourth quarter.
Fourth-quarter ending deposits in the consumer bank were up $36.7 billion or 17% year over year, driven by the stimulus-driven surge in deposits in the second quarter.
Average deposits were up 19% for the fourth quarter and up 15% for the full year.
Our average deposit interest rate decreased 73 basis points year over year and 19 basis points from the linked quarter as we reduced deposit pricing in response to the market interest rate environment and competitive dynamics.
Fourth-quarter Consumer Banking revenue increased 18% from the prior-year quarter.
Annual revenue was up 4%.
Both increases were driven by growth in auto loans and retail deposits.
Annual growth was negatively impacted by differences in the timing of Federal Reserve rate cuts, preceding our deposit pricing reduction.
Noninterest expense in Consumer Banking was up 1% year over year.
Fourth-quarter provision for credit losses improved by $275 million year over year, driven by lower charge-offs and a modest allowance release in our auto business.
Fourth-quarter credit results in our auto business remain unusually strong even after seasonal linked quarter increases in 24 basis points in the auto charge-off rate and 102 basis points in the delinquency rate.
Year over year, the charge-off rate improved 143 basis points to 0.47% and the delinquency rate improved 210 basis points to 4.78%.
Strong auto credit is the result of several factors.
In addition to the same general drivers of Domestic Card credit strength, auto credit also benefited from very strong auction values.
And our auto forbearance is having a temporary positive impact, particularly on delinquency rates.
We've provided updated auto forbearance information on appendix Slide 18.
We expect auto credit metrics to increase from their unusually low levels as auction prices normalize and the temporary impacts of COVID forbearance play out.
Moving to Slide 13.
I'll discuss our Commercial Banking business.
Fourth-quarter ending loan balances were up 2% year over year, driven by growth in selected C&I and CRE specialties.
Average loans were also up 2% for the fourth quarter and 6% for the full year.
Quarterly average deposits increased 21% from the fourth quarter of 2019, and average -- annual average deposits grew 14% in 2020 as middle market customers continued to bolster their liquidity.
Fourth-quarter revenue was up 10% from the prior-year quarter.
Annual revenue was up 6% for the year.
Annual revenue growth from higher loan and deposit volumes and higher noninterest income was partially offset by lower net interest margin.
Noninterest expense for the quarter increased by 1% year over year.
Provision for credit losses improved by $90 million compared to the fourth quarter of 2019.
The allowance release that Scott discussed was partially offset by higher charge-offs largely related to our oil and gas portfolio.
Our oil and gas exposure declined year over year.
We've provided a breakout of our oil and gas portfolio composition and reserves on appendix Slide 19.
The Commercial Banking annualized charge-off rate for the quarter was 0.45%.
The criticized performing loan rate for the quarter increased compared to both the prior year and linked quarters to 9.5%, driven by downgrades in our commercial real estate portfolio.
The criticized nonperforming loan rate rose modestly from the prior-year quarter to 0.9%.
I'll close tonight with some thoughts on our results and how we're positioned for the future.
It's not a surprise that the pandemic shaped our 2020 results.
For the full year, total company loan balances declined 5%.
Annual revenue was essentially flat, including $535 million in gains on our Snowflake investment.
Noninterest expense was down 3%, with a decline in marketing and relatively flat operating expense.
Provision for credit losses increased by $4 billion.
And earnings per share rebounded from negative territory early in the year to $5.18 for the full year, down significantly from 2019.
Three key themes are evident in our 2020 results.
The pandemic pressured top-line loan balances and revenue, particularly in the first half of the year.
On the bottom line, strikingly strong credit resulted in a return to positive trajectory and record profitability in the second half of the year.
And our long-standing strategic choices put us in a strong position to respond to both the near-term challenges and the emerging opportunities.
Turning first to the near-term challenges.
Domestic Card loan balances declined sharply as cautious consumers, stimulus and widespread industry forbearance drove historically high payment rates and reduced demand.
Lower loan balances put pressure on revenue, efficiency and scale.
The operating efficiency ratio net of adjustments was 46%.
It was 46.9%, excluding Snowflake gains.
The flip side of this top-line pressure was exceptionally strong consumer credit performance, which drove two consecutive quarters of record earnings in the second half of 2020.
And strong second-half earnings, coupled with a smaller balance sheet, enabled us to increase our CET1 ratio to 13.7%.
Today, we've announced our intent to raise the quarterly dividend to its prior level of $0.40 per share subject to board approval, and we've also discussed our plan -- we also discussed our plan for up to $7.5 billion of share repurchases, which our board has already approved.
Throughout 2020, we have been well-served by the choices we made before the downturn began.
Since our founding days, we've hardwired resilience into the choices we've made on credit, capital and liquidity through good times and bad.
As a result, we entered the downturn with strong and resilient credit trends, a fortified balance sheet and deep experience in successfully navigating through prior periods of stress, including the Great Recession.
Our investments to transform our technology and how we work and our efforts to drive the company to digital are paying off.
Our transformation is powering our response to the downturn and putting us in a strong position for emerging opportunities as the pandemic plays out.
Pulling way up despite the pressures of the pandemic in the near term, nothing has changed about where we think our businesses are headed or the long-term strategic opportunities that are being created as sweeping digital change continues to transform banking.
As we manage through the near-term challenges, we also continue to focus on the things that create long-term value when delivered and sustained over time, continuing to transform our technology from the ground up, capitalizing on our transformation to drive innovation and growth, generating positive operating leverage and improving efficiency, and managing capital efficiently and effectively, including significant capital distribution.
It's been a pleasure to work with you over the years, and I wish you all the success as you go forward.
And now we'll start the Q&A session.
[Operator instructions] Keith, please start the Q&A.
 Assistant:

Chosen response:
compname reports fourth quarter 2020 net income of $2.6 billion, or $5.35 per share.
q4 adjusted earnings per share $5.29 excluding items.
q4 earnings per share $5.35.
in addition, capital one's board of directors has authorized a common stock repurchase program of up to $7.5 billion.
qtrly net interest margin of 6.05 percent.
common equity tier 1 capital ratio under basel iii standardized approach of 13.7 percent at december 31, 2020.


Prompt:
Human: We started this year off on a positive note, and we're excited about our momentum.
We took share in the contact lens market with strength in our silicone hydrogel portfolio led by MyDay and Biofinity.
Our myopia management portfolio continued to strengthen, including MiSight growing 82% to 3 million and CooperSurgical posted a very strong quarter with Paragard growing 16% and fertility 10%.
With both businesses outperforming, we delivered robust earnings and cash flow and expect continued strong performance moving forward.
Regarding the quarter and reporting all percentages on a constant currency basis, even with continuing COVID challenges, we posted consolidated revenues of 681 million with CooperVision revenues of 507 million, up 1%, and CooperSurgical revenues of 174 million, up 7%.
Non-GAAP earnings per share were $3.17.
For CooperVision, we saw strength in our daily silicone hydrogel portfolio and in our Biofinity franchise, along with general strength in torics and multifocals.
By geography, the Americas grew 6% led by strength in Biofinity and daily silicones, including nice growth from both Clariti and MyDay.
EMEA was down 4% as several countries continued managing through stringent COVID-related restrictions.
We did see growth in our daily silicones and Biofinity, though, so that bodes well for the future.
Asia Pac was up 3% led by strength in MyDay, especially in Japan.
Overall, sales exceeded expectations, and we're well positioned to continue growing and taking share with current and future product launches driving momentum.
Moving to some additional quarterly numbers.
Our silicone hydrogel dailies grew 8% with both MyDay and Clariti growing.
Particular strength was noted in MyDay and especially MyDay toric as we continue rolling that product out around the world.
Overall, dailies silicones are leading the market right now as health and wellness trends drive adoption, and we believe that will continue as there's still 2.4 billion in annual global sales of older hydrogels that need to be traded up.
Moving to our FRP portfolio.
Biofinity grew 6% with strike noted in Biofinity Energys and Biofinity toric multifocal.
I've mentioned these products before, but as a reminder, Energys is a truly unique and innovative lens that uses digital zone optics to help alleviate eye fatigue from excessive screen time.
In today's world, this product has the ability to perform well, and we're seeing that.
And our Biofinity toric multifocal was launched last year and is doing extremely well.
This is a made-to-order product and part of our extensive offering of unique products that differentiate our business.
Regarding product launches, we remain incredibly active.
We now have regulatory approval to launch Clariti in Japan, and we'll be doing that shortly.
And that's in addition to our ongoing successful launch of a second base curve for MyDay sphere in that market.
We're also continuing to launch and relaunch MyDay sphere and toric in many other markets around the world.
We're continuing the rollout of Biofinity toric multifocal, including launching in Europe shortly, and we're rolling out extended toric ranges for Clariti and Biofinity.
Additionally, our pipeline is strong, and we expect to remain very active going forward.
And lastly, we're incredibly busy with our myopia management portfolio of MiSight and Ortho-k lenses, which grew 46% for the quarter to 12 million.
Within this, MiSight grew 82% to 3 million and Ortho-k grew 37%, including 1 million of revenue from our acquisition of GP Specialists from August of last year.
With respect to MiSight, we now have over 30,000 kids around the world wearing the lens, including over 2,000 in the U.S., and our momentum is accelerating.
Our launch activity continues to go extremely well, and we expect similar success in new markets such as South Korea where we'll be launching in the next few months.
We've also made advancements in discussions with several large retailers and buying groups regarding MiSight and even moved into a test phase with one large retailer for roughly 70 stores.
We've also received several awards recently, including from Contact Lens Spectrum and Popular Science, and we're making advancements with multiple professional associations, helping to get myopia management recognize the standard of care.
And we made great progress with several universities, supporting the training and education of their optometry students as many schools are now adding myopia management training courses to their curriculums.
From a fitting perspective, if we look at U.S. data, the average age for a new MiSight wear remains 11 years old, and in a positive sign, it's trending younger.
Comparing this to the average age of a regular new contact lens wear of 17 shows we're bringing kids into contacts at a much younger age, which is fantastic.
This is all extremely exciting and supports our goal of reaching or exceeding 25 million of MiSight sales this fiscal year and over 50 million next year.
Moving to myopia management spectacles, I want to touch on our recent acquisition of SightGlass Vision and our partnership with EssilorLuxottica.
SightGlass Vision has developed innovative spectacles to reduce the progression of myopia in children, and our joint venture with EssilorLuxottica will leverage our shared expertise and global leadership in myopia management to accelerate the commercialization of these spectacles around the world.
We're now working through the typical regulatory requirements to form the JV, and we started developing launch plans in certain markets as we await the two-year clinical data, which will be out in the next couple of months.
The SightGlass technology is a great complement to our existing myopia management portfolio of contact lenses.
And working with a great partner like EssilorLuxottica will accelerate growth of the entire pediatric vision marketplace.
More to follow on this exciting opportunity as we continue making progress.
To wrap up on myopia management, we're at the forefront of an extremely exciting global pediatric opportunity.
This market is in its infancy, but the growth is exciting, and having the only FDA-approved product in MiSight has been a game-changer.
We're continuing to invest in sales and marketing programs and new launches, regulatory approvals and R&D to keep driving adoption on a global basis.
Proactively addressing the progression of myopia in pediatric patients offers immediate visual correction, along with many long-term health benefits, such as reducing the risk of serious eye disease later in life, such as retinal detachment, cataracts and glaucoma.
So, this effort is important, and it's why so many eye care professionals are getting involved and strongly supporting this activity.
To conclude on vision, let me add that the continuing rollout of vaccines will definitely benefit us given the consumer nature of our business.
In the near term, we expect better foot traffic in retail outlets, especially malls, along with increasing service capacity and better staffing attendance in optometry offices.
We also expect a strong back-to-school season as in-person learning returns around the world.
On a longer-term basis, our growth drivers remain strong and are likely improving with the macro trend of people spending more time on electronic devices.
It's estimated that roughly one-third of the world is currently myopic, and that's expected to increase to 50% by 2050.
Combining this trend with a continuing shift to daily silicones, geographic expansion and growth in torics and multifocals, our industry has a very bright future.
For CooperVision, our robust product portfolio, active product launch activity, momentum with myopia management and strong new fit data puts us in a great position for long-term sustainable growth.
We had a very strong quarter led by Paragard and fertility.
Overall revenues were 174 million, up a healthy 7% as markets rebounded and we took share.
I'm really excited about the state of CooperSurgical right now under the fantastic leadership of Holly and our team, and the future looks extremely bright.
Revenues grew 10% year over year to 70 million with strikes seen around the world and throughout our product portfolio.
We're taking share, and we're well positioned for future gains with improving traction in our key accounts.
One of the strengths of our fertility business is our broad product portfolio, which essentially covers the full spectrum of fertility clinics' needs outside of pharma products.
We've done a great job cross-selling and building relationships with the larger clinics around the world, and this has resulted in solid growth in areas ranging from consumable products like pipettes, media and RI Witness, our RFID lab-based management system that I discussed last quarter, to equipment such as incubators and workstations to genetic testing.
From a market perspective, COVID is still negatively impacting patient flow, and some important countries like India are still significantly hampered, but we're definitely seeing a pickup in activity.
In the meantime, we're taking market share, and we expect that to continue.
Overall, the fertility market has extremely positive long-term macro growth trends, and we're well positioned to capitalize on these trends to drive growth.
Within our office and surgical unit, we were up 5% led by Paragard's growth of 16%.
As the only 100% hormone-free IUD in the U.S. market, the product offers a fantastic, long-lasting birth control option that addresses the needs and interest of women looking for a healthy alternative.
We're very bullish on Paragard right now and believe we'll continue posting solid growth this year.
Elsewhere, we've seen deferred elective procedures steadily rescheduled, and our medical device sales have improved.
Several of our focus products grew in the quarter, including Endosee Advance, our direct visualization system for evaluation of the endometrial, INSORB, our patented surgical skin closure device, and our portfolio of uterine manipulators.
We made great progress over the past several years, and we have a lot of exciting things happening today.
We just completed an ESG materiality assessment to ensure we stay focused on the right areas, and my passion and commitment to this type of work remains very strong.
If anyone has any questions or interest in our ESG efforts, please reach out and let's connect.
Our fourth-quarter consolidated revenues increased 5% year over year, or 3% in constant currency to $681 million.
Consolidated gross margin increased 50 basis points year over year to 67.8%.
This improvement was driven by strength in CooperSurgical with higher-margin Paragard and fertility consumable products performing extremely well, along with favorable currency.
Moving forward, we're in excellent shape to continue delivering solid gross margins.
We completed our manufacturing restructuring activity in Q1, so we're well positioned for the current environment, along with being ready to efficiently ramp up quickly as demand continues to rebound.
We still have absorption-related inefficiencies, but we expect those to go away with sales growth.
Opex was up only 2.1% year over year as we kept expenses under control.
This resulted in consolidated operating margins of 26.9%, up nicely from 25% last year.
This performance exceeded expectations, and we expect to continue posting strong results, balancing expense control against investment opportunities that we see within our business, particularly within myopia management.
Interest expense for the quarter was $6.4 million driven by lower rates and lower average debt, and the effective tax rate was 11.3%.
Non-GAAP earnings per share was $3.17 with roughly 49.7 million average shares outstanding.
Free cash flow was solid at $92 million comprised of $148 million of operating cash flow, offset by $56 million of capex.
Net debt increased slightly to $1.7 billion, while our adjusted leverage ratio decreased to 2.1 times with improving EBITDA.
And finally, we repurchased $25 million worth of stock this past quarter at an average price of $357 per share.
In addition to our strong operational performance, we completed several tuck-in acquisitions recently.
During the quarter, we acquired Embryo Options to add a cryo storage software solution to our fertility portfolio, allowing clinics to automate the management of cryopreserved embryos, eggs and sperm.
The business did $4.7 million in sales last year and added $500,000 in revenue in our Q1.
Within CooperVision, as Al mentioned, we acquired the remaining 80% stake of SightGlass Vision in January for $41 million in cash plus aggregate potential earn-outs of up to $139 million based on revenue milestones and regulatory approvals.
After the close of the quarter, we entered into an agreement to form a 50-50 joint venture with EssilorLuxottica that we hope to close soon.
Also subsequent to quarter end, we closed two more tuck-in deals at CooperSurgical.
The first was the GA Medical, a pre-revenue manufacturer of an in-office water vapor ablation system that will launch shortly, and Safe Obstetric Systems, owner of Fetal Pillow, a balloon device used during c-sections to make the delivery less traumatic for the mother and baby.
The business did $4.4 million in sales last year.
And we repurchased -- I'm sorry, we purchased it for $52 million in cash plus a potential earn-out of up to $14 million.
This is directly tied to the tax item I discussed last quarter where CooperVision's intellectual property and related assets were transferred to the U.K. in November 2020.
For non-GAAP purposes, we adjusted for this activity and will continue doing so moving forward.
We continue to monitor and evaluate the scope, duration and impact of the ongoing COVID-19 pandemic on our operations and financial results.
While we still view resurgences as a significant risk factor, our visibility has improved.
So, we're now providing full-year 2021 guidance to provide a better feel for our expected upcoming performance, including our anticipated myopia management investments.
The guidance includes consolidated revenues of 2.8 to 2.845 billion, up 15 to 17%, or up 12 to 14% in constant currency, with CooperVision revenues of 2.090 to 2.120 billion, up 13 to 15%, or up 9 to 11% and in constant currency, and CooperSurgical revenues of 710 to 725 million, up 21 to 23%, or 19 to 22% in constant currency.
Non-GAAP earnings per share is expected to be in the range of $12.90 to $13.10.
Lastly, on free cash flow, we now expect to approach 500 million this year as operating cash flow improves, and capex reduces.
 Assistant:

Chosen response:
q1 non-gaap earnings per share $3.17.
sees fiscal 2021 non-gaap diluted earnings per share $12.90 - $13.10.


Prompt:
Human: I'm Rebecca Gardy, Vice President of Investor Relations.
A transcript of this earnings conference call will be available within 24 hours at investor.
These statements rely on assumptions and estimates, which could be inaccurate and are subject to risk.
On Slide 4, you will see today's agenda.
With us on the call today are Mark Clouse, Campbell's President and CEO and Chief Financial Officer, Mick Beekhuizen.
Mark will share his overall thoughts on our third quarter performance and our end market performance by division.
Mick will discuss the financial results of the quarter in more detail and review our guidance for the full year fiscal 2021.
Mark will then make some closing remarks before moving to an analyst Q&A.
Throughout the last year, we rallied through the pandemic and made decisions focused on prioritizing the safety and well-being of our employees while meeting the needs of our customers and consumers.
This approach has served us well over the past 15 months as we progressed our strategy in a volatile operating environment.
Our team pulled together, we executed with excellence, and we delivered strong results.
However, you will also have seen the continued strength in-market on market shares underpinned by healthy retention of new and younger households and the full recovery of distribution levels.
We did face a significant inflationary environment in the quarter as well as shorter-term increases in supply chain costs.
We anticipated the vast majority of these drivers, but in certain areas, the pressures intensified especially around inflation and some of the transitional costs moving out of the COVID-19 environment.
We are confident that we can address these issues and we have plans and pricing already in place as we exit the fiscal year and enter fiscal 2022.
Our confidence is further strengthened by our continued in-market momentum and the structural health of our business and brands.
I will first review our results and then share the context and actions we are taking to address these challenges and the improving trajectory we expect for the rest of the year as we head into fiscal 2022.
As we outlined during our second quarter earnings call, we expected this would be a challenging quarter and we recognize that there would be headwinds as we lap the peak of COVID-19 demand, manage the volatility of current market dynamics, and continue to navigate our own transformation agenda.
We delivered sales of $1.98 billion, in line with our expectations as we cycled a 17% organic growth comparison to a year ago.
Our sales results benefited from the continued momentum of our Snacks power brands and our U.S. retail products in our Meals & Beverage division as well as the early signs of recovery from our foodservice business.
Importantly, our brands remain strong with nearly three-quarters of our portfolio gaining or holding share in the quarter.
In our core categories, most of our brands grew at higher rates than pre-pandemic levels and our brand consumption on a two-year comparison grew 9%.
These results were driven by our decision to invest in supply and service while preserving brand investments with advertising and consumer promotion expense as a percentage of net sales comparable to last year.
Looking ahead, we expect organic sales in the fourth quarter to decline versus last year as the COVID-19 lap continues.
We do expect a sequential improvement from the third quarter as the comparison to prior year eases a bit and our foodservice business continues to recover.
From a margin perspective, our decline versus prior year excluding the net benefit from mark-to-market adjustments on outstanding commodity hedges stemmed from certain headwinds, which are grouped into three main bucket.
First, external factors were larger than we had anticipated.
We, like others, face pronounced inflation related primarily to steeply higher transportation costs, some of which was an outcome from the strain of the Texas winter storms on supply chain logistics and the closure of our Paris, Texas facility for two weeks.
These factors partially offset by our productivity improvements reflect about a third of the gross margin erosion in the third quarter and will continue into fiscal 2022.
We currently expect the benefit from pricing actions we have put in place across our portfolio and our strong productivity plans to mitigate this inflation pressure in fiscal 2022 while we remain vigilant monitoring the ongoing dynamic nature of the current environment.
The second bucket I would characterize as transitional items that we are working our way through as we move out of the COVID-19 environment and fully recover on supply.
This includes areas like lower fixed cost leverage as we lap the year ago elevated levels of demand, sustain labor challenges and added investment in higher cost co-manufacturers to recover fully on supply.
We had factored these pressures into our plans, but in some cases, they were more significant than anticipated as either the time to recover or the magnitude of the impact were greater than expected.
These transitional costs reflect about half of our gross margin erosion in the quarter and while we expect the impact of these costs to moderate into the fourth quarter, they will continue to add pressure as we fully cycle the COVID-19 environment.
The third bucket is execution related to the high degree of transformation we have under way in our Snacks division.
Throughout my time at Campbell, we have taken significant steps to improve our execution as we have steadily advanced our agenda.
However, this quarter, the convergence of multiple transformation efforts including systems, logistics, and capacity all put additional executional pressure on the business in a tough third quarter environment.
We have already taken decisive actions to allocate more resources and better phase projects to address these issues.
We do not expect these elements will have a material impact on the fourth quarter and more importantly, they do not alter our long-term expectations for the Snacks margin expansion opportunity we highlighted last quarter and will share in greater detail during our Investor Day later this year.
Although all of these headwinds put pressure on our near-end performance, they do not represent structural issues and we remain confident in our strategic plans.
As a result of the third quarter pressures on margin, adjusted earnings per share came in lower than we expected at $0.57.
As Mick will discuss in more depth, we are updating our guidance accordingly.
Turning to our division performance, let me begin with Meals & Beverages.
Our net sales decline of 14% and in-market performance of minus 24% in the third quarter reflect lapping the historically high consumption levels that we experienced during the onset of the pandemic last year.
On a two-year basis, we had net sales momentum in key categories with share gains over prior year in condensed soups, ready-to-serve soups, Swanson broth, Prego, and Pacific Foods.
Compared to the third quarter of fiscal 2019, we delivered strong consumption growth of 9% against organic net sales growth of 3% with the gap driven by our foodservice business, which continued to recover as governments gradually eased on-site dining restrictions in some markets.
Overall, as we have invested in our service levels, they are stabilizing and we are now in a better position on supply across the division.
We have restored the shelf in the majority of our categories and our share of total points of distribution is consistent with pre-COVID-19 levels across U.S. soup, Prego, and V8 beverages.
In-market consumption for soup was strong versus two years ago growing at 9% and gaining dollar share.
We delivered record share growth in U.S. soup of nearly 2 points driven by condensed soups, Swanson broth, Chunky, and Pacific Foods.
We also made significant progress on the retention of new households since the onset of the pandemic.
Soup gained dollar share in all three categories with millennials driving strong growth in condensed cooking, broth, and ready-to-serve soup.
We are confident that the brand investments made are working as buyers and buy rate remain elevated compared to pre-COVID-19 levels.
We continue to be encouraged by the sustainment of quick scratch cooking behaviors and in-home eating occasions even as COVID-19 restrictions are lifted.
In fact, condensed delivered its ninth consecutive quarter of dollar share gains growing share nearly 3 points.
Notably with millennial consumers, condensed grew share by nearly 4 points.
Within ready-to-serve, Chunky delivered double-digit in-market consumption growth on a two-year basis.
Pacific Foods continued to be a powerful growth engine within our soup portfolio with in-market consumption growth of nearly 30% on a two-year basis and continued share gains versus prior year, marking its sixth consecutive quarter of share improvement.
On Swanson broth, as we invested to restore distribution and service, we increased share by nearly 2 points versus prior year.
On a two-year basis, we grew household penetration by more than a point and saw higher repeat rates on our brand.
Prego delivered its 24th consecutive month with the Number 1 share position in the Italian sauce category and achieved its strongest share gain in over three years.
Compared to pre-pandemic levels, we are seeing strong repeat rates and buyer retention on this brand as well as strong resonance with millennial consumers.
Overall, the Meals & Beverages division delivered a strong in-market quarter against difficult comparisons with share gains in key categories especially among younger consumers, TPD [Phonetic] gains and improved service levels continuing to support our confidence that it will emerge from the pandemic in a stronger position.
Let's now turn to Snacks where our power brands continue to fuel performance with in-market consumption growth of 14% on a two-year basis despite being down 5% year-over-year.
On a two-year basis, total Snacks consumption grew 10% against organic net sales growth of 3% with the gap driven by the decline in our partner brands and continued pressure in the convenience channels.
We grew share on many of our power brands over prior year and repeat rates on seven of nine power brands are ahead of pre-COVID-19 levels.
We delivered our fifth consecutive quarter of share growth on Late July Snacks, Kettle Brand potato chips, Snack Factory Pretzel Crisps, and Lance sandwich crackers.
On a two-year comparison within the power brands, our salty snack brands grew in-market consumption nearly 20% and increased household penetration across the majority of these brands.
Our Pepperidge Farm Farmhouse products also continued to deliver exceptional results with in-market consumption growth of 9% on top of the prior year increase.
Turning to Goldfish, we returned to share growth, increasing by more than 1 point compared to prior year.
This was in part due to an improved performance on multi-packs, continued momentum on Flavor Blasted Goldfish, and new broadened digital activation.
We also exited the quarter with early momentum from the launch of limited edition Frank's RedHot Goldfish.
Turning to Slide 12, as Mark just shared, our third quarter results were impacted by last year's demand surge related to the start of the COVID-19 pandemic as well as the gross margin impact due to pronounced inflation, our transition out of the COVID-19 environment, and some executional pressure as we continued to advance our transformation agenda primarily in our Snacks division.
During the quarter, organic net sales declined 12% and adjusted EBIT decreased 27% driven by lower sales volume and a lower adjusted gross margin partially offset by lower marketing and selling expenses.
Adjusted earnings per share from continuing operations decreased 31% to $0.57 per share primarily reflecting the decrease in adjusted EBIT.
Year-to-date, our organic net sales increased 1% driven by lower promotional spending in both divisions.
Meals & Beverages increased 1% mainly driven by growth in U.S. soup and V8 beverage offset by declines in foodservice.
In Snacks, organic net sales were flat as declines in Lance sandwich crackers and in partner brands within the Snyder's-Lance portfolio were offset by gains in our salty snacks portfolio and our fresh bakery products.
Year-to-date adjusted EBIT of $1.14 billion was comparable to prior year as a lower adjusted gross margin and increased adjusted administrative expenses were offset by lower adjusted marketing and selling expenses, higher adjusted other income and sales volume gains.
Within marketing and selling expenses, lower selling and other marketing costs were partially offset by a 3% increase in advertising and consumer promotion expense or A&C.
Year-to-date, our adjusted EBIT margin was 17.2% compared to 17.3% in the prior year.
Adjusted earnings per share from continuing operations increased 4% to $2.43 per share primarily reflecting lower adjusted net interest expense.
I'll review in the next couple of slides our third quarter results in more detail and provide revised guidance for the remainder of fiscal 2021 reflecting these results and our expectation for sustained inflationary pressures through the remainder of the year.
Our organic net sales decreased 12% during the quarter lapping the prior year organic net sales increase of 17% when the demand for at-home consumption surged at the onset of the COVID-19 pandemic.
Compared to the third quarter of fiscal 2019, organic net sales grew 3%.
Our adjusted gross margin decreased by 290 basis points in the third quarter from 34.7% to 31.8%.
On the slide, you'll see the various items bridging the year-over-year change in our overall gross margin.
Now let me tie it back to Mark's earlier comments, which excludes the 250 basis points net benefit from mark-to-market adjustments on outstanding commodity hedges included in inflation and other in the bridge.
First, external factors led to about one-third of the year-over-year decrease in margin.
These external factors included approximately 290 basis points of inflation and some temporary disruption from the Texas storm back in February, both reflected in inflation and other in the bridge.
Cost inflation was approximately 4% on a rate basis, which was higher than anticipated largely driven by freight rates.
Partially offsetting these headwinds was our ongoing supply chain productivity program, which contributed 150 basis points to gross margin and included initiatives among others within procurement and logistics optimization.
Second, headwinds related to our transition into the post COVID-19 operating environment represented about half of the gross margin decline as we transitioned from last year's demand surge, mix, and operating leverage.
Each had an approximate 110 basis point negative impact on gross margin in the third quarter.
Net pricing drove a positive 30 basis point improvement.
The remainder were incremental other supply chain costs within inflation and other such as increased costs associated with co-manufacturing to support supply and distribution recovery.
Third, executional challenges, which represented the remainder of the decline were mostly incremental other supply chain costs within inflation and other.
These costs were mainly related to the transformation of our Snacks division and were partially offset by our cost savings program, which added 60 basis points to our gross margin.
Moving on to other operating items, marketing and selling expenses decreased $37 million or 15% in the quarter.
This decrease was driven by lower A&C, lower incentive compensation, lower selling expenses and the benefits of cost savings initiatives.
Overall, our marketing and selling expenses represented 10.2% of net sales during the quarter compared to 10.7% last year.
As a percentage of net sales, total A&C was comparable to the prior year quarter.
Adjusted administrative expenses decreased $2 million or 1% driven primarily by lower incentive compensation partially offset by higher benefit related costs.
Adjusted administrative expenses represented 7.2% of [Technical Issues] an 80 basis point increase compared to last year.
Moving to the next slide, we have continued to successfully deliver against our multi-year enterprise cost savings initiatives.
This quarter, we achieved $20 million in incremental year-over-year savings resulting in year-to-date savings of $55 million.
We expect an additional $20 million in the fourth quarter to deliver an aggregate $75 million of cost savings for the fiscal year with the majority of the savings from the Snyder's-Lance integration.
We remain on track to deliver our cumulative savings target of $850 million by the end of fiscal 2022.
On Slide 17, we are providing a total company adjusted EBIT bridge to summarize the key drivers of performance this quarter.
As previously mentioned, adjusted EBIT declined by 27%.
The previously mentioned net sales decline resulted in a $88 million dollar EBIT headwind while the 290 basis point gross margin decline resulted in a $58 million EBIT headwind.
Both were partially offset by lower marketing and selling expenses.
Overall, our adjusted EBIT margin decreased year-over-year by 290 basis points to 14.3%.
The following chart breaks down our adjusted earnings per share growth between our operating performance and below the line items.
Adjusted earnings per share decreased $0.26 from $0.83 in the prior year quarter to $0.57 per share due to the negative $0.26 impact of adjusted EBIT as slightly lower interest expense was offset by slightly higher adjusted taxes.
In Meals & Beverages, organic net sales decreased 15% to $1 billion primarily due to declines across U.S. retail products, including U.S. soup and Prego pasta sauces as well as declines in Canada and foodservice.
Sales of U.S. soup decreased 21% due to volume declines in condensed soup, ready-to-serve soups, and broth lapping a 35% increase in the prior year quarter.
For Meals & Beverages, volume decreased in U.S. retail driven by lapping increased demand of food purchases for at-home consumption at the onset of the COVID-19 pandemic in the prior year quarter when organic net sales increased 21%.
Compared to the third quarter of fiscal 2019, organic net sales in Meals & Beverages grew 3%.
Operating earnings for Meals & Beverages decreased 35% to $179 million.
The decrease was primarily due to sales following [Phonetic] declines and a lower gross margin partially offset by lower marketing and selling expenses.
The lower gross margin resulted from higher cost inflation including higher freight costs, other supply chain costs such as external sourcing and the weather-related disruption at the beginning of the quarter, reduced operating leverage and unfavorable product mix partially offset by the benefits of supply chain productivity improvements.
Overall within our Meals & Beverages division, the operating margin decreased year-over-year by 550 basis points to 17.2%.
Within Snacks, organic net sales decreased 8% driven by volume declines within our salty snacks portfolio including Pop Secret popcorn, Cape Cod potato chips, and Snyder's of Hanover pretzels as well as in Lance sandwich crackers, partner brands and fresh bakery.
Volume declines were partially driven by lapping increased demand of food purchases for at-home consumption at the onset of the COVID-19 pandemic in the prior year quarter when organic net sales increased 12%.
Compared to the third quarter of fiscal 2019, Snacks organic net sales grew 3%.
Operating earnings for Snacks decreased 29% for the quarter driven by a lower gross margin and sales volume declines partially offset by lower marketing and selling expenses and lower administrative expenses.
The lower gross margin resulted from higher cost inflation and other supply chain costs, reduced operating leverage, and unfavorable product mix partially offset by the benefits of supply chain productivity improvements.
Overall within our Snacks division, the operating margin decreased year-over-year by 350 basis points to 11.5%.
I'll now turn to our cash flow and liquidity.
Fiscal year-to-date cash flow from operations decreased from $1.1 billion in the prior year to $881 million primarily due to changes in working capital, principally from lower accrued liabilities and lapping significant benefits in accounts payable in the prior year.
Our year-to-date cash for investing activities were largely reflective of the cash outlay for capital expenditures of $190 million, which was $30 million lower than the prior year primarily driven by discontinued operations.
Our year-to-date cash outflows for financing activities were $1.4 billion, reflecting cash outlays due to dividends paid of $327 million.
Additionally, we reduced our debt by $1 billion [Phonetic].
We ended the quarter with cash and cash equivalents of $209 million.
The company's March 2017 strategic share repurchase program remains suspended.
In the fourth quarter, we expect more pronounced inflationary pressures to negatively impact margins while pricing actions take hold in the beginning of fiscal 2022.
In addition, although we expect to make progress on the transition into the post COVID-19 environment, it will remain a headwind from a margin perspective.
While we expect gross margin headwinds to persist through the fourth quarter, we expect a sequential improvement of our EBIT margin relative to prior year due to easier comparables, improved execution, and normalizing marketing investments.
We expect net sales for fiscal 2021 to decline 3.5% to 3%.
Excluding the impact from the 53rd week in fiscal 2020 and the impact of the European chips and Plum divestitures, we expect organic net sales to decline 1.2% to minus 0.7%.
To put our fiscal 2021 organic net sales guidance into perspective at the midpoint of our guidance range, we expect fiscal 2021 to be 6% above fiscal 2019.
We expect adjusted EBIT of minus 5% to minus 4%.
We expect net interest expense of $210 [Phonetic] million to $215 [Phonetic] million and an adjusted effective tax rate of approximately 24%.
As a result, we expect adjusted earnings per share of $2.90 to $2.93 per share, representing a year-over-year decline of minus 2% to minus 1% to the prior year.
The earnings per share impact of the 53rd week in fiscal 2020 was estimated to be $0.04 per share.
To put our fiscal 2021 earnings per share guidance into perspective at the midpoint of our guidance range, we expect fiscal 2021 to be in line with fiscal 2020 considering the impact of the 53rd week and 27% above fiscal 2019 adjusted EPS.
Regarding capital expenditures, we now expect to spend approximately $300 million for the full year, which is below previous expectations driven by the impact from COVID-19 on the operating environment.
In closing, I want to reiterate Mark's conviction in the long-term performance of Campbell.
We are working diligently to deliver the results we know we are capable of delivering and I remain optimistic about our strategy, our team, and the underlying strength of our brands.
In closing, we expected this to be a challenging quarter for the company, but it was made even tougher by several additional factors.
However, we do not see these challenges as structural nor do they temper in any way our confidence in the transformation we are implementing at Campbell.
We knew this would not be simple and we remain confident in how we are responding and the actions already under way.
Finally, and most importantly for the long-term health of our business is the progress we are making on our categories and brands and the overwhelmingly positive indicators that we are seeing from consumers and customers.
We will address the inflation and execution and as we continue to demonstrate sustainable growth, we will unlock Campbell's full potential.
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Chosen response:
compname says q3 adjusted earnings per share $0.57 from continuing operations excluding items.
q3 adjusted earnings per share $0.57 from continuing operations excluding items.
updates full-year fiscal 2021 guidance.
qtrly reported net sales $1.98 billion versus $2.24 billion.
sees fy 2021 net sales down 3.5% to down 3.0%.
qtrly organic net sales decreased 12% from prior year.
sees fy 2021 adjusted earnings per share $2.90 to $2.93.
authorized anti-dilutive share repurchase program of up to $250 million to offset dilution from shares issued under stock compensation programs.
remains on track to deliver annualized savings of $850 million by end of fiscal 2022.
in q4, expects continued margin pressure related to transition out of covid-19 environment.