Company Reports

After several years of elevated utilization that has not been fully offset by rate increases yet, covered MCO shares have risen about 35% on average since our last managed care industry report in September 2025, in anticipation of rising profits in at-risk medical insurance plans.

Centene reported second-quarter results that included 4% premium revenue growth, a medical cost ratio improvement of over 300 basis points, and adjusted EPS of $2.51, well above FactSet consensus of $1.08 and the loss generated in the prior-year period. Management also raised its 2026 outlook.

Centene aims to be a top provider of government-sponsored health plans. Although it has grown at a solid clip organically, it also has made significant acquisitions—most notably WellCare in Medicare Advantage plans in 2020—to meet that goal. Technology investments to boost efficiency have also helped Centene prosper in this relatively low-margin market.

Centene started 2026 stronger than anticipated, including adjusted EPS of $3.37, which was $0.50 better than management's previous view and higher than its prior full-year expectation of at least $3. Management raised 2026 adjusted EPS guidance to greater than $3.40 on this development

After hours on April 6, the Centers for Medicare & Medicaid Services released its final rate notice for the 2027 Medicare Advantage program, which included a 2.5% overall increase, compared with a flat initial rate notice in late January.

Centene aims to be a top provider of government-sponsored health plans. Although it has grown at a solid clip organically, it also has made significant acquisitions—most notably WellCare in Medicare Advantage plans in 2020—to meet that goal. Technology investments to boost efficiency have also helped Centene prosper in this relatively low-margin market.

Centene ended 2025 about as expected from a profit perspective, including a loss of just over $1 per share, which contributed to a 71% year over year decline in adjusted earnings per share to $2.08 in 2025, which slightly exceeded the consensus of $2.04. Management targets about $3 of EPS for 2026.

After hours on Jan. 26, the Centers for Medicare & Medicaid Services released its initial rate notice for the 2027 Medicare Advantage program, which included a flat overall rate increase rather than the 5% increase in 2026. Most of that differential is related to new risk assessment-related changes.

On Nov. 9, the US Senate agreed to terms that would reopen the US federal government after a record shutdown period. However, the solution did not include a plan to extend federal subsidies on the individual exchanges.

Centene reported quarterly results that included a nearly 70% drop in adjusted EPS despite 22% revenue growth, due to margin headwinds in Medicaid, individual plans, and Medicare. However, the firm increased its 2025 profit outlook slightly, boosting shares about 10% in early trading Oct. 29.

After withdrawing 2025 guidance in early July due primarily to challenges in the individual exchange market, Centene turned in a second-quarter loss after its medical loss ratio ballooned to 93%, despite 18% growth in premium and service revenue. Guidance for 2025 now includes $1.75 of adjusted EPS.

Centene aims to be a top provider of government-sponsored health plans. Although it has grown at a solid clip organically, it also has made significant acquisitions—most notably WellCare in Medicare Advantage plans in 2020—to meet that goal. Technology investments to boost efficiency have also helped Centene prosper in this relatively low-margin market.

The House passed the Senate's version of the budget reconciliation bill, which includes expected Medicaid spending reductions that that could cut 12 million people from Medicaid (low income) membership by 2034, according to Congressional Budget Office estimates.

Centene aims to be a top provider of government-sponsored health plans. Although it has grown at a solid clip organically, it also has made significant acquisitions—most notably WellCare in Medicare Advantage plans in 2020—to meet that goal. Technology investments to boost efficiency have also helped Centene prosper in this relatively low-margin market.

Centene withdrew its guidance primarily due to challenges in its individual plans, including elevated medical utilization that is also plaguing the Medicaid market. Management quantified the known EPS risks in 72% of its individual members at $2.75 of its withdrawn 2025 view of at least $7.25.

Centene aims to be a top provider of government-sponsored health plans. Although it has grown at a solid clip organically, it also has made significant acquisitions—most notably WellCare in Medicare Advantage plans in 2020—to meet that goal. Technology investments to boost efficiency have also helped Centene prosper in this relatively low-margin market.

In a 50-50 vote that was broken by Vice President JD Vance, Senate Republicans advanced their budget reconciliation bill that, according to estimates from the Congressional Budget Office, would cut 12 million people from Medicaid rolls by 2034.

On May 11 and 12, Republicans revealed updated regulatory stances that included plans to lower drug prices and pull back on Medicaid spending by about $715 billion over the next 10 years versus $880 billion expected previously.

In the first quarter, Centene benefited from strong demand in its higher-margin individual exchange plans, which helped boost premium and service revenue by 17% and adjusted EPS by 28% year over year. However, the company merely maintained its 2025 outlook despite this strong performance.

Over the past week, tariff-related news has created significant volatility in the US market, including in medical services-related firms like managed care organizations, caregivers, and medical suppliers.