#United States #St. Louis #Centene Corporation #Health Insurance #Earnings Guidance

Centene Corporation Withdraws 2025 Earnings Guidance

On July 1, 2025, Centene Corporation (NYSE: CNC) announced it is retracting its earlier guidance for 2025 regarding GAAP and adjusted diluted earnings per share (EPS), indicating significant market challenges that necessitated this decision. The company's preliminary assessment of recent Marketplace data revealed trends that diverged substantially from its previous assumptions, prompting adjustments to its financial forecasts.

Centene recently obtained its first assessment of the 2025 Health Insurance Marketplace data from Wakely, a recognized independent actuarial firm. This data set encompasses 22 of Centene's 29 states within the Marketplace, representing roughly 72% of its overall Marketplace membership. The findings painted a troubling picture—overall market growth in these states was less than anticipated, coupled with a markedly higher aggregate morbidity that contradicted Centene’s earlier risk adjustment revenue projections.

In light of this analysis, Centene estimates a reduction of approximately $1.8 billion in net risk adjustment revenue transfer, corresponding to about a $2.75 impact on adjusted diluted EPS for the year. This figure accounts for projected data across the remaining months of 2025 and is derived from claims data available up to April 30, as well as current membership and morbidity trend estimates.

Furthermore, although there is a lack of specific information for the remaining seven Marketplace states, it is projected that similar morbidity trends will likely lead to additional downward adjustments in net risk revenues—again influencing future earnings expectations.

Future Market Strategies

Looking ahead to the 2026 Marketplace plan year, Centene has already initiated the re-filing of Marketplace rates to account for a higher baseline morbidity projection than previously expected. These necessary adjustments are anticipated to apply in states representing a substantial majority of Centene’s membership.

Recently released final risk adjustment results for the 2024 year from the Centers for Medicare and Medicaid Services (CMS) lined up with Centene’s expectations, including necessary adjustments in the Minimum Medical Loss Ratio (MLR) and Risk Adjustment Data Validation (RADV) accruements. However, these results will continue to be evaluated pending potential new information from CMS.

Medicaid Cost Trends

In addition to these concerns, Centene indicated a noticeable increase in the medical cost trend within its Medicaid operations, particularly affecting behavioral health, home health services, and prescription drugs. This increase has been especially pronounced in specific regions like New York and Florida, where existing service rates and risk adjustments are insufficient to cover the costs incurred. As a consequence, a higher Medicaid Health Benefits Ratio (HBR) for the second quarter of 2025 compared to the first quarter is anticipated due to these escalating costs.

Performance in Medicare Plans

Conversely, Centene’s Medicare Advantage and Medicare Prescription Drug Plan divisions are performing above expectations for the second quarter of 2025, indicating some areas of strength amongst the overall challenges in revenues. The company is also achieving solid operational synergies, with a focus on reducing selling, general, and administrative expenses amidst service revenue growth.

Centene plans to publish its complete second-quarter results on July 25, 2025, alongside additional insights into the impacts of adjustments made to its risk projections across both the Marketplace and Medicaid sectors.

About Centene Corporation

As a Fortune 500 entity, Centene Corporation is a prominent player in the healthcare industry. The organization is dedicated to enhancing access to quality healthcare services while ensuring affordability, particularly for under-served populations. Leveraging local brands and teams, Centene aims to provide integrated healthcare services across the United States, encompassing Medicaid and Medicare programs, and operating significantly in the Health Insurance Marketplace.

For ongoing developments and comprehensive updates about Centene, stakeholders are encouraged to access the investor relations section of the company's website.