CENTENE CORPORATION WITHDRAWS 2025 GUIDANCE
Centene Corporation (NYSE: CNC) has withdrawn its previously issued 2025 GAAP and adjusted diluted earnings per share (EPS) guidance due to significant challenges in its Health Insurance Marketplace business and Medicaid operations.
Based on data from Wakely covering 22 of 29 Marketplace states, CNC expects a reduction of approximately $1.8 billion in net risk adjustment revenue transfer, corresponding to an adjusted diluted EPS impact of about $2.75. The company anticipates additional reductions from the remaining seven states. In response, Centene has begun refiling 2026 Marketplace rates to reflect higher projected baseline morbidity.
The company's Medicaid business is experiencing increased medical cost trends in behavioral health, home health, and high-cost drugs, particularly in New York and Florida. The Q2 2025 Medicaid Health Benefits Ratio is expected to be higher than Q1. On a positive note, Medicare Advantage and Medicare Prescription Drug Plan businesses are performing above expectations, and the company continues to achieve strong SG&A expense leverage.
Centene Corporation (NYSE: CNC) ha ritirato le precedenti previsioni per il 2025 riguardanti l'utile per azione (EPS) diluito GAAP e rettificato a causa di significative difficoltà nel suo business del Health Insurance Marketplace e nelle operazioni Medicaid.
Secondo i dati di Wakely, che coprono 22 dei 29 stati del Marketplace, CNC prevede una riduzione di circa 1,8 miliardi di dollari nei trasferimenti netti di ricavi da risk adjustment, con un impatto sull'EPS diluito rettificato di circa 2,75 dollari. L'azienda si aspetta ulteriori riduzioni dagli altri sette stati. In risposta, Centene ha iniziato a rifare le tariffe per il Marketplace del 2026 per riflettere una morbilità di base più alta prevista.
Il business Medicaid dell'azienda sta affrontando un aumento delle tendenze dei costi medici in ambito salute comportamentale, assistenza domiciliare e farmaci ad alto costo, in particolare a New York e Florida. Il rapporto dei benefici sanitari Medicaid del secondo trimestre 2025 dovrebbe essere superiore a quello del primo trimestre. In positivo, i business Medicare Advantage e Medicare Prescription Drug Plan stanno performando oltre le aspettative e l'azienda continua a ottenere una forte leva sulle spese SG&A.
Centene Corporation (NYSE: CNC) ha retirado su guÃa previamente emitida para las ganancias diluidas por acción (EPS) GAAP y ajustadas de 2025 debido a importantes desafÃos en su negocio del Health Insurance Marketplace y en las operaciones de Medicaid.
Basándose en datos de Wakely que cubren 22 de los 29 estados del Marketplace, CNC espera una reducción de aproximadamente 1.8 mil millones de dólares en la transferencia neta de ingresos por ajuste de riesgo, lo que corresponde a un impacto en el EPS diluido ajustado de alrededor de 2.75 dólares. La compañÃa anticipa reducciones adicionales en los siete estados restantes. En respuesta, Centene ha comenzado a volver a presentar las tarifas del Marketplace para 2026 para reflejar una morbilidad basal proyectada más alta.
El negocio de Medicaid de la compañÃa está experimentando un aumento en las tendencias de costos médicos en salud conductual, atención domiciliaria y medicamentos de alto costo, especialmente en Nueva York y Florida. Se espera que la ratio de beneficios de salud de Medicaid del segundo trimestre de 2025 sea mayor que la del primer trimestre. En una nota positiva, los negocios de Medicare Advantage y Medicare Prescription Drug Plan están funcionando por encima de las expectativas y la compañÃa continúa logrando un fuerte apalancamiento en gastos SG&A.
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Centene Corporation (NYSE : CNC) a retiré ses prévisions précédemment publiées pour le bénéfice par action (BPA) dilué GAAP et ajusté de 2025 en raison de défis importants dans son activité Health Insurance Marketplace et ses opérations Medicaid.
Selon les données de Wakely couvrant 22 des 29 États du Marketplace, CNC prévoit une réduction d'environ 1,8 milliard de dollars des transferts nets de revenus liés à l'ajustement des risques, ce qui correspond à un impact sur le BPA dilué ajusté d'environ 2,75 dollars. La société anticipe des réductions supplémentaires dans les sept États restants. En réponse, Centene a commencé à soumettre à nouveau les tarifs du Marketplace pour 2026 afin de refléter une morbidité de base plus élevée prévue.
L'activité Medicaid de la société connaît une augmentation des tendances des coûts médicaux dans la santé comportementale, les soins à domicile et les médicaments coûteux, notamment à New York et en Floride. Le ratio des prestations de santé Medicaid pour le deuxième trimestre 2025 devrait être supérieur à celui du premier trimestre. Sur une note positive, les activités Medicare Advantage et Medicare Prescription Drug Plan dépassent les attentes, et la société continue de réaliser un fort effet de levier sur les dépenses SG&A.
Centene Corporation (NYSE: CNC) hat seine zuvor ausgegebene Prognose für das GAAP und bereinigte verwässerte Ergebnis je Aktie (EPS) für 2025 zurückgezogen, aufgrund erheblicher Herausforderungen im Bereich Health Insurance Marketplace und Medicaid-Geschäft.
Basierend auf Daten von Wakely, die 22 von 29 Marketplace-Bundesstaaten abdecken, erwartet CNC eine Reduzierung der Netto-Risikoeinstellungsumsätze um etwa 1,8 Milliarden US-Dollar, was einem bereinigten verwässerten EPS-Einfluss von etwa 2,75 US-Dollar entspricht. Das Unternehmen rechnet mit weiteren Rückgängen in den verbleibenden sieben Bundesstaaten. Als Reaktion hat Centene begonnen, die Marketplace-Tarife für 2026 neu einzureichen, um eine höhere prognostizierte Basismorbidität zu berücksichtigen.
Das Medicaid-Geschäft des Unternehmens verzeichnet steigende medizinische Kostenentwicklungen im Bereich Verhaltensgesundheit, häusliche Pflege und hochpreisige Medikamente, insbesondere in New York und Florida. Die Medicaid Health Benefits Ratio für das zweite Quartal 2025 wird voraussichtlich höher als im ersten Quartal ausfallen. Positiv ist, dass die Medicare Advantage- und Medicare Prescription Drug Plan-Geschäfte besser als erwartet laufen und das Unternehmen weiterhin eine starke Hebelwirkung bei den SG&A-Ausgaben erzielt.
- Medicare Advantage and Medicare Prescription Drug Plan businesses performing better than expected in Q2 2025
- Strong selling, general and administrative expense leverage on consolidated premium and service revenue growth
- Final 2024 risk adjustment results from CMS aligned with company expectations
- Company taking corrective pricing actions for 2026 Marketplace rates in majority of states
- Withdrawal of 2025 GAAP and adjusted diluted EPS guidance
- Expected $1.8 billion reduction in net risk adjustment revenue transfer, impacting EPS by $2.75
- Additional revenue transfer reductions expected from seven remaining Marketplace states
- Medicaid business experiencing increased medical cost trends in behavioral health, home health, and high-cost drugs
- Higher Q2 2025 Medicaid Health Benefits Ratio expected compared to Q1
Insights
Centene withdrew 2025 guidance due to a $1.8B Marketplace risk adjustment shortfall and rising Medicaid costs, indicating significant earnings deterioration.
Centene has withdrawn its 2025 earnings guidance after discovering that its Marketplace business faces a substantially more costly risk pool than anticipated. Based on preliminary data from Wakely covering 72% of Centene's Marketplace membership, the company estimates a
This financial shock stems from two key factors: lower-than-expected overall market growth and significantly higher market morbidity (sickness levels) than Centene had projected when setting its 2025 guidance. The risk adjustment mechanism, which transfers funds from insurers with healthier members to those with sicker ones, is now expected to require Centene to pay substantially more than anticipated.
Compounding these challenges, Centene's Medicaid business is experiencing accelerating medical cost trends, particularly in behavioral health, home health, and high-cost drugs. These cost pressures are especially pronounced in New York and Florida, where the company notes that services were added to coverage requirements without corresponding rate adjustments. This has driven the Q2 2025 Medicaid Health Benefits Ratio higher than Q1, indicating deteriorating profitability.
The only bright spots are better-than-expected performance in Medicare Advantage and Medicare Prescription Drug Plans, along with continued SG&A expense leverage. However, these positives appear insufficient to offset the Marketplace and Medicaid headwinds. For 2026, Centene has begun refiling higher Marketplace premium rates to address the morbidity issues, but the financial damage for 2025 is already done.
Marketplace 2025 Risk Adjustment Update
The Company recently received and analyzed its first view of 2025 industry Health Insurance Marketplace (Marketplace) data from Wakely, an independent actuarial firm, covering 22 of Centene's 29 Marketplace states, and representing approximately
Based upon the Company's preliminary interpretation of the data and discussions with Wakely, the overall market growth in the 22 states is lower than expected and the implied aggregate market morbidity in those states is significantly higher than, and materially inconsistent with, the Company's assumptions for risk adjustment revenue transfer used in the preparation of its previous 2025 consolidated guidance.
The Company's preliminary analysis of the 22 states results in a reduction to its previous full year net risk adjustment revenue transfer1 expectation by a preliminary estimate of approximately
The Company does not have information or estimates for its remaining seven Marketplace states, but anticipates, due to the morbidity trends observed in the 22 states, an additional reduction to its net risk adjustment revenue transfer expectation with a corresponding adjusted diluted EPS impact.
Regarding the 2026 Marketplace plan year, the Company has commenced the process of refiling 2026 Marketplace rates to reflect a higher projected baseline of Marketplace morbidity than previously expected. The Company currently expects to be able to take corrective pricing actions for 2026 in states representing a substantial majority of its Marketplace membership.
CMS Final 2024 Marketplace Risk Adjustment in Line with Expectations
The final 2024 risk adjustment results released by Centers for Medicare and Medicaid Services (CMS) yesterday were in line with the Company's expectations, including offsetting increases in the Minimum Medical Loss Ratio (MLR) payable, Risk Adjustment Data Validation (RADV) accrual and other offsets, subject to any new information to come from CMS pertaining to its disclaimer regarding another carrier's late 2024 submission.
Medicaid Step-Up in Cost Trend
The Company's Medicaid business has experienced a step-up in medical cost trend in the same areas previously identified by the Company: behavioral health, home health and high-cost drugs. These dynamics were more pronounced in specific geographies, such as
Medicare Advantage, PDP and SG&A Performance
The Company's Medicare Advantage and Medicare Prescription Drug Plan businesses are performing better than expected in the second quarter 2025.
The Company also continues to drive strong selling, general and administrative expense leverage on its consolidated premium and service revenue growth.
The Company is in the process of closing the second quarter and analyzing data, including in Marketplace and Medicaid, and expects to report the second quarter 2025 results and provide additional insights on July 25, 2025.
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1 | The risk adjustment transfer is net of corresponding changes in the Minimum Medical Loss Ratio (MLR) payable, Risk Adjustment Data Validation (RADV) accrual and other offsets. |
About Centene Corporation
Centene Corporation, a Fortune 500 company, is a leading healthcare enterprise that is committed to helping people live healthier lives. The Company takes a local approach � with local brands and local teams � to provide fully integrated, high-quality, and cost-effective services to government-sponsored and commercial healthcare programs, focusing on under-insured and uninsured individuals. Centene offers affordable and high-quality products to more than 1 in 15 individuals across the nation, including Medicaid and Medicare members (including Medicare Prescription Drug Plans) as well as individuals and families served by the Health Insurance Marketplace.
Centene uses its investor relations website to publish important information about the Company, including information that may be deemed material to investors. Financial and other information about Centene is routinely posted and is accessible on Centene's investor relations website, .
Forward-Looking Statements
All statements, other than statements of current or historical fact, contained in this press release are forward-looking statements. Without limiting the foregoing, forward-looking statements often use words such as "believe," "anticipate," "plan," "expect," "estimate," "guidance," "intend," "seek," "target," "goal," "may," "will," "would," "could," "should," "can," "continue" and other similar words or expressions (and the negative thereof). Centene Corporation and its subsidiaries (Centene, the Company, our or we) intends such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we are including this statement for purposes of complying with these safe-harbor provisions. In particular, these statements include, without limitation, statements about our expected future operating or financial performance, changes in laws and regulations, market opportunity, expectations concerning pricing actions, competition, expected contract start dates and terms, expected activities in connection with completed and future acquisitions and dispositions, our investments, and the adequacy of our available cash resources. These forward-looking statements reflect our current views with respect to future events and are based on numerous assumptions and assessments made by us in light of our experience and perception of historical trends, current conditions, business strategies, operating environments, future developments, and other factors we believe appropriate. By their nature, forward-looking statements involve known and unknown risks and uncertainties and are subject to change because they relate to events and depend on circumstances that will occur in the future, including economic, regulatory, competitive, and other factors that may cause our or our industry's actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and assumptions. All forward-looking statements included in this press release are based on information available to us on the date hereof. Except as may be otherwise required by law, we undertake no obligation to update or revise the forward-looking statements included in this press release, whether as a result of new information, future events, or otherwise, after the date hereof. You should not place undue reliance on any forward-looking statements, as actual results may differ materially from projections, estimates, or other forward-looking statements due to a variety of important factors, variables, and events including, but not limited to: our ability to design and price products that are competitive and/or actuarially sound including but not limited to any impacts resulting from Medicaid redeterminations; our ability to accurately predict and effectively manage health benefits and other operating expenses and reserves, including fluctuations in medical utilization rates; rate cuts, insufficient rate changes or other payment reductions or delays by governmental payors and other risks and uncertainties affecting our government businesses; the effect of social, economic, and political conditions, geopolitical events and state and
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