Key Takeaways:
Centene Corp. (NYSE: CNC) on Tuesday reported first-quarter adjusted earnings of $3.37 per share, beating Wall Street estimates by $1.50, and raised its full-year profit outlook.
"Our strong first quarter results position us to increase our full year 2026 adjusted diluted (earnings per share) guidance to greater than $3.40,” Centene chief executive officer Sarah London said. “We remain confident in the long-term earnings power of the enterprise."
The health insurer posted revenue of $49.94 billion, exceeding the average analyst estimate of $47.47 billion. Net income climbed to $1.54 billion, or $3.11 per share, from $1.3 billion, or $2.64 per share, in the same period a year ago.
The strong results came despite a significant drop in enrollment in its individual health insurance plans sold on the Affordable Care Act marketplace. The company’s Ambetter-branded plans saw membership fall to 3.58 million, a decrease of two million from the prior-year quarter, following the expiration of enhanced federal subsidies.
Centene’s ability to beat profit expectations was aided by improved cost management. The company’s health benefits ratio (HBR), a key measure of how much of its premiums are spent on medical care, decreased to 87.3 percent from 87.5 percent in the first quarter of 2025. The company attributed the improvement to rate increases and progress in managing medical costs, particularly in its Medicaid business.
Revenue growth was driven by its Medicare prescription drug plan business and state-directed payments in Medicaid, which helped offset the lower membership in the ACA marketplace plans. The company's total revenue increased by 7 percent year-over-year.
The guidance raise suggests management is confident in its ability to manage medical costs effectively, even with declining membership in its most visible business line. Investors will watch the second-quarter results for signs of continued margin recovery and stabilization in individual plan enrollment.
This article is for informational purposes only and does not constitute investment advice.
