Insurer Centene Stock Spikes on Earnings. There’s Still a Long Road to Recovery

Centene posted better-than-expected third-quarter adjusted earnings. (Joe Raedle/Getty Images)

Key Points

• Centene’s third-quarter adjusted earnings of 50 cents a share and revenue of $49.69 billion exceed analysts’ expectations.
• Centene’s medical-loss ratio came in at 92.7%, compared with the 92.9% consensus call.
• Centene raises its full-year adjusted earnings guidance.

Shares of the embattled health insurer Centene jumped almost 8% on Wednesday after medical costs for its Medicaid plans came in below expectations, leaving it with better-than-expected third quarter results.

The stock has been a dramatic underperformer this year. Shares plummeted 40% in a single day in early July when the company withdrew its 2025 financial guidance, citing worries about the plans it offers on the Affordable Care Act exchanges.

Since then, the stock has been “bouncing near the bottom like a pogo stick in an infinity pool,” as Mizuho healthcare equity strategist Jared Holz put it in an email to investors early Wednesday. The stock closed Tuesday at $33.19 per share, down 45% from where it ended 2024, at $60.58.

The results Centene reported early Wednesday were strong enough to lift shares a bit. Centene reported adjusted earnings of $0.50 per share, better than the loss of $0.14 per share that analysts had projected, according to FactSet. Revenue was $49.7 billion, compared with the $47.7 billion consensus estimate.

The company raised revised guidance it introduced late in July after ditching its earlier forecast. It said it expects non-GAAP adjusted diluted earnings of at least $2 per share, up from the prior call for $1.75.

The solid third-quarter results appear to have been driven by the company’s Medicaid medical-loss ratio, which tracks the proportion of premiums paid out to cover medical expenses. Centene said that the figure, 93.4%, benefited from retroactive payments covering prior periods received from Florida in the quarter.

The Medicaid result left the company’s overall medical loss ratio at 92.7%, better than the 92.9% consensus estimate.

Premium and service revenue swelled 22% to $44.9 billion in the quarter. Growth was partially offset by lower Medicaid membership, Centene said.

The Centene report comes as insurers deal with a turbulent political environment for the insurers. State Medicaid programs are set to lose members under the One Big Beautiful Bill Act, which among other things creates work requirements for many recipients. Subsidies that had reduced premiums for plans offered on the Affordable Care Act exchanges, meanwhile, are set to expire at the end of this year.

Centene said it had taken a $6.7 billion goodwill impairment in the third quarter as a result of the One Big Beautiful Bill Act and the drop in the company’s stock price.

Democrats have demanded an extension of the ACA subsidies as part of the negotiations over the government shutdown. On an investor call early Wednesday, Centene CEO Sarah London said that the “outcome remains uncertain,” and argued in favor of extending the subsidies.

Open enrollment for the ACA plans is set to begin on Nov. 1. “We are ready to open enrollment with strengthened digital tools and well-trained call center personnel to aid members during this time of uncertainty,” London said.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com and Mackenzie Tatananni at mackenzie.tatananni@barrons.com