Centene Stock Pops on Reassuring Update. A Recovery Is Still Far Away.

Centene stock is far below where it was trading in early July. (Dreamstime)

Key Points

About This Summary

• Centene shares rose after the insurer reaffirmed its full-year earnings guidance and gave a reassuring update.
• Centene withdrew its earlier full-year guidance two months ago, triggering a significant selloff of its shares.
• CEO Sarah London said 2026 exchange plans are being refiled and repriced to reflect the sicker population signing up.

Shares of the insurer Centene jumped early Thursday, after the company said in a securities filing that it was maintaining the full-year earnings guidance it had issued in late July, and issued an encouraging update at an investor conference.

That the stock gained 12% on a largely anodyne set of developments reflects the extraordinary investor anxiety that has hung over managed care stocks in recent months. It has been a particular problem for those like Centene with extensive exposure to government health programs such as Medicare Advantage and Medicaid.

Centene weathered a significant selloff two months ago, when it withdrew its earlier full-year guidance. Even after two separate days of strong performance this week, the stock is still trading nearly 40% below where it was in early July.

Throughout the week, managed-care names have gyrated in response to updates given ahead of investor conferences, and on hints about bonus payments tied to the Medicare Advantage program’s quality rankings. UnitedHealth Group shares closed up 8.6% on Tuesday after the company reaffirmed its guidance, and said that it expected to achieve a high proportion of top-level Medicare Advantage quality rankings.

Also on Tuesday, hints about how the Centers for Medicare and Medicaid Services would assign this year’s quality ratings sent shares of Humana down 12%, and shares of Centene up 7.7%.

Centene withdrew its guidance in July in response to data it had seen on the insurance plans it sells on the Affordable Care Act exchanges showing that plan growth was lower than anticipated, and that patients were sicker than the company had expected. The stock, which had been trading at $56.65 ahead of the announcement, closed that day at $33.78.

Two months later, the stock hasn’t recovered. Shares were trading at $35.62 early Thursday.

In a filing issued ahead of a presentation at an investor conference on Thursday morning, Centene said that its financial results through August “are consistent with its previously-issued full year 2025 forecast of approximately $1.75 adjusted diluted earnings per share.”

Analysts are expecting earnings of $1.73 per share this year, according to FactSet.

At the conference, hosted by Deutsche Bank, CEO Sarah London said that the exchange plans for next year are being refiled and will be priced to reflect the sicker population that the company has seen sign up for the coverage.

London also said that the company had seen preliminary results for the quality ratings of its Medicare Advantage plans, and that it expects the proportion of its members in highly rated plans to be slightly higher than last year.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com