Centene Raises Profit Outlook as Government Programs Drive Growth
Second-quarter revenue reached $53.58 billion, rising 7.3% from the first quarter.
Managed-care company Centene Corp. (CNC) raised its 2026 adjusted earnings floor to more than $4.80 a share after returning to profitability in the second quarter. The previous floor was more than $3.40, and the new outlook included about $0.50 a share of nonrecurring Medicare and Commercial benefits.
Total revenue increased $3.64 billion sequentially, while premium and service revenue edged down from the first quarter to $44.38 billion. Premium and service revenue rose 4% from a year earlier as the business shifted further toward government programs.
GAAP earnings were $2.19 a share, down from $3.11 in the first quarter and up from a loss of $0.51 a year earlier. Adjusted earnings were $2.51 a share, compared with $3.37 in the prior quarter and a loss of $0.16 a year earlier.
Medicare premium and service revenue grew 17% from a year earlier to $11.06 billion, and Medicaid revenue rose 5% to $22.77 billion. Commercial revenue declined 7% to $9.36 billion. Broader revenue growth was driven by higher prescription-drug-plan membership and premium yield, rate increases, Marketplace risk-adjustment transfers and state-directed payments, partly offset by lower Marketplace and Medicaid enrollment.
The health-benefits ratio improved to 89.6% from 93.0% a year earlier, then moved higher from 87.3% in the first quarter. Commercial posted the largest year-over-year improvement, with its ratio falling to 79.2% from 90.6%. Medicare and Medicaid ratios also improved from a year earlier, aided by rate and revenue gains, medical-cost management and favorable resolution of certain 2025 Medicare items.
At-risk membership fell by 387,500 from the first quarter to 25.89 million and was down 2.12 million from a year earlier. Marketplace membership dropped to 3.49 million, and Medicaid enrollment declined to 12.11 million. Medicare prescription-drug-plan membership provided a counterweight, rising to 8.80 million from 7.85 million a year earlier.
Centene now expects full-year total revenue of $193.5 billion to $197.5 billion, a $6.0 billion increase from its prior range. Its premium and service revenue forecast rose by $2.0 billion to a range of $173.0 billion to $177.0 billion, while the GAAP earnings floor increased to more than $3.11 a share from more than $2.37.
The company recorded $37 million of enterprise-optimization costs and $15 million of related severance and contract-exit costs during the quarter. Centene also repurchased $260 million of senior notes, helping reduce debt to 41.6% of capitalization from 43.2% in the first quarter as cash, investments and restricted deposits rose to $44.85 billion.